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- International Journal of Management (IJM)
Volume 7, Issue 1, Jan-Feb 2016, pp. 50-60, Article ID: IJM_07_01_005
Available online at
http://www.iaeme.com/IJM/issues.asp?JType=IJM&VType=7&IType=1
Journal Impact Factor (2016): 8.1920 (Calculated by GISI) www.jifactor.com
ISSN Print: 0976-6502 and ISSN Online: 0976-6510
© IAEME Publication
TELECOMMUNICATIONS BUSINESS
TRANSFORMATION: FRAMEWORK AND
RECOMMENDATIONS
Settapong Malisuwan, Dithdanai Milindavanij and Noppadol Tiamnara
National Broadcasting and Telecommunications Commission (NBTC), Thailand
ABSTRACT
Fueled by the convergence of mobile broadband, the Internet and growing
demand for real-time access to information, technology is disrupting all areas
of businesses. Disruption is strong across all industries and transforming
traditional products and services, including business models. With the rapid
migration to Internet protocol-based services, it is driving pervasive
disruption throughout the mobile industry ecosystem. The mobile industry is
now poised to be the next major disruption. Therefore, telecommunications
business success requires organizations to be more resilient, adaptive and
creative in order to invent new business models and transform their internal
processes. The successful business transformation will directly drive
significant customer and service initiatives and make investment in ICT and
related industries. More importantly, mobile operators are finding themselves
in increasingly intense competition with the Internet-based service providers,
the so-called over-the-top (OTT) players. Faced by increasingly unpredictable
competition, the mobile network operator is confronted with a new threat of
business disruption. To manage this threat, successful mobile network
operators will have to adapt their strategies and transform their business
models to meet a vast array of disruption and new market conditions. The
objectives of this paper are to study the transformation of mobile businesses
and propose a transformation framework to help a mobile network operator to
implement the successful transformation. To achieve the objectives of the
research, this paper uses both primary and secondary qualitative data to
create the business transformation framework and strategy.
Key word: Telecommunications, Business, Transformation, Mobile,
Framework, Strategy
Cite this Article: Settapong Malisuwan, Dithdanai Milindavanij and
Noppadol Tiamnara. Telecommunications Business Transformation:
Framework and Recommendations. International Journal of Management,
7(1), 2016, pp. 50-60.
http://www.iaeme.com/IJM/issues.asp?JType=IJM&VType=7&IType=1
http://www.iaeme.com/IJM/index.asp 50 editor@iaeme.com
- Telecommunications Business Transformation: Framework And Recommendations
1. INTRODUCTION
By the end of 2016, the study in [1] predicted that smartphone subscribers will
increase over 46% of the global population, significantly driven by a major adoption
in Africa and Asia. More than 4.8 billion people globally will use a mobile phone and
consumers will utilize more streaming and on-demand services on mobile devices.
Mobile data traffic has grown exponentially in the past five years and there is still far
more growth in the future [2]. The growing usage of video-on-demand services and
other rich multimedia content is going to rise the mobile data traffic and continuing to
grow dramatically for the rest of this decade [3]. Forecasts of annual global mobile
data traffic by several researches are illustrated in Fig.1.
Figure 1 Annual global mobile data traffic (in Exabytes)
Source: GSMA
Today, mobile network operators are finding themselves in increasingly intense
competition with the Internet-based service providers, the so-called over-the-top
(OTT) players. The OTT service providers are small and large corporations such as
Google, Microsoft, Facebook, Amazon, YouTube, or Line. They have been very fast
in matching telecommunications ecosystem in terms of services and revenue over and
bypassing the mobile network companies. The OTT service providers have
successfully managed to position themselves worldwide in various services through
the Internet such as gaming, on-demand and streaming services, cloud-based
management, video, and messaging [4]. However, revenue and traffic of the mobile
network operators are unbalanced in an increasingly data-dominant services as shown
in Fig.2 [5]. Indicated in [6], the paper reported that streaming video is already
growing over 50% of total traffic.
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- Settapong Malisuwan, Dithdanai Milindavanij and Noppadol Tiamnara
Figure 2 Revenue and traffic are disassociated in an increasingly data-dominant world
Source: Nokia-Siemens; IBM Institute for Business Value analysis
Digital disruption innovates rapidly and radically changes market share. For an
example, WhatsApp’s severe impact on the global text messaging market makes a
powerful lesson for the mobile industry (see Fig.3). WhatsApp was bought by
Facebook in 2014. However, Facebook is not only making the disruption on the
telecommunications industry. The company is extending the service to the person-to-
person (P2P) payments via Facebook Messenger to WhatsApp’s 800 million users [7].
Figure 3 How WhatsApp Disrupted an Industry
To achieve the objectives of this research, this paper is organized as follows.
Section 2 explains the research methodology. A review of business transformation
including key drivers to achieve a successful implementation is presented in section 3.
Results of the research and discussion are described in section 4. The conclusion is
provided in the last section.
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- Telecommunications Business Transformation: Framework And Recommendations
2. RESEARCH METHODOLOGY
The objectives of this research are to propose the Business Transformation
Framework and provide recommendations to develop a business model of an efficient
mobile network operator. It is intended as a quality research based on in-depth
interviews and supported by inputs of secondary data culled from academic papers,
business and best-practices reports made by respectable reference sources. Its primary
data will come from in-depth interviews of distinguished experts in related fields
under the following research framework as illustrated by Fig.4.
Figure 4 Research framework
The respondent profiles of our subject matter experts are shown in Table 1. We
classified subject matter experts into four categories depending on their area of
expertise in Telecommunications, Economics, Strategic Management, and Marketing.
The total number of subject matter experts or respondents is 12 with 3 from each key
focus area.
Table 1 Interviewing experts and key focus
Area of expertise Numbers
Telecommunications 3
Economics 3
Strategic Management 3
Marketing 3
Inputs from the in-depth interviews will be processed and analyzed together with
secondary data which will be summarized into a preliminary draft conclusion to be
forwarded to the 12 experts for further comments with an intention of streamlining
them into a shared common direction. The version assessed and scrutinized by the 12
experts will then be adopted as a basis for formulating a business transformation
framework with a guideline for implementing key points to ensure efficient and
successful transformation for the mobile network operator.
3. TRANSFORMATION OF MIBILE BUSINESSES
The digital services are increasingly integrating cross-industry applications, services,
and business models. Innovative digital services based on mobile connectivity, social
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- Settapong Malisuwan, Dithdanai Milindavanij and Noppadol Tiamnara
media, OTT services and big data are driving consumer demand, creating job
opportunities and making the national economy more competitive [8]. Mobile
network operators will benefit from having an opportunity to expand their function in
the value chain [9].
To gain sustainable competitive advantages and drive growth, mobile network
operators need to transform their traditional business model by replacing a new
generation of network services with open and agile digital platforms [10]. This change
includes interacting with customers; monetizing network assets; innovating new
services; and creating new value chains [11].
Partnership, network capability, and flexibility will become key success factors
for the new business model of mobile network operators. The operators need
capabilities to co-create new services and share revenues with their partners and adapt
to their customer requirements. If customer requirements on a market disruption, an
operator must be able to shift to another market and develop a new service strategy.
The operators must act quickly and sustainably to take advantage of any opportunities
which arise [12]. Fig.5 shows the framework of positioning opportunities for
telecommunications companies which is explained in detail in [12].
Figure 5 Positioning opportunities for telecommunications companies
Source: Detecon
As referred to the reference [13], there are three drivers that must be considered
for network transformation, cost efficiency, customer experience, and business
innovation as shown in Table 2. To be successful therefore, operators must leverage
upon their cost, customer and innovation to drive competitive differentiation in
established markets and position for extending beyond traditional mobile operator
boundaries to embrace new markets and industries.
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- Telecommunications Business Transformation: Framework And Recommendations
Table 2 Three drivers for network transformation
Driver Actions/Solutions
Run a financial analysis and make decisions on reorganization
Cost Implement PLM/GTM to launch new P/S efficiently
Efficiency Network redesign (core, transport, access, NOC)
Systems optimization, convergence, migration
Network upgrade/modernization
Customer Customer experience model implementation
Experience Loyalty and churn
Operational excellence
Develop new business models/marketing strategy product catalog
Implement data mart, analyze usage information, implement up-selling, cross-
Business
selling, and customized marketing actions and promotions
Innovation
Simplify network and operations, enhancing flexibility, scalability and
reducing technology dependency.
In this paper, we adopt the theory of enterprise transformation from the research in
[14]. The transformation in [14] is addressed as following:
"Transformation is driven by value deficiencies and involves examining and
changing work processes. This examination involves consideration of how changes
are likely to affect future states of the enterprise. Potential impacts on enterprise states
are assessed in terms of value consequences. Projected consequences can, and should,
influence how investments of attention and resources are allocated. The problem
solving and decision making abilities of management, as well as the social context,
influence how and how well all of this happens." The transformation framework from
[14] can be demostrated in Fig.6
Figure 6 The transformation framework defined by [14]
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- Settapong Malisuwan, Dithdanai Milindavanij and Noppadol Tiamnara
Table 3 summarizes the relationships among initiatives in six thrust areas with the
state, work, value, and input constructs defined above. The detail of the relationships
of initiatives to Enterprise Model is explained in the reference [15].
Table 3 Relationships of Initiatives to Enterprise Model
Enterprise Work Enterprise Enterprise
Input Processes State Output
Transformation
How to represent, manipulate, optimize, and portray input, work, state,
Method &
output, and value for the past, present, and future of the enterprise.
Tools
Emerging How emerging enterprise technologies are likely to
Enterprise impact work, state and output, and the strategy/policy
Technologies implications of these impacts.
Organizational How work processes affect state
and the experience of the state of
Simulation and enterprise
How
Investment Affect value
investments of
generated, e.g.,
Valuation financial
options created
resources
Organizational How value priorities drive work processes, affect
Culture & organizational culture and change, and thereby
Change influence state and output
Best Practices How past and current approaches to and changes of input, work, state, and
output have impacted subsequent enterprise value creation, for better or
Research worse.
4. RESULT AND DISCUSSION
After collecting and analyzing data from the interviews to create a transformation
framework to achieve the objectives of the paper with a guideline on strategy and
implementation that will contribute to following results:
A. Transformation Framework
The result of the research conducted in accordance with the methodology detailed in
Section 2 shows that almost all experts agreed to adopt the internationally and
academically accepted principles dealing with enterprise transformation referred in
[14]. Furthermore, the process of the 10-step implementation from [16] will be
applied in the proposed framework. Accordingly, the research results will help us
propose a transformation framework as illustrated in Fig.7
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- Telecommunications Business Transformation: Framework And Recommendations
Figure 7 The proposed transformation framework
The proposed framework composes of four key inputs that enable companies to
align their digital transformation efforts under architecture vision, business
architecture, mobile architecture, and IT architecture. A clear vision helps to frame in
people’s understanding a picture of how the company will transform in the future.
One of the major components to drive the transformation is 'Monitor digital
behaviors and develop customer adoption' which the mechanism of the component
can be demonstrated in Fig.8. This component deals with the integration and
interaction between operational processes and customer-facing processes. We adopted
this model from the reference [17].
Figure 8 Monitor digital behaviors and develop customer adoption
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- Settapong Malisuwan, Dithdanai Milindavanij and Noppadol Tiamnara
B. Recommendations and Discussions
A variety of credible secondary sources are applied in this research focusing on
evidence-based approach. The results of analysis from these sources are concluded as
following:
1. Mobile network operators need to redefine strategies for diversifying their
services while improving their network cost structures. As well as seeking new
profitable revenue opportunities, they need to create more parties becoming
involved in the service delivery value chain. To innovate their service
delivery, operators will need to transform their legacy infrastructure to flexible
network and open IT infrastructure [18]. At the same time, more and more
parties are involved in the end-to-end service delivery chain.
2. Moving to an all-IP LTE network enables operators to create flexible and
simplified networks, which reduces cost, decreases latency, and improves
reliability. LTE is important for operators for two main reasons then. First, it
will increase the e ciency of their entire network. Second, it will make their
operations easier and less expensive to manage. LTE changes the
telecommunications ecosystem on two main reasons. First, LTE and LTE-A
increase spectral efficiency of the mobile network. Second, it will make their
operations easier and less expensive to upgrade and manage.
3. Mobile, social network, Big Data, Analytics and cloud technologies interact
with each other, thus creating the innovative services for operators and will
enable customers cost effectively [19]. As mobile network operators have
evolved using an integration of these technologies, platforms, vendors, and
standards, their transformation now requires a variety of capabilities,
expertise, knowledge and skills.
4. The pressure is on mobile network operators to establish new sustainable
business models and revenue streams to improve their position in the content-
to-consumer value chain, create a more profit from escalating over-the-top
(OTT) video traffic. Mobile network operators are focusing to play a role on
OTT players to determine whether to compete or co-operate that goes beyond
carrying the data stream. There are four approaches to developing a content
strategy as following [20]:
Retail content portal: Manage for content through relationships with
producers; host and deliver it to consumers subject to pay-per-view) or
sponsorship (advertising).
Content host: In this strategy, the network operator depends on other
companies to obtain content for distribution, fulfill retail relationships or both.
The network operator acts as a provider of a Content Delivery Network
(CDN). This way can be considered as monetization strategy.
Critical adjunct services for content delivery: This strategy focuses on content
policy management and parental control. The services in this category include
identity management, digital right management, location-based services.
Premium paths for content delivery to consumers: The services in this strategy
offer expedited delivery or special Quality-of-Service (QoS) to content as an
extra-cost option, paid either by consumers or content providers.
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- Telecommunications Business Transformation: Framework And Recommendations
The type of a content strategy and model is defined by various factors, but the
most significant are regulatory requirements set by the jurisdictions where carriers
operate.
5. CONCLUSION
Mobile Broadband Internet is the key driver to create digital transformation.
Telecommunications business helps to integrate different industries together and
create new value chains and opportunities that traditional businesses cannot offer. As
Mobile Internet advancement continues to eliminate the distance and time barriers,
markets will emerge, develop and be disrupted faster than ever before. The battle for
mobile industry will drive technology convergence and redefine the ICT landscape.
Mobile network operators are transforming their current infrastructure, operations and
businesses to dominate their competitors and survive in the ICT industry. Innovation,
harmonization, and customer focus are key elements of transformation.
Transformation is fundamentally about change, related to people, processes,
strategies, structures, and competitive dynamics . In this paper, a review of business
transformation including key drivers to achieve a successful implementation is
presented. The proposed transformation framework for a mobile network operator
presented in this research is based on the theory of enterprise transformation which is
explained in details. Recommendations in some important aspects are described in
this research.
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