Telecoms & Broadband Business Newsletter - November 2013

Editorial - The digital business buzzword is ‘transformation’

It has now well and truly sunk in among most of the businesses experiencing challenging economic circumstances – adapt or perish. There won’t be many organisations that will not be affected by the rapid changes in technology. The key here is that by using these new technologies you can start taking costs out of your business model.

As a consequence those who adapt can offer products and services at a lower price than those who do not; and unless there is another value that the business can add, for which customers will pay a premium, those customers will start looking around and, as has by now been well-documented, that is what customers are doing all around the world.

Key technologies here include: internet, broadband, smartphones, tablets, apps, cloud computing, big data and M2M.

The digitalisation developments also allow for far more personalised services, which will compete with the one-size-fits-all approach of those organisations operating in mass markets. This also affects the entertainment, media and advertising businesses.

Ongoing cost-cutting in governments will also see these sectors having to adapt. The cost of healthcare and energy, for example, cannot rise simply because these sectors do not adjust to these changes.

It is the digital economy that is pushing this along, but the transformation needed in order to be able to adapt has nothing to do with technology. The keywords here are leadership, breaking down silos, collaboration and cultural change.

Without those elements transformation will not take place. Leadership is often weak because management is reluctant to change, as it often requires cannibalisation of old models. Also, most of the time businesses experience problems in identifying the opportunities to generate new revenue to compensate for the products that now have to be sold at a lower price – in other words, there is a lack of a good business model.

In general terms, but not always, the key here is that organisations need to stick to what they are good at, and from there to build on new models utilising the digital technologies. Again this needs to be led from the top. It cannot be left to a particular silo in the organisation to take this on. Only through leadership from the top can the whole organisation be aligned to the transformation process. A cross-organisation team is needed to plan and execute the transformation.

This team will have to place the customer at the front and see how their organisation can be better aligned with their demands; it is most likely that the digital transformation is going to cut several steps out of the traditional model by giving customers direct access to information and processes within the organisation.

Within the business model that the organisation operates the customer should be serviced in the broadest possible context. This could mean that the organisation will include other parties on the supply side to deliver what their customers want, in a way they feel comfortable with and at a price they will accept. This all needs to be transparent as the customers of today can do internet research themselves, and so they are now in greater control than ever before. In this context the use of social media will, in many cases, become a must, so as to make it possible to follow the customer and their buying behaviour patterns.

Paul Budde