Are Telcos at Risk of Missing the Digital Opportunity?
The Role of Process Mining in Digital Transformation: Part 1
By Tunde Ibiyemi
Process Mining is an emerging process improvement technique that organizations are adopting to drive their digital transformation efforts. In this two-part series, we delve into what makes it different from the traditional Business Process Reengineering (BPR) practices currently ingrained in telecom companies, and why it is necessary to adopt for digital transformation projects.
In this first article, we review the opportunity that digital transformation offers telecom companies, and what their focus should be to ensure they can capitalize on it. In addition, because telecom operators will have to change the way they operate to deliver on the promise of digital transformation, we investigate why current approaches to organizational process change will also need to change.
Businesses are investing significant amounts of time and effort to take advantage of the opportunities arising from the fast-changing digital landscape. IDC estimated that $1.1 trillion would be spent worldwide on digital transformation in 2018, up 16.8% on spending in 2017.
For the telecommunications industry, this represents a huge opportunity. In its 2017 Digital Transformation Initiatives (DTI) white paper, the World Economic Forum (WEF) estimated that there is $1.2 trillion in value at stake for the telecom industry from digital transformation within the next decade.
Unfortunately, operators have so far failed to realize the full benefits of this shift, even though the services they provide underpin and enable these changes. The WEF reports that operator share of industry profits which stood at 58% in 2010, is forecasted to represent only 45% by the end of 2018.
OTT providers and internet companies have largely been responsible for this decline in share and continue to exert considerable pressure on traditional revenue sources of operators. For operators to compete effectively, it is imperative that they seek new and innovative ways of adapting to, and taking advantage of, the changing digital landscape.
Four Digital Transformation Initiatives for Telcos
The WEF white paper identified 4 key focus areas for telecom companies and specific initiatives in each that would be the most impactful:
- Network abstraction and virtualization, through NFV and SDN, to lower telcos’ cost base while increasing network reliability and resiliency.
- New revenue sources and business models in IoT, digital services, and emerging forms of communications, such as Augmented Reality and Virtual Reality.
- Rethinking customer engagement to match or even exceed the levels of customer experience consumers have come to expect.
- Rapid innovation to change away from the traditional long cycle of product innovation, spanning development of industry standards to infrastructure development and deployment.
These initiatives will generate even more data as their operations and processes are digitized, leading to a rich cache of information on operational performance. The clear benefit is that this data could shed light on areas that were previously obscured. However, to succeed, Telcos must first determine how to manage the increase in data and extract value from it.
How Telcos are Approaching These Initiatives – What’s Working and What Isn’t
Capturing value from data presents two important challenges for operations:
- Coping with the quantity of data resulting from digital transformation, and
- A need to transform business operations to support digital transformation
To deal with the first challenge, organizations are adopting big data technologies, and beginning to look to Machine Learning and advanced analytics as the means of automating activities – improving decision making and processes.
While current adoption may still be low, it is expected to accelerate with 75% of business executives expecting active implementation in the next three years. A recent survey of 100 European enterprises found that 31 said their main driver for adopting AI is to improve either their internal or customer facing operations.
For the second challenge, telecom companies need to re-examine the way they manage their operations, as some of the management tools and techniques of the past will need to change to cope with new realities.
To overcome this challenge, telecom operators ‒ and other enterprises in general ‒ are using Business Process Reengineering (BPR) practices. A typical BPR approach is as follows:
- Design: Management starts by defining objectives for its reengineering endeavour. Target business processes are identified, and a project team is activated to carry the change through. The team then maps existing ‘as-is’ processes by reviewing existing documentation, interviewing stakeholders, observing the processes being implemented, and/or by using any other appropriate techniques.
- Model: Armed with information, the next step is to analyse and gain insights that form the basis for process redesign with the aim of making them less expensive, faster and/or improve their quality.
- Implement: Suggested changes are carried out and employed in the organization.
- Monitor & Improve: Management sets up a mechanism to ensure that the processes are continuously monitored and improved in an ongoing basis.
Although BPR practices are well understood and widely adopted, this approach has its shortcomings. Reengineering the activities of a large enterprise is inherently risky, often complex and expensive, with high chances of failing to achieve desired outcomes if not well managed. Failure rates are reported to be as high as 50-70%.
Furthermore, the process of eliciting the ‘as-is’ process may fail to capture ad-hoc activities and workarounds which may have accreted to the process, and as such, may be difficult to capture through traditional methods.
As companies enter the digital future envisioned in the WEF report, new tools and techniques are therefore needed to match the new-found agility that companies are poised to gain. In Part 2 of this series, we’ll look at how emerging Process Mining techniques provide a more flexible toolkit than standard Business Process Management and add greater responsiveness to digital transformation projects. <>
> Read Part 2: Process Mining Use Cases for Telcos