Executive Briefing

The ‘Agile Operator’: 5 Key Ways to Meet

the Agility Challenge
An industry self-assessment of how and where telcos need to transform
to become more ‘agile’
Anthony Dornan, Consultant, STL Partners/Telco 2.0
[email protected]

APRIL 2015

Excerpt
What is ‘agility’ and what makes it meaningful to operators? We explored the
concept and characteristics of ‘operator agility’ through 29 interviews with telco
senior executives, found three main barriers and five key opportunity areas,
and identified some surprising and important conclusions about both what it
means and the key steps needed to achieve it.

Telco 2.0™ keywords

Agility, Agile Development, Innovation, Lean-start up, Organisational Culture,
Fast Failure, SDN, NFV, Self-care, Big Data Analytics, Ericsson

Who should read this report?

CXOs of Telco Operators, Strategists and Marketers from Telco Operators and
Vendors, Product Managers, technology support teams
 The ‘Agile Operator’: 5 Key Ways to Meet the Agility Challenge | APRIL 2015

Preface
This report explores the telecom industry’s vision of the ‘Agile Operator’, highlighting the key areas where
operators need to become more agile and outlining the best or next practice within these areas. As operators
face ever increased pressure and competition from other telco, internet and over the top (OTT) players they
need to move at faster speeds and learn and adapt quickly in order to take advantage of new opportunities
and improve how they manage their businesses. Becoming more agile is therefore fundamental to the future
success of ambitious operators.

This report explores: “It all comes down to the fact that we (the telecoms
industry) haven’t transformed quickly enough.
 What agility means to operators
Unfortunately we waited so long to make this
 The challenges to becoming more agile transformation that it is not going to happen in the
next 6 months and of which only a few are going to
 The key areas where agility is important
be really successful.”
 Best or next practice within these areas

 Recommended actions and how to

measure agility within these areas CTO – European Operator

The report is based on 29 interviews with telco senior executives. This research was commissioned and
supported by Ericsson. The interviews, analysis and the writing of the report itself were carried out
independently by STL Partners (STL). The views and conclusions contained herein are those of STL.

Figure 1: Regional & Functional Breakdown of Interviewees

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Executive Summary
Making ‘Agility’ meaningful
As the telecoms industry has come under increased pressure, through heightened competition from both OTT
players and other telcos, many operators are attempting to transform in order to remain competitive. Typically
these transformation efforts have straddled the line between cost cutting exercises (to streamline the business)
and developing new techniques and tools to offer new services (to expand capabilities and offerings) to grow
revenues.

Mindset: ‘right thoughts, right words, right actions’

Attempting to simultaneously streamline and grow a business can only ultimately be achieved by changing
both the strategic goals of the organisation and the way of working. To achieve this requires a change in the
collective intent and outlook of (first) senior management and then the teams supporting them. In the rest of
this report, we use ‘mindset’ as shorthand for this ‘collective intent and outlook’.

The principles of agility identified in this report are congruent with a different mindset than has been traditional
in telecoms in the past, and the report starts to explore the changes and actions needed to achieve both this
mindset and the corresponding principles. Our findings here are based on 29 independent private interviews
we conducted with senior executives within operators.

This report details the industry’s vision of what constitutes an ‘Agile Operator’, setting out the potential barriers
to ‘agility’ and a vision for how and where telcos need to become more ‘agile’. This vision is based on the
interviewees’ responses and is supplemented by STL analysis and research.

It is worth noting that interviewees generally held a broad interpretation of the concept of ‘agility’. Whilst agility,
by definition, relates to moving and making decisions or changing direction faster, interviewees also related
this concept to their wider transformation efforts and strategic ambitions. In addition to instilling the ability to
move faster and simplify processes, the description of agility often focused on becoming a more intelligent,
customer-centric operator. These related concepts help make the vision of ‘agility’ meaningful as they provide
greater context and direction.

It is also worth stressing that agility is a concept that resonates strongly with operators; 29/29 of the
interviewees felt that becoming more agile was important or critical to their organisation.

A journey of a thousand miles starts with the first steps

This metaphorical question ‘how to change the wheels while the car is moving?’ summarises one of the key
philosophical challenges to ‘agility’ that can often be posed by change-resistant cultures and organisations.
How can an organisation become agile, do new things, whilst continuing to do the stuff it already does?

There is no one simple answer. In an ideal world one would simultaneous transform senior management’s
mindset, strategy, structure, systems and culture. But in reality that’s hard, if not impossible, to do. It is more
realistic is to seek to change areas over time, building on successful initiatives. For example, an operator could
make one business unit, process or system more agile, measure the results, and use the proof of success to
lead senior management to embrace the concept.

Hence while this report defines agility as a whole, all of the areas and actions outlined in this report represent
‘steps’ towards agility. All of which could and should count towards the ultimate transformation.

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We will explore the mechanisms and barriers to change in separate research, reviewing what we have learnt
and the wider literature. In the remainder of this report we will summarise the barriers to, definition of, and key
steps to meaningful agility that we have identified in this research.

The Barriers to (Telco) Agility

Interviewees identified 3 main barriers to becoming more agile:
1. Legacy systems
2. Mindset & Culture
3. Organisational Structure & Internal Processes

Figure 2: The Barriers to Telco Agility

Source: STL Partners

Legacy systems present technical challenges when attempting to change, modify or expand offerings. This
constraint both dramatically increases the time it takes to launch or modify services and also limits what
operators can create and deliver. This limitation in turn stymies innovation and agility.

Similarly, several interviewees told us that cultural barriers prevent operators from moving fast enough. The
‘classic’ telco mindset installed rigid controls and processes and focused on the end product rather than the
customer. This mindset is effective at maintaining and scaling defined operations but it hampers the ability to
move at speed, innovate and respond to the competition.

Stemming from legacy cultural issues, the third key barrier discussed by interviewees was around
organisational structure and processes. With a rigid, functional organisational structure, no-one in particular
has a full overview of the whole (customer) process and they are therefore not able to understand the different
dimensions, constraints, usage and experience of the product/service.

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The Telco Agility Framework

STL Partners tested and refined a framework of ‘Agility’ with interviewees. This framework sets out the key
areas where it is most important for operators to become more agile. The framework outlined in Figure 3 was
supported by the majority of interviewees.

Figure 3: The Telco Agility Framework

Source: STL Partners

The section at the left of the framework (Organisation) shapes the next level within the framework (i.e. Network,
Service, Customer) and relates to the culture and structure of the organisation as a whole. The middle three
areas (Network, Service, Customer) describe the core building blocks of an operator’s business: the network
(which operators have traditionally considered their core asset), the products and services they offer to
customers and the level of service they provide to their customers. Finally, the section at the right of the
framework (Partnerships) is born out of the other components of the framework. Partnerships principally relates
to relationships between an operator and 3rd parties who offer their services to an operator’s customers but it
can also refer to the vendor/supplier relationship. The report describes the key aspects of agility within these
5 domains.

Organisational Agility
Interviewees stressed that the most important (and most challenging) element required to become more agile
as an organisation was to overcome the cultural and structural barriers. Establishing an agile mindset will allow
operators to overcome legacy cultural and structural barriers; this ‘agile culture’ will lead to closer collaboration
between teams, shared knowledge and faster, localised decision-making, empowering employees across the
business to work more flexibly, efficiently and independently. This in turn will stimulate innovation and allow
an operator to move at the speeds necessary to succeed in today’s competitive marketplace. If an operator
adopts a more agile culture and mindset, technology can further enhance an operator’s ability to move at faster
speeds and to innovate.

Most operators have a long way to go to become more agile as an organisation and to embed news ways of
working. In order to achieve this vision STL recommends that operators:

 Secure Senior Management Support – Senior Management must fully embrace the need to
change entrenched cultures and processes and adopt a more agile mindset and approach.

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 Focus on the Customer – An operator’s focus should shift from their products towards the needs
and behaviour of the customer. This is achieved through both a mindset switch and organisational
structure change as well as embracing relevant metrics, tools and technologies.

 Simplify Processes – In order to compete against OTT players (& other telcos) operators need to
move at much faster speeds. Processes therefore need to be (relatively) simple, enabling decision-
makers to act quickly.

 Focus on Innovation – Senior Management should prioritise and encourage innovation across all
teams. Operators should regularly undertake new initiatives and aim to quickly identify initiatives that
will not succeed and learn from them, embracing the ‘fail fast, fail well’ mantra.

 Embrace Agility-Enabling Technologies – Technology can further increase an operator’s ability to

move at speed and to innovate.
 Analytics technology can help operators better understand service performance/usage and
customer needs, helping operators to refine and improve their offering
 Service creation tools enable operators to create new products and services more rapidly
 Similarly, flexible OSS/BSS systems allow operators to manage new (& existing) services
more effectively and to track associated billing requirements
 Enterprise Mobility tools allow employees to work more flexibly, reinforcing an agile culture
 XaaS models can potentially free up capital and staff costs (allowing operators to focus
resources on other areas), and it can reduce the risk when trying something new

 Measure & Evolve – Operators need to regularly take stock of changes in the market and adapt
accordingly to ensure continued relevance in the future. Operators should develop new metrics to
both track market developments and to assess their ability to react and evolve to meet the changing
market environment. Senior Management should leverage this information to review the
organisation’s strategic direction.
Figure 4: The Agile Organisation

Source: STL Partners

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Network Agility
The majority of interviewees stressed that the network remained a key asset for the operator and a potential
source of differentiation. Becoming more ‘network agile’ was therefore deemed a priority for operators with
three key themes emerging that describe an operator who is ‘network agile’:

1. Embraces Virtualisation – to enable faster and more flexible product & service innovation and
capacity management
2. Uses Real-Time Analytics – to meet customer experience and capacity needs
3. Is Geared up for the Internet of Things – ensuring infrastructure meets future requirements

Network transformation is challenging and will take time, yet the interviewees clearly see the benefits and the
vision for what they would like to achieve with their networks. STL proposes the following 3 stage approach to
achieve this vision of network agility:

 Network Aware – Start with trying to better understand your network. Understand performance
issues and how these translate into customers’ experiences that matter.

 Network Optimisation – Build on this awareness towards taking action in real-time. Develop the
capabilities to optimise the network to meet customer and capacity needs.

 Virtualisation – Commit to the virtualisation of your network. This will create a network that is
programmable and elastic, allowing you to be flexible in your offerings, scale-up and down resources
and to better meet the needs of your customers.

Service Agility
In order to compete effectively with the OTT players, operators need to develop the capability to create
products and services in a much more iterative manner. This approach will allow operators to develop new
products faster, with less investment and in a way that better serves customer needs.

Interviewees notably emphasized that becoming more agile in terms of creating and managing their products
and services was a key challenge. In order to develop services in a more agile way STL recommends that
operators:

 Instil a Mindset of Customer-Centric Iterative Product Development – When developing new

products and services operators need to adopt agile development methodologies in order to create
services that (continue to) meet customer needs. Operators should also be able to develop products
through component assembly, re-using components from existing products.

 Use Technology to your Advantage – Technology can facilitate better management of

service/product portfolios and allow operators to be smarter in new service creation.
 Service management tools can allow operators to more effectively run and track
performance of their product/service portfolio, and to off-board services from their systems
 Service creation tools can make new product/service creation simpler and faster
 Flexible billing and charging systems enable an operator to create more dynamic services
 Analytics tools allow an operator to understand the usage of services, leading to
improvement of the service during testing or in-life.

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 Track the Competition – Operators should track the offerings of direct telco competitors and OTT
players and understand the potential impact before it is too late. This will allow them to be more
competitive and to develop countering offers sooner.

Customer Agility
Providing the best possible service is paramount to the Agile Operator. The Agile Operator understands the
customer’s experience of the service and gains insight into customer behaviour to develop and refine services.
To achieve this STL recommends that operators:

 Deploy Customisable Self-Care Tools Across all Touchpoints – Self-care is becoming the
normal and preferred way for customers to manage their own service. Operators should therefore
develop and promote a tool that is intuitive and customisable, allowing customers to manage and
modify their service. Operators should also seek to deploy the same self-care tool/system across
their various customer touchpoints. This will lead to a common understanding of the customer across
the different touchpoints, ensuring that consistent offers are made across the different channels, as
well as leading to cost reductions (through the deployment of one universal system).

 Define a Big Data Analytics Strategy – an Agile Operator has defined a comprehensive approach
to exploit the power of Big Data Analytics, using analytics to:
 Track service usage
 Understand the experience of a service at any given moment (and over time)
 Gain insight into customer behaviour/satisfaction to enable the development of new services

Partnering Agility
Interviewees highlighted that most operators have difficulty when it comes to partnering. Yet, as more and
more 3rd party services are being consumed on devices, becoming an effective partner becomes even more
important. STL recommends that operators:

 Understand & Employ the Right Skills to Assess Potential Partnerships – An Agile Operator
understands that there are many different types of partnership, with different roles for operator and
partner, and that a single model of partnering will no longer work. To partner successfully operators
must have the requisite skills to fully understand and analyse potential partners’ strategies and
assess how they can add value to the partnership.

 Track the Performance of the Partnership – The success of the partnership should be evaluated
from a commercial standpoint as well as through an assessment of both parties level of satisfaction
with the partnership. If the relationship or partnership is not working then an operator should retain
the ability to change partners relatively quickly.

 Put in Place the Right Processes – Processes need to support the type of partnership. Operators
need to ensure that their processes will work for different types of situations and partners to ensure
that the business relationship is viable and effective for both parties.

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 Make it Easy from a Technical Point of View – As partnering becomes more important and central
to operators’ strategies, technical integration needs to be as easy and fast as possible. Operators
cannot develop and customise APIs for every partnership and need to develop a set of robust,
standard APIs that can be readily used by partners.

“Understanding each other’s business models

“We generally don’t know what we want from (is the main barrier). Telcos focus too much on
digital partnerships and forget about being able their own needs and own plans. There is too
to support partners in the same position.” little understanding of the needs of others.”

Head of Technology Strategy – MENA Head of Partnerships – Europe

The Agility Challenge - Find out how agile you are

STL Partners are running an Agility Challenge, allowing operators to gauge how agile they are.

Operators can self-score across the 5 domains of agility.

Scores will remain confidential and operators will receive an anonymised benchmark of how they compare
against the other Challenge participants.

Click here to enter the Agility Challenge

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Contents
Executive Summary......................................................................................................................................... 3

Understanding Agility ................................................................................................................................... 12

What does ‘Agility’ mean? ................................................................................................................... 12

Barriers to (telco) agility ....................................................................................................................... 13

“Agility” is an aspiration that resonates with operators ....................................................................... 16

Where is it important to be agile? ................................................................................................................ 18

The Telco Agility Framework ............................................................................................................... 18

Organisational Agility.................................................................................................................................... 19

The Agile Organisation ........................................................................................................................ 19

Recommended Actions: Becoming the ‘Agile’ Organisation ............................................................... 25

Network Agility ............................................................................................................................................... 27

A Flexible & Scalable Virtualised Network .......................................................................................... 27

Recommended Actions: The Journey to the ‘Agile Network’ .............................................................. 32

Service Agility ................................................................................................................................................ 33

Fast & Reactive New Service Creation & Modification ....................................................................... 33

Recommended Actions: Developing More-relevant Services at Faster Timescales .......................... 36

Customer Agility ............................................................................................................................................ 37

Understand and Make it Easy for your Customers ............................................................................. 37

Recommended Actions: Understand your Customers and Empower them to Manage & Customise

their Own Service ................................................................................................................................ 40

Partnering Agility ........................................................................................................................................... 41

Open and Ready for Partnering .......................................................................................................... 41

Recommended Actions: Become an Effective Partner ....................................................................... 44

Conclusion ..................................................................................................................................................... 45

About STL Partners and Telco 2.0: Change the Game .............................................................................. 48

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Table of Figures
Figure 1: Regional & Functional Breakdown of Interviewees ............................................................................ 2

Figure 2: The Barriers to Telco Agility ............................................................................................................... 4

Figure 3: The Telco Agility Framework .............................................................................................................. 5

Figure 4: The Agile Organisation ....................................................................................................................... 6

Figure 5: Agile Software Development ............................................................................................................ 12

Figure 6: What’s Stopping Telco Agility? ......................................................................................................... 14

Figure 7: The Importance of Agility .................................................................................................................. 16

Figure 8: The Drivers & Barriers of Agility ....................................................................................................... 17

Figure 9: The Telco Agility Framework ............................................................................................................ 18

Figure 10: The Agile Organisation ................................................................................................................... 19

Figure 11: Organisational Structure: Functional vs. Customer-Segmented .................................................... 20

Figure 12: How Google Works – Small, Open Teams .................................................................................... 22

Figure 13: How Google Works – Failing Well .................................................................................................. 23

Figure 14: NFV managed by SDN ................................................................................................................... 28

Figure 15: Using Big Data Analytics to Predictively Cache Content ............................................................... 30

Figure 16: Three Steps to Network Agility ....................................................................................................... 32

Figure 17: Launch with the Minimum Viable Proposition – Gmail ................................................................... 34

Figure 18: The Key Components of Customer Agility ..................................................................................... 37

Figure 19: Using Network Analytics to Prioritise High Value Applications ...................................................... 39

Figure 20: Knowing When to Partner .............................................................................................................. 42

Figure 21: The Telco Agility Framework .......................................................................................................... 45

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Understanding Agility
What does ‘Agility’ mean?
A number of business strategies and industries spring to mind when considering the term
‘agility’ but the telecoms industry is not front and centre…

Agility describes the ability to change direction and move at speed, whilst maintaining control and balance.
This innate flexibility and adaptability aptly describes an athlete, a boxer or a cheetah, yet this description can
be (and is) readily applied in a business context. Whilst the telecoms industry is not usually referenced as a
model of agility (and is often described as the opposite), a number of business strategies and industries have
adopted more ‘agile’ approaches, attempting to simultaneously reduce inefficiencies, maximise the
deployment of resources, learn though testing and stimulate innovation. It is worthwhile recapping some of the
key ‘agile’ approaches as they inform our and the interviewees’ vision of agility for the telecoms operator.

When introduced, these approaches have helped redefine their respective industries. One of the first business
strategies that popularised a more ‘agile’ approach was the infamous ‘lean-production’ and related ‘just-in-
time’ methodologies, principally developed by Toyota in the mid-1900s1. Toyota placed their focus on reducing
waste and streamlining the production process with the mindset of "only what is needed, when it is needed,
and in the amount needed,"2 reshaping the manufacturing industry.

The methodology that perhaps springs to many people’s minds when they hear the word agility is ‘agile
software development’. This methodology relies on iterative cycles of rapid prototyping followed by customer
validation with increasing cross-functional involvement to develop software products that are tested, evolved
and improved repeatedly throughout the development process. This iterative and continuous improvement
directly contrasts the waterfall development model where a scripted user acceptance testing phase typically
occurs towards the end of the process. The agile approach to development speeds up the process and results
in software that meets the end users’ needs more effectively due to continual testing throughout the process.

Figure 5: Agile Software Development

Source: Marinertek.com

1
http://www.toyota-global.com/company/history_of_toyota/75years/
2
http://www.toyota-global.com/company/vision_philosophy/toyota_production_system/just-in-time.html

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More recently the ‘lean startup’ methodology has become increasingly popular as an innovation strategy.
Similarly to agile development, this methodology also focuses on iterative testing (replacing the testing of
software with business-hypotheses and new products). Through iterative testing and learning a startup is able
to better understand and meet the needs of its users or customers, reducing the inherent risk of failure whilst
keeping the required investment to a minimum. The success of high-tech startups has popularised this
approach; however the key principles and lessons are not solely applicable to startups but also to established
companies.

Despite the fact that (most of) these methodologies or philosophies have existed for a long time, they have not
been adopted consistently across all industries. The digital or internet industry was built on these ‘agile’
principles, whereas the telecoms industry has sought to emulate this by adopting agile models and methods.
Of course these two industries differ in nature and there will inevitably be constraints that affect the ability to
be agile across different industries (e.g. the long planning and investment cycles required to build network
infrastructure) yet these principles can broadly be applied more universally, underwriting a more effective way
of working.

This report highlights the benefits and challenges of becoming more ‘agile’ and sets out the operator’s
perspective of ‘agility’ across a number of key domains. This vision of the ‘Agile Operator’ was captured through
29 interviews with senior telecoms executives and is supplemented by STL analysis and research.

Barriers to (telco) agility

…The telecoms industry is hindered by legacy systems, rigid organisational structures and
cultural issues…

It is well known that the telecoms industry is hampered by legacy systems; systems that may have been
originally deployed between 5-20 years ago are functionally limited. Coordinating across these legacy systems
impedes a telco’s ability to innovate and customise product offerings or to obtain a complete view of customers.
In addition to legacy system challenges, interview participants outlined a number of other key barriers to
becoming more agile. Three principle barriers emerged:

1. Legacy systems
2. Mindset & Culture
3. Organisational Structure & Internal Processes

Legacy Systems
One of the main (and often voiced by interviewees) barriers to achieving greater agility are legacy systems.
Dealing with legacy IT systems and technology can be very cumbersome and time-consuming as typically they
are not built to be further developed in an agile way. Even seemingly simple change requests end in
development queues that stretch out many months (often years). Therefore operators remain locked-in to the
same, limited core capabilities and options, which in turn stymies innovation and agility.

The inability to modify a process, a pricing plan or to easily on/off-board a 3rd-party product has significant
ramifications for how agile a company can be. It can directly limit innovation within the product development
process and indirectly diminish employees’ appetite for innovation.

It is often the case that operators are forced to find ‘workarounds’ to launch new products and services. These
workarounds can be practical and innovative, yet they are often crude manipulations of the existing capabilities.
They are therefore limited in terms what they can do and in terms of the information that can be captured for

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reporting and learning for new product development. They may also create additional technical challenges
when trying to migrate the ‘workaround’ product or service to a new system.

Figure 6: What’s Stopping Telco Agility?

Source: STL Partners

Mindset & Culture

The historic (incumbent) telco culture, born out of public sector ownership, is the opposite of an ‘agile’ mindset.
It is one that put in place rigid controls and structure, repealed accountability and stymied enthusiasm for
innovation – the model was built to maintain and scale the status quo. For a long time the industry invested in
the technology and capabilities aligned to this approach, with notable success. As technology advanced (e.g.
ever-improving feature phones and mobile data) this approach served telcos well, enhancing their offerings
which in turn further entrenched this mindset and culture. However as technology has advanced even further
(e.g. the internet, smartphones), this focus on proven development models has resulted in telcos becoming
slow to address key opportunities in the digital and mobile internet ecosystems. They now face a marketplace
of thriving competition, constant disruption and rapid technological advancement.

This classic telco mindset is also one that emphasized “technical” product development and specifications
rather than the user experience. It was (and still is) commonplace for telcos to invest heavily upfront in the
creation of relatively untested products and services and then to let the product run its course, rather than alter
and improve the product throughout its life.

Whilst this mindset has changed or is changing across the industry, interviewees felt that the mindset and
culture has still not moved far enough. Indeed many respondents indicated that this was still the main barrier
to agility. Generally they felt that telcos did not operate with a mindset that was conducive to agile practices
and this contributed to their inability to compete effectively against the internet players and to provide the levels
of service that customers are beginning to expect.

“The foundation and culture that has been

“We are too big and don’t have this culture. We built are quite strong, rigid and inflexible
grew too ‘rich’ under another model and we haven’t (both for my company and the industry).”
adapted to a more agile approach.”

CTO – MENA Operator

Head of IT – MENA Operator

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Organisational Structure & Internal Processes

Organisational structure and internal processes are closely linked to the overall culture and mindset of an
organisation and hence it is no surprise that interviewees also noted this aspect as a key barrier to agility.
Interviewees felt that the typical (functionally-orientated) organisational structure hinders their companies’
ability to be agile: there is a team for sales, a team for marketing, a team for product development, a network
team, a billing team, a provisioning team, an IT team, a customer care team, a legal team, a security team, a
privacy team, several compliance teams etc.. This functional set-up, whilst useful for ramping-up and managing
an established product, clearly hinders a more agile approach to developing new products and services
through understanding customer needs and testing adoption/behaviour. With this set-up, no-one in particular
has a full overview of the whole process and they are therefore not able to understand the different dimensions,
constraints, usage and experience of the product/service.

Furthermore, having these discrete teams makes it hard to collaborate efficiently – each team’s focus is to
complete their own tasks, not to work collaboratively. Indeed some of the interviewees blamed the
organisational structure for creating a layer of ‘middle management’ that does not have a clear understanding
of the commercial pressures facing the organisation, a route to address potential opportunities nor an incentive
to work outside their teams. This leads to teams working in silos and to a lack of information sharing across
the organisation.

A rigid mindset begets a rigid organisational structure which in turn leads to the entrenchment of inflexible
internal processes. Interviewees saw internal processes as a key barrier, indicating that within their
organisation and across the industry in general internal decision-making is too slow and bureaucratic.

“The other barrier is the people. A lot of people “Often it takes months to make a simple
are stuck in an old fashioned, Project decision. We have set-up subsidiaries precisely
Management planning habit; this blocks agility. to ensure that they have more freedom to move
For example we have locked in the budgets for quickly (e.g. Digital Units).”
2015 so we won’t be able to allocate budget for
XX until 2016 – this hinders agile behavior.”

• Need to have the right guidance from Senior AVP of Innovation – Asia-Pacific
Management to establish an agile culture. Not
Operator
Head of Business Development &
easy to implement in a big / old company.

Partnerships – European MNO

Interviewees noted that there were too many checks and processes to go through when making decisions and
often new ideas or opportunities fell outside the scope of priority activities. Interviewees highlighted project
management planning as an example of the lack of agility; most telcos operate against 1-2 year project plans
(with associated budgeting). Typically the budget is locked in for the year (or longer), preventing the re-
allocation of financing towards an opportunity that arises during this period. This inflexibility prevents telcos
from quickly capitalising on potential opportunities and from (re-)allocating resources more efficiently.

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“Agility” is an aspiration that resonates with operators

… Operators aspire to adopt a more ‘agile’ approach in order to succeed in an increasingly
competitive environment.

Despite these internal barriers, interviewees strongly emphasised the importance of becoming more ‘agile’. All
29 of the interviewees indicated that this transformation was important for their business.

Figure 7: The Importance of Agility

“Yes we want to be an Agile Operator so we can
face these challenges and beat the OTT players
as well as capitalising on big data opportunities.”

Head of Marketing & Sales – Asia-Pacific

“It is fundamental to be agile. For me

it is much more important than being
lean – it is more than just efficiency.”

CTO – Europe
“Agility is part of the answer – definitely.
Typically our challenge is that we can’t do
everything, we need to prioritise. We can’t
do things fast enough and we struggle to
respond quickly. Agility would be a huge
competitive advantage if we could get there.”

Head of Product Development &

Management – Europe
The desire to become more agile stems from the external challenges that operators are facing. Of greatest
concern to interviewees was the increased competition in the marketplace, both from telco competitors as well
as from OTT players.

Operators are facing increased pressure from within the industry as markets reach saturation and core
revenues are in decline. This industry pressure is leading to price wars (even in the US, a market previously
blessed with gravity-defying ARPU growth), significant cost-cutting and consolidation. In more advanced
markets consolidation has taken the form of convergence (with the need to offer quad-play) e.g. BT & EE (for
more analysis please read STL’s recent report: BT/EE: Huge Regulatory Headache and Trigger for European
Transformation). However, in our research interviewees suggested that this converged consolidation strategy
often creates more industry pressure rather than less as the newly combined converged entity typically uses
the acquired part of the business as a subsidy for its traditional core services, further increasing pressure on
standalone operators.

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Telcos have also felt the significant impact of competition from OTT players providing communication services.
These services directly impact telco communication revenues as they provide a substitutable form of
communication. SMS revenues in advanced markets have been decimated by OTT comms applications (e.g.
WhatsApp) and international calling revenues has been materially affected by VoIP applications (e.g. Skype).

In addition to providing cheaper communication services, OTT players have also raised expectations in
customer experience. Often OTT services can be more innovative and intuitive than competing core telco
services (e.g. greater social “context”, intuitive self-care and real-time exchange of media such as photos).
OTT communications players can provide more compelling user experiences whereas a telco’s role providing
the underlying connectivity and other capabilities is often overlooked or only noticed whenever there is an
issue (e.g. lack of coverage or slow-buffering). In many cases the telco experience has to be near-perfect to
simply satisfy customers.

Figure 8: The Drivers & Barriers of Agility

Source: STL Partners

This highly competitive environment with ever-increasing customer expectations is forcing the industry to adapt
and transform. Operators are streamlining operations and processes, cutting costs & changing cost structures,
maximising the use of resources. This transformation, to become more ‘agile’, will allow operators to compete
more effectively. Additionally this agile transformation will also allow operators to capitalise on potential new
opportunities. Operators who can adapt accordingly will be able to address new opportunity areas, as they will
be flexible and fast enough to develop new business models, create attractive products and services and to
partner with innovative companies.

An agile mindset and the adoption of enabling technical capabilities are key to telcos’ transformation to a more
efficient, flexible and innovative state.

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Where is it important to be agile?

The Telco Agility Framework
STL tested a number of potential areas where agility might be considered important for operators and has
developed a framework that is consistent with the majority of the interviewees’ opinions. Figure 9 sets out the
framework covering five key areas of operator agility.

Figure 9: The Telco Agility Framework

Source: STL Partners

This Telco Agility Framework provides a clear breakdown of the areas where operators should focus their agile
transformation efforts. The section at the left of the framework (Organisation) shapes the next level within the
framework (i.e. Network, Service, Customer) and relates to the culture and structure of the organisation as a
whole. It is therefore the most important area to address, as establishing this agile mindset and culture will
drive agility and innovation across the core areas of the business.

The middle three areas (Network, Service, Customer) describe the core building blocks of an operator’s
business: the network (which operators have traditionally considered their core asset), the products and
services they offer to customers and the level of service they provide to their customers. Becoming more agile
in these domains will allow an operator to develop and offer more compelling products & services and provide
a superior customer experience whilst reducing costs and deploying resources more efficiently.

The section at the right of the framework (Partnerships) is born out of the other components of the framework.
Partnerships principally relates to relationships between an operator and 3rd parties who offer their services to
an operator’s customers but it can also refer to the vendor/supplier relationship. The ability to be agile with
partners also stems from a general mindset of agility and flexibility that runs throughout the organisation. As
consumers use more and more 3rd party services, it is becoming increasingly important that operators learn to
become agile partners.

The following sections detail, based on the interview responses and STL analysis, the key aspects of agility
within these 5 domains.

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Organisational Agility
The Agile Organisation
Interviewees stressed that the most important (and most challenging) element required to become more agile
as an organisation was to overcome the cultural and structural barriers. An organisation needs to adopt an
agile mindset from the top – it requires the full backing of senior management in order to embed this culture
throughout the whole organisation.

Establishing this agile mindset and culture will lead to closer collaboration between teams, shared knowledge
and faster, localised decision-making, empowering employees across the business to work more flexibly,
efficiently and independently. This in turn will stimulate innovation and allow an operator to move at the speeds
necessary to succeed in today’s competitive marketplace. If an operator adopts a more agile culture and
mindset, technology can empower operators to move at faster speeds and to innovate.

Interviewees generally stated that a more agile

organisation emulates the culture and practices of the “Even if the technology is there, the culture and
successful digital players. Google, Apple, Amazon etc… organisation need to be agile. Agility is about
were referenced by operators as examples of more agile the people & processes.”
organisations. The following section therefore draws on
both interviewees’ comments as well as key learnings
from the digital players. Head of IT – MENA Operator
Interviewees identified four key organisational attributes of the ‘Agile Operator’:

1. Places the customer at the centre of their strategy and decision making
2. Has simplified internal processes to enable quick decision making
3. Fosters an innovation culture, built upon the lean-start up approach
4. Measures and evolves, adapting to changes in the marketplace

Figure 10: The Agile Organisation

Source: STL Partners

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Customer First:
The Agile Operator recognises that the customer is the key to success and hence places the customer at the
centre of how and why they do business.

The old telco mindset focused on the product first – what the internet and OTT players have demonstrated is
that focusing on customers and their experience from the outset and thereafter is fundamental to success.
They have stolen ground from the telcos with more attractive propositions and compelling user experiences.
Whilst focusing on the customer or user is not a new concept, it is one that telcos have been guilty of
overlooking. They need to more deeply ingrain this thinking in their DNA.

The Agile Operator understands, develops and delivers for their customers and structures their business
accordingly. Analytics is key to understanding the needs of your customer and in the era of big data, this is
now a possibility. The technology to analyse a combination of usage, behaviour and profiles has vastly
improved and reduced in cost, making it possible to harness the power of big data to make smarter decisions
and serve customer needs. Through analytics, the operator is able to provide a better service to the customer,
both in terms of the delivery of the service (through smarter network management) and in terms of the level of
support (when the customer is making purchasing decisions or has technical or service issues). Analytics can
be used to drive actions and change in an organisation by bringing a focus on making actual measurable
improvements to satisfaction, revenues, costs, time-to-market etc.

The Agile Operator goes one step further and fundamentally structures their business to put the customer first.
Again, the old telco model is to have lots of teams with the responsibility for one function (e.g. marketing, IT,
network, sales etc.) – each team has responsibility for that function across all areas of the business and hence
no team fully understands the end-to-end business process nor do they appreciate the customer experience.
The Agile Operator structures their organisation to meet the needs of their customers – they are customer
segment-orientated as opposed to functionally-orientated.

Figure 11: Organisational Structure: Functional vs. Customer-Segmented

Source: STL Partners

Business units are set up according to customer segments 3 (e.g. digital natives, students, young professionals,
silver surfers etc...). This organisational structure allows a business unit to fully understand their customers’

3
This research and report does not explore the appropriate segmentation models for operators.

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needs and the end-to-end business processes. As a team they are able to deliver a better service, understand
customer issues and pain-points, resolve problems and most importantly, innovate to improve their offering.

Whilst this customer-segmented structure may seem more complex and may indeed lead to the duplication of
some roles across the different teams, the benefits outweigh the cons. As each team addresses most of the
business requirements for a customer-segment the team will have much more insight into the customer-
segment, both in terms of the customers’ needs and experience and the business unit’s performance; this
knowledge and insight will allow the team to provide a better service and to improve the service in an efficient
manner. The team will inherently possess a mix of skill-sets and will benefit from continual cross-functional
collaboration. The mix of skill-sets and functions within a team will invariably increase the amount of
interactions between different aspects of the business unit; this in turn will create an environment that
encourages and stimulates innovation.

Furthermore, as the required functions are all present within the same team, decision-making is significantly
faster, again facilitating greater amounts of innovation and action. This environment will also increase
employee satisfaction as they have more responsibility, can clearly understand how their role fits into the
business and they can materially affect their team’s performance.

Functional oversight is still maintained with small functional-management teams having oversight across the
Customer-Segment Business Units. This will allow the business to further share knowledge across the
organisation and to benefit from synergies created within the other business units.

Whilst not every operator will (be able to) adopt this strict customer-segment orientation, a hybrid approach
can also be implemented, where the operator stills prioritises the customer over functional business units.
Individuals within specific functional teams will have responsibility for customer segments and will work closely
with other individuals across other functional teams who also have the same customer segment focus. The
goal of this structure is to allow your (customer) team to fully understand the customer and the end-to-end
processes, enabling them to act faster to address potential problems or to capitalise on potential opportunities.

Simplified Processes
Interviewees described burdensome and lengthy internal processes as a key barrier to agility. Onerous
processes prevent operators from making decisions and moving at speed – which in turns stymies enthusiasm
for innovation. The Agile Operator has simplified internal processes and localises decision-making within the
requisite team. The Agile Operator is therefore able to move and make decisions faster, at the right level of
the organisation, whether it be partnering with a 3rd party service provider or developing and launching a new
core communications product.

Simplifying processes can be challenging; as an organisation grows, they typically cement processes in place
as this enables them to create a repeatable formula, scale-up and maintain. This approach has actually served
telcos well, particularly when they were expanding coverage of stable core services at a fast yet steady pace
in a bid to keep up with demand. However, in more dynamic market environments, with continual disruption
and lots of competition, these ‘locked-in’ processes significantly hamper an organisation’s ability to move
quickly and take advantage of new opportunities.

Google, who adopt an agile approach and mindset, outline 3 key principles that help simplify their processes
and decision making:
 Small teams
 Open Communication
 Rallying around the best answer

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The key principle behind simplifying processes is to grant more responsibility and decision-making authority to
smaller teams, while retaining appropriate company-wide oversight to ensure alignment across the
organisation. As set-out previously, operating with a segment-orientation rather than a functional-orientation
can create this environment where smaller teams are able to make informed decisions and retain ownership
over the process.

Similarly, sharing information and open communication helps break-down internal process barriers within an
organisation. An Agile Operator should enable easy access to any information which could be relevant across
different business units – this will firstly reduce bottlenecks in the system and secondly will increase the level
of trust with employees, fostering a more positive culture and encouraging them to act on their own initiative.

Where possible, decision-making should be localised within smaller teams or business units. This allows the
team to act much faster to capitalise on opportunities or to take action to resolve a problem. If decision-making
is localised within smaller teams it allows everyone to have a voice and to input into the decision. Decision-
making should be consensus-driven. However most people and organisations misunderstand how to achieve
this; consensus does not mean agreement – consensus is achieved by listening to and understanding the
potential approaches or actions and then rallying behind the ‘best answer’.

Simplifying processes and localising decision-making will allow an operator to move at much faster speeds
and to take advantage of potential opportunities.

Figure 12: How Google Works – Small, Open Teams

Source: Google: How Google Works

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Foster a Culture of Innovation

Placing the customer at the centre of your business, breaking down internal process barriers and encouraging
cross-functional collaboration and decision-making within smaller, focused teams already puts in place some
of the pieces required to drive agility and innovation.

The next piece to add is the methodology for innovation. The lean-startup approach outlined earlier provides
a good template to understand how to innovate. Most interviewees described this innovation culture and lean-
start-up mindset as a critical component to becoming more agile as an organisation.

Innovation is built upon three key principles:

 The acceptance of change
 Understanding that every idea or invention may not succeed
 Starting with a well-defined end state and blueprint ‘blinkers’ the process

In order to successfully innovate you first need to be able to accept that the world, industry or product is subject
to (and will inevitably) change. An appreciation that the old model, method or product can be improved or
altered is fundamental – this acceptance of change becomes difficult in an environment with rigid structures
and processes and hence established businesses and industries struggle to bring innovative products to
market and are ripe for disruption from new propositions. Indeed the telecoms industry largely refused to
accept how the communications landscape was changing and hence missed out on establishing a central role
within the bourgeoning digital ecosystem.

The companies that are the best innovators (Google, the $10 Billion Club, Amazon etc.) understand that not
every project or idea will succeed. Most ideas (& start-ups) fail but this is not a reason to ignore innovation.
The often touted mantra is ‘fail fast, fail often’ – while there is merit to this statement, the real value is from
learning from your failures and acknowledging failure at the right time, before overcommitting resources.
Google advocates setting very lofty goals and in the process of trying to achieve these goals, ‘failing well’.
Whilst it isn’t possible to succeed with every idea or even to ‘fail-well’, the learnings and insight (procedural or
practical) gained through the process may benefit future opportunities.

Figure 13: How Google Works – Failing Well

Source: Google: How Google Works

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The classic telco approach is to define your product up front - plan, analyse, plan some more and build complex
models and forecasts. Then spend $X amount of money (and many months) building and launching the
product; the financial commitment to the new product does not afford it an opportunity to fail – there is too
much at stake for the telco. In traditional telco thinking, failure can be minimised through better analysis and
planning. Agile thinking holds that the opposite is true: endless analysis and planning focuses on the end
product as the goal. As the end-state is already pre-determined (and likely to be neither new nor particularly
valued by customers) and investment upfront is committed, the product or service remains relatively untested
until it is ready for launch. The risk of failure is therefore much greater as it has not been allowed to evolve
through actual engagement with potential users.

The Agile Operator innovates with an idea of the desired-end state,

not a blueprint, realising that the product must adapt and evolve “Operators need to have the ability
during the development process. The best way (and one that to do trial and error – we have to
interviewees heavily stressed) is to continually test new products learn from the OTTs.”
and services with customers, capturing their feedback directly or
through an assessment of their usage or behaviour, and then
modifying the product/service accordingly. This iterative testing CSO – European Operator
process helps to create products that meet the users’ needs and
provides them with a compelling experience.

Progress has been made here, with a number of operators in recent years focusing on creating innovation
hubs or digital teams. Whilst this is a positive step, operators need to recognise and accept that this mindset
of agile innovation needs to transcend the whole organisation – not just a particular team or unit.

Measure & Evolve

The final key component of an agile organisation is the ability to constantly evolve over time, retaining the
ability to transform. Being truly agile is more than just implementing flexible processes or stimulating innovation,
it is the ability to evolve the business over time to capitalise on new opportunities and to adapt to disruptive
changes.

Staying abreast and taking advantage of changing marketplace dynamics and potential disruptive threats
underpins what it means to be truly agile. You are not just agile in terms of your own processes but you are
also agile as a whole business when reacting to the changes going on around you. An Agile Operator develops
new metrics that track the changes in the marketplace as well as the operator’s ability to react and adapt to
these changes. STL has recently published a report, The Digital Dashboard: How new metrics drive success
in telco digital initiatives, assessing the importance of metrics in shaping business performance.

The Agile Operator is also flexible enough to explore new business models. New models, such as XaaS, can
change how services are received and delivered, enabling different revenue and cost models and potentially

“You need to have the right guidance from “How fast the company adapts to disruptive
Senior Management to establish an agile changes; how quickly they are able to
culture. This is not easy to implement in a big, transform.”
old company."

CTO – MENA Operator

Head of Business Development –
European MNO

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freeing up resources to invest in innovation. Adopting new models and metrics will allow operators to adapt
and evolve to remain competitive.

Creating the right culture will allow you to better meet the needs of your customers, attack new opportunities
faster than the competition, become more efficient across the whole business and to attract and retain the
most talented and ambitious employees. These in turn enable an organisation to be agile and to continually
evolve to succeed in ever-changing market environments.

Recommended Actions: Becoming the ‘Agile’ Organisation

To undertake an agile transformation process, operators must be able to tangibly measure how agile they are
becoming and benchmark their transformation over time. In order to do this operators should develop key
performance indicators (KPIs) for the different domains of Agility presented in Figure 9. In this section STL
sets out both the recommended actions for operators and potential criteria to assist in the development of KPIs.

Most operators have a long way to go to become more agile as an organisation and to embed news ways of
working. In order to achieve this vision STL recommends that operators:

 Secure Senior Management Support – Senior Management must fully embrace the need to
change entrenched cultures and processes and adopt a more agile mindset and approach.

 Focus on the Customer – The Operator’s focus should shift from their own products towards the
needs and behaviour of the customer. This is achieved through both a mindset switch and
organisational structure change as well as embracing relevant technologies.

Key Components of Agility Key Criteria / Example KPIs

Focus on the Customer Knowledge of Customer; Use of Customer Analytics; Customer-Segment
Orientation; Employee Satisfaction; Customer Satisfaction

 Simplify Processes – In order to compete against OTT players (& other telcos) operators need to
move at much faster speeds. Processes therefore need to be (relatively) simple, enabling decision-
makers to act quickly.

Key Components of Agility Key Criteria / Example KPIs

Simplified Processes Decision-making close to customer; Speed of decision-making; Amount of
information sharing across teams; No. of internal complaints

 Focus on Innovation – Senior Management should prioritise and encourage innovation across all
teams. Operators should regularly undertake new initiatives and embrace the ‘fail fast, fail well’
mantra.

Key Components of Agility Key Criteria / Example KPIs

Innovation Culture Investment in Innovation; Employee Satisfaction; Ability to Fail Fast; Agile
Development Approaches; User Testing

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 Embrace Agility-Enabling Technologies – Technology can further increase an operator’s ability to

move at speed and to innovate.
 Analytics technology can help operators better understand service performance/usage and
customer needs, helping operators to refine and improve their offering
 Service creation tools enable operators to create new products and services more rapidly.
 Similarly, flexible OSS/BSS systems allow operators to manage new (& existing) services
more effectively and to track associated billing requirements
 Enterprise Mobility tools allow employees to work more flexibly, reinforcing an agile culture
 XaaS models can potentially free up capital and staff costs (allowing operators to focus
resources on other areas), and it can reduce the risk when trying something new

 Measure & Evolve – Operators need to regularly take stock of changes in the market and adapt
accordingly to ensure continued relevance in the future. Operators should develop new metrics to both
track market developments and to assess their ability to react and evolve to meet the changing market
environment. Senior Management should leverage this information to review the organisation’s
strategic direction.

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Network Agility
A Flexible & Scalable Virtualised Network
In the past the network has been the core of a telco’s business - it was the single asset that ultimately
determined customers’ experience of your services. The top performing telcos typically invested heavily in their
networks and were able to provide their customers with better coverage and when data services were
introduced, increased speeds. Yet as customer needs and behaviour have changed and the underlying
network has become divorced from the services running over it, the rationale for ever-increasing investment
in a commoditising service is not as clear as it once was.

Will the network become a source of differentiation and a tool for innovation for the telco or will it simply be the
case that the network becomes a commodity, with operators continually improving the speed of their networks
while managing costs aggressively?

Whilst commentators are split as to the future value of the network, the significant majority of our interviewees
felt that the network was key to the success of the telco. However, they acknowledged that building a more
agile network was not easy and that there were a number of potential challenges around this network
transformation. The key barriers to network agility mentioned were:

 Legacy Network – interviewees frequently stated that moving from legacy networks to a more-agile
virtualised world will take a number of years of hard-fought transformation. They felt that it is not
something that can happen in a short timeframe and the process and associated investment will
need to be carefully planned and implemented.

 Skills & Mindset– operators felt that most employees do not fully understand or embrace
virtualisation. They stressed a skills challenge with few employees having the requisite skill-sets to
develop networks and services in a virtualised environment. More specifically, they needed to
combine “old world” engineering know-how with iterative “new world” digital innovation.

 The Lack of a Clear Business Case – related to this transformation process, a number of
interviewees felt that there wasn’t a clear business case for new technologies (e.g. SDN & NFV).
Whilst the benefits were well articulated, interviewees felt that their internal processes required
justification through a full business case for the new technologies. STL has begun to address this
question in the recent research report: Key Questions for NextGen Broadband Part 1: The Business
Case

 The Vendors – Some interviewees went further and claimed that the vendors don’t fully understand
this virtualisation transformation process. They commented that most vendors don’t incorporate
virtualisation into their core network proposition; rather this process is treated as separate to the core
network. In order for this vision to be fully embraced by operators – vendors must place this
proposition front and centre.

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Despite challenges around network transformation, the majority of interviewees stressed that the network
remained a key asset for the operator and a potential source of differentiation. Three key themes emerged
from the research that describe an operator who is ‘network agile’:

1. Embraces Virtualisation
2. Uses Real-Time Analytics to meet Customer Experience and Capacity Needs
3. Is Geared up for the Internet of Things

For more information on STL’s view of next generation network strategies please visit our dedicated research
stream: Future of the Network.

The Agile Operator Embraces Virtualisation

The Agile Operator embraces the virtualised world, understanding that networks are no longer solely physical
assets but that efficiency gains, product & service innovation and capacity management can all be achieved
more effectively through virtualisation of the network.

Virtualisation and software defined networking (SDN) started out within data centres, significantly increasing
computing power and storage capacity, enabling the birth of cloud computing. This process of virtualisation is
expanding to other networks – including the operators’ own mobile networks.

SDN virtualises the control of the network, removing the need for point to point connections and allowing the
network to be manipulated in real time to meet the needs of applications and systems that sit on top of it. The
related concept of Network Functions Virtualisation (NFV) virtualises the individual network applications or
functions. The ‘intelligence’ layer is taken out of the individual components in a network, meaning that
components are more standardised and lower cost.

Figure 14: NFV managed by SDN

Source: STL Partners

For more information on SDN and NFV please read STL’s research: Software Defined Networking (SDN): A
Potential ‘Game Changer’ and NFV: Great Promises, but How to Deliver?

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Virtualisation, including SDN and NFV can empower an operator to become truly agile – it creates more
programmable networks that allow an operator to quickly (and at low cost) test new business models and new
services. This technology provides an avenue for operators to adopt the ‘Innovation Culture’ (outlined in the
previous section) for the development of core and deployment of 3rd party products and services. It facilitates
building and testing in an iterative way (without significant investment in a long-term process with a defined
end-goal), allowing an operator to meet customers’ needs and improve the product experience over time or to
fail without significant upfront investment.

“Network agility is the ability to customize “NFV is instrumental in bringing Network Agility.”
network functions in a scalable way.”

Director of Corporate Strategy –

Chief Strategy Officer – European MENA Operator
Operator
In addition to benefits for product and service innovation, virtualisation also allows operators to:

 Redefine networks dynamically to allocate resources where they are needed, facilitating better
capacity management

 Ensure specific functionality on demand for specific services, guaranteeing QoS service for priority
services or potentially for high value customers

 Open up their network to customers or 3rd parties to be defined as needed on a minute by minute
basis, allowing the network to better serve the needs of customers or partners

These applications or benefits of virtualisation allow an operator to be much more flexible with its offerings,
(potentially leading to new business models) and to better understand and manage network capacity.

Real-Time Network Analytics

Understanding the network in real-time is key to becoming ‘network agile’. Knowing cell site capacity and
understanding customer experience at any given moment allows an operator to take action in real-time,
improving the quality of service, and to plan network investment at short notice, optimising the deployment of
resources. Whilst real-time network analytics is something that most operators are implementing or exploring,
interviewees stressed that it was of critical importance for an ‘Agile Operator’.

Network awareness and insight allows operators to make smarter decisions; operators can take action if they
know that a cell-site is overloaded and that customers are experiencing bad coverage and service. Simple
actions like pro-actively contacting the customer to inform them of service issues and offering a form of
compensation (e.g. free minutes SMS or data) will increase customer satisfaction in what can be “moments
that matter” for customers. More importantly, this insight can allow operators to make smarter investment
decisions. Understanding network capacity issues allows an operator to quickly review cell planning; for
example an operator could quickly deploy small cells in order to provide a better service for customers.
Analytics can also provide information on equipment performance. Monitoring performance enables pro-active
or automatic replacement based on failure prediction rates and performance metrics.

Real-time network analytics can provide key data for operators to understand the quality of experience for
customers. This information can prove extremely valuable as it builds a much stronger picture of the customer,

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indicating when and why a customer might be likely to churn and also allowing an operator to prioritise services
that are high value for customers or even to prioritise the service to high-value customers or SLA agreements.

One example of using network analytics is to relieve network congestion through caching content on devices.
Understanding the behaviour of customers (e.g. commuting patterns, content consumed, similar customers’
behaviour) can allow operators to predict content that is likely to be consumed. To avoid congestion in busy
cell-sites in peak hours and to ensure a sustained customer experience, an operator can cache content when
the customer is travelling through under-utilised cell sites. This better utilises available capacity resources and
provides relief to overloaded areas.

Figure 15: Using Big Data Analytics to Predictively Cache Content

Source: STL Partners

Analytics is key to operators’ thinking and the network is their key source of their information. The Agile
Operator has complete oversight of their network and pairs this with CRM information to optimise the service
delivered to customers.

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Ready for the Internet of Things

Interviewees also stressed that the ‘Agile Operator’ is ready for the Internet of Things (IoT). Connectivity is the
lynchpin of IoT, with lots of connected devices transmitting varying amounts of information. Whilst most of this
data will not be high bandwidth, the sheer number of connections will be much greater than today.

The Agile Operator needs to do 2 things to succeed in this environment:

 Build and modify their network infrastructure to meet the needs of the IoT world
 Adopt new monetisation models

One of the key challenges when building networks for IoT is managing vast numbers of connections with lower
revenue per connection. This constant information flow will create higher volume, lower margin scenarios. This
will have ramifications in terms of the cost of the network and supporting IT infrastructure. Operators will
therefore need to build and operate these differently, with an understanding that the revenue and cost model
will change.

The Agile Operator also needs to embrace new monetisation models in the IoT world. New business models
will emerge, taking advantage of ‘smart devices’ and additional information. The abundance of business
models becomes clear when you consider one touted IoT product: the smart fridge. The classic model is for
the user to pay for data transfer as they benefit from knowing they are low on a particular item, allowing them
to re-stock. However the maker of the smart-fridge could also pay for this data transfer and can then use the
information to market to the customer or to sell information about consumption habits to supermarkets.
Perhaps more interestingly, the supermarkets themselves could pay for connectivity. A customer could
potentially ‘sign-up’ their fridge to a supermarket (or ‘sign-up’ for particular products from a supermarket). When
they have run out of an item the supermarket will automatically know and replace the goods, providing them
with more visibility and predictability over consumption, enabling smarter inventory management.

The Agile Operator will therefore need to build advanced and flexible platforms to deal with these new potential
business models.

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Recommended Actions: The Journey to the ‘Agile Network’

Network transformation is challenging and will take time, yet operators clearly see the benefits and the vision
for what they would like to achieve with their networks. STL proposes the following 3 stage approach to achieve
this vision of network agility.

Figure 16: Three Steps to Network Agility

Source: STL Partners

 Network Aware – Start with trying to better understand your network. Understand performance
issues and how these translate into customers’ experiences that matter.

Key Components of Agility Key Criteria / Example KPIs

Network Awareness Network Performance Analytics; User-Experience Metrics; Pro-
active/Predictive Equipment Monitoring & Replacement

 Network Optimisation – Build on this awareness towards taking action in real-time. Develop the
capabilities to optimise the network to meet customer and capacity needs.

Key Components of Agility Key Criteria / Example KPIs

Real-time Network Ability to scale-up and down network resources; Speed of network roll-out;
Optimisation User-Experience Metrics

 Virtualisation – Commit to the virtualisation of your network. This will create a network that is
programmable and elastic, allowing you to be flexible in your offerings, scale-up and down resources
and to better meet the needs of your customers.

Key Components of Agility Key Criteria / Example KPIs

Virtualisation Time until implementation of SDN/NFV; Approach to SDN/NFV – central to
core network transformation

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Service Agility
Fast & Reactive New Service Creation & Modification
Operators around the world are experiencing (significant) revenue decline in their core services as they face
increased competition from both OTT players and price-warring telcos. Interviewees felt that this decline in
revenue has largely occurred as their services have not been able to keep pace with the OTT players; OTT
players have adopted a more agile approach, creating products and services that are not only lower cost but
also offer richer customer experiences. OTT services are defined, refined and tested throughout their
development and in life, retaining the ability to easily and quickly modify services as needed. This flexibility
allows them to create products that continually address the needs of the user and then to scale up accordingly.

Telcos on the other hand do not move at the same speeds – constrained by legacy IT systems and drawn-out
internal processes. Simple product changes, such as launching a new tariff or zero-rating data for a particular
service can prove to be a technical challenge, with implementation taking a number of days or even weeks.
Furthermore, when it comes to partnering, lengthy internal processes can significantly slow down decision-
making, frustrating potential partners or leading to missed opportunities with market timing. Partnering Agility
is inherently linked to Service Agility as a 3rd party is providing services to an operator’s customers. We have
(based on interviewees responses) kept Partnering Agility as a separate domain due to the relative size and
importance of both categories.

Interviewees felt that the IT challenges, internal process restrictions and the inability to get to market quickly
were the key barriers to achieving Service Agility. Some also noted that simply identifying opportunities for
service innovation was a barrier to telco innovation.

An Agile Operator however does not struggle with these barriers – interviewees identified three key
characteristics of an operator that demonstrates Service Agility:

1. Iterative product creation, placing the customer first

2. Reduced time-to-market for new services
3. Quick response to the market and to competitors’ offerings

Launch & Evolve, placing the Customer’s needs first

In order to compete effectively with the OTT players, operators need to develop the capability to create
products and services in a much more iterative manner. This approach will allow operators to develop new
products faster, with less investment and in a way that better serves customer needs. Interviewees stressed
that this mindset and approach was the key to becoming more agile and faster in the development and launch
of new services.

When creating a new product or service, the Agile Operator first seeks to define and engage users with a
minimum viable proposition – the service carries out its objective and operates with basic functionality. The
product is then developed iteratively and refined through testing and usage of the service by customers. Direct
feedback from the customer is requested and analytics is used to assess the performance and usage of the
service. Together this information will allow an operator to continually improve the product over time – providing
a better end-user experience. When a monetization route has been proved and the service is experiencing
sustainable traction with customers, it can be scaled-up.

Interviewees linked this description to the launch of Gmail; initially Gmail was used for access to Google’s
internal email system. It then launched in beta in 2004 and remained in beta until 2009 (although it was

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promoted to the general public in 2007). This iterative development process allowed Google to offer an
improved service over other email providers (e.g. increased storage) and to scale up at the right time (also
addressing privacy concerns), resulting in Gmail being a huge success – as of June 2012 it is the most used
web-based email service.4

Figure 17: Launch with the Minimum Viable Proposition – Gmail

Source: Google; STL Partners

As part of this iterative process the Agile Operator is also able to fail fast, or rather learn through its failures. If
a new service is not going to be viable then it will be stopped. Any learnings from the process should be
extracted as they may prove relevant for future projects or if/when the market environment has changed.

Additionally, the Agile Operator does not just launch a new product and let it run its course – the Agile Operator
changes and improves the service in life. The feedback and analytics process remains ongoing after the
product is launched with the operator having the potential to alter and improve the product during the course
of its life. As laid out previously in the Organisational Agility section, a principal mindset shift for operators is
to place the customer at the centre of their services. Rather than building a product to meet specific technical
requirements, operators should have a vision of the end state and then continually test and improve the service
both during the development phase and in life – this ensures that the service more readily meets users’ needs.

Becoming more agile with your service offerings relates not just to consumer services but also to enterprise
offerings. An Agile Operator understands the needs of its enterprise customers and iteratively builds and
develops services to meet them. Furthermore the service is improved in life, based on direct customer
feedback and from analytics assessing service performance and the customer’s usage/behaviour.

The Agile Operator iteratively develops products, committing less resource and investment upfront and
tailoring the product over time to provide the best possible experience for the user.

Reduce Time to Market

The Agile Operator is able to move at “Internet” speed, getting products to market quickly. Interviewees
reported that fast time-to-market was the single biggest aspect of ‘operator agility’ and that it is currently one

4
http://venturebeat.com/2012/06/28/gmail-hotmail-yahoo-email-users/

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of the main pain-points in the industry with legacy systems and an inflexible mindset and processes preventing
operators from developing and launching products quickly.

The Agile Operator has addressed legacy IT issues and adopted streamlined processes and is therefore able
to bring products to market in a matter of weeks, days or even hours, as opposed to the typical 6-18 month
product development cycle. A tariff plan can be created and launched on the same day, a new enterprise
service can be defined and installed within a number of weeks or discussion, negotiation and launch of 3rd
party services can occur in a number of weeks, rather than months.

Reduced time to market is a result of changing the mindset, operational structure and processes as well as
transforming the legacy IT stack. The vision set out in the Organisational Agility section of simplified processes
and building a culture of innovation will enable an operator to develop products and bring them to market at
much faster timescales.

Respond to the Competition

A truly agile operator is able to respond quickly to the competition. If a telco competitor offers a new tariff, price
plan or communications product, an operator should be able to determine a response to that offering and take
action on the same day. An Agile Operator therefore has to be fully aware of their competitive marketplace,
knowing the competitors’ offerings and having the capability to observe, process, decide and act quickly.

Furthermore, the Agile Operator should stay abreast of general changes in the marketplace. If a new (OTT)
entrant is changing the communications landscape, an Agile Operator should understand the potential dynamic
shift and take both tactical and strategic action to combat or align with the new world.

Additionally, operators should look to enhance the value of their traditional services in ways in which the
competition cannot. OTT players are limited in the sense that they don’t have access to the network; operators
are therefore primed to add value to their core offerings through control of the network.

Operators that retain this ability to respond to changes in the marketplace and react/evolve will be able to
survive and thrive.

““Be prepared to launch beta and improve “It is the flexibility of increasing or modifying
iteratively and quickly with more customer based on customer requirements. The customer
feedback. This is a fundamental change for us.” environment can change rapidly; we need to be
able to respond.”

AVP of Innovation Strategy – Asia- Chief Strategy Officer – European

Pacific Operator Operator

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Recommended Actions: Developing More-relevant Services

at Faster Timescales
Interviewees notably suggested that becoming more agile in terms of creating and managing their products
and services was a key challenge. In order to develop services in a more agile way STL recommends that
operators:

 Instil a Mindset of Iterative Product Development – When developing new products and services
operators need to adopt agile development methodologies in order to create services that (continue
to) meet customer needs. Operators should also be able to develop products through component
assembly, re-using components from existing products.

Key Components of Agility Key Criteria / Example KPIs

Launch & Evolve Amount of customer feedback; Beta testing; Analytics tracking usage of
new products; No. of product updates; No. of modifications in life; Cost of
new product development; Ability to Fail Fast

 Use Technology to your Advantage – Technology can facilitate better management of

service/product portfolios and allow operators to be smarter in new service creation
 Service management tools can allow operators to more effectively run and track
performance of their product/service portfolio, and to off-board services from their systems
 Service creation tools can make new product/service creation simpler and faster
 Flexible billing and charging systems enable an operator to create more dynamic services
 Analytics tools allow an operator to understand the usage of services, leading to
improvement of the service during testing or in-life. Analytics can also provide insight on
customer behaviour, allowing operators to create more relevant and compelling services

Key Components of Agility Key Criteria / Example KPIs

Reduce Time to Market Time to market; Cost of new product development; Speed of integration/on-
boarding into systems; Speed of off-boarding

 Track the Competition – Operators should track the offerings of direct telco competitors and OTT
players. This will allow them to be more competitive and to develop countering offers.

Key Components of Agility Key Criteria / Example KPIs

Respond to the Competition Methodology to track new competitor offerings; Time to market of own
reaction (e.g. time to launch competing tariff)

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Customer Agility
Understand and Make it Easy for your Customers
As technology advances, customers expect ever-increasing standards in user experience. Companies like
Apple and Amazon have raised the bar in terms of how customers interact with their phones – they now expect
a simple, clean interface that they can self-manage. Presenting even more of a challenge for telcos is that their
value-add is often hidden in plain sight; customers do not typically notice the operator’s role unless there is a
problem in the process (e.g. bad coverage, call drops, excessive buffering). Customers are now also more
aware of choice and substitutable services and typically do not want to be locked-in to long term contracts with
operators.

To succeed in this demanding environment, telecoms operators need to raise the level of service they provide
to customers. In order to provide the required level of service, interviewees identified 2 key components of
Customer Agility:

1. Provide a simple, intuitive & customisable self-care platform

2. Use big data analytics to understand customer usage, experience & context

Figure 18: The Key Components of Customer Agility

Source: STL Partners

Self-care
Self-care portals are becoming the norm for operators; they provide relatively low-cost, easy to use platforms
for customers to manage their own service. Self-care tools and interfaces are cost-effective when compared
to call centre and in-store customer care costs. Furthermore, as customers become more entrenched with
smart-devices, their preferences are changing – users now prefer to manage services themselves via their
device rather than over the telephone. Customers’ preference for self-service and the potential cost savings
mean that self-care can be a win-win for operators.

The Agile Operator has adopted a self-care first approach. Their portal provides the tools for a customer to
manage all aspects of the service themselves. The portal presents numerous options for the customer to
choose from and a simple interface for the customer to select and view or modify their service. The experience
for the user is seamless with their service updating based on their selection. One interviewee described the
vision as ‘the Amazon of the telecom world for the customer; complex processes need to be seamless and
transparent to the customer – he clicks and he gets the product.”

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The self-care portal is not just the prime interface with the customer, it can also become the primary tool for
in-store and call centre customer care. Employees can use the same tool across all the different customer
touchpoints, minimising costs and ensuring consistency of experience across all channels.

Establishing this channel as the main contact point with the customer can also lead to other benefits. It gives
the operator a digital foothold on the device coupled with a billing relationship. It is possible that this relationship
and channel could be extended to provide new products and services and enable charging to bill in a seamless
fashion. It is also a path to understand more about the customer (e.g. apps installed on phone). Using big data
analytics, offers within the self-care portal can be tailored to the customer, presenting offers that are more
relevant to the user.

Big Data Analytics

Big data analytics refers to the uncovering of patterns, insights and learnings that are hidden within large,
complex heterogeneous data sets. Uncovering this insight can inform businesses and help them make smarter
decisions. Big data analytics is the hot topic in many industries, including the telecoms industry. The increase
in the amount of data created (with always in-use smartphones) and the improvement and reduced cost in
analytics technology, storage and processing is driving interest and adoption of analytics tools.

Interviewees stated that big data analytics was a central, recurring theme for the Agile Operator; the Agile
Operator uses big data analytics to manage network capacity, build new products and also to improve
customers’ experience of the service.

The Agile Operator uses analytics to improve the customer experience in two main ways:
 Real-time customer care and quality of experience management
 Tailoring offers to match customer usage and preferences

Using analytics, an operator can understand customers’ experience of the operator’s service; this includes
real-time diagnosis of experience and an assessment of historic service performance. The experience of the
service, such as call quality, coverage, length of time buffering video, can be captured and a more-complete
view of the customer experience can be built over time. Operators can go one step further and align user
preferences or weightings to a particular event based on user profiles or inferred preferences: e.g. a customer
(segment) may prioritise fast video loading and may be disproportionately dissatisfied with the service if it takes
a long time, relative to another customer (segment). Operators can front-weight the most recent event
occurrences to gauge a customer’s current satisfaction with their service.

This knowledge allows customer care to better understand service problems and offer more helpful diagnosis
and advice to the customer. Using advanced customer experience analytics, operators are also able to form a
clearer picture of the likelihood of a customer churning (through experience history, profiling, timing) and they
can take appropriate action (e.g. offering a device upgrade).

Through analytics operators can improve the quality of experience in real-time, prioritising services that are
valuable to the customer (segment). As discussed earlier, operators can use analytics to give priority to
services or applications that are deemed of high value to a particular customer (segment). For example, if a
user places high value on VoIP calling, using real-time analytics, an operator can prioritise this experience for
that particular user. Use cases around prioritising valued services of applications potentially improve customer
experience and allow an operator to better utilise resource in over-capacity locations

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Figure 19: Using Network Analytics to Prioritise High Value Applications

Source: STL Partners

Big data analytics can also be used to enable an operator to make smarter, more relevant product offers.
Capturing additional information on top of the customer’s experience of the service, including profile
information, preferences, context etc. can allow an operator to build up an inferred representation of the
customer. The operator is then able to offer more relevant products and services to this customer, potentially
increasing ARPU as well as offering services which are more relevant to users. For example, if a customer
regularly travels to a particular country and uses their device sparingly, the operator could offer them a bespoke
discount tariff for calls to and from that particular country. This bespoke offering would increase customer
satisfaction and increase ARPU.

Insight through analytics is a cornerstone of the Agile Operator – it allows the operator to better maximise their
(network) resources, to create new products and services that meet the needs of users and to improve the
customer experience.

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Recommended Actions: Understand your Customers and

Empower them to Manage & Customise their Own Service
Providing the best possible service is paramount to the Agile Operator. The Agile Operator understands the
customer’s experience of the service and gains insight into customer behaviour to develop and refine
services. To achieve this STL recommends that operators:

 Deploy Customisable Self-Care Tools Across all Touchpoints – Self-care is becoming the
normal and preferred way for customers to manage their own service. Operators should therefore
develop and promote a tool that is intuitive and customisable, allowing customers to manage and
modify their service. Operators should also seek to deploy the same self-care tool/system across
their various customer touchpoints. This will lead to a common understanding of the customer across
the different touchpoints, ensuring that consistent offers are made across the different channels, as
well as leading to cost reductions (through the deployment on one universal system).

Key Components of Agility Key Criteria / Example KPIs

Self-care / care Customer usage of Self-care; Use of self-care across all touchpoints;
Response time to customer query; Cost of satisfaction (e.g. stores per
customer/NPS); Complaints per customer

 Define a Big Data Analytics Strategy – an Agile Operator has defined a comprehensive approach
to exploit the power of Big Data Analytics, using analytics to:
 Track service usage
 Understand the experience of a service at any given moment (and over time)
 Gain insight into customer behaviour/satisfaction to enable the development of new services

Key Components of Agility Key Criteria / Example KPIs

Big Data Analytics Customer Experience Metrics; Knowledge of Customer; Ability to
Personalise Service

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Partnering Agility
Open and Ready for Partnering
Telcos are considered to be bad partners; they are perceived as arrogant and lumbering, with partnering
processes revolving around their needs, rather than those of partners. In practice, operators tend to have a
few large partners, able to overcome their limitations.

This mindset and approach is not viable in today’s marketplace. The majority of services consumed on devices
are from 3rd parties. Often it is the case that these 3rd party companies are very agile and fast-moving (e.g.
young start-up/OTT players) and they are not interested in taking part in lengthy negotiations with telcos. As
these 3rd party services become more critical, telcos need to adapt to meet the needs of these partners.

Partnerships are not only needed to launch new services. Partnering extends to all aspects of the business. It
sits to the right in the Telco Agility Framework as it consist of partnering across the different domains of the
business (i.e. Network, Service, Customer) – partners can be suppliers (network, OSS/BSS, Customer Care),
3rd party service providers and potentially competitors.

Interviewees heavily stressed the need to be good at partnering – they considered partnering to be
fundamental to future success as those who can partner effectively can take advantage of new opportunities
and provide a better service to their customers. They indicated that partnering must be driven from the top;
operators need Senior Management support to partner effectively. A partnering culture must be fostered by
Senior Management, encouraging discussions with potential partners and ensuring simplified processes are
in place. Two areas were highlighted by interviewees as essential to ensure an agile partnering approach:

1. Understand a (potential) partner’s business model and adapt accordingly

2. Ensure the right processes, contractual structure and incentives are in place

Understand the Partner’s Business Model

The most common theme mentioned by interviewees was that of developing a better understanding of
partners’ business models and then adapting accordingly. In a number of cases interviewees felt that telcos
didn’t fully understand or appreciate the partner’s business model and hence they couldn’t negotiate or bring
new services to the market effectively; interviewees cited a lack of skills internally as a cause of this problem.
They highlighted that telco employees’ skills are not focused around assessing future trends in the digital
ecosystem and understanding a range of different and complex business models and hence telcos struggle to
form effective partnerships.

Additionally interviewees stressed that the relationship between operators and partners differs depending on
the type of partner. Historically operators have partnered with large technology suppliers – the size and scale
of these partnerships has meant lengthy contract negotiations and long procurement processes. The telco has
typically been placed in a position of power with these types of relationships. However, partnering with other
types of companies (such as OTT/ digital service players) cannot happen in the same way – they are not able
to engage in protracted negotiations and can often choose to partner with someone else. In order to take
advantage of these opportunities operators need to revisit their whole approach to partnering.

Indeed even when partnering with suppliers, telecoms operators need to be more responsive, more equal and
more open. The operator needs to become more aware of what they want and need from the partner.
Developing more trust and having more open dialogue between both parties will allow both the supplier and

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the operator to have a more equal understanding and to create a win-win environment. The supplier should
not be seen as an opponent (at least not at all points of the partnership).

Operators with aspirations beyond connectivity need to understand even more complex market dynamics.
Firstly they need to understand the space they are trying to enter; they need to ask a number of questions,
including: who are the key players, what has made them successful, how can you measure success, why is
this attractive to consumers, how can the operator add value? Operators then need to understand the
(potential) partner’s business model: how do they make money; how do they measure success; how do they
partner etc…

Understanding these new market dynamics is challenging as the marketplace can be complex (with a number
of different parties), the business model unclear (with potentially a number of different business models in
place for similar services) and the state of the market is in continual flux. Operators need to have the skills
internally to understand and assess these potential opportunities if they have wider aspirations outside
connectivity. To be successful they need to know why they are partnering and what they want to achieve from
the partnership.

Operators should not partner if they are unsure what they want and what they are trying to get out of the
partnership. They should not partner based on vague ambition to play in a particular space (e.g. digital
services) – they need to truly understand the marketplace, how they add value and how they can partner
effectively. The minor exception to this rule is with their suppliers. If they engage in open, mature dialogue with
their supplier, the supplier may be able to direct the operator to take the best possible path. However, if their
relationship is not based on trust, but rather reflects the traditional vendor-telco relationship they should not
partner unless they are sure of their direction.

Figure 20: Knowing When to Partner

Source: STL Partners

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Similarly they should be aware of and know how to partner with a supplier or established company that isn’t
sure what they want from the partnership. If a vendor is not able to articulate a clear vision for a particular
product set or service, the operator should approach the partnership accordingly (as a co-creation activity).
Indeed, operators should think twice about partnering with established players, such as large content players,
unless both parties are clear of what they want (and can achieve) from the relationship – they should not
partner simply because others are partnering in the same space. However, operators may be able to partner
with smaller, start-up companies if they have a clear understanding of what they want from the partnership and
how the partner may be able to bring this about, even if the startup company is unsure of their vision of the
relationship.

The Agile Operator has the skills internally to critically assess new opportunities and form effective
partnerships; they understand the marketplace and can assess the partner’s business model, knowing how
they add value. The Agile Operator adopts an ‘open and ready for partnering’ mindset, creating more equality
with partners and adapting their engagement model accordingly. Through better understanding of both their
own vision and of the partner’s business model the Agile Operator enters partnerships that represent a win-
win for both parties.

Make it Easy for Partners

Interviewees also felt that their processes for dealing with partners were not suitable. Operators often have
standard procurement processes in place for all partners, regardless of size or type of partnership – these can
include: long, legalistic contracts, lengthy negotiation periods, long-payment cycles, liability requirements and
a lack of flexibility in adopting new business models. Whilst some of these strict approaches are necessary for
certain partnerships, they are clearly not relevant, and in fact can be inhibiting, to many partners. As previously
discussed, an Agile Operator needs to understand the business model of the partner. The next step is then to
adopt the right processes, contractual structure and incentives. Operators need to make it as easy and fast as
possible for partners.

The Agile Operator firstly is able to bring the right people to the table from within their organisation to
discussions with a potential partner. They are also flexible enough when they are at the table to make changes
to meet the needs of the partner (as well as their own), allowing a partnership to work without significant
investment. The Agile Operator understands the business model of the partner and adopts the right contractual
structure and risk reward incentive to match the partner’s needs and ambition. In the case where they are
partnering with a smaller business, remuneration could be based on the parts of the service where the partner’s
involvement can clearly be identified.

Sharing risk with the partner and adopting a success-based approach (with no upfront costs) can incentivise
both parties to make the joint product or service work. If the partnership is working the relationship can then
evolve to match how it is growing. These models also afford an operator the opportunity to pursue multiple
partnerships more easily, as there is limited risk upfront.

“We generally don’t know what we want from “Understanding each other’s business models
digital partnerships and forget about being able (is the main barrier). Telcos focus too much on
to support partners in the same position.” their own needs and own plans. There is too
little understanding of the needs of others.”

Head of Technology Strategy – Head of Business Development &

MENA Operator Partnerships – European Operator

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In addition to simplified processes and contracts, the Agile Operator also makes it easy for partners from a
technology standpoint. If you continually have to develop new/different interfaces for each partner then you
are engaging in a customisation process and you are not agile. The Agile Operator has standardised and
defined interfaces for partners, where different partners can plug in. An Agile Operator should also be able to
change partners relatively easily and hence the interfacing needs to be standardised.

Recommended Actions: Become an Effective Partner

Interviewees highlighted that most operators have difficulty when it comes to partnering. Yet, as more and
more 3rd party services are being consumed on devices, becoming an effective partner becomes even more
important. STL recommends that operators:

 Understand & Employ the Right Skills to Assess Potential Partnerships – An Agile Operator
understands that there are many different types of partnership, with different roles for operator and
partner, and that a single model of partnering will no longer work. To partner successfully operators
must have the requisite skills to fully understand and analyse potential partners’ strategies and
assess how they can add value to the partnership.

Key Components of Agility Key Criteria / Example KPIs

Understand Partner’s Undertake strategic analysis of partner; Ability to adopt a new business
Business Model model (to form partnership)

 Track the Performance of the Partnership – The success of the partnership should be evaluated
from a commercial standpoint as well as through an assessment of both parties level of satisfaction
with the partnership. If the relationship or partnership is not working then an operator should retain
the ability to change partners relatively quickly.

Key Components of Agility Key Criteria / Example KPIs

Ability to Evaluate Success of Commercial success of partnership; Grade of satisfaction with the partner;
Partnership Partner satisfaction; Ability/speed to change partner

 Put in Place the Right Processes – Processes need to match the type of partnership. Operators
need to adapt their processes for different types of organisations to ensure that the business
relationship is viable and effective for both parties.

Key Components of Agility Key Criteria / Example KPIs

Ensure Right Processes are in Ease of doing business; Contract templates for different types/sizes of
place partners; Time to Market with Partners; Length of time of Negotiation;
Speed to change partners

 Make it Easy from a Technical Point of View – As partnering becomes more important and central
to operators’ strategies, technical integration needs to be as easy and fast as possible. Operators
cannot develop and customise APIs for every partnership and need to develop a set of standard,
defined APIs that can be readily used by partners.

Key Components of Agility Key Criteria / Example KPIs

Understand Partner’s Speed to onboard partners (technically); Ability/speed to change partner
Business Model (technically); Ability to

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Conclusions
Agility is a concept that resonates with operators, with all 29 interviewees indicating that becoming more agile
is very important to their organisation. Despite differing interpretations of agility, a number of key themes and
interesting conclusions emerged through this research.

Firstly it is worth recapping that whilst a strict definition of agility describes the ability to move and make
decisions quickly and easily, responses typically focused on broader characterisations of agility. To effectively
describe the vision of ‘operator agility’ it must be placed in the context of an operator's overarching strategic
ambition. Simply moving faster and being more flexible conveys little meaning unless you also understand how
operators are seeking to become more agile and to what end.

As the industry is facing increased pressure and competition, operators are seeking to transform. Hence
interviewees typically positioned their interpretation and vision of agility against a backdrop of strategic
transformation. This transformation centres around becoming more streamlined (reducing costs) and on the
ability to offer new services (to grow revenue). Adopting a more agile mindset and approach is necessary in
order to achieve these goals.

This broader interpretation of agility also focused on adjacent themes; becoming both a more intelligent and
customer-centric organisation. These themes further reinforce the context of the ‘Agile Operator’. Analytics
underpinned the discussion around agility and was seen as a key tool to allow smarter (and more automated)
decision-making. Similarly, becoming more agile was viewed as critical to more effectively understand and
address the needs of customers.

To better understand where it is important for operators to become more agile, STL tested and refined a
framework of ‘Operator Agility’. The revised framework outlines 5 key areas where operators need to focus
their agile transformation efforts. Again, whilst interviewees’ visions of agility within each domain differed a
number of key themes were repeatedly identified.

Figure 21: The Telco Agility Framework

Source: STL Partners

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 The ‘Agile Operator’: 5 Key Ways to Meet the Agility Challenge | APRIL 2015

Organisational Agility
A key learning through the discussions with operators was the importance of developing a more agile culture
and organisational structure. Internal culture and processes were seen as key barriers to becoming more agile.
Establishing this agile mindset and culture will lead to closer collaboration between teams, shared knowledge
and faster, localised decision-making, empowering employees across the business to work more flexibly,
efficiently and independently. This in turn will stimulate innovation and allow an operator to move at the speeds
necessary to succeed in today’s competitive marketplace. The vision outlined:

 Places the customer at the centre of their strategy and decision making

 Has simplified internal processes to enable quick decision making

 Fosters an innovation culture, built upon the lean-start up approach

 Measures and evolves, adapting to changes in the marketplace

Network Agility
The network is an operator’s principal asset. Becoming more agile with the network therefore allows an
operator to both improve the service they are offering and reduce costs. Interviewees focused on the future
vision of network transformation, stressing that operators must:

 Embrace Virtualisation – to enable faster and more flexible product & service innovation and
capacity management

 Use Real-Time Analytics – to meet customer experience and capacity needs

 Gear up for the Internet of Things – ensuring infrastructure meets future requirements

Service Agility
The most commonly discussed aspect of agility was reducing time to market for new services. Legacy systems
and structural barriers prevent operators from launching services quickly and as operators face increased
competition from OTT players (who are able to launch new services very rapidly) this concern becomes more
visible and apparent. Additionally interviewees stressed that operators need to learn from the digital and OTT
players, developing products through iterative testing. The Agile Operator adopts the following principles for
new service creation:

 Iterative product creation, placing the customer first

 Reduced time-to-market for new services

 Quick response to the market and to competitors’ offerings

Customer Agility
Understanding the customer and ensuring that they receive the best possible experience were of utmost
importance to interviewees. The majority of interviewees felt that intuitive self-care tools/platforms were the
best (and most cost-effective) way to provide the best possible service. Similarly, interviewees stressed the
importance of analytics to understand usage and customer behaviour to enable the provision of a better service
and to facilitate new service creation.

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Operators must:

 Provide a simple, intuitive & customisable self-care platform

 Use big data analytics to understand customer usage, experience & context

Partnering Agility
Interviewees typically indicated that partnering agility was related to service agility. However in addition to
partnering to provide new services to an operator’s customer, partnering agility also includes the
vendor/supplier relationship. In order to be a successful partner interviewees stressed that operators need to
firstly understand the strategy and business model of a potential partner and then to make sure that they can
adopt the right partnering model. Additionally operators need to ensure that they can adapt processes (e.g.
contracts, NDAs) to suit the type of partnering situation. Becoming a good partner was seen as increasing
important; as more 3rd party services are consumed on the device, interviewees recognise that they will need
to partner. To partner effectively they must:

 Understand a (potential) partner’s business model and adapt accordingly

 Ensure the right processes, contractual structure and incentives are in place

It is clear through the discussions that this agile transformation process is happening now across the industry.
Interviewees recognise that as the industry becomes more competitive they need to adapt and evolve.
Establishing this agile mindset and culture across the organisation and focusing on becoming leaner and more
agile across the key ‘agility domains’ will transform and improve an operator’s business. This agile
transformation will allow ambitious operators to compete successfully in this continually changing marketplace.

The Agility Challenge - Find out how agile you are

STL Partners are running an Agility Challenge, allowing operators to gauge how agile they are.

Operators can self-score across the 5 domains of agility.

Scores will remain confidential and operators will receive an anonymised benchmark of how they compare
against the other Challenge participants.

Click here to enter the Agility Challenge

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 The ‘Agile Operator’: 5 Key Ways to Meet the Agility Challenge | APRIL 2015

About STL Partners and Telco 2.0: Change

the Game
STL Partners delivers original and strategic research, consulting and advisory services for telecoms,
technology and media businesses that seek transformational success in the digital economy. It:

 Helps clients create opportunities, make new connections, deal with threats, and drive strategy, plans
and effective actions.

 Specialises in changing business models, driving innovation and growth, and is the behind ‘Telco 2.0’ –
the leading visionary benchmark for success in Telecoms.

 Key practice areas include: Transformation; Disruptive Strategies in Communications, Content and
Commerce; Cloud and Enterprise ICT; and Future Networks.

To get involved, please call +44 (0) 247 5003 or email [email protected] to engage with us through:

 STL Partners Research, which includes the Telco 2.0 Executive Briefing Service, in-depth streams on
the key practice areas, and the widely read Telco 2.0 industry blog and newsletter

 Bespoke Consulting and analytical services, typically helping clients evaluate opportunities, develop new
propositions and business models, and develop ‘go to market’ strategies.

 Expert and interactive support for specific engagements with key market contacts and new connections.

© STL Partners EXECUTIVE BRIEFING 48