'Transopetition' in the making

Tony Poulos
19 Jun 2012

The idea that transformation projects are simply one-off events designed to modernize or update legacy internal processes is daft. It would be like updating a mobile network to 3G then resting while competitors forge into the 3.5G and 4G worlds.

Nonetheless, some operators have embarked on transformation projects without clear progression plans after the first is completed. Is it because they fear the wrath of shareholders and board members who see continuous outflow of capital, or their own nervousness at making long-term plans?

It takes considerable guts and fortitude for CEOs, despite coming through long and costly transformation processes, to stand up and say‚ “enough is not enough”. The need to keep moving forward in highly competitive markets may be the driver, but it is just as likely that cost reduction and optimization of resources are the real reasons.

Nobody willingly takes on transformation of any description if the benefit does not outweigh, in the longer term, the cost and disruption it generates. Despite the best-laid plans, it is probably fair to say that no telco has experienced a trouble-free transformation, either, but once embarked on, there is usually no turning back.

A number of CSPs have even experienced a slip in market share and depleted share prices after announcing big transformation projects. Strangely, the reverse occurs when they announce massive layoffs or outsourcing contracts that presumably reduce capex and opex, but do not necessarily equate to long-term operating improvements. The press is often less friendly, many dismissing transformation announcements as no more than an endless series of expenditure exercises that appear to have become the norm for the broader telecom industry. These are the same people that revel in writing about bill shock, and the very same to report horrible customer experience stories that transformations are specifically trying to address.

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