Transform and survive

Italtel Vice President, Head of International Markets

November 8, 2017 – Transform and survive: how to adapt with a shifting market.

As companies from all industries look to keep pace with a rapidly shifting technology marketplace, the growing digitalization trend is having a dramatic, disruptive effect on traditional industry dynamics and business models. In telecommunications, operators and service providers are beginning to adapt to this digital revolution and are starting to work out what role they can play in the new digital ecosystem.

This period of reflection is the catalyst that is driving the convergence of telecoms and IT, opening the door for significant Business-to-Business (B2B) activity in the ICT Industry. Telcos are now at a stage where they must ask themselves if digitalization is truly a threat or an opportunity to update their existing business models.

A forward-thinking strategy focused on operational efficiency is a low-risk option for traditional telcos looking to remain competitive among an influx of newcomers, while incumbents need to see this revolution as an opportunity to lay the groundwork that will enable them to take advantage of innovative B2B opportunities based on their core competences.

If telcos understand and adapt to these markets trends, they will be in prime position to take full advantage of the market share and revenues opportunities that they present.

Dealing in data

Data is the primary currency of digitization, but its full value can only truly be delivered when the right technological infrastructure seamlessly connects it and enables it to be exchanged anytime and anywhere. In the next few years, telcos are likely to see their current visions and plans for networks and services disrupted by this developing trend and many will find themselves at a crossroads. In an industry like B2B telecommunications where the pace of change is so frenetic, these few years can seem like a lifetime. However, taking the time to make the right strategic choices at this juncture will ensure that operations can adapt to these changes and become more futureproof.

In the short- to medium-term, assessing the possible roles and opportunities that are emerging can provide leaders with valuable insights on how to position themselves for success. Now is the time for telcos to determine what role they want to play in this highly digitized, hyper-connected world whether that be to operate as a utility service or offer something more. The successful telcos of the future will not only facilitate connectedness, but also extend it to value-added services.

Whether they aspire to become fully-fledged digital service providers or choose to focus primarily on providing connectivity, telcos must accelerate innovation, agility and efficiency to meet customers’ high expectations.

A changing landscape

Italtel has a long track record of success in IT system integration, managed services, Network Functions Virtualization (NFV) and all-IP solutions, counting leading global service providers and several multinational enterprises among its customers. These relationships have illustrated the importance of collaboration as service providers and enterprises seek to make their infrastructures more automated and flexible to deliver more personalized, user-driven services that best respond to customers’ needs.

Ubiquitous internet-based connectivity is driving a growth in spending on network digitization, as well as the resulting consultation and implementation services. More sophisticated network design and integration skills will be required to service advanced IP-based products, which will usually call for some customization in order to make them work effectively within customers’ existing ICT systems. Software capabilities will become more important in the future, with service set-up and integration depending less upon wiring and more upon programming. In addition, the requirements for field technicians will change significantly and the skills of the in-field workforce must be adjusted accordingly. Telcos will need to carefully manage the migration to IP-based solutions to avoid cannibalizing traditional, high-margin telecoms revenues and diluting unit margins and cash flows.

Furthermore, telcos will need system integrators and advisory partners to be able to leverage on both telecommunications and IT competences. Selecting a system integrator with knowledge and skills in both areas will enable faster network transformation with the network agility needed to foster new services from the core out to the distributed network’s edge compute cloud, driving cost-effectiveness while avoiding vendor lock-in.

In the field

Across the Latin American market, changes to the connectivity landscape are creating a very fluid situation in which operators and service providers alike need to be agile in order to stay ahead of the game. We are seeing a growing requirement for data center capacity in markets such as Brazil, Peru, Colombia, Ecuador and Argentina – where it actively supports service providers – while vertical applications and unified communications projects are becoming increasingly prominent.

Banking is one such vertical market that is seeing an increasing need for telecommunications services and Italtel has worked alongside operators such as Telefónica, including a communication project for Banco de Crédito del Perú for which we provided the on-site technology.

The vast majority of service provider effort is being spent on adapting to these changing business models, and it is clear that system integration is required to bring together the work of different vendors and provide a solution that can deliver the level of service that the modern customer requires.

An example of this requirement is a project which Italtel undertook in Peru during construction of the Lima Convention Center (LCC), an 80,000 square meter development that was built for the annual meeting of the World Bank and the International Monetary Fund. With many different developers involved in the project, integrating their numerous technologies was essential to the smooth operation of a technological infrastructure that was described as one of the most advanced in Latin America. The integration of data center, internal communications network and the security and automation systems has enabled the LCC to maintain its reputation as one of the region’s premier convention venues.

Keeping ahead

In order to stay ahead of the market, telcos have to evolve their thinking to take into account the fact that future growth is likely to come from non-core segments, including new services in industries and vertical markets such as banking, utilities and smart cities through Internet of Things connectivity.

In order to support this evolution, telcos have to become more agile in covering the key components, which form the pillars of agility transformation. To deliver network agility through infrastructure transformation, a flexible and open infrastructure must be created to foster competition and innovation from a broader ecosystem of vendors and enable the development and deployment of new revenue-generating services.

Service agility will also be required, delivered through Operation Support Systems transformation. These systems need to evolve to enable rapid and dynamic service creation, provisioning, activation and retirement of services. Faster time-to-market for new services will enable telcos to react more quickly to business and competitive pressures and accelerate time-to-revenue. Finally, customer agility needs to be delivered through Business Support Systems. These will need to support an end-to-end, customer-centric approach that ensures subscribers get what they want, when they want it – or, thanks to predictive analytics, even before they realize they want it.

To maximize overall agility, telcos need to successfully implement network and IT transformations in each of these three pillars. The telecommunications landscape has changed significantly in the last few years, with telcos under significant pressure to change their operating models in the face of digital disruption.

However, they don’t have to be left behind as their industry evolves. In every crisis, there is an opportunity and digital disruption presents a huge opportunity for telcos to expand their capabilities and provide the services that consumers want.

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Guido Candiani
Italtel Vice President, Head of International Markets Responsible for TI Group, Telefonica Group and the whole Latin America Region. Starting his career in 1989 at Aerovironment (USA, California) and having spent the following 2 years in Telettra Spain, the Spanish subsidiary of the Fiat Group’s telecommunication manufacturer company, Mr Candiani joined Italtel in 1991 and covered various roles of growing responsibility in the product and marketing management. Born in Genova in 1965, married with three children, Guido obtained his degree in Electronic Engineering at Politecnico of Milan in 1989 and followed the YTMP Executive program at INSEAD.
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