Measuring the Business Performance of Digital Transformation for Telecom Operators

 Yathish L. Nagavalli Chief Enterprise Architect,  Software Marketing Dept.  Huawei Technologies

Yathish L. Nagavalli,

Chief Enterprise Architect, Software Marketing Dept., Huawei Technologies

The debate over the need for digital transformation is over. Everyone understands the importance of digitalization and recognize the needs to invest and go through the transformation journey. Telecom operators still need to qualitatively and quantitatively define right performance metrics in order to get the investment from the stakeholders. The digital transformation is complex, time consuming and expensive as it affects every aspect of the operator business. It entails the organization to embrace ROADS (Real time, On-demand, All-online, DIY, and Social) experience by reconstructing the ICT architecture, Network, Service and operations to make it a digital enterprise. The challenge faced by the industry is determining what transformation programs to invest in and how to measure the transformation progress to keep the confidence of the investors.
In order to increase the stakeholder value and net cash, organizations determine the investment strategies in consideration of the overall strategic goals and objectives. The investment strategies are primarily in the area of improving the customer excellence, new revenue potential, cost efficiency and capital efficiency. The organization culture, innovation and effective business management contribute to the success of the above investment strategies. It is imperative for the organizations to understand the metrics and performance indicators to measure the success of investments in digital transformation. Some of the key metrics for each of the investment strategies are described below:
1.Customer Excellence: Businesses strive to create memorable experience for their customers. A mere customer satisfaction is not good enough. Some of the metrics to measure customer experience are:
a.Customer Lifetime Value – Assess lifetime dollar value of the customer in terms of sales and social influence
b.Share of Wallet – Measures the amount of customer’s total spending that a business captures in the products & services that it offers
c.Net Promoter Score (NPS) – Used to gauge the loyalty of the firm’s customer relationships & whether they would recommend a product or service
d.Customer Effort Score (CES) or simplicity metrics – Measures how much effort a customer must put into resolving his/her issues.
e.Efficiency of agents handling queries across channels that includes time to respond, escalations to agents assisted channels, number of interactions before a resolution, cost per interaction, customer feedback relating to agent interaction, First Contact Resolution (FCR) and Next

Issue avoidance.
f.Customer Loyalty / Retention / Renewal
g.Customer Sentiment and perception – Analyses what the customer likes and dislikes about the product, service or the brand
h.Customer Satisfaction Score (CSAT) – Measures general level of satisfaction
2.New Revenue Potential: There are metrics that demonstrate the new revenue potential like:
a.Real options valuation: Building a collection of capabilities at each layer like Network, Compute, Storage and Services that can open up new opportunities depending on market conditions.
b.Data Monetization that measures how the insights from disparate data is monetized.
c.Percentage of sales through new offerings or through digital channels.
d.Number of ideas generated resulting in cost savings or new sales.
3.Cost Efficiency: Cost efficiencies are the operational efficiencies that impact OPEX. These are typically measured in terms of:
a.TCO impact based on ongoing operational and maintenance costs.
b.TTM metrics like New Product Introduction (NPI) time.
c.Digital Maturity Model – Percentage of services delivered digitally, new products and services created using digital data streams, intelligent operations like proactive actions based on insight generated from disparate data and automation used to optimize operations resulting in either reduced manpower or people focusing on more value oriented tasks, enhanced decision making and customer experience.
d.Performance metrics of systems, resources, processes and people.
e.Fast failure metrics that promote risk taking but learn quickly.
f.Crowd sourcing metrics that engages public for things like digital ideas, problem resolutions and product recommendations.
4.Capital Efficiency: Capital efficiencies are associated with how capital investments (CAPEX) are used to drive digital production. The investments should drive the virtualization of resources, automation using software defined architectures, dynamic orchestration of these resources and enable new types of product and service creation in the future. The performance measurement metrics include:
a.Percentage of resources virtualized itemized by network, storage, and compute
b.Automation level using concepts such as Software Defined Everything (SDx)
c.Monetization of assets
d.Inventory of new capabilities
While making investment decision companies also use comparison metrics like best in class benchmarks or competitive analysis. These metrics should be used in the context of making sure the company is not totally falling behind the industry. Investment decisions are made primarily keeping in mind the organization strategy, goals and the needs of the customer in mind – not the competitor. Also, analysis of the cost of inaction needs to be done to see what is going to happen if we did nothing!
Organizations need to learn the impact of changes in technology & business have on the overall performance. There is still a lot of intuition and gut feeling that goes into the investment decisions and the organizations will need to go through the learning process to correlate the investment strategies & metrics into business performance. The learning must start with the organization Enterprise Architecture blueprint including the key investment strategies and measurement metrics as one of the key artifacts to help organizations understand the business value upfront so that they can make the right investment choices and execute appropriate transformation programs to success.

Investment decisions are made primarily keeping in mind the organization strategy, goals and the needs of the customer in mind – not the competitor