The CIO’s role in the future of telecommunications

By Roberta Prescott


The role of chief information officers is changing globally in all industries. As information has become the “new oil,” CIOs have started to lead their companies toward a better understanding of their clients, services and the company itself.

With CIOs positioned at the nexus of the information flowing into and out of the company, it’s natural that they lead corporations’ transformation into more digital, mobile and cloud-based businesses as well as introducing other new technologies and helping their companies benefit from big data.

The situation is no different for CIOs at telecom operators. As carriers face increased competition not only from other telecom operators but also from over-the top players, CIOs are in the position to help communication service providers become more competitive, understand their customers better, increase revenue and reduce operational costs. These tasks all fit the CIO role. In addition, since they manage applications, network systems, corporate systems and a mobile workforce, among other things, CIOs should have a seat at the strategy table, as operators work to define and implement plans to defend revenue, profit and subscribers from traditional service providers and OTT players.

While it differs widely by telecom operator, Ovum principal analyst Mike Sapien said that increasingly the CIO is being asked to move from acting as a cost center to providing strategic direction for technology introduction and innovation as well as expanding the utility of telco assets with third-parties including back-office functions (e.g., billing and contact centers). Courtney Munroe, IDC’s VP for worldwide telecommunications, mobility and network infrastructure, said that many CIOs are already at the strategy table. “For example, in the [United States], I’m seeing some of the largest service providers saying: ‘OK, we are going to have the CIO or even CTO driving product development, driving transformation, improving time to market and helping carriers be more efficient in terms of how they create more innovative services,” Munroe said. The CIO of Telefónica Group, Phil Jordan, said that while historically CIOs haven’t played strategic roles, that is changing. “IT was for too long a poor relation to the network, and in many telcos, IT was led by people with a network leadership background,” Jordan said. “I am pleased to say that this has changed now. Excellent IT professionals occupy the top jobs in most telcos, and now is our time.” The change is happening. As telcos look at new digital services and focus on date and analytics, CIOs are starting to take on stronger roles, and they are no longer seen as supporting, but as co-delivering the business. “CIOs are playing a critical role in developing and delivering new services,” said Neil Osmond, research director in Gartner’s CSP technology organization. However, he noted that the strength of the CIO’s role depends on the operator. “Digital content and data have a whole new range in the BSS and OSS,” Osmond said. “New services require new developments.

As telecommunication operators face increasing competition not only from other carriers but also from over-the-top players, chief information officers are helping their companies become more competitive. As telecommunication companies have started looking at new digital services and focusing on data and analytics, the role of CIOs has become more central. They are no longer seen as simply supporting the business, but helping to deliver it. Raimondo Zizza, CIO of Brazilian operator TIM Brasil, which is owned by Telecom Italia, said that CIOs are challenged to make their area as strategic as possible for the company. For this, he added, IT leaders must address actions that combine innovation and technology. “Innovation depends not just on creativity but on knowledge, on understanding concepts and implementing innovation processes,” he said. Defining the CIO’s new role Among carriers, the CIO’s new role follows the transformation that is happening across all industries. The CIO is moving from being the “go to” person for the IT infrastructure to a strategic position that helps address the impact of cloud computing, virtualization, mobility and the ICT convergence to IP platform. “For telcos, as they face competition from OTT players, [the CIO’s] role is to make sure the telecom remains relevant. OTTs don’t have the legacy and don’t face the regulation demands that carriers do,” said IDC’s Munroe. The CIO’s tasks include not only helping carriers maintain a high level of service to meet competition, but also evolving and transforming IT for internal and external users. Indeed, IT transformation is critical for the carriers’ change to digital services. “CIOs can help telcos both become more open and innovative by encouraging new technologies and developments that allow new service alliances, customer interactions and third-parties to leverage the telco assets,” said Ovum’s Sapien.

“This can be as simple as integrating / testing the mobile network with new services to allowing third-parties to test the interfaces into the telco for improved customer care or billing features.” TIM’s Zizza also noted that IT professionals have a different background, which includes more than technology skills. Being up to date on new trends is key, but CIOs must have expertise in other areas such as contract management, procurement, process and project management as well as the financial skills to manage the IT budget. Currently, telecom operators are looking at three main priorities: business growth, reducing costs to gain operational efficiency and attracting returning customers. To address these needs, Gartner’s Osmond said that telcos should adopt business intelligence and analytics solutions to monetize the information they already have and the data they can store. Osmond pointed to examples of software as a service under a cloud implementation model and solutions focused on customer experience, such as customer relationship management. This scenario seems exciting for those inside IT organizations at telecom operations. The CIO of Telefónica Group is one example. In Jordan’s opinion, there has never been a better time to work in IT at a telco. “In an increasingly competitive landscape, tough market conditions and the opening of the new digital economy, I believe the whole industry has realized that future differentiation will come from multi-channel sales and service, an ability to understand customers through data and insight, and to be the best aggregator of digital experiences – this is all about IT,” Jordan said. CIOs have always been executives that see the business end-to-end. Now, CIOs will be increasingly central to change leadership and strategy definition for telcos.

“Cost optimized operation, delivering enhanced and consistent customer experiences in the channels, on the bill, through the use of products and services, or as a change leader ensuring that telcos can exploit their customer relationship in this increasingly digital world. IT and IT leadership is critical,” Jordan explained.

The whole telecom industry is at an inflection point, according to Grant Seiffert, president of the Telecommunications Industry Association. “We are becoming more crucial in the global economy because we enable all services,” Seiffert said. “Whether in healthcare or transportation, our technologies are helping to transform or reform other industries.” The huge change brought about by such advances as big data, telecom analytics, cloud computing, social media and mobile technology, has created tough challenges but it has also presented great opportunities. “Information and data are helping carriers to make decisions, and CIOs are the ones who analyze information, so they should be looking at the value chain of services,” said Seiffert. “Their role is to understand by analyzing what the competition is doing, what is going to drive consumer behavior, and how they’re provisioning services.”

Ovum’s Sapien also pointed to big data as a strategic area for CIOs. “There are so many new technology trends in telecommunications, and with the convergence of IT and telecom, CIOs need to be at the strategy level to assess and make some critical business decisions,” he said. “The amount of data that a telco has with multiple systems and disparate departments requires a major effort to consolidate the information that telcos generate and have internally,” Sapien added. “Then, making the critical decisions about how to mine this information, prioritize its value, and monetize this data is one of the major issues for telcos today.” A June survey from Informa Telecoms & Media conducted with approximately 120 operators showed that 48% of carriers are already implementing big data projects. Although this percentage is high, the consultant firm noted that the lack of clear business propositions and skilled teams are still major barriers. In the short-term, big data solutions are expected to focus on solving internal challenges, such as improving data warehousing, increasing loyalty and managing the customer experience. Informa stated that operators are in a good position to generate new opportunities with the data collected daily through their different customer touch-points, including their network. Julio Puschel, the study’s co-author, said that it makes sense for operators to use big data to understand key challenges and improve customer experience. He mentioned optimizing processes and improving quality of services as examples of how telcos can benefit from big data and find new business opportunities. The Informa study also found that 58% of operators believe that the main long-term driver for big data will be generating new business models. Seventy-two percent of current big data implementations are focused on specific business applications rather than endto-end solutions. Operators also said that big data currently represents 10% on average of their total IT budget. This percentage is expected to increase to approximately 23% in the next five years.

Technology trends and challenges ahead However, nothing can be done without overcoming challenges. Telecom CIOs have to keep the business running while implementing new technologies and supporting the launch of new services and offerings. The time-to-market in the telecommunications industry is crucial.

Sprint’s CIO, Peter Campbell, said that telcos are competing in a market based on capability. “If you want to win, you need to respond quickly,” he said.

According to Campbell, the biggest challenge for IT executives is the competitive environment, the need to be ahead of the competition, and for that, time-to-market and agility are essential. Dealing with legacy is another concern.

While CIOs phase out legacy technologies, turning off many older services and supporting systems, and defining endof- life management, they must also keep= system agility up, supporting innovation and implementing cloud services.

Security, mobile access and data privacy are also major challenges. In addition, CIOs need to prioritize the data they are capturing, which can have a very large volume. Having a process to do this is among the CIOs’ greatest concerns. They have to create a strategy to capture, store, analyze and transform raw data into valuable information that can positively impact the business. Telecom analytics tools are emerging as a trending technology, as carriers look to address big data and provide better (and more personalized) offerings for their customers.

Great challenges also come along with constant demand of continuing to implement a more efficient cost structure. CIOs will always be asked to reduce cost. For the Telefónica Group, the biggest challenge is to transform the Spanish telecom giant from a traditional communications provider to a digital telecommunications company. “IT is at the heart of this transformation, and it requires major skills as well as culture and mindset change for the IT function, a journey which is underway,” Jordan said.

Source: Sprint

Sprint CIO Peter Campbell

What are the technologies that will help communications service providers meet current needs and the challenges of the future? According to Gartner, CSPs are actively considering deployment of a new breed of IT-centric services that involve the use of data, analytics and digital content. CIOs will need to transform business-only, support IT to effectively deliver customer-facing digital services. To transform CSPs into diversified service providers, Gartner said that CIOs must harvest business value from existing networks, IT and information assets, and hunt for new 2013, CIO’s IT budgets were projected to be slightly down with a weighted global average decline of .5%. Cloud computing, mobile and software-defined networking are top trends that will impact telecom operators in the coming years, according to Ovum’s Sapien. IDC’s Munroe added implementing technologies to increase capacity and security to the list. “[They need] to have greater management of the mobile segment,” he said. “With the advance of LTE, basically, they have more capacity and bandwidth for users.” Telefónica’s CIO said that clearly, telcos are taking a leadership position in driving the world of mobile, social and cloud in all industries. “But we feel the same opportunity in our business,” Jordan said. “I would add the nascent technologies that are being captured under the term big data as a key trend.” Indeed, telecom operators have always been big data companies.

• 48% of carriers are already implementing big data.

• 58% of operators agree that the main long-term driver for big data will be generating new business models.

• 72% of current big data implementations are focused on specific business applications rather than on end-to-end solutions.

• Operators said that big data currently represents 10% on average of their total IT budget, which is expected to increase to approximately 23% in five years. Adoption of big data solutions

“The opportunities using digital services. To drive new revenue, CIO offices must acquire new skill sets to align IT to business strategies. Gartner conducted a worldwide survey in the fourth quarter of 2012, including 2,053 CIOs, representing more than $230 billion in CIO IT budgets and covering 36 industries in 41 countries. The survey found that analytics, business intelligence and cloud computing (SaaS,

IaaS, PaaS) were ranked as the top three technology priorities. Gartner’s Osmond said that among carriers, the top technologies are quite similar to other enterprises.

According to the Gartner survey, over the last 18 months, digital technologies – including mobile, analytics, big data, social and cloud – have reached a tipping point with business executives. The survey also showed that CIO’s IT budgets have been flat to negative ever since the “dot-com” bust of 2002.

Source: Informa Telecoms & Media

For transformation we are making now is to use all that data in the most customer sensitive and driven way to enhance our products and services,” Jordan added. Efforts to capture information using the cloud, understand and store it are changing business models, noted TIA president Seiffert. “Companies that have come to the market are reinventing the Internet and how it is provisioned to consumers,” he pointed out Seiffert also recognized big data as an opportunity, saying that CIOs have a very strategic job to do, looking at trends and creating opportunities to position carriers in the marketplace. Christiane Edington, the CIO of Telefónica’s Brazilian unit Vivo, added more challenges to the above list: softwareas- a-service (SaaS) for critical applications aimed at reducing time-to-market; server virtualization; and storage virtualization. “Currently, 55% of our servers are virtualized, and we started to work following this same line with storage,” she said.

Some additional challenges that CIOs are looking at include: fostering real-time analytics solutions; reducing time-tomarket; bringing more innovation to the company; and improving the integration of systems, and as consequence, products.

Mobile development is also on the radar. Sprint’s Campbell noted that putting more capabilities on the phones and tablets helps telecoms interface with customers. From an enterprise perspective, the mobilization of IT and the cloud environment could help customers. Big data, social, cloud computing and mobility are competitive areas currently, and all have a foundation in IT. CIOs are evolving. The world seems to be more complex now with multiple environments, over-the-top players, and the role of IT leaders is partly to simplify this complexity and make everything

work together. Telecom projects The priorities of telecom CIOs are related to business applications, business intelligence, analytics, customer service support systems, centralizing the billing systems and the convergence of Internet protocol.

While CIOs work to deliver applications and innovation, they are also asked to be as cost effective as possible. Looking ahead, IT leaders from communications service providers need to be aware of the shifts brought by new technologies – and they will be requested to provide insights on how carriers should provide strategic plans and new services to be launched based on them. This may involve changes to the infrastructure layer to fit new demands. In addition, just like CIOs from other industries, telecom IT leaders must be informed of new technologies and how they affect the telecom business, so they can provision technology replacement and work to address skill shortages of both newer and older technology.

“CIOs will struggle to manage the change of cloud services and software-defined networking enabled enhancements as they will both put a strain on internal IT resources, budget and skill levels,” said Ovum’s Sapien. Machine-to-machine and the

“Internet-of-things” are also trends that CIOs should pay attention to because they will impact several aspects of the telecommunications industry, and the IT organization within it. As IDC’s Munroe pointed out, CIOs need to figure out how to manage all devices and what carriers can do with the large amount of data.

The key challenge is, basically, how to use the information to make money.

“Currently, the world is generating much more data and at a very high speed.

… The traditional computer technologies cannot handle and get value from this information explosion,” said TIM CIO Zizza. “We’re watching the evolution of big data closely, and we believe that this will allow us to use 90% of the data that are currently not adequately explored. Big data is a concept that brings great benefits: the potential for new discoveries that can lead to a competitive advantage, flexibility and the ease to explore information processing capacity and high volume of unstructured data.” Zizza cited OSS and BSS as among the most important IT projects conducted recently by TIM Brasil. “In 2012, with Amdocs [platform], we reduced risk and obtained a smooth entry into production of critical systems through a single point of responsibility,” he said. “With that, we limited the impact on teams of support and systems.”

Ongoing projects

When asked about recent important IT projects, the Sprint’s Campbell said that over the last two to three years the carrier has focused on its Network Vision upgrade to an LTE environment. “IT is a key part for supporting our network team to build it out,” Campbell said. “It’s one of our key priorities because it’s a way to compete in the marketplace.” In addition, the IT organization of the U.S.-based carrier, which was recently acquired by Japan’s Softbank, is also focusing on improvements to its customer care platform, providing a better customer experience. Sprint’s IT team is also working on supporting new revenue opportunities, such as mobile advertising, cloud and M2M services. “We are leveraging the IT platform for new revenue opportunities,” Campbell said.  Simplification, consolidation and integration are among Telefónica Group’s top projects. As the group’s CIO explained, the telecom operator is passing through a business transformation that is redefining Telefónica as a digital telco. “We continue to break new ground in many markets with market leading propositions, and I am very proud of all our projects which have created world class, global data center capability in the Telefónica Group,” Jordan said. Vivo CIO Edington, said that this business transformation also affects local operations. She is conducting a three-year strategic plan at Vivo that will last until 2015, which is expected to include about 35 projects, apart from the IT department’s routine and daily demands. There is a synergy between headquarters and subsidiaries, according to Edington. Brazil along with Spain will be the first to roll out this IT transformation. Telefónica’s Vivo has chosen to begin with updates and enhancements on those systems that attend to customers’ demands, which include improving all solutions that affect telco clients, such as CRM software, billing systems and workforce management. “We aim at convergence, to look at our customers of different products as unique,” Edington said. Looking ahead, Telefónica’s Jordan said that IT projects will continue to be at the heart of the company’s strategic efforts to become a digital telco. “This will mean more projects in the areas of cloud, consolidation, application transformation and simplification,” he said. “But most importantly, we will continue to invest in delivering a better customer experience, using our knowledge of customers to improve products and services.”