Modern IT infrastructure leverages the twin towers of cloud computing and high speed optical and wireless communications. But it isn’t just the generic enterprise that is navigating the digital transformation, the traditional telecommunications providers themselves must also adapt their legacy systems even as they enable others’ moves to the cloud. With us today to look at how that process is going is Andrew Walker, Senior Managing Director and Communications & Media industry lead for North America at Accenture. Andrew has been consulting for the telecommunications and high tech world since the late 90s, joining Accenture six years ago after a decade at Deloitte and rising to his current role a year or so ago.
TR: Where does Accenture’s communications and media business fit into the industry? What part do you play?
AW: We serve every major communications and most major media companies through a variety of services. For strategy, we work with C-level individuals to help them figure out what the business should be doing, how they should pivot it, and how to be successful in the future. For consulting, we help with the process work to transform the business. We help them transform their technology stacks and handle some operations work, taking over parts of our client's business to run it more efficiently for them. We also have another set of services called interactive, which is legacy agency type work such as designing new processes and products, etc.
TR: In today’s market, that must mean you are deeply involved in helping the industry move to the cloud. What opportunity do you see there?
AW: Telecommunications is one of the industries that can benefit the most from moving to the cloud. If you think about the large telcos, they are running on a 30- or 40-year-old IT infrastructure. There have been some material billing projects out there, but for the most part they have not upgraded their legacy IT infrastructure because of the costs of doing so. For them, it’s not just the cost out the door because if they get it wrong then suddenly it's a revenue impacting event. Telcos have basically stacked layers of IT on top of itself for years and their current systems don't give them any insight into the data that's sitting in those systems. Many of the projects I've done have involved digging into the telco systems to pull out pieces of data that can tell stories about a carrier's profitability, sales effectiveness or customer segment profitability. Today, you would have to go into hundreds of systems to be able to piece that type of information together. By moving it to the cloud, telcos can have access to those applications and data in a way that they didn't before. One thing that is particularly compelling to telcos is what we call data-driven reinvention where they actually have access to their data in a way that enables them to do things like deploy their networks faster or more efficiently, and to make their supply chains run much more efficiently.
TR: Which types of telecommunications companies are most interested in your help for this process?
AW: Our focus right now is on working with several large cloud transformation efforts by the legacy incumbent local exchange carriers (ILECs). We’ve also been talking with smaller carriers about cloud, but for many of them they’re focused more on fiber deployment right now than on cloud … which is a wise move, because that fiber will really be the backbone of their business in the years to come.
TR: Given how large a deal the cloud is and how closely the telcos are involved in its spread across the enterprise space, you would think telcos would have been the earliest converts. Why do you think they have been so hesitant to dive in themselves?
AW: Telcos are very close to the cloud, and I would say that cloud providers in particular have become frenemies of sorts. Just look at companies such as Microsoft, Amazon and Google and the giant global fiber and data center networks they're building. It’s absolutely disrupting the enterprise telecommunications landscape, as they are taking share from the legacy enterprise players. Part of this is that they've looked at them as being competitors to some degree. The other part is that telcos have squeezed their IT budgets for years. They've dealt with IT through application rationalization, data center rationalization, i.e. “how do I do more with less?” They haven't looked at IT as a source of competitive advantage or even, frankly, comparative advantage. They've looked at IT as a cost center.
TR: So what stage are they in when it comes to moving their own processes to the cloud?
AW: It runs the gamut. Some have announced big cloud transformation projects. Others have talked in the press about the fact that they're on the journey. All of them are on the path of doing something, just to varying degrees. Some companies are moving along incrementally, e.g. with 40% of applications in the cloud. Others are taking the big bang approach, partnering with Microsoft, Google or Amazon to go all in and make it happen in 18 months or something like that. However, no one has completed the journey that I'm aware of.
TR: Have any of them tripped and fallen along the path?
AW: Without naming names, there were some early out-of-the-gate players that viewed this as an IT project. That's a really dangerous way to think about it. We would say that 85% of the benefits are in the business: the ability to deploy network faster, supply chain, care & sales benefits, etc. The challenge with the project sitting in IT is that the business leadership wasn’t engaged in a meaningful way to help the company achieve those benefits. As such, those companies are falling a bit behind in taking advantage of the opportunities for a data-driven reinvention of their businesses.
TR: If it’s not an IT project, who needs to be driving the process to make it successful?
AW: I personally believe that the CEO needs to hold his or her team accountable for the success of a cloud and data-driven transformation program. While not every telco is structured in a way where the CEO plays the role of transformation agent, I do think it is one of the big things that a CEO has to hold his team accountable for. Likewise, the CFO has to own the value case, and not just for the spend, but for the benefits. The people that run the B2C and B2B parts of the business need to have clear business cases to be able to implement. All those different functions need to have taken the overall business case built it into their future models, and they need to be pressing on the cloud transformation to get them the data that allows them to transform. If it's just the CIO doing it and the rest of the business isn't engaged, then the CIO is selling upstream. She or he can provide all the data, but can’t make them use it to transform their parts of the business the way they could. Telcos tend to be very metrics-driven organizations with a bit of an engineering mindset. If you set goals, they will achieve them. But if there's no goal, or if it's soft, nothing's going to happen.
TR: Is the technology itself ready for the telcos to move to the cloud? Or is there work yet to be done to prepare for the migration?
AW: I would say it is halfway ready. You could lift and shift all the applications right now, but the next step is actually evolving the applications into something more flexible & agile. The telco stack took years to develop, with all sorts of fits and starts along the way. I don't know if there's a ready-to-use, cloud-based perfect telco stack out there to just migrate to. There are some smaller carriers who have had success moving to cloud-based OSS/BSS stacks, but it still remains to be seen whether these platforms can handle the complexity that exists in larger telecoms with their legacy wireline products and offers, in addition to their wireless. However, this is how innovation works, right from the Clayton Christiansen books -- it often starts with small upstarts who are looking for new ways of doing things.
TR: Has all the M&A in the industry made this process more difficult, and might M&A integration become easier for telcos that have successfully undergone a cloud transformation?
AW: I think M&A has increased the need for companies to do this. Every carrier that has gone through an M&A integration has eventually claimed they were fully integrated and were moving forward. However, when you dig down into the weeds, I think any telco veteran will tell you that, in many cases, they just stitched together old billers, or old OSS, and nothing got turned off. If they were able to move this process to the Cloud and maybe even migrate it to a common platform, it would make M&A much easier. The more disparate systems that are running in those weeds, the more benefit they will see.
TR: Are data sovereignty laws playing a role in driving cloud transformation in the industry?
AW: That is one of the six or seven big issues we see on the horizon from a policy perspective, considering what’s happened in the EU, the California data privacy law, Virginia’s efforts, and Biden’s potential nominees possibly delving into data privacy. Telcos today are carrying a lot of customer data, but they've always been regulated. Their ability to adjust and control data is probably more mature than the more digital-native internet companies, who never really had to deal with a lot of regulation. It's going to make things more complex, but it may also create even more problems for their newer digital-native competition in the future.
TR: So what is the biggest challenge ahead for the cloud transformation in the telco world?
AW: If you're in the cloud business, it’s very easy to go sell the message, "Hey, move all your applications to our platform and all of a sudden everything will be magical and good." However, having worked in telco for 25 years, I have seen how complex it really is. The amount of spaghetti code that's been laid on top of itself is such that there's not a magic wand here. The shifts are going to happen, but the execution of those shifts is going to be hard and deriving the value from it will also be hard. That is why I believe the CEO should really be focusing her or his team on it. You want everyone to be engaged because this is not going to be as easy as the cloud providers think it is.
TR: Does the industry have the expertise and skill sets in place to follow through at this point?
AW: Companies are having to do something they haven’t done before so it will take time for them to obtain the right skills and achieve the knowledge required for this type of transformation. There are, however, a couple of companies that can do this well. But if everyone decides to go at once, the A-team can't be everywhere. Some of these transformations are going to go sideways unless we have very mature conversations about how to sequence the projects.
My experience in telco systems tells me you are better off having that conversation up front than getting into the midst of it before realizing you don't have the talent needed to deal with some of the issues that are going to pop up.
TR: Thank you for talking with Telecom Ramblings!
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