Customer-Centric Digital Transformation: Analytics-Driven Impact on Business Strategies for Communications Service Providers

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1 A Poit of View Customer-Cetric Digital Trasformatio: Aalytics-Drive Impact o Busiess Strategies for Commuicatios Service Providers Abstract Commuicatio service providers (CSPs) face a array of challeges i this rapidly chagig telecommuicatios idustry. The evolvig digital ecosystem ad presece of over-the-top (OTT) players have made it imperative for CSPs to stregthe their core fuctios ad leverage iovatio to expad ito ew offerigs. With a extesive reach across busiess verticals, CSPs already have a rich data repository drive by their uique etwork itelligece that ca be utilized for maximizig service delivery levels. This paper highlights the importace of customer cetricity to drive busiess outcomes for CSPs. It assesses the curret idustry state ad CSP capabilities geared towards customer cetricity that ca help offer a more persoalized experiece ad boost loyalty. The case for digital trasformatio is preseted, alog with a framework that ca help CSPs reimagie their busiesses. Itroductio: Customer Cetricity Replaces Customer Service as the New Madate Today's CSPs face more challeges tha ever before to retai their customer base while tappig ito ew sources of reveue. They must move beyod traditioal cotracts ad chur mitigatio iitiatives. Quality coverage ad good plas are oly the bedrock for added iitiatives that ca provide a more compellig ed-to-ed, omi-chael cosumer experiece for their curret cosumer base. CSPs must also better serve their eterprise busiess-to-busiess (B2B) cliets while usig ew data moetizatio models to expad judiciously ito ew busiess-to-busiess-to-cosumer (B2B2C) markets. Future success depeds o each CSP's ability to aalyze their data ad leverage their exclusive capabilities to cater to differet customer segmets. By embracig 'customer cetricity' as the strategic differetiator, CSPs ca retai ad grow reveues with their cosumer ad eterprise customers to differetiate themselves from traditioal ad o-traditioal competitors. This paper explores the curret CSP eviromet ad uderscores the eed for customer cetricity as a critical corerstoe of success. It also presets the case for digital trasformatio ad highlights examples of successful iitiatives to offer a roadmap for chage. The curret state of CSPs: I Search of Reveue ad Margis With icreasig competitio i a rapidly evolvig digital ladscape, CSPs are costatly challeged to adapt ad develop future-ready strategies. Lower growth ad thiig margis i mature markets result from a series of factors as detailed below ad illustrated i Figure 1. Customer Isights... CSP Challeges Mature market with low growth ad straied margis OTT ad o-traditioal players stealig reveues Core Cosumer ad Eterprise Busiess... eables more persoalized experieces for greater up/cross-sell CUSTOMER INSIGHT: New Busiess... idetifies ew sources of reveue to couter the impact of a mature busiess.... defeds the core agaist OTT ad o- traditioal players... icreases ew competitio potetial versus across reveue to large OTT players Data ad device explodig with tablets, lot, m2m Lookig for ew reveue opportuities Process ad techology trasformatio... exploits device data ito persoalized, cotextbased customer experiece... drives improved B2B customer experiece ad ew data moetizatio models... reduces data silos, lowers ifrastructure costs ad leverages advaced aalytics... meas more data with better cotext to sell across more vertical idustries...poits to a competitive ad profitable offer to sell to the B2B(2C) market... eables commo aalytics platform to mitigate silos ad icrease ecoomies fo scale Operatioal Leverage Figure 1. Customer Itelligece Mitigates Challeges Faced by CSPs

2 User saturatio, more aggressive competitive pricig, ad busiess model pressures impact reveue ad profits. Chur is maaged, but at a high cost. Expected gais from subsidy reductios are offset by costs as the world of forced loyalty via cotracts shows clear sigs of strai ad chur ad margi pressures icrease. High capital expeditures for log term evolutio (LTE), fiber, ad spectrum ivolve eormous ivestmet to offer a competitive advatage. OTT ad o-traditioal service providers have established themselves i the commuicatio space to offer stiff competitio to CSPs. For 1 example, Juiper Research estimates operators will suffer $14B i lost reveues as OTTs take market share up 26% over Additioally, these players cotiue to create ew adjacet value that rides high o CSPs pipes, further limitig reveue growth opportuities. Mobile techology has cotiued to peetrate cosumer lives, with 58 percet of America adults curretly possessig a smartphoe ad 2 42 percet of America adults owig a tablet. The risig popularity of the Iteret of Thigs (IoT) is expected to grow from 12 billio 3 etworked devices i 2013 to approximately 21 billio i However, the growth i devices ad the commesurate explosio i data is a double-edged sword. O the oe had, this pheomeo ca drive reveue growth ad eable ew cosumer ad eterprise opportuities at home ad i the field of telematics, health, logistics, ad other areas. O the flipside, data volumes will require more capex ivestmet for effective hadlig, alog with expoetial growth i the umber of customer touchpoits ad the maagemet of isights. Moreover, i the case of IoT, if operators are uable to better uderstad ad serve their customers they may yet agai fid OTT players stealig large swaths of opportuity. CSPs are still o the lookout for ew busiess opportuities that ca ehace their positio i the commuicatios space. Despite eterprise opportuities i B2B ad cloud, these aveues have ot yet delivered the expected retur. Fially, the challeges of process ad techology trasformatio cotiue to have a impact o CSPs busiess. While CSPs axiously look for ways to boost reveue, they must simultaeously lower costs. To that ed, may compaies have set up iitiatives to combie wirelie or wireless operatios. Most players are o their ow customized evolutio paths towards iteret protocol (IP) ext geeratio techologies that ca drive service delivery flexibility, lower operatig costs, ad ultimately, deliver customer-cetered services. Some leadig CSPs have established ew corporate offices dedicated to lea or Six Sigma performace excellece. They grapple with silo mitigatio to lower costs ad improve operatios, but with margial success so far. Maximizig the Potetial of CSPs Despite this seemigly grim outlook, CSPs are edowed with uique capabilities which if leveraged appropriately place them i a positio of stregth. By cotrollig the mobile experiece ad uderstadig each cosumer's 'cotext', CSPs ca egage with cosumers aytime, aywhere. Add to this, the aticipated explosio of IoT which will icrease mobile cotextual iformatio (B2C ad B2B), positioig CSPs for strategic beefits. The extesive cosumer reach of CSPs makes them well suited as B2B(2C) parters for capturig, aalyzig, ad moetizig data. Moreover, their reach across ad ito vertical busiess segmets allows them to become preferred B2B parters as busiesses seek to deliver more relevat offers at the right time. Fially, CSPs have uique platform capabilities. They ca autheticate ad drive cofidece i real-time iteractios with cosumers ad as trusted federated data brokers. CSPs' mobile paymet ad wallet iitiatives provide additioal isights that help CSPs ad other idustries act o this improved uderstadig of cosumer prefereces ad behavior. CSPs already capture Big Data o a scale that exceeds most other idustries. This is coupled with their ability to deploy real-time aalytics, allowig them to geerate proprietary isights from owed ad third party data. These CSP-oly capabilities help geerate a deep customer uderstadig that ca serve as the commo basis for future competitive ad busiess health. Embracig a customer-cetric approach across the eterprise helps CSPs drive more reveue while lowerig costs by: Deliverig a more persoalized customer experiece withi their cosumer base to drive up-sell ad cross-sell opportuities ad lower costs of loyalty Extedig their deep uderstadig of cosumers to help eterprise customers i vertical markets improve the quality of products ad services to their ed customers Moetizig data i ew ad differet ways to add eve more reveue streams [1] Juiper Research, Press Release: Operators to Suffer $14b i Lost Reveues this Year, as OTTs Take Market Share, (October 21, 2014), [2] Pew Research Ceter, Pew Research Iteret Project, Mobile Techology Fact Sheet (Jauary 2014), [3] Cisco, Virtual Networkig Idex (VNI) Global IP Traffic Forecast ,( Jue 2014), 2

3 CSPs opportuity for growth begis with their B2C core ad, most importatly, with a 720 degree view of each customer which serves as the foudatio to deepe customer isight, deliver omi-chael customer excellece, ad power compellig, relevat ew offers. The 720 degree view of the customer ca be used to create a sigle versio of the truth, based o a aalytics-drive strategy that draws o ustructured ad structured data withi the service provider (360 ) ad from outside sources (360 ). It draws o omi-chael touchpoit data, cross lie-of-busiess data, setimet ad social data from cogitive aalytics, site ad applicatio usage data, ad of course, etwork experiece data, all across structured ad ustructured sources. Armed with XDRs, eriched with full 720 degree data, CSPs ca persoalize offers, propositios, rewards, ad touchpoits across all chaels, from CSPs olie presece ad retail stores to kiosks ad the customer service ceter. More successful up-sell ad cross-sell campaigs ca result, with a rise i Net Promoter Scores ad reductio i the cost of maagig chur due to improved customer experieces. Simulatio, testig, lauchig, ad drivig adoptio for ew offers ca become better qualified ad targeted. With better pricig ad offers, marketig metrics ad margis ca improve. A sigle view of the customer ca boost busiess processes ad IT efficiecy. To be successful, CSPs must assemble the 720 degree view of each customer ad leverage sophisticated descriptive, predictive, ad, most importatly, prescriptive aalytics to build trust ad ecourage real sustaiable loyalty withi their B2C core busiess. Uderstadig the ed cosumer helps as CSPs leverage the explosio of devices ad icreased badwidth over the past five years. This growth has opeed up a secod area of reveue potetial with a host of emergig opportuities i CSPs' B2B sector. These iclude services such as freight trackig, home automatio, eergy moitorig, healthcare IT iitiatives, ad may more. As these markets cotiue to evolve ad mature, customer data ad isights will oly help CSPs grow i the importat ad lucrative eterprise market. The third area of opportuity is the B2B2C segmet that may cosider a emergig must wi growth area. CSPs ca leverage their stregths as access providers, with close proximity to their customers, to eter ew markets ad itroduce services outside the core busiess with iovative busiess models aimed at moetizig data. These emergig opportuities alig with machie-to-machie (m2m) or IoT device growth, cloud, ad etwork ad platform-as-a-service plays. Most iitiatives remai i formative stages as CSPs cotiue to aalyze risk ad explore which ew busiesses offer eough opportuity to warrat ivestmet. Some CSPs are ivestig i oe aalytics-based data moetizatio platform that ca be leveraged for ecoomic savigs iterally ad exterally across markets. The Case for Digital Trasformatio The chagig digital ladscape ad the pheomeo of covergece have made it imperative for CSPs to adopt emergig digital techologies to build this deep uderstadig of customers. Digital techologies have a eormous impact o the way i which CSPs trasform their busiess to establish greater customer cetricity. They drive chage through: Social etworks which create ew chaels to commuicate with customers ad gai isights from coversatios. Social coversatios ad graphs are emergig data sources providig valuable iformatio that ca ehace the customer experiece. Mobility which drives compellig ew customer experieces outside the core busiess through opportuities like telematics, iteractive healthcare apps, retail offers, ad locatio based services. The potetial of mobility to icrease cotextual relevace is oe of the cetral reasos CSPS are so well positioed to moetize data opportuities. Big Data ad aalytic models which provide powerful isights to buyer behavior by creatig a sigle versio of truth about customers. They provide smarter, more effective marketig programs, better customer experiece, ad improved customer uderstadig to drive higher moetizatio value i the curret core busiess ad B2B(2C). To esure success, CSPs must access all the data sources that are utapped or uder-leveraged, such as omi-chael touchpoit data, lie of busiess (LOB) itelligece, ad etwork aalytics, amog others. Cloud which eables CSPs to offer low-cost computig ad storage capabilities to both cosumers ad busiesses i ay idustry, ad to deploy B2B(2C) services platforms that ca be ecoomically leveraged ito may CSPs' multi-proged vertical iitiatives. IoT which is a emergig area for CSPs to maximize o opportuities from the explosio of Iteret-coected devices. CSPs that embrace customer cetricity ad cosumer uderstadig ca maximize their opportuity to capture this opportuity with vertical parters. 3

4 Iovative CSPs are implemetig uique digital trasformatio iitiatives to ehace customer value, improve operatioal efficiecies, ad develop ew reveue sources. Some of the eterprises that have opted for digital trasformatio are: Telefoica O2 UK lauched TU Go app, a cloud based telephoy service that eables users to make calls, text, ad use voic services via Iteret, at ay physical locatio (idoor 4 or outdoor) over Wi-Fi, usig the phoe umber from their existig customer cotract. Verizo Wireless, the largest US carrier with more tha 98 millio retail customers, lauched its Precisio Markets Isights Divisio to share aoymous ad aggregated subscriber data with outside parties. This iformatio eables marketers to improve mobile advertisig targetig ad provides Verizo 5 with a ew reveue stream. Based o its 4G capability, Vodafoe has aouced that it will supply m2m commuicatios, i-car avigatio, ad ifotaimet 6 services to Volkswage ad Audi i Europe from AT&T ad Tesla have etered ito a mult-year exclusive agreemet to eable high 7 speed wireless coectivity to power such items as remote egie diagostics ad telematics. These brief aecdotes provide isights o digital trasformatio's impact ad potetial. Yet, despite the clear eed for chage, may CSP executives feel they are ot progressig fast eough i developig ad implemetig a successful digital strategy. I fact, while 74 percet of compaies have a digital strategy, oly oe-third of the executives believe that their approach is correct, ad less tha oe i six executives feel their firm has the skills ad competecies to execute the digital strategy. Eablig a strategy for deliverig superb customer experiece, drivig operatioal efficiecies, or geeratig ew reveue streams requires isights at both the customer ad busiess level. However, the challege for CSPs is to fid the right iitiatives to move forward ad effectively cofrot the critical issues resultig from mature market challeges. The right solutios ca help CSPs develop isights to create compellig offers that egage customers, drive loyalty, ad optimize cost effective chaels. Doe right, customer cetricity drives ew growth opportuities ad operatig efficiecies that ca icrease the top ad bottom lie. Whether it is optimizig etworks to esure quality of service, elimiatig orgaizatioal silos, or lowerig data ad ifrastructure costs, all these iitiatives ca have a sigificat trasformative ad fiacial impact. While the overall case for digital trasformatio to drive customer cetricity is extremely compellig, the problem lies i its implemetatio. CSPs face a umber of optios regardig what, where, how, whe, ad why they must start, which ca seem dautig. It is importat to choose the right parter who uderstads the itricacies of their busiess, to leverage existig assets ad develop the best strategic pla to move forward. Gettig started with digital trasformatio requires a measured approach Digital trasformatio is ot a oe-size-fits-all propositio. It should ot overwhelm the orgaizatio with a overly complex ad expesive approach. Cosultats ad media ted to over-hype digital trasformatio, creatig cofusio about which techology or specific solutio oe should focus o ad where oe should begi. Every orgaizatio has its uique set of resource costraits defied by its ifrastructure, processes, talet, ad fiacial resources. Despite the differeces amog CSPs i terms of their maturity, readiess, ad other costraits, establishig customer cetricity is a commo theme drivig digital trasformatio imperatives. There are three critical cosideratios for successful iitiatives: 1. Developig compellig customer experieces, 2. Optimizig operatig costs while deliverig quality service ad coveiece, ad 3. Creatig ew services to eter ad grow ew markets. It is see that optimal results come from a measured approach to trasformatio. Based o each compay's idividual busiess imperatives, the Digital Trasformatio Framework (illustrated i Figure 2) ca help determie where the CSP is positioed ad how it ca achieve its digital trasformatio objectives. Likig busiess outcomes directly to solutio capabilities ad associated ivestmet eables CSP executives to visualize the direct impact of trasformatio iitiatives o key metrics. 4 Iovative CSPs are implemetig uique digital trasformatio iitiatives to ehace customer value, improve operatioal efficiecies, ad develop ew reveue sources. [4] Telefoica press release Telefoica Lauches TU Go i the UK (March 1, 2013), [5] Verizo press release Precisio Market Isights from Verizo to Help Brads Better Uderstad ad Egage with Customers (October 1, 2012), [6] Vodafoe press release Networkig o the Road: Volkswage ad Audi Bak o Vodafoe (March 7, 2014), [7] AT&T press release A Tell-All Touchscree for the Electric Car (Ja 2014), [8] Forrester Research, The Future of Busiess is Digital (March 2014)

5 Metric 1 Metric 2 Metric 3 Metric 1 Metric 2 Metric 3 Metric 1 Metric 2 Metric 3 Deliver Customer Value Digital Trasformatio Imperatives Drive Efficiet Operatios Create New Reveues Digital Trasformatio Eablers Examples Examples Examples Digital Experiece Process Optimizatio Moetize Assets Loyalty Maagemet Streamlied Customer Care Services to Complete/ Fraud & Risk Maagemet Cross Chael Maagemet Complemet OTT Multi-chael Experiece Product Recommedatios Paymets / billig Persoalizatio Cost Reductio Locatio-based Services Secure Eviromet Fraud Maagemet Cloud-based Services Foudatioal Capabilities 360 degree customer view Seamless chael experiece Brad buildig & customer acquisitio Customer support services Process Orgaizatioal Goverace Maagemet System Skills ad Expertise Trasformatio Techologies Social Mobile Big Data / Aalytics Cloud Figure 2: Recommeded Digital Trasformatio Framework As oted i Figure 2, CSPs' trasformatio imperatives serve as the startig poits ad geerally map to the orgaizatios that iitiate chage. Digital trasformatio iitiatives are directly mapped to busiess outcomes ad tracked with operatig metrics. Experiece reveals that executives leadig successful trasformatio iitiatives have a laser focus o improvig a few core busiess metrics. Commuicatig early successes effectively ca jumpstart follow-o iitiatives across the orgaizatio ad build mometum. The key leverage poits i the model are the foudatioal capabilities that support processes ad provide the buildig blocks for ew fuctioality. Havig a 720 view (usig iteral operatioal data for a 360 view plus a 360 perspective from exteral sources) eables marketig executives to direct more effective campaigs ad implemet persoalized services. The same holistic capability is essetial i creatig a omi-chael experiece. The glue eeded to bid digital trasformatio iitiatives are the orgaizatio's goverace, processes, ad specialized skills. Successful CSPs have established iteral digital trasformatio orgaizatios to create strategies for ew customer services ad moetize CSP data. Effective goverace requires buy-i across all levels of the compay with fully egaged process owers to lead itegratio across the orgaizatio. New skills also may be eeded to cofigure ad operatioalize solutios. Achievig trasformatio targets requires a strategy that cosiders the orgaizatio's curret positioig or 'digital maturity' a baselie that describes its progress towards trasformatio. Some CSPs may be more advaced i specific areas but may lag i others based o their busiess eeds ad priorities. Bridgig the gap betwee a orgaizatio's curret digital maturity ad its future aspiratios requires a roadmap that balaces customer cetricity with retur o ivestmet (ROI) ad risk. This framework provides isight o whether the orgaizatio should focus or make trade-offs to achieve its trasformatio objectives. 5

6 Coclusio Customer cetricity is o loger a choice for CSPs, it is a madate. Attractig ad sustaiig cosumers' attetio does ot simply rest o how great a provider's service ad usage plas are. Successful CSPs are embracig digital techologies to create competitive differetiatio ad redefie customer relatioships. Aalytics are beig applied to gai isights o customer behavior ad operatig efficiecies. New omi-chael experieces allow seamless itegratio of access optios, creatig ew customer experieces that leverage the most costeffective meas of service delivery. CSPs have a choice of vedors to parter with for their digital trasformatio iitiatives. Broad-based techology platforms are ofte cost prohibitive ad time cosumig while other offerigs ca be arrow, o-itegrated poit solutios that focus o isolated issues. They may also require further itegratio with platforms ad additioal poit solutios. There is o sigle right aswer to the questio of determiig the correct path to digital trasformatio. The marketig ad operatios orgaizatios for a give CSP may start at differet maturity levels based o competitive positio, resources, risk profile, aspiratios, ad may other factors. With the right tools ad egagemet models, CSPs ca determie busiess impact ad ROI for each trasformatio iitiative. Armed with these isights, CSP executives ca focus o the priority ad optimal sequece for trasformatio projects based o ecoomic impact aalysis. Results provide itelligece o where CSPs eed to focus to achieve their ow visio of digital trasformatio. 6

7 About TCS Digital Software ad Solutios Group With the rapidly growig ifluece of ew digital techologies, embeddig digital trasformatio i the compay strategy has emerged as a key objective across idustries. Recogizig this, TCS offers a comprehesive portfolio of software ad solutios that help eterprises leverage emergig digital techologies to their fullest competitive advatage. Developed by idustry experts, our fully itegrated licesed software ad solutios are cofigured to address our cliets' specific busiess pai poits withi their idustry cotext. Our modular solutios help orgaizatios effectively respod to the rate of techology chage, ad exted the ifluece of digital techologies to trasform the busiess ladscape. As a result, our cliets ca attract ad build lifelog relatioships with their customers, eve as they reduce operatioal costs across the customer experiece ad digital commerce cycle. With TCS as a strategic parter, eterprises are empowered to respod with agility to the chagig digital eviromet, ad achieve certaity i a icreasigly ucertai digital world. Cotact For more iformatio about TCS' Digital Software & Solutios Group visit: Software-Solutios/Pages/default.aspx About Tata Cosultacy Services Ltd (TCS) Tata Cosultacy Services is a IT services, cosultig ad busiess solutios orgaizatio that delivers real results to global busiess, esurig a level of certaity o other firm ca match. TCS offers a cosultig-led, itegrated portfolio of IT ad IT-eabled ifrastructure, egieerig ad TM assurace services. This is delivered through its uique Global Network Delivery Model, recogized as the bechmark of excellece i software developmet. A part of the Tata Group, Idia s largest idustrial coglomerate, TCS has a global footprit ad is listed o the Natioal Stock Exchage ad Bombay Stock Exchage i Idia. For more iformatio, visit us at IT Services Busiess Solutios Cosultig All cotet / iformatio preset here is the exclusive property of Tata Cosultacy Services Limited (TCS). The cotet / iformatio cotaied here is correct at the time of publishig. No material from here may be copied, modified, reproduced, republished, uploaded, trasmitted, posted or distributed i ay form without prior writte permissio from TCS. Uauthorized use of the cotet / iformatio appearig here may violate copyright, trademark ad other applicable laws, ad could result i crimial or civil pealties. Copyright 2015 Tata Cosultacy Services Limited TCS Desig Services I M I 01 I 15

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