Telecommunications service providers say they are behind in making the significant changes required to survive in a highly competitive marketplace, according to a global survey by Deloitte. Industry leaders acknowledge they must make numerous organizational improvements to keep pace with changing customer needs, new regulatory philosophies and accelerating technologies.
The study, "Waking Up to Competition," finds more than half of those polled believe "significant improvement" is needed in seven critical business processes: revenue assurance, IT management, new product development, business information, customer service, service provisioning and billing/collections. Three-quarters of survey respondents say their existing internal processes make it difficult to react quickly to market demands.
"This survey shows an industry still scrambling to manage extraordinary change," said Phil Asmundson, partner in Deloitte's Global Technology, Media and Telecommunications Group. "Since the 1990s, telecommunications service providers have been pressed to evolve from a static, monopoly model to a more agile, retail- oriented approach. The overall picture is bright for operators who rise to these challenges. But it's become increasingly clear today's telecommunications market is swiftly separating into two kinds of players - the winners and the losers."
Most of the executives surveyed admit their companies face the biggest challenge in the area of customer service, leading to customer churn. This problem is caused in part by an inability to understand customer needs, resulting in poor product and service innovation. Seventy percent of respondents say retaining existing customers and attracting new ones is a key priority, but the survey indicates customer management is being compromised by outdated corporate structures and poor support technology.
The survey identified several important regional differences in priorities for improvement. North American executives were more likely than executives in Europe and the Asia Pacific region to say they needed to do a better job of managing customer information and were less likely to voice concerns about service provisioning.
The survey also shows industry executives anticipate a rapid migration from voice to data products. While 53 percent of executives regard voice as their "most significant" source of revenue today, only 38 percent expect it to be the most significant contributor by 2007, heralding an historic shift for the industry. However, three years may be an unrealistic timeline given the lack of viable revenue models for data products. "These responses may be indicative of an industry unsure of its future direction, rather than the shape of things to come," said Asmundson.
The report includes five key recommendations for telecommunications operators looking to leave the monopoly mindset behind and compete effectively. They include:
- Create a customer-centric enterprise that acts like a retail business at every level.
- Integrate business intelligence into all aspects of the decision-making processes in product development, customer care, and marketing.
- Balance cost cutting with shrewd investments in product development, quality personnel, and customer care.
- Reinvent wisely, focusing on a nimble and efficient response to accelerating change.
- Accept regulatory change and stop using it as an industry bogeyman.
"In the long run, there should be strong and rising demand for telecommunications services, but many service providers are likely to face severe competitive pressures before they can benefit from an upturn," said Asmundson. "Operators must reinvent themselves as true market warriors to fulfill the sector's potential and secure their own future."
Survey Methodology: Based on 60-minute interviews with 108 executives of major telecommunications operating companies in the second quarter of 2003. The survey focused on North America (47 interviews), Europe-Middle East-Africa (31 interviews), Asia Pacific (20 interviews), and Latin America (10 interviews). Qualifying operators had revenues in excess of $500 million. All respondents were key decision makers; 60 percent were CXO level.
The TMT Group has deep industry knowledge of technology, media, and telecommunications companies and the challenges these industries face in areas such as Internet, software, computers, telecommunications and networking, semiconductor and related industries, along with broadcasting and publishing.
Deloitte provides audit, tax, financial advisory services and consulting through nearly 30,000 people in more than 80 U.S. cities.