Souhail Haddaji, Vice President, Product Development at Du, has some highly insightful views on digital transformation and customer-centricity throughout the Middle East. Ahead of his speaking session at the upcoming Middle East Com Telco & ICT Leadership Summit he gives us his thoughts on the future of the digital industry.
How would you qualify the impact of the digital disruption?
I would say it is a matter of survival because, as with every industrial revolution, firms which adapt to changing economic and societal conditions grow and prosper. Others which fail to do so merely survive or, in extreme cases, simply cease to exist.
The profound societal and economic changes induced by digitization of our connected lives are of similar magnitude, and therefore they will probably trigger an impact of comparable scale on people, firms and societies in general.
Talking about telcos specifically, they are today at a crossroads for several reasons:
OTTs are threating telcos’ traditional value chain positioning (Ovum estimated this impact to be – $ 386 billion between 2012 and 2018)
The age of the customer: Empowered by technology, with instant access to any information they need and supported by their social network, customers have taken the lead in the buyer-seller relationship. Customers today know better than their service providers about their products, reputation, latest competition’s offers and promotions. In the past decade, telcos built highly effective customer acquisition machines. But, the implications induced by the age of customer and market maturity, require telcos to shift gear towards customer centricity by putting customers at heart of the organization.
Core services maturity: Mobile voice, SMS and fixed broadband markets have matured and competition has increased severely, leading to margin squeeze and pressure on the income statement.
Inadequacy of IT capabilities for the digital age: Telcos built highly effective acquisition machines based on complex and often siloed IT systems, to manage various customer-facing and back-office functions (CRM, billing, fulfillment, assurance…etc.). The problem is that these systems, often integrated in complex ways, are not optimized to meet digital challenges, such as personalization, real-time customer responses and omnichannel capabilities.
How are other industries dealing with digital disruption?
At the end of 2014, we completed research with INSEAD regarding customer-centricity and the impact of digital disruption in the banking industry. It revealed that a few years ago, banks’ boards started to raise some fundamental questions that need to be addressed by CXOs in response to the coming digital disruption:
Should they redirect investment into new independent digital ventures, or should they keep allocating resources to old business as well?
How to move organizations from siloed product-centric structures to customer-centric ones?
With increasing ROCE pressure from shareholders, what are the next generation of productivity improvements for product portfolios, sales channels and contact centers?
Is the branch obsolete in an omnichannel world? How to shift retail network focus from transactional business to a more customer advisory value creation role?
What CIO vision is required to support the digital ambition? What are the consequences for legacy systems? What transformational paths should be followed?
What is the appropriate organizational model to support the digital journey? What is the appropriate governance model to steer the digital transformation and ensure adequacy between resource allocation and business value throughput?
Telcos need to fundamentally rethink their strategic assumptions in a similar way, in order to handle the potent dynamics blurring the boundaries of their industry.
They need to address, simultaneously and in coherence, two transformational challenges: the customer centricity and the digital imperatives. Addressing one without the other will result in an incomplete organization, partially equipped to deal with the strategic imperatives brought by the digital disruption. From where should telcos start this journey to become digital operators?
For telcos to navigate through this turbulent and stormy weather, they have to focus on the right compass…their customers! They represent their strongest competitive advantage and greatest challenge at the same time.
Telcos need to develop a healthy obsession with their customers: deeply understanding their needs, their aspirations, what interactions frustrate them most and what delights them. Only when armed with these insights can they build customer-centric propositions, delivered through consistent and omnichannel-enabled customer experience. Two dimensions should form the pinnacle of telcos’ customers centricity: customer intimacy and customer experience excellence.
To find out more about Middle East Com Telco & ICT Leadership Summit, or to register, visit the website: www.comworldseries.com/me This academic research paper by Souhail Haddaji was originally published by TMForum and MIT on 8thJune 2015