Unleash the Power of a Fully Digital Second Brand

Every telco is undergoing digital transformation – but some are reaping the rewards faster than others

Digital transformation can be hard, especially for established telcos. Legacy processes, systems, and legacy thinking can stall the best intentions of telcos looking to evolve into new digital-first companies. Getting to the point where they are selling a range of digital services across a variety of digital platforms to an increasingly digital-savvy customer base can be a hazardous journey.

It’s a problem for many established telcos. On the one hand, there’s the board and shareholders extolling the need to “go digital” and enjoy the benefits of lower costs and the opportunities to increase revenues. On the other hand, there’s the established telco way of working – the processes, the legacy systems, the inflexible vendor models. The urgency for change often runs into a legacy roadblock resulting in reduced performance and increased pressure.

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Legacy Systems – Slowing Down Digital Transformation and Stifling Innovation

Legacy BSS has always been a stumbling block for telcos on their transformation journeys. Leading analyst firm, Analysys Mason, called this out in their 2018 paper, "The Crux of CSP (Communication Service Provider) to DSP (Digital Service Provider) Transformation," where they said:

"Existing BSS systems with their legacy frameworks represent a key bottleneck for CSPs in their journeys to become DSPs. Many CSPs have built up extensive infrastructure over many decades, including the associated support systems needed to support specific requirements. 

As a result, they now have disparate architecture frameworks with multiple information silos, often at the departmental level…this increased overall system complexity, as well as significantly reducing the CSP’s agility”.

Fast forward two years, and the problem is still there. In September 2020, the TM Forum published a report called “Digital Maturity: Are We on the Right Path?” In this report, they said,

It is true that a big reason for CSPs’ transformation difficulties is their legacy technology and systems. This frequently results in operators remaining consumed by the considerable everyday challenges of running their businesses rather than looking to the digital horizon.

This resistance to focusing on the urgent instead of the important is costing them dearly
”.

Clearly, if telcos want to accelerate the pace of digitalisation the issue of legacy systems needs to be addressed.

 

Second Brands – “Look! No Legacy”

 To speed up the pace of digitalisation, many telcos have increasingly decided to adopt a ‘digital second brand’ business strategy, where they create and launch new, dedicated digital propositions to the market as second brands or sub-brands. This involves new modern systems, a dedicated team to operate in a new agile way,  and perhaps most importantly, no legacy. They can start as a digital business from day 1.

This approach is becoming increasingly popular with telcos. Today, over 200 sub-brands have been launched globally (GSMA Intelligence, 2021). And these are typically launched using new digital business platforms that can be introduced quickly and independently from the mainstream legacy business. This provides telcos with the fastest time-to-market to compete in digital markets.

In fact, industry studies have proven that the new digital attacker brands typically contribute 25% of the overall gross additional subscribers to the incumbent operators after four quarters after a launch. As well as adding many new additions, these new subscribers are also more than 5% profitable (McKinsey & Co, 2020). While achieving this success, they create a future proof digital foundation to also migrate the established legacy business later to the new digital platform at a pace suitable to the telco.

 

What Next?

Digital brands are one of the fastest-growing sectors in the mobile market. They are giving telcos a blank canvas on which to build and grow a business. By enabling innovation and removing the shackles of legacy systems, telcos can get innovative while at the same time reducing costs, improving customer experience, and opening up new opportunities.

Qvantel Flex puts telcos’ business teams fully in control of what is implemented to achieve the flexibility required for innovation and a new level of business agility – with up to 80% reduction in time-to-market and costs.

I would encourage any telco who is interested in accelerating their digital transformation to read our recent eBook “The Power of Digital Greenfield Brands.” Please click link below to get your free copy.

 

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Jukka Heiska,
CMO, Qvantel