Telecom operator CTOs and CIOs say disruptive competition is the single greatest strategic challenge for the telecommunications sector, according to EY’s report on Digital transformation for 2020 and beyond.
47 percent of CTOs and CIOs cite lack of organizational agility, while 37 percent say lack of return on investment are the other challenges faced by the global telecom industry.
“Disruption remains a hot theme in the telecoms industry, as newcomers eat into legacy revenue streams and operators seek new growth opportunities in the Internet of Things and beyond. If operators are to make the most of the 5G era from 2020 onwards, they must take bolder steps to overhaul legacy business models and form more dynamic customer relationships,” said Prashant Singhal, EY Global Telecommunications Leader.
Key messages from EY research
# Disruptive competition tops the list of industry challenges
# Digital business models, customer experience and cost control lead the 2020 strategic agenda
# The network dominates the near-term spending agenda, but a range of IT improvements are also being sought
# Network Capex is trending up but IT spending profiles vary
# Confidence is rising in the digital services opportunity, yet caveats remain
# Analytics and virtualization are the top innovation drivers, but legacy IT and a lack of skills are acting as brakes
# Process automation leads the list of long-term IT enablers. 8. The post-2020 landscape will be transformed by 5G
Strategic agenda
Telecom operators are focusing investment through 2020 on digital business models and improving the customer experience to address new competition from outside the sector.
39 percent identified customer experience as their number one focus area and 61 percent said it’s one of their top-three initiatives.
Digital business models emerged as the biggest strategic priority for 24 percent of those surveyed and a top-three priority for 71 percent of respondents.
Telecom operator confidence in Internet of Things (IoT) services is rising, with 31 percent viewing smart home as one of the top three drivers of future revenue growth.
37 percent see 5G as the network access technology with the greatest impact on the industry over the next five years.
Legacy IT impeding digital transformation
Legacy IT is seen as the main impediment to transformation for 65 percent of respondents.
Global telecoms IT investment will reach $85 billion in 2020, with 74 percent of this total being spent with external providers rather than internally.
Growth in spending on systems hardware and packaged software will be strong, reflecting the move to more flexible virtualization technologies.
Internal IT spending on areas like IT desktop capabilities and IT departments will see slow growth between 2015 and 2020, at a CAGR of just 1 percent.
Who participated in the EY survey?
# Cosmas Adam Chief Technology and Information Officer MTN Cyprus
# Daniel Mizrachi Belisario Chief Technology Officer Millicom International Cellular Costa Rica
# Enrique Blanco Chief Technology Officer Telefonica Group
# Axel Clauberg Vice President, Aggregation, Transport, IP (CTO-ATI) Deutsche Telekom
# Mike Cole Chief Information Officer Bell Canada
# Nicolas Costaras Chief Information Officer Wind Hellas
# Claudio Farina Head Financial Planning & Analysis Vodafone Italia
# Jay Ferro, Chief Information Officer, Chief Product Officer EarthLink
# Vikas Grover Chief Information Officer Vodafone India
# David Havercroft Chief Operating Officer Spark New Zealand
# Kashif Syed Haq Chief Technology Officer Axiata Digital
# Hisham Fathy Hassan Director, Technology Strategy & Control Viva Bahrain
# Luis Martin Hernandez Chief Information Officer America Movil — Telcel (Mexico)
# Bouke Hoving CIO KPN
# Phil Jordan Chief Information Officer Telefonica Group
# Panicos Kallenos Chief Technology and Information Officer CYTA
# Veenod Kurup Group Chief Information Officer Liberty Global
# Francois Mairey Chief Technology and Information Officer Tele2 Group
# Amit Marwah Head of Sales, End to End Solutions Nokia Solutions and Networks India
# Gary McLaren Chief Technology Officer HKBN
# Shin Murakami Corporate Officer, Chief Mobile Officer Yahoo Japan
# Ali Obtel Chief Technology Officer Viva Kuwait
# Tommy Olenius Chief Technology Officer DNA
# Peter Jantosovic Director Technology Transformation & Optimization Slovak Telekom
# Gunar Post Head of IT Strategy Deutsche Telekom
# Scott Rice Chief Information Officer Sprint
# John Romano Acting Chief Information Officer Telstra
# Ruza Sabanovic Chief Technology and Information Officer Telenor Group
# Daniele Schneeberg Head of Transformation Vodafone Italia
# Ken Smithard Vice President, Performance Organizational Efficiency & IT Cogeco Connexion
# Peter Taylor Vice President, Technology Operations and Support Shaw Communications
# Hugo Van Zyl Chief Technology and Information Officer Telkom Group
# Saad Muzaffar Waraich Chief Technology and Information Officer PTCL Pakistan
Marlon Yu-Shan Chief Information Officer, Millicom
