HowTo Transform To A Digital Business - Web

C-SUITE
HOW TO
GUIDE
TRANSFORMING
TO A DIGITAL
BUSINESS
ABOUT THE AUTHOR
DR. JIM METZLER
Dr. Jim Metzler has a long history in the networking
industry, including creating software tools to design
customer networks for a major network operator, working
as an engineering manager for data services for a different
operator, being a product manager for network hardware,
managing networks at two Global 2000 companies,
performing market research at a major industry analyst
firm and running a consulting organization. His current
interests include application delivery, software-defined
networking (SDN) and business transformation. In
December 2013 Dr. Metzler published an e-book entitled,
The 2013 Guide to Network Virtualization and SDN.
He also runs a one-day workshop on SDN & network
virtualization at the Interop conferences in the U.S.
C-SUITE
HOW TO
GUIDE
TRANSFORMING
TO A DIGITAL
BUSINESS
First published in Great Britain in 2014 by
TM Forum
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Copyright © 2014 TBC

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ISBN 978-1-939303-51-6
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of any material in this publication can be accepted by the author or publisher.
Views expressed in the publication are not necessarily those of TM Forum.
TRADEMARKS
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CONTENTS
Foreword 4
Chapter 1 6
What is a digital business and why transform to one?
Chapter 2 18
What are your options and how long have you got?
Chapter 3 32
Introducing business agility and rapid innovation
Chapter 4 42
Operational agility and effectiveness
Chapter 5 54
The customer is the business
Chapter 6 62
Exploiting IT, becoming data centric
Chapter 7 70
Leadership and managing the cultural shift
Chapter 8 80
Steps to take now
FOREWORD
FOREWORD
This isn’t yet another book outlining how the digital revolution is
fundamentally changing everything, although that’s true. It’s a pragmatic
guide, for the CEO and team, about what you can do to ride the digital wave
instead of drowning in it – and, most importantly, how to do it.
The companies that succeed in the digital economy will be customer-centric,

nimble, flexible and innovative. This how-to guide is the first in a series
that TM Forum is producing to help companies thrive in the global digital
economy. They will be ‘living’ documents – in print and digitally – added to
over time, bursting with recommendations and examples drawn from real-life
success stories of transformation in action.
Becoming a digital business isn’t simply about getting new products to

market faster; it’s about building for the future by changing the way the
business is run. That allows you to satisfy customers’ shifting expectations
without major upheaval, delays, and hugely expensive customization and
integration. A big part of being able to move fast, while keeping cost and risk
to the minimum, is about adopting and adapting tried and tested tools and
best practices instead of constantly reinventing the wheel.
A companion title to this guide, designed to help C-suite executives, is the

also just-published Becoming an agile business. We will publish additional
guides for senior executives looking at how to make your business
information-driven and customer-centric, and how to create new digital
revenue streams later this year.
4 TRANSFORMING TO A DIGITAL BUSINESS

FOREWORD
All the guides offer pragmatic steps you can take today – and there are many.
We offer many proven tools and best practices you can adopt and adapt,
developed and evolved by TM Forum’s unique Collaboration Community. Here
professionals from many different segments form workgroups to address
specific business issues. Our tools and best practices are constantly updated to
meet market needs and implemented all over the world.
In this guide, we identify key concepts and issues relative to a digital

transformation, based in part on TM Forum’s extensive research and in part on
the research performed by organizations such as Capgemini Consulting, the
Massachusetts Institute of Technology (MIT) Sloan School of Management
and McKinsey & Company, as well as reports and white papers written by
companies such as AT&T. We are also most grateful to Duarte Begonha,
partner at McKinsey & Company, for his and the company’s support.
Several TM Forum members and friends of the Forum kindly agreed to be

interviewed for this guide. They include: Pierre Blanchard, Head of Capgemini
Telecom Practice; Evžen Chlanda, Product and Services Director, Telefónica
O2 Czech Republic; Dr. Qian Chang, China Mobile; Scott Gegenheimer, Group
CEO, Zain; Monte Hong, former Managing Director, Communications Industry,
Accenture; Albert Hitchcock, Group CIO Pearson plc and former Group CIO,
Vodafone; Erik Hoving, Group Chief Technology Officer, KPN; Phil Jordan, Group
CIO, Telefónica; Ilker Kuruöz, Chief Technology Group Officer, Turkcell; David
Moffatt, former CEO, Lebara Group, and former Chief Financial Officer, Telstra;
Wu Choy Peng, Group Chief Information Officer, SingTel; Steffen Roehn, former
CIO, Deutsche Telekom; Peter Sany, Chief Information & Technology Officer,
Swiss Life; Ben Verwaayen, former CEO, Alcatel-Lucent and BT; Pascal Vignier,
Group CIO, Orange; and Neil Ward, Vice President and General Manager, Global
Business Operations, Skype. Many thanks to all of you for your time and insight.
We hope you find these guides enjoyable to read and useful for your
business. We welcome your comments.
Keith Willetts
Founder, TM Forum
TRANSFORMING TO A DIGITAL BUSINESS 5

#1.
WHAT IS
A DIGITAL
BUSINESS AND
WHY TRANSFORM
TO ONE?
WHAT IS A DIGITAL BUSINESS AND WHY TRANSFORM TO ONE?
The average lifespan of a Standard & Poor’s (S&P) 500 company has
decreased by more than 50 years in the last century, from 67 years in the
1920s to just 15 years today. By 2020, more than three-quarters of the S&P
500 will be companies no one has heard of yet1. And you can bet most of them
will have a huge digital component, if not entirely built on a digital model.
The term ‘digital business’ is relatively new, has no universally accepted

definition and continues to evolve. It used to describe native digital
businesses like Amazon, Facebook and Google. Now it means any
business that creates competitive advantage by leveraging innovative digital
technologies and has a digital ‘mindset’ regarding its customer interaction,
operations and business models.
CEOs must transform their businesses by taking advantage of the

opportunities and defending against the challenges of digitization.
CEOs are recognizing that their companies must transform into digital
businesses quickly, which means convincing all the stakeholders, who
include the company’s board and senior management team, employees,
customers, suppliers and investors. Here are three key drivers, as outlined by
Ben Verwaayen, former CEO of both Alcatel-Lucent and BT:
n Digital channels are quickly becoming the number one way people want
to interact with businesses.
n Costs are dramatically lower in a digital environment than an analog one.

n Bringing together the various parts of an organization in a customer-

centric approach is only possible if the information streams are aligned,
which will drive the digitization of the whole process.
Put another way, digital businesses can create competitive advantage

through:
n Information availability – harnessing big data and analytical techniques

to better understand customers’ needs and behavior to make smarter
decisions about products, pricing, positioning and so on.
n Innovative processes and technology – to create, produce and deliver

new products and services.
n Global reach to new markets – that otherwise would be too costly to

serve.
Harnessing technology is an elementary part of digital transformation, but

only the nuts and bolts. An understanding of customers and serving them
really well is at the heart of digital businesses – just look who the success
stories are – and their whole organizations are built around it. They offer easy
access to their products and services, which are designed from the ground
up with the customer in mind. They are easy to deal with and build fanatical
loyalty in some cases – Apple is a good case in point – and make life so much
more convenient that they are irresistible – like Amazon and Facebook.
But let’s not get too carried away. David Moffatt, former CEO, Lebara Group,
nicely punctures the digital hype saying, “All business is business, and the
drivers are largely the same for the shareholders and the board.” By this he
means that ‘digital’ hasn’t fundamentally changed business management,
but it is ushering in new rules of the game. At TM Forum, we see business
agility and rapid innovation, operational agility and effectiveness, IT and data
centricity, plus customer centricity as the strategic pillars of a digital business,
shown in Figure 1-1. We will explore each in detail in Chapters 3 through 6.

FIGURE 1 -1 : THE FOUR STRATEGIC PILLARS OF A DIGITAL BUSINESS
DIGITAL BUSINESS
BUSINESS OPERATIONAL IT & DATA CUSTOMER

AGILITY & AGILITY & CENTRICITY CENTRICITY
RAPID EFFECTIVENESS
INNOVATION
Source: TM Forum, 2014

CEOs must manage the transformation to a digital business by changing

culture and adding new competencies to their skill base.
Of course CEOs don’t perform these tasks themselves, but they must
understand them and ensure they happen. In most cases, what they’ve got
already can be improved by adding digital elements and better sharing of
information across the organization. Good examples of this approach in action
include Nordstrom in the U.S. and The John Lewis Partnership in the U.K.,
both renowned for excellent customer service. The digital channels they have
made available to customers are very successful extensions of that.
Many retailers are working to do a better job of integrating all the ways
in which they communicate with customers – a concept referred to as
omnichannel – to enable customers to interact with them however they
want, whenever they want, in the way that’s most convenient for them.
U.S. retailer Home Depot is a good example. According to an article in CIO
magazine2, in April 2014, Home Depot has implemented omnichannel efforts
that include buy-online-return-in-store and buy-online-ship-to-store programs,
which complement its buy-online-pick-up-in-store initiative.
The company is also creating a mobile mapping app to help customers find
items more easily in Home Depot’s huge stores, and using analytics to help
with more competitive pricing. It bought an analytics startup and is now using
that technology to monitor the online pricing of its rivals and adjust its own
prices in real time.
BEWARE THE RISK OF ‘INCREMENTALISM’

Exploiting the potential of being truly digital means tangible, radical change
– that is what we mean by transformation. Few organizations can achieve it
in one step but will have to tackle it in a number of stages. The danger here
is ‘incrementalism’, meaning you can end up tinkering around the edges
without ever tackling the big, important stuff: creating an ‘outside-in’ culture
that puts the customer at the heart of decisions; streamlining and simplifying
your portfolio, systems and processes; and delivering a great customer

experience. These are the main themes of this guide and won’t be achieved
without real vision and leadership from the CEO.
Erik Hoving, Group Chief Technology Officer, KPN, comments, “If a company
has the goal of becoming [totally digital], it will not achieve that goal by
merely creating incremental goals on a year-by-year basis”. Rather, he adds,
companies must look to the future and then “bring that backwards”, while
continuing to focus on present success.
Put another way, figure out where you want your organization to go, then
pan backwards and work out what steps you need to take to get there. It
is the CEO and team’s responsibility to coordinate the prioritization, timing
and interdependencies of the many steps across multiple areas that will be
needed to reach your business goals.
CREATE ‘BEACHHEADS’
A nice term for the steps you need to take to become a digital business
is creating a ‘beachhead’. As an example, AT&T is working to avoid
incrementalism in its long-term plan to improve business agility and shorten
time-to-revenue, called Domain 2.03. Recently John Donovan, Senior
Executive Vice President, AT&T, said, “What we’re looking for in 2014 are
beachhead projects that can move us from an old Domain 1.0 architecture to
a Domain 2.0 architecture,” he said. “We’re calling it Domain 1.5.”
The beachhead projects are quick wins, and AT&T has already identified six.
Clearly, while the company’s plans may change over time, AT&T intends to
make a significant transformation through smaller, manageable projects to
reach a halfway house quickly.

CEOs must find an effective transformation champion and

must visibly and proactively support the transformation process.
Several of the top executives we interviewed stress the importance of

a transformation champion. Peter Sany, Chief Information & Technology
Officer, Swiss Life, believes this role is crucial. It could be played by the CEO,
or it could be a key influencer(s) on the board or executive committee.
Whoever the champion(s) is or are, Verwaayen defines their two main

responsibilities as creating the vision for the transformation and executing
on it. “If the CEO does not fully and actively support the vision, then the
execution primarily revolves around technology – and you and I know that
transformation is so much more than that,” he says. The way Verwaayen
sees it, a number of people within the company could potentially facilitate
execution of the vision and in that role drive ideas, concepts, investments
and different ways of working. Driving new ways of working is the most
important of these tasks and accomplishing it is very difficult to do without
support from the CEO.
THE ROLE OF FEAR

Sany points out that the two strongest motivators of change in any
organization are ‘fear’ and ‘love’. It’s not hard to find reasons for all
stakeholders to be scared about the future of any company if it isn’t
sufficiently swift and adaptable at embracing digitalization. Household names
like HMV in the U.K., Virgin Megastore in France, Borders bookstore, Kodak
Eastman and Blockbuster in the U.S., Arcandor, Neckermann, and Quelle in
Germany, Finland’s Nokia and Canada’s BlackBerry are all great examples.
Blockbuster’s business was movie and video game rentals. It had around
60,000 employees and more than 9,000 stores at its peak. Unlike its
disruptive competitor Netflix, it didn’t make the next move to streaming
content and filed for bankruptcy protection in 2010.

Eastman Kodak was founded in 1888 and held a dominant position in

photographic film throughout the twentieth century, but filed for bankruptcy
protection in 2012, having failed to shift its activities to digital images.
Ironically, the company invented the core technology used in digital cameras
today, but was not able to profit from it.
Standing still is not an option and the champion needs to ensure stakeholders
understand that, without creating an environment of doom and gloom – which
is where ‘love’ comes into it.
THE ROLE OF LOVE

As Sany explains, the transformation champion must create a vision of a
“brighter future for the company if they do certain things.” This could include
new revenues and customers, greater customer loyalty, higher profitability
and a much stronger strategic position. Again, there is no shortage of success
stories for the champion to point to, including those mentioned. It’s worth
remembering that Apple was weeks away from going out of business in 1997.
The champion should stress that numerous studies show that companies
with an above-average mix of digital revenue grow faster, improve margins
and use their capital better than less-digitized peers. Research by Capgemini
and MIT4 shows these companies are 26 percent more profitable than their
competitors, generating 9 percent more revenue through their employees
and physical assets, and 12 percent higher market-valuation ratios.
Examples from other industries are helpful and should help shape the vision.
For example, Netflix’s success is largely built on agility and continuous focus
on the customer. “We very, very early came up with the idea that Netflix
would be about finding movies you love, which in fact has nothing to do with
how you choose to receive them,” Netflix co-founder Marc Randolph told the
Silicon Valley Business Journal.5 “And from that point, our investment was
pretty deep in cementing that in our customers’ minds.”

CEOs should use a combination of love

and fear to motivate all stakeholders.
Fear keeps a company on its toes and helps it stay competitive, while love
provides the reassurance necessary for the transformation vision to become
reality.
THE POWER OF CROWDSOURCING

An essential element of speed and agility is exploiting ready-to-use, free,
proven tools and best practices, rather than investing time and effort
developing things that exist already. Although we didn’t know it at the time,
TM Forum started using crowdsourcing way before the term was coined. We
are a not-for-profit association with over 900 member companies, including
more than 250 service providers who collectively serve over 90 percent of the
world’s communications customers.
The heart of TM Forum always has been our unique Collaboration

Community. It has been continuously developed and expanded through the
carefully coordinated efforts of literally thousands of architects, engineers
and developers from service providers, suppliers, integrators and other
organizations. By working together, we’ve been able to crowdsource the
collective expertise of an industry into a suite of practical tools, best practices
and standards called Frameworx (see panel on page 15), now used to
underpin successful transformation programs around the world.
While our original heartland was telecommunications, our membership and

collaboration work now embraces enterprises in multiple industry sectors.

HOW FRAMEWORX WORKS

TM Forum’s Frameworx suite of standards-based tools and best practices has
been widely adopted by, and delivered massive business benefits to, a wide
variety of our members and their customers. Many companies rely on elements
of Frameworx, in endless combinations, to implement the standards and
best practices ‘out of the box’, saving time and money on commissioning and
implementing custom software and complex integration programs.
Frameworx is updated continuously (consolidated into two formal updates a

year) and consists of the following four elements:
n The Business Process Framework is a comprehensive, detailed process

model for business operations. The framework breaks down individual
business tasks so that users can map various applications and functions
in software to it. It can be used to map existing processes and identify
duplications and gaps, and to design new, more efficient and effective
end-to-end business processes across your own and your partners’
infrastructure – physical and virtual.
n The Information Framework defines the key elements of information

passing around those processes. Having a common data definition allows
systems to exchange information much more readily, which is essential
when working in complex value chains comprising multiple players in the
ecosystem.
n The Application Framework comprises application building blocks,

which can be used to establish which processes are needed to form
applications and deliver a fully automated set of business functions such
as order handling, customer relationship management, billing and so on.
n The Integration Framework defines key application program interfaces

(APIs) between critical business systems to allow the easy interchange
of business and operational information. The use of APIs will be very
important during the transition stage, for example to ensure the right
information flow between new and old systems.

TAKEAWAYS
Time is short – and ‘analog’ ways of doing business cannot compete.
Customers’ views about how they interact with companies and the levels of
service they expect are largely set by native digital companies and those who
have successfully introduced digital elements into their businesses.
Being digital brings big benefits to the companies themselves as well as their
customers in terms of efficiency and profitability. You need to join their ranks.
Innovation isn’t about what you’ve invented or implemented; it can be about

how your business is run as well as about figuring out how to monetize
products and services by giving customers what they want, when and how
they want it – and being a pleasure to deal with.
Appoint a champion to convey a sense of urgency to all stakeholders (fear)

while stressing the huge opportunities for the company (love) and individual
stakeholders through successful, timely transformation.
Save time, money and resources by using proven standards, best practices
and tools wherever you can.
1 Professor Richard Foster of Yale University quoted on the BBC www.bbc.co.uk/

news/business-16611040
2 www.cio-digital.com/ciodigital/20140401?pg=29#pg29
3 www.att.com/gen/press-room?pid=24817&cdvn=news&newsarticleid=37013&map
code=
4 Please see Embracing Digital Technology: A New Strategic Imperative, www.

capgemini.com/resource-file-access/resource/pdf/embracing_digital_technology_a_
new_strategic_imperative.pdf
5 www.bizjournals.com/sanjose/news/2014/01/08/netflixs-first-ceo-on-reed-hastings.
html?page=all

NOTES

#2.
WHAT ARE
YOUR OPTIONS
AND HOW LONG
HAVE YOU GOT?
WHAT ARE YOUR OPTIONS AND HOW LONG HAVE YOU GOT?
There is an old maxim that says no time is wasted in planning. This is

true, but length of time, cost and probability of success are important factors
which impact transformation planning. They have to be weighed against
the window of opportunity for exploiting or defending against the business
pressures of not transforming. For many, time is short.
Also, evidence shows that the more a company is under financial pressure and
so delays undertaking transformation, the lower the probability of success, the
higher the costs and the longer transformation takes, as management becomes
consumed with short-term survival. Figure 2-1 depicts the challenge.
FIGURE 2 -1 : TIME TO TRANSFORM VERSUS PROFITABILITY

TIME / COST OF
TRANSFORMATION
MONEY
PROFITABILITY
TIME

Looking at the communications sector, if we were to place mobile network

operators on the graph, many European players would be relatively far to the
right because their markets are saturated and competition fierce. In markets
such as Brazil and India, however, where growth is still apparent, and in
countries where there is a relative lack of competition, operators would be
further to the left.
AVOIDING THE WOLF PACK CALAMITY

While we urge executives to analyze what has made other companies
successful, blindly following their lead is not the answer. Erik Hoving,
Group Chief Technology Officer, KPN, believes many service providers are
too influenced by what their competitors are doing, rather than figuring out
what best suits their unique circumstances. He offers the analogy of a pack
of wolves where one wolf leads and the rest follow blindly, with their heads
down, and “their noses in a very strange place.” If the pack leader runs off a
cliff, so do the others.
The appropriate vision for a given company depends on the company’s

position and assets now, where it wants to go, how quickly, and the time and
resources available for the journey.
A DANGEROUS LACK OF URGENCY
CEOs need to create a sense of urgency relative to transformation.
A recent report from Capgemini and the Massachusetts Institute of

Technology Sloan School of Management6 asked more than 1,500
executives and managers to indicate the factors that inhibit the ability of
their organizations to transform into digital businesses. Their most common
response was the lack of a sense of urgency.
Neil Ward, General Manager, Global Business Operations, Skype, points out
that when a network operator that earns tens of billions of dollars in revenue
annually loses a half billion dollars over a couple of years, it seldom, if ever,
results in a sense of urgency to understand the problem and fix it.

CEOs must identify the factors that are likely to impede

transformation and develop a strategy to mitigate them.
Dr. Steffen Roehn, CEO, Roehn Management Consulting and former CIO,
Deutsche Telekom, identifies three main factors in the communications
sector that can become excuses for delay:
n Regulation – uncertainty created by governments with burdensome

regulation and control;
n Short-termism – shareholders who take often very short-term views

and drive focus on the next quarter’s earnings, deferring longer-term
transformational investment; and
n Diversion – management’s attention is on dealing with immediate

competitors and ignoring the bigger picture.
DEFINING AND DRIVING A VISION
One of the first steps in defining a vision is determining the state of the
business today, in part based on the graph shown in Figure 2-1 (see page 19).
Other questions must include:
n What are our key business processes?

n How agile and efficient are we?
n Can we raise the capital to fund transformation?
n Where are we most exposed to incursion by digital competitors?
n What is our current level of customer centricity?
n Which systems, processes and information deliver what value?
n How efficient and cost-effective are our business operations?

Figure 2-2 (see page 23) shows an example of a high-level decision tree
that CEOs can use to evaluate which type of vision they want to create for
their companies. This example for a communications service provider draws
heavily on a realistic examination of the company’s position.
APPROACHING THE BOARD
The process used to drive the CEO’s vision should reflect how much
time the company has to transform.
Scott Gegenheimer became Group CEO at Kuwait-based Zain Group in

December 2012. Due to the environment he inherited, Gegenheimer began
Zain’s transition to a digital business by “getting the basics set up,” which
included creating a vision around several ‘strategic pillars’. We built upon
Gegenheimer’s strategic pillars idea to develop Figure 1-1 (see page 9) as a
simple way of showing the areas that need the most energy and talent to
drive change.
As we outlined earlier, David Moffatt, former CEO, Lebara Group, sees every
business as a digital business and says, “The real question for the CEO is to
identify the strategy, people, and process and technology gaps that need to
get fixed, and to have a really honest conversation with his or her board about
that. What’s the need for change? What are the drivers? What are customers
saying? Why will this create shareholder value?”
The CEO must “help the board be prepared for the dynamic shifts that happen
along the journey, because customers change their preferences, competitors
act differently, and the regulatory environment sometimes changes,” Moffatt
continues. “So, stay dynamic…and then, of course, as the CEO you must be
accountable for the specific timeframes and outcomes delivered, and for the
capital you are deploying to bring about the transformation.”
Ben Verwaayen, former CEO of BT and Alcatel-Lucent, advocates new ways

of reaching decisions quickly, avoiding lengthy market and business case
analysis. “We do not have the luxury of time,” he says.

FIGURE 2 - 2 : DECISION TREE FOR EVALUATING THE VISION
Maximize Simplify
Infrastructure- Tactics: business
based fixed Reduce
processes & YES
efficiency systems
broadband + OpWEx
voice provider Margins Reduce churn Improve Systematically
under customer improve
pressure: experience experience
Continual
capital
demand YES YES
Can Are
Infrastructure Prices falling
Strategy: we sustain we agile & Can we deliver
mobile
Reposition to investment customer sufficient
access,
sustainable to be focused enough growth to satisfy
+ voice
growth infrastructure- to compete as markets?
messaging
based? a retailer?
NO NO NO
Infrastructure- Consider Innovate

based fixed moving to be and partner
broadband + an embedded to expand
voice provider ‘enabler’ portfolio
Become NO
Become Drive Can
easy to do Broaden
excellent at operating we innovate/
business ‘enabling’
innovative agility/ partner
with; simple/ services to
software efficiency successfully
open APIs embrace
development to optimum to compete
& excellent cloud
& data levels at application
customer compute/
analytics services
experience storage level?
+ related
services
YES
CONSIDER
Establish Partner Should we

excellent with market focus on
digital leaders in consumer or
‘storefront’ target industry enterprise app
ENTERPRISE
& customer sectors markets?

experience e.g. heath,
automotive
CONSUMER

OPTIONS FOR SERVICE PROVIDERS

Neil Ward , Vice President and General Manager, Global Business Operations,
Skype, has three key pieces of advice for companies looking to transform
quickly into digital enterprises:
n Play out when your current revenues will run down and when you need
new revenues.
n Know your strengths and your core.
n Identify whether you have the right to play in the markets of the future
and the past.
Transformation visions must clearly identify types

of services that will and will not be offered.
There are many ways to define markets and market segments. For a high-
level vision, simplicity is key, as many people need to share a common view
of the company’s goals. A picture that is too complex can cause confusion
and lead to disparate interpretations. Figure 2-3 (see page 25) shows a simple
view of the markets where a communications service provider can play.
Connectivity – enabling access to applications and content

This strategy calls for providing core connectivity, while developing excellent
relationships with application and content providers who become key
partners. As Gegenheimer points out, while partnering is not an area where
communications companies excel, he believes they must develop this
competence and build a sustainable ecosystem of partners.
This is also the approach KPN is taking. Hoving’s vision for his company is to
be the best at providing integrated access, which he describes as, “the on-
ramp to the digital world.” He continues, “Everything will go OTT [over-the-
top] – the approach of fending off the OTT players is over.”

FIGURE 2 - 3 : MARKET POSITIONS IN THE DIGITAL MARKETPLACE
GO-TO-MARKET SERVICES
Digital stores (e.g. Google Play, iTunes, Netﬂix),
Service aggregators (e.g. Parallels)
Browsers and search engines
APPLICATION/ CONTENT SERVICES

Voice (e.g. Skype); Messaging (e.g. SMS); Social
networks (e.g. Facebook), B2C (e.g. Angry Birds),
B2B (e.g. Salesforce.com), B2B2C/B2G2C
(e.g.health, energy, education, automotive)
PLATFORM SERVICES
Cloud (compute, storage)
Platform (security/authentication,
charging /billing, disaster recovery,
CRM, etc.)
CONNECTIVITY
SERVICES
Fixed broadband,
mobile access,
enterprise, wholesale,
content delivery

“Let’s not forget that cash flow pools in a few big buckets in the
communications industry’s supply chain,” adds Moffatt. “Telcos are in
good position to do something positive for the industry, and for their agility
and competitiveness, but it requires a big ‘mind shift’ to a more positive
leadership attitude towards innovation and partnering.”
Platforms that enable applications and content

These are infrastructure-based businesses that enable applications or
content to exist and be delivered. Connectivity services cover a range of
fixed and mobile capabilities, while platform services are in areas such as
cloud computing, storage, authentication, security and billing. Increasingly
application and content service providers focus on what they do best
– providing infrastructure. For example, Netflix’s video services run on
Amazon’s cloud platform.
Infrastructure-based service enablers rely on economies of scale to gain

competitive advantage and need highly available, secure services. Hence it
is not surprising to see communications providers entering this expanded
‘enabling services’ market.
Acquisition rather than organic growth of platform services is probably a

faster route. A recent article in Network World evaluated the ten most
powerful cloud players.7 The two communications companies that made the
top ten both used the acquisition route – CenturyLink, which acquired Savvis,
and Verizon, which acquired Terremark.
Other potential platform services include tiered quality of service, location-

based services and advanced security services. The latter is particularly
interesting. “KPN believes that there is a massive opportunity to provide
better security for its users,” says Hoving.
Verizon already offers location-based services which include a level of

information about customers, in the shape of Verizon Location Data Services.
The services provide detailed insight about transactions and offer additional
functions such as fraud protection. The services also can identify customers’

behavior patterns, implement targeted messaging and provide analytics on

mobile marketing campaigns.
Application and content services

This is a rapidly growing area, initially of consumer-based applications,
but companies in every sector in every geography are exploiting digital
applications in many different market models. Success means that companies
have to be innovative, agile and fast moving, and have a keen understanding
of what customers want.
Verwaayen doubts that many large network operators can succeed as application
providers. “Trying to do what other companies do better than you is never a good
idea,” he says.
Go-to-market services
Google and Apple have already shown the power of app stores as routes to market
for consumer applications and content. A communications provider adopting
this strategy could offer a similar aggregation point for enterprise applications.
Unlike consumer apps, enterprise applications need much better customer

support, reliability and security. Monte Hong, former Managing Director,
Communications Industry, Accenture, is an advocate of this approach, citing
Amazon as an example of a company which has experienced great success
as an aggregator.
Hong believes network operators could build on their relationships with

enterprise and government customers by positioning themselves “at
the heart and center of business.” Specifically, he sees service providers
acting as an aggregator, bundling applications for a specific sector such as
healthcare or the automotive industry. They could provide these services
directly or through specialty partners.
Again, service providers could have an advantage here because customers trust
their brands from both a privacy and security viewpoint. This leaves operators
in a quandary: They could use their wealth of customer data to develop new

applications or sell it to third parties to open a potentially lucrative revenue

stream; however, if they sell it, they will no longer be perceived as more secure
and more respectful of customers’ privacy than OTT players. So far, most
network operators have opted to guard their customers’ privacy.
MAKING THE VISION REALITY

A service provider could choose any combination of these options as its
business goals.
The table in Figure 2-4 shows the extent to which each of the competencies
described by the four pillars in Figure 1-1 (see page 9) are important to the
possible roles in the digital ecosystem outlined above.
The table illustrates the type of analysis the CEO and team must conduct
when creating the vision for digital transformation. The values for each
element of the table will vary by company and the market sector(s) they
choose to focus on, based on factors such as where the business is today.
To understand how to interpret and use the table, consider a company that
intends to offer enabling connectivity or platform services. The company would
have to be highly effective in its business operations, as operational cost is key
to profitability. It would also have to be flexible and quick to adapt to changes in
FIGURE 2 - 4 : IMPORTANCE OF THE FOUR PILLARS BY POTENTIAL

SERVICE
BUSINESS
POTENTIAL OPERATIONAL AGILE CUSTOMER
AGILITY AND
SERVICE AGILITY IT CENTRICITY
INNOVATION
Connectivity Medium High Medium Low
Platform Medium High High Medium
Applications
High Low Medium High
and content
Go-to-market High Low Medium High

the market. The company could also need to improve customer centricity, but
probably not as much as it would to offer applications and content.
The next four chapters look at the competencies represented by the four
strategic pillars in turn.
TAKEAWAYS
Analyze the success and failings of other companies across a range of
sectors, but don’t follow them blindly – you and your company are in a unique
position and you need to figure out what will work for you.
The clock is ticking, yet in many companies there is a lack of urgency. The
longer you delay taking action, the harder it will be and the less likely you will
be to succeed.
You need a vision – decide what role(s) you want to play in the digital
ecosystem and what your business goals for those roles are, then pan back
and figure out what you need to do to get there.
There are four pillars identified by TM Forum to being critical to a digital

business: business agility and rapid innovation; operational agility and
effectiveness; IT and data centricity; and customer centricity. You need to
assess how each of them will be impacted by your choice of roles and goals
as part of drawing up your transformation plan.
6 Please see Embracing Digital Technology: A New Strategic Imperative, www.

capgemini.com/resource-file-access/resource/pdf/embracing_digital_technology_a_
new_strategic_imperative.pdf
7 www.networkworld.com/supp/2012/enterprise2/040912-ecs-iaas-
companies-257611.html?

#3.
BUSINESS
AGILITY
AND RAPID
INNOVATION
BUSINESS AGILITY AND RAPID INNOVATION
In the agile approach, the outcome is more important than the structured
proceedings. Peter Sany, Chief Information & Technology Officer, Swiss
Life, says, “All of the stakeholders have to be prepared, in short sprints, to
produce tangible results. Moving the business forward is about putting the
people with stakes in the business together such as marketing, product sales,
IT, customer service and finance. A mega-project is now three to six months;
a sprint is a month at most.”
Neil Ward, Vice President and General Manager, Global Business Operations,
Skype, believes there is a strong link in digital companies between agility,
innovation and customer centricity. “There isn’t a minute in the day when
Skype isn’t connected to its customers asking questions about products,
product features and policies,” he says. “The real distinction from the
traditional players is that the time to market for an idea or a business case is
short-circuited by a factor of at least ten. Traditional players are not as tuned
in to their customers and have become more of a wholesale infrastructure
rather than an intuitive customer play.”
CEOs must be able to visualize where their

companies fit in the overall ecosystem.
The digital economy is complex: Services are created by weaving together

components from multiple service providers and sold through multiple
channels. Increasing reliance on partners in the ecosystem is one of the most
important changes between traditional business and the digital economy.

CHALLENGES OF AN ECOSYSTEM
Working in an ecosystem means more than just ensuring that services can
flow seamlessly along the chain – the standards underpinning the Internet take
care of that. The real challenge lies in how the ‘business wrapper’ around the
services works. Partners must be able to answer many questions, such as:
n How are customers’ orders and contracts carried out when multiple
parties are engaged in delivering a service?
n How is a great customer experience designed and delivered without

‘finger-pointing’ among partners when something goes wrong?
n How does money move around the ecosystem where revenue may be split?
n How do service level agreements and rebates work without manual

intervention so that costs can be kept to a minimum?
Being able to string together a number of online service components from

multiple suppliers means different processes and approaches to those used
in a vertically-integrated business. This is a major thrust of TM Forum’s Digital
Services Reference Architecture initiative (which is explored in another of our
how-to guides for executives, Becoming an agile business. There is also more
detail on page 64).
People and enterprises want to use many applications and sources of

information from different providers, but they also want a consistent overall
service. So the key will be for the companies controlling the relationship with
end users to deliver consistent service and a great customer experience while
working with many upstream partners.
As executive team members visualize where they want their companies to fit
in the digital ecosystem, it is important to realize that there is only a limited
amount of profit margin to go around. The profit margin is the difference
between the final price the customer pays and the sum of all costs incurred in
the creation and delivery of the service.

Over time, the various players in the ecosystem will try to get a higher
proportion of this margin. In an ecosystem as volatile and dynamic as the
digital economy, players will constantly jostle and reposition themselves to
maximize their competitive advantage.
SIMPLIFY AND STREAMLINE THE OFFER

New players like Twitter and Instagram can move so quickly because they
have simple product portfolios. Typically, the more established the company,
the more complex its portfolio and operational processes are, making
transformation harder.
CEOs must drive simplification throughout

the organization to make it sustainable.
Ben Verwaayen, former CEO of Alcatel-Lucent and BT, contends that many
companies are slow to respond to customers’ requests because their
portfolios, and hence processes, are too complex, and their systems are
bloated with functionality that’s never used. “Take out 80 percent of the
features and see how agile you become,” he says.
See Figure 3-1 (see page 34) for the interrelationship between the
simplification of operations and providing excellent customer service while
keeping costs down. Indeed, in our new guide, also for executives, Becoming
an agile business, this figure is the basis of a simple methodology to achieve
just that.
One of the first things Steve Jobs did on his return to the almost-bankrupt
Apple in 1997 was massively reduce and simplify its portfolio. When Apple
overtook Google as the world’s most valuable brand in spring 2011, an article
in Forbes8 noted: “It’s extraordinary to think that the world’s top brand has
a product portfolio that could fit on a small table. Of course that’s part of the
reason why Apple is so successful – its relentless focus on creating a small
number of simple and elegant products.“

FIGURE 3 -1 : A SIMPLICITY- BASED APPROACH TO BECOMING AN

AGILE BUSINESS.
‘OUTSIDE - IN’
CUSTOMER
FOCUS
DON’T CLEAR VISION

ADD BACK AND STRONG
COMPLEXITY LEADERSHIP
SIMPLICITY =
customer experience
and agility up, operating
costs down
RADICALLY SIMPLIFY
SIMPLIFY PORTFOLIO &
SYSTEMS CHANNELS
RADICALLY
SIMPLIFY
PROCESSES

THE POWER OF PARTNERSHIPS

Many companies are also partnering with others to boost agility and innovation
cycles. This allows companies to focus on what they do best and get help
from others who also are concentrating on their core competency. “Sourcing
is something that the organization has got to get right,” says Wu Choy Peng,
Group Chief Information Officer, SingTel. “You can’t be 100 percent insourced,
nor 100 percent outsourced. Having some backup armies by way of [additional]
providers will give you the necessary headroom. You can never be that agile by
being 100 percent insourced unless you carry a lot of buffer.”
CEOs must ensure the company develops or acquires the skills

necessary to partner successfully.
TM Forum can help organizations increase business agility through

partnerships with our pioneering B2B2X Accelerator Pack. It includes a
comprehensive set of tools and best practices to enable:
n quick setup of partnering arrangements;
n efficient on-boarding of new partners through consistent, repeatable

processes;
n swapping out products; and
n the evolution of partnerships.
BALANCING BUSINESS MODELS

Unlike a startup, in an established business, operations dominate
management’s time and consume a huge chunk of resources. This limits
the resources available to develop innovative new strategies – the classic
‘innovator’s dilemma’ that Clayton Christensen describes in his bestselling
book, The Innovator’s Dilemma: When New Technologies Cause Great Firms
to Fail.9 In addition, the culture of the large business is usually different than
the culture desirable in a startup.

One way for a company to meet this challenge is to create an innovative

startup outside of or within the larger company. Cisco Systems did this
with software-defined networking company Insieme Networks. Cisco
funded Insieme as an independent startup and once it reached pre-defined
milestones, Cisco acquired it. Alcatel-Lucent took a different tack by launching
startup Nuage Networks inside the parent company because it wanted to
transfer significant intellectual property to Nuage and felt that it needed to
control where it went.
Launching a startup to generate agility doesn’t always work. Telefónica initially

attempted to drive its transformation to a digital business through a separate
company, Telefónica Digital. The new entity didn’t see its second birthday
before its activities were absorbed back into the main company, early in 2014.
Even so, no doubt Telefónica learned a great deal from the whole experience
and should be able to feed those lessons into its on-going transformation.
AT&T’S NEW AGILE APPROACH

At Mobile World Congress in Barcelona in February 2014, John Donovan,
Senior Executive Vice President, AT&T, announced a number of important
changes to the company’s business model and approach. Dubbed Domain
2.0, the strategy heralds fundamental changes in many of AT&T’s core
business practices.
“It’s a change in how we do business with suppliers and how we manage

platforms, systems and software,” Donovan told attendees. “It changes our
people; we have to take advantage of cultural change at our company.”
AT&T intends to provide elastic network services. “Customers will be able to

self-provision networking services on the fly, as needed, just as they now do
with compute services and storage from cloud service providers,” Donovan
explained.
One way AT&T plans to transform its traditional approach to sourcing is

by increasing employees’ depth of understanding of the company’s core
technologies so that they can integrate and even design the systems from

scratch. As a result, AT&T expects to benefit from being able to do business

with startups and small businesses – partners AT&T might have deemed to
be too risky in the past.
“Small businesses demonstrate the large fraction of innovation and agile

development in the marketplace and enabling the company to do business
better with these small companies is a key element of Domain 2.0,” states
an AT&T white paper about Domain 2.0.10
Another way AT&T will move away from its usual approach is by deploying
a software framework suitable for large network operators, based on open
source code. The company believes this will allow it to draw from a much
broader set of software sources and attract top-tier software architects and
developers.
“This software framework will be the scaffolding for AT&T services, and
also serve as the foundation for third parties to build on,” the Domain
2.0 white paper explains. “Needless to say, in the development of this
software ecosystem, we will not accept a proprietary information model,
API [application program interface], or system that would bind us tightly to a
single supplier or approach.”
DON’T FORGET THE BASICS

In the midst of transformation, it’s important to ensure you keep doing what
you’ve always done as efficiently as possible to keep costs down, maximize
revenue and free up funds to invest in the new. Revenue assurance might
not set your pulse racing, but it could save you millions, for relatively little
investment (as users of TM Forum’s tools and best practices for revenue
assurance have demonstrated very many times). What’s more, as the digital
ecosystem and, your company’s role in it, evolves the number of potential
leakage points for revenue grows too, along with opportunities for fraud.
CEOs must remember the basics as well

as the new during transformation.

TAKEAWAYS
Figure out where and how you fit into the digital ecosystem. Accept that
working in various value chains with a range of partners is fundamental to your
company’s future, then think very hard about how you’re going to address it.
While everyone wants to be as close to the end-customer as possible

(depending on the strategic option you’re taking, you might need to let go of
this), there will be a lot of jockeying for position among the partners as well
as attempts by all to increase their share of revenues. Consider carefully what
value you’re bringing to the partnerships.
Large and complex product portfolios confuse the customer and dictate
complex business processes to deliver them. This complexity is at the heart
of a lack of agility and cost effectiveness.
Complexity is your enemy – if you want to be agile in business, get rid of

all the stuff you don’t need or use in your systems and processes, and
rationalize what you offer to customers.
Think of ways you can foster innovation – give it a chance to grow and
breathe away from the pressures of everyday operations.
Don’t forget that while you’re focusing on how to introduce the new stuff,
you need the old stuff to run as efficiently as possible, freeing up time,
resources and funding to invest elsewhere.
8 www.forbes.com/sites/carminegallo/2011/05/16/steve-jobs-get-rid-of-the-crappy-
stuff/
9 www.claytonchristensen.com/books/the-innovators-dilemma/
10 www.att.com/Common/about_us/pdf/AT&T%20Domain%202.0%20Vision%20
White%20Paper.pdf

NOTES

#4.
OPERATIONAL
AGILITY AND
EFFECTIVENESS

A company’s operations are closely allied to agility and innovation
across the business (which we explore in detail in TM Forum’s Becoming an
agile business guide, also written for executives).
As the digital economy is highly competitive and typically global, margins

are tight as prices fall to the point where only the most efficient provider can
make acceptable returns. We define operational effectiveness as the optimal
balance between being able to provide good customer experience, run at low
operating costs and make acceptable returns for shareholders.
Figure 4-1 (on page 42, repeated there from Chapter 3 for convenience)
shows the steps an organization needs to take to achieve this kind of agility.
PUT CUSTOMERS AT THE HEART OF THE BUSINESS

It is of paramount importance to understand the customers’ needs and
behavior. This goes far beyond a simple ‘what do you want?’ type of market
research. It should embrace how your customers use your products and
services, how they interact with your company, what they are saying on social
media and so on, across a wide base of customers and ideally in near real time.
It demands an ‘outside-in’ culture that looks at everything from an external
(customer and market) viewpoint, rather than an internal view looking out.
This focus on customers, in turn, means acquiring ever-greater competency

in data analytics and using the information from them to gain clear insights
into your customer’s customer – and truly have them at the heart of every

OPERATIONAL AGILITY AND EFFECTIVENESS
FIGURE 4 -1 : A SIMPLICITY- BASED APPROACH TO BECOMING AN

AGILE BUSINESS.
‘OUTSIDE - IN’
CUSTOMER
FOCUS
DON’T CLEAR VISION

ADD BACK AND STRONG
COMPLEXITY LEADERSHIP
SIMPLICITY =
customer experience
and agility up, operating
costs down
RADICALLY SIMPLIFY
SIMPLIFY PORTFOLIO &
SYSTEMS CHANNELS
RADICALLY
SIMPLIFY
PROCESSES

decision you make. Unless you do this thoroughly, it will be very difficult to
move to the next stage of becoming an agile digital business.
The executive team needs a clear vision of what the company is

transforming to and how to transform successfully.
You must have a clear vision of:
n Which customers you want to serve
n With which products
n In which markets
n Through which channels
n Where the company will differentiate itself.
You will also need a clear vision of how to organize and deliver the
transformation program. As in all great performances, vision, timing and
coordination are key. Vision and the will to make change happen have to
come from the CEO. This is not to be confused with control-freakery and
micro-management, nor is it only about top-down enforcement; but about
discovery and iteration, about acting on bottom-up feedback and constantly
refining thinking and implementations. That way you’ll benefit from the
huge expertise of those on the front line, who know more about day-to-day
operations than those further up the hierarchy; and it also includes everyone.
SIMPLIFY YOUR PORTFOLIO AND CHANNELS TO MARKET

The level of complexity regarding the portfolio and channels to market is
generally in direct proportion to how long you have been in business and
the rigor of your product management processes. Most companies tend to
maintain a large number of aging products and out-of-date customer options
in an ever expanding portfolio. Added to that, many of these products
may have come through acquisition or are run by parallel organizations or

on multiple process and systems stacks. This is typically compounded by

multiple routes to market, often run by different departments using yet more
fragmented processes and systems, and you soon have a nightmarishly
complex stating point. This almost certainly spells low agility, high costs and
terrible customer service.
Channels to market need to be rationalized through an ‘omnichannel’ strategy

with single views of the customer right across them.
Omnichannel is a multichannel approach that seeks to provide the customer

with a seamless shopping experience, whether the customer is buying online
from a desktop or mobile device, on the phone or in a bricks-and-mortar store.
This is achieved by having full integration between channels at the back end.
Unless you fix this core problem, it will be very difficult to reap the real
benefits of agility in rationalizing your processes and systems as their
complexity is usually a reflection of a complex portfolio.
SIMPLIFY YOUR BUSINESS PROCESSES

The next step is to create an agile platform on which your business runs. This
is the amalgam of business processes and the systems that deliver them.
There is little point in rationalizing the systems part of that platform if you
don’t also radically simplify your business processes.
To do this effectively you will probably need to appoint business process

owners who can understand the processes from end-to-end across the entire
enterprise. They must be empowered to strip away every non-essential task
in the entire delivery chain and rationalize multiple process variants into one
core set of company-wide processes.
The executive team must be ruthless in stripping complexity

out of business processes, and understanding the
difference between customization and configuration.

Although most companies have what they see as unique business processes,
most of them are not. After all, nearly every company does much the same
thing: It has a route to market, takes orders, fixes customers’ problems, bills,
collects money and so on. The argument for customized business processes
is an excuse for preserving the status quo. Yes, each county and culture
has minor differences in things like tax, how customers prefer to pay and so
on, but these should be configuration options in most cases, not expensive
customized processes and systems.
Remember, every time you support a ‘custom special’ process or task, it likely
means adding complexity and cost because it typically involves developing
and maintaining customized software. Avoid this: The more your processes
can be normalized, the more you can use commercial off-the-shelf systems to
implement them, reducing costs and complexity, now and in future.
As we’ve mentioned, TM Forum can help with a ready-built comprehensive

business process model (the Business Process Framework – see page 15)
which breaks macro processes (such as order-to-cash) down into individual
tasks. An increasing number of systems vendors are building systems that
automate processes aligned with this framework.
SIMPLIFY YOUR SYSTEMS

The other half of an agile operating platform is the IT systems and
applications that deliver the processes. It crucial to recognize IT as being
central to the transformation, not an overhead you have to tolerate.
The fewer systems you have, the less complexity there is.
One of the main simplification tasks is to reduce the number of systems.

Typically companies ‘collect’ systems over the years as new ones are
introduced and old ones are never retired. Acquisitions or inter-divisional
politics also play a part in the growth of multiple ordering, billing and customer
care systems. Many will be custom engineered and custom integrated, with
the constant threat of creating instability when any system is changed. This is
a big obstacle to automation.

Legacy systems in major companies tend to be inflexible, with changes often

taking weeks or months. Hence the aim is highly effective, agile, automated
systems and processes which require minimal human intervention: so-called
‘zero touch’ is the ultimate goal. Human beings are far more adaptable, but
they are also a lot more expensive.
APPLYING AUTOMATION
Increasingly, customers prefer self-service and self-care, but only if systems
are very well thought out, intuitive and easy to use. Legacy systems were
designed for use by staff, not customers. Simply putting a website in front
of them doesn’t work when it is masking incompatible and ‘dirty’ data,
and fragmented systems which only provide an incomplete view of the
customer’s services and contract.
TM Forum’s Information Framework (see page 15) and can help companies
automate processes.11 It uses standardized data definitions for operational
systems and provides an automated means of creating standardized
interfaces, which can be used within the enterprise and with partners. It
is particularly powerful when used in conjunction with other Frameworx
elements.
Getting automation right brings massive business

benefits to customers and your company.
A good example of this is Russia’s Rostelecom, which was striving to

improve its services to enterprises and government customers. Its partner/
supplier Wellink used the Forum’s Information Framework in conjunction
with our Application Framework to address conflicts and service problems,
arising from poorly integrated service level agreements and processes,
through monitoring and automation. Responsibility is now clearly delineated
and many issues are picked up before they affect the customers. It has eased
the introduction of new services and reduced operational expenditure, while
increasing customer satisfaction.

The CIO must stop complexity from creeping back in.
Don’t let your portfolio, processes and systems creep back to a state of
fragmented complexity over time. In particular, avoid the temptation to add
custom features and extensions to systems, even if they are relatively easy
to produce. This is the route back towards a lack of agility, high costs and
poor customer experience. Keep to the rule – configure, don’t customize!
MULTIPLE OPERATING COMPANIES MULTIPLY CHALLENGES

Transforming into a digital business is much harder for an enterprise with a
group of operating companies which serve different markets with different
portfolios, cultures, operating processes, systems and suppliers. The group
culture itself may vary from having strong central direction and control, to a
high level of local decision-making.
The executive team must control from the center to be cohesive

and benefit from economies of scale.
Transformation in this context is difficult because it multiplies the number

of transformation tasks. Agreeing common goals and targets is harder,
especially when individual operating companies have legitimate reasons for
working differently. For example, a target of handling 90 percent of bills and
customer payments online through direct-debit or credit-card transactions
may make sense to managers in one country, but their counterparts
elsewhere perhaps have many customers who prefer to settle bills in person,
with cash, at a retail outlet.
Smaller operating companies often view the umbrella organization as remote,

out of touch and with no understanding of local needs and issues. Building
trust right across the group is essential for transformation.

The method for orchestrating the transformation process depends on the

organization – some companies mandate certain suppliers, others coordinate
procurement via a committee of CIOs from the operating companies. A
former group CIO, who worked across around 20 operating companies,
spanning extremely disparate markets, explains that with only minority
stakes in some group companies, a dictatorial approach could never have
worked. Instead, the company opted to negotiate advantageous group-wide
agreements and discounts with strategic suppliers. It used these economic
advantages to move its operating companies onto rationalized platforms.
ADDITIONAL CONSIDERATIONS FOR GROUPS

Peter Sany, Chief Information and Technology Officer, Swiss Life, agrees
with the six transformational areas shown in Figure 4-1 (on page 42) and
their associated remedial actions for transformation outlined above, but adds
some which are particularly helpful in transforming an enterprise with multiple
operating companies:
n Convince the umbrella group’s board and CEO of the need for change,
identifying the critical pressure points and a transformation program
based on what the company could become, not where it is. The group
CEO must endorse and support the direction, and help bring regional
companies and subsidiaries into line with the program.
n Form a cross-functional, cross-regional steering group and hold workshops

to create a ‘positive platform’ among regional operating company
executives, so that everyone shares the same goals and enthusiasm.
n Scan the regional operating companies or industry groups like TM Forum

for examples of best practices that can be implemented on a group-wide
basis. This not only delivers results, but helps the regional companies
feel invested by creating the understanding that it is a shared vision, not
one dictated from the center. (Within Ooredo, savings of $50 million
were achieved in the first year of a three-year plan to roll out TM Forum’s
proven best practices for revenue assurance right across the operating
companies. It set up a centralized academy for training its revenue

assurance teams and ensured regular meetings so they can share

intelligence).
n Centralize procurement with a relatively low purchasing threshold

devolved to local executives. This ensures that major components are
sourced from agreed strategic suppliers and that configurations and
specifications are aligned with the agreed target architecture.
n Agree on a common implementation plan, with leadership of various

component projects given to individuals in regional operating companies,
to build a positive and forward-thinking approach.
n Consolidate data centers into fewer large centers which serve multiple
operating companies.
A CASE IN POINT: VODAFONE’S TRANSFORMATION

Vodafone, a 30-year-old communications service provider serving more than
400 million subscribers in 50 countries, has been undergoing transformation
in several areas over the past few years. The company comprises an
umbrella organization, which leverages a common brand and aims to provide
consistent customer experience to subscribers served by its operating
companies.
Vodafone began transformation projects in finance, human resources and

supply-chain management to build confidence and trust before embarking
on more complex projects. Other projects have consolidated disparate data
centers into a smaller number of regional centers and reduced the number of
suppliers. The company’s latest project in its transformation journey involves
customer care and billing. This includes a ‘greenfield’ approach, which means
converting to an entirely new customer care and billing platform.

Vodafone’s primary goals for the customer care and billing transformation are
to:
n select strategic suppliers for a new customer care and billing platform;
n test the new platform in one operating company, loading various

customer groups (for example, prepaid, then post-paid, etc.);
n centralize product management and normalize the product portfolio across

the group;
n replicate the program in two other operating companies of varying sizes;

and
n roll out the new platform to all operating companies in progressive waves.
Vodafone rationalized and coordinated the target architecture, roadmap

and procurement for IT in the group at an early stage to prevent more
fragmentation and begin the process of systems and process rationalization.
TAKEAWAYS
The trick is balancing great customer service with low operating costs and
acceptable returns for shareholders – but everything starts with the customer
(as we show in the virtuous circle in Figure 4-1 on page 42).
Simplify your portfolio, channels to market and the underlying systems and
processes, which will enable you to develop an omnichannel approach to
provide excellent, joined-up customer service. Remember that configuration,
not customization, is the way to go.
Where you have a number of operating companies cohesion through

centralization is a good approach, although you need to accommodate local
market conditions.

Automation is key to improving agility and customer experience while keeping

costs down – TM Forum’s Frameworx assets can be invaluable in helping you
do this. As it is a widely adopted approach, commercial-off the shelf systems
incorporating our standards are available from multiple suppliers. In addition,
there is a large body of people trained to use Frameworx and partners may
already use the same standards, making interoperation across the ecosystem
much easier and quicker, and ultimately more profitable.
11 www.tmforum.org/integrationframework

#5.
THE CUSTOMER
IS THE BUSINESS
THE CUSTOMER IS THE BUSINESS
Many companies describe themselves as ‘customer-driven’, yet many

continue to receive low customer-satisfaction scores. Not all truly understand
the link between delivering a good customer experience and bottom-line
profitability. It’s this simple: The second follows the first.
CEOs must drive company-wide recognition that

without satisfied customers, there is no business.
The digital world is rapidly raising customer expectations of what a good

experience is, and when done correctly, it can often simultaneously reduce
operational costs, as companies like Amazon, Apple, Ritz-Carlton and
Nordstrom have shown.
Figure 5-1 (on page 56) shows the causal linkage between improving
customer engagement and the bottom line.

FIGURE 5 -1 : THE LINK BETWEEN CUSTOMER EXPERIENCE AND

PROFITABILITY
A GREAT CUSTOMER
EXPERIENCE
MEANS HAPPY CUSTOMERS
WITH INCREASED
BRAND LOYALTY
WHO SPEND MORE
& ARE MORE TOLERANT
WHO RECOMMEND YOU

TO FRIENDS, FAMILY &
ON SOCIAL MEDIA
& CHURN LESS OFTEN
GIVING HIGHER MARGINS
AND THUS INCREASING

PROFITABILITY

We recognize seven principles that customer-centric companies use to

become leaders in satisfaction and loyalty. They are:
n An ‘outside-in’ focus – customer-centric companies look at the world

from the customer’s perspective and deliver products and services
customers want. This often means offering support for and advice about
additional services that may enhance customers’ experience. Apple,
for example, provides free classes for iPhone, iPod and iPad users to
demonstrate the power of its devices and to teach tricks for getting the
most out of them.
n A deep understanding of the customer across the lifecycle –

customer-centric companies develop a holistic view of individual customer
interactions and experiences over the life of the relationship. They
recognize that customers’ needs change over time, and they respond to
the change continuously, as it occurs. Good examples are the way Amazon
analyzes customer-behavior data to create personalized recommendations
and how eBay uses analytics during a single browsing session to change
how it presents information about products to suit the visitor.
n Empowerment at the point of interaction – customer-centric

companies empower employees with the authority and accountability to
take action on behalf of the customer. This allows employees to make
judgments to solve customer problems quickly. This is exemplified by the
Ritz-Carlton hotel chain, whose motto is: “We are ladies and gentlemen
serving ladies and gentlemen.
“We entrust every single Ritz-Carlton staff member, without approval

from their general manager, to spend up to $2,000 on a guest. And that’s
not per year. It’s per incident,” former CEO Simon Cooper told Forbes
magazine12. “When you say up to $2,000, suddenly somebody says,
‘Wow, this isn’t just about rebating a movie because your room was
late, this is a really meaningful amount’. It doesn’t get used much, but it
displays a deep trust in our staff’s judgment. Frankly, they could go over
that amount, with the general manager’s permission.”

n Efficient, tailored business processes – customer-centric companies

strive for efficiency in their processes to increase speed and satisfaction,
but they also recognize the need to tailor processes and performance
based on customers’ characteristics, such their customer lifetime value.
The preferred customer programs offered by several airlines are a good
example of offering high-value customers a quicker response or more
options for solving a problem.
n Cross-company consistency – customer-centric companies understand

that customers ultimately build their perceptions of a company based
on the whole company and that they expect consistent and predictable
interactions across all channels. Leaders in this space include Nordstrom
and Apple, which have created consistency across digital, bricks-and-
mortar, and mass-media sales and support channels.
n Transparency – customer-centric companies understand that it is not

enough to be responsive, knowledgeable, efficient and consistent; they
must also demonstrate this to customers on demand, at a transactional
level. To accomplish this, such companies build transparency into their
business processes, allowing customers real-time access to data, such as
billing information, and giving them well-designed self-service capabilities.
Good examples of this are United Parcel Service and Federal Express,
which electronically report the delivery progress of packages to their
customers and inform them about how to dynamically change delivery
logistics.
n A data-driven strategy – customer-centric companies understand

that execution of their strategy is highly dependent on having the right
information at the right time. This requires the capture, management
and analysis of relevant data to create business and customer value.
Google and Caesars Entertainment both excel at capturing data about
users’ behavior in an effort to understand their needs better and improve
relationships with them.

MOVING FROM CONCEPT TO ACTION

Goals for improving customer centricity should be a fundamental motivation
for digital transformation and address the seven principles outlined above. In
addition, companies should consider their customers’ needs throughout the
transformation process.
CEOs must give those who deal with

customers the power to please them.
As we outline in Chapter 7, cultural change presents some of the greatest

opportunities and challenges in digital transformation. The cultural focus
needs to include outside-in thinking and understanding of the customer
lifecycle. Perhaps most importantly, it needs to incorporate the principles of
empowerment along with authority and accountability, with management
setting guidelines. In addition, management must invest in the development
of employees and motivational tools, such as reward and recognition
systems, to encourage customer centricity.
Operational agility (see Chapter 4) should be driven at least in part by

changes in customers’ needs, both at tactical and strategic levels. One
way Ritz-Carlton addresses operational agility is by holding daily meetings
with staff, reviewing events or changes, discussing how they might impact
customers’ experiences and giving guidance on how to fix things as well as
noting available resources. Strategically, changes must at least be reviewed
for customer impact, but ideally be driven by current or anticipated needs.
Importantly, initiatives should be driven by factual data (see the next chapter)
and should have measurable objectives.
GIVE YOURSELF A HEAD START

TM Forum hosts a vibrant collaboration group focused on customer
experience, which has released a number of documents that can add value
for any digital business trying to become more customer-centric. They include
a guidebook discussing customer experience concepts and fundamentals; a
customer lifecycle model describing the stages of the lifecycle; a customer
experience maturity model for evaluation of progress and approach; and

more than 250 metrics for customer experience focused primarily on service
providers.13
TAKEAWAYS
Profitability and sustainability depend on making your customers happy. Even
the no-frills European airline Ryanair, which was famously disrespectful of its
customers, has gone on a major charm offensive and abandoned some of its
signature practices (unallocated seating) to become far more customer-centric
since incurring losses last year. In particular it is keen to attract families and
business travelers.
One bad experience can have big ramifications, so great customer service is
about getting it right every time and fixing it to the customer’s satisfaction,
and fast, when things go wrong. Empower your customer-facing staff to use
their discretion and reward good performers.
Make sure everyone in your company understands their primary goal is

making customers happy, no matter what their job title is.
Try communicating with your own organization through customer channels. If

you don’t like it, customers won’t either.
Use TM Forum’s freely available documents, models and metrics to kick start
your drive for customer centricity.
12 www.forbes.com/2009/10/30/simon-cooper-ritz-leadership-ceonetwork-hotels.html
13 More information about the Forum’s customer-centric programs can be found at

www.tmforum.org/customerengagement.

NOTES

#6.
EXPLOITING IT,
BECOMING
DATA CENTRIC
EXPLOITING IT, BECOMING DATA CENTRIC
CEOs need to be IT literate, in part so that they can understand how

their IT needs to change to support the sort of digital business they want to
become (see Chapter 2). As previously mentioned, the key characteristic of
IT is about creating an agile business platform on which a digital business
runs. This section describes a number of technologies, processes and other
changes that are the key components of how IT can become more agile.
CEOs need to understand IT and its impact on the business.
SOME GOLDEN RULES FOR CREATING IT AGILITY

You need guiding principles at the heart of the transformation process to
reverse the approaches that got the company into a complex and fragmented
situation. Some ‘golden rules’ for creating an agile, IT-based business
platform are:
n Start with an ‘outside-in’, customer- and market-centric viewpoint (see the

beginning of Chapter 5).
n Bring the design of business processes and your IT into one unified agile
business platform. The days where the processes are supported by IT are
over – IT is the process.
n Simplify whatever and wherever you can – configuration, not

customization is the key. You can address this in the following ways:

n Reduce the number of suppliers by procuring larger ‘footprints’ –

using pre-integrated applications from the same supplier that deliver
company-wide business functions (see Telekom Malaysia case
study on page 65 for more about this).
n Eliminate the replication of multiple systems doing the same job.
n Stop building custom software except where this genuinely delivers

competitive advantage and reserve your development talent for real
innovation, not building better mousetraps.
n Use standardized, commercial-off-the-shelf (COTS) technology

wherever you can.
n Integrate systems using open, standardized application program

interfaces (APIs).
CEOs must ensure their IT organization is business led.
Many factors are shifting the focus of the IT organization towards a business-
oriented, customer-oriented approach and toward greater freedom for users. This
has led to changes in the CIO role which been underway for some time (which
we explore in the Chapter 7), but pressures created by a rapidly moving
digital world are accelerating the change. As Businessweek14 magazine put it,
“The successful CIO’s profile has changed profoundly. Knowledge of either
technology or the business is insufficient. In sum, the successful CIO needs
an intimate idea of how current technology can increase the company’s sales
and not just reduce costs or improve clerical productivity.”
UNDERSTAND THE POWER OF VIRTUALIZATION

To lower cost and speed access to applications and services, enterprises’ IT
organizations are making increasing use of virtualized ‘cloud’ computing and
applications. Functional managers are becoming more aware that they can quickly
acquire applications and services from cloud service providers, often at lower
cost than traditional in-house hosting of applications in corporate data centers.

The key characteristics of a traditional IT infrastructure which makes it

expensive to run and slow to respond to new requirements are that it:
n is hardware centric;
n comprises equipment from many, assorted vendors and of varying

vintages; and
n relies on inadequate automation tools.
A software-defined data center (SDDC) represents the antithesis of the

traditional IT infrastructure. For example, part of the promise of a SDDC is
that it will enable applications to dynamically define the resources it needs in
line with the company’s security, compliance and performance requirements.
This will in turn facilitate more rapid deployment of applications and enable IT
to be more responsive to business requirements.
Software-defined networking (SDN) is a network architecture that centralizes

the network control functions in a device called an SDN controller, which has
programmatic interfaces. Previously the control functions were implemented in
each network element. If SDN is successful in the market, it will enable network
organizations to be more software-centric than they have ever been, allowing
them to allocate network resources dynamically. Also, the network’s functionality
will evolve on a software lifecycle, which is a lot shorter than that of hardware.
CEOs need to embrace a software-centric approach wherever possible.
Network functions virtualization (NFV) offers communications service providers

the prospect of greatly simplifying their operations and reducing expense by
running network functions as virtual applications on commercial computing
platforms rather than being encapsulated in specific provider’s hardware. The
idea is that ultimately there is no difference between operating and controlling
network applications, or any other type of applications, hence the management
of the data center, network and applications should have a unified approach
(see panel on page 64 regarding TM Forum’s work in this area).

ZOOMING INTO VIRTUALIZATION

TM Forum is working to ensure NFV fulfills this potential through the Zero-
time Orchestration, Operations and Management (ZOOM) initiative, which
focuses on virtual IT environments.15 Some of the goals of this initiative
are to:
n define a vision of the new virtualized operations environment;
n define an architecture based on the seamless interaction between

physical and virtual components, which are easily and dynamically
assembled into personalized services;
n help companies completely rethink their business and operational

practices to achieve the agility needed to leverage virtual networks
and services; and
n provide tangible business and operational blueprints to navigate the

transformation journey enabled by virtualization.
ZOOM aligns with the Forum’s Digital Services Reference Architecture,

which provides a standardized best practice for open, interoperable
virtualized digital services focusing on maximizing re-use, agility of
operations and scalability to meet future demands.16 As more services
are developed using a mash-up of existing capabilities as well as new
products, this architecture enables end-to-end management of services
across the ecosystem.
TM Forum is collaborating widely on NFV, especially with the European

Telecommunications Standards Institute (ETSI) to understand
the implications of operating and managing NFV and SDN-based
infrastructure.

BE AWARE OF APIs
As we virtualize more infrastructure, and use open APIs to link formerly
separate pieces together, the focus shifts to integration. Organizing and
standardizing this aspect of IT opens up the power of the underlying
infrastructure without having to replicate it. However you need to take a
standardized approach to APIs or you’ll just end up making the integration
problems worse in the long run.
TM Forum is taking an agile approach to developing APIs through hothouses

and so far has had a dazzling array of applications developed for them at
hackathons, hackfests, jams and other such events – often by developers
with no idea who TM Forum is or what we do. Consider adopting the same
approach in your organization – the only limitation is imagination
USE OFF-THE-SHELF PRODUCTS

Many companies that have rationalized their processes are moving to using
off-the-shelf software. In the communications sector, this has been helped
by TM Forum’s activities in structuring processes and information through its
Frameworx suite of standards-based tools and best practices (see page 15).
By simplifying and streamlining systems, processes and information, you are in
a much stronger position to buy (and sell) more standardized products and services.
CEOs must understand the unbeatable combination

of COTS and a standardized approach.
As a result of the move to commercial offerings, some companies have

swapped a software development issue for a software integration challenge.
In an attempt to address this, they reduced the number of suppliers by
buying big chunks of software from a single vendor. This had led to major
consolidation among suppliers.
COTS CASE STUDY: TELEKOM MALAYSIA

Telekom Malaysia has undergone massive transformation in the last few years,
working to rollout national infrastructure in public-private partnership with the

government. It chose to go down the COTS route, with solutions that were
certified as conforming to TM Forum’s Business Process Framework.
This ‘out-of-the-box approach’ meant that customization was cut dramatically:

Services were launched in record time and the company achieved end-to-end
automation of 98 percent of orders. It also enabled the company to carry out
flexible product bundling and pricing configuration so that the time needed to
configure innovative new packages and promotions reduced by two-thirds.
ADOPT AGILE METHODOLOGIES

Agile methodology was pioneered in software development and is now
becoming more popular17 for other project types. It assumes that in the time
it takes to complete a project, the business realities are likely to have changed
so dramatically that its outcome will be outdated or irrelevant when complete.
The need for speed is urgent, address it with Agile approaches.
Instead of making a big effort to capture requirements at the start, an Agile

project starts with a vision of the end point for the implementation. It then
builds in many opportunities to assess the direction of a project throughout
the development lifecycle, through sprints or iterations. At the end of these
assessment activities, teams must present a shippable increment of work.
By repeating shorter work cycles – and the functional product they yield – the
Agile methodology could be described as iterative and incremental. There are
many specific Agile development methods, but most promote development,
teamwork, collaboration and adaptable processes throughout the project.
They contrast sharply with traditional, lengthy delivery approaches because

they are very flexible, made up of projects that are a series of relatively small
tasks. These tasks are conceived and executed as the situation demands,
in an adaptive manner, rather than as a complete, pre-planned process.
Iterations are short ‘time boxes’ which typically last from one to four weeks.

BOOST YOUR USE OF DATA ANALYTICS

Analytics are becoming hugely important in delivering excellent customer
experience, automation, timely personalized offers, proactive care and churn
prevention, and many more applications crucial to succeeding as a digital
business. It’s probably fair to say that at the moment many companies are
still figuring out how they can best use analytics and to what ends.
TM Forum’s Big Data Analytics Guidebook contains more than 30 use

cases. It establishes the crucial linkage between business value that big data
analytics can unlock and the big data technologies and information sources in
the document’s pioneering Big Data Reference Model.
We will be exploring how to become more customer-centric in much greater

detail in a how-to guide for executives to be published later in 2014.
TAKEAWAYS
Rapidly emerging virtualization technologies have the potential to massively
extend your use of COTS, which would drive down capital expenditure –
but don’t replace software development costs with integration headaches.
Standardized, open APIs are key.
Adopt Agile methodologies to get moving, instead of trying to iron out every
wrinkle before embarking on transformational projects. If you don’t, you’re
likely to find that the outcomes will be irrelevant by the time you’ve got there.
Experiment, iterate, fix, deploy (or dump) is the mantra.
14 www.businessweek.com/articles/2013-05-22/the-new-role-of-the-cio
15 More on the Forum’s ZOOM initiative is available at www.tmforum.org/ZOOM
16 www.tmforum.org/DSRA
17 John C. Goodpasture’s Project Management the Agile Way: Making it Work in the
Enterprise: ISBN13: 9781604270273

#7.
LEADERSHIP AND
MANAGING THE
CULTURAL SHIFT
LEADERSHIP AND MANAGING THE CULTURAL SHIFT
“Culture eats strategy for breakfast.” – Peter Drucker
Having a clear vision for digital transformation is just the first step
toward success. “No matter what vision you have, you need the right people
and culture,” says Scott Gegenheimer, Group CEO, Zain.
Establishing the right culture and finding the right people isn’t easy.
“Governance cannot cope with this new agile world,” says Peter Sany, Chief
Information and Technology Officer, Swiss Life. “Culture is much more
powerful and agile than governance.”
CEOs need to drive the shift away from an analog to a digital culture.
A recent white paper about digital culture, produced by Booz & Company18,
identifies the key features of an analog culture versus those of a digital
culture along three primary dimensions: customers and demand; organization;
and attitudes and ways of working (see Figure 7-1 on page 70). The CEO
must drive the overall vision and a critical element of that is cultural change.
CEOs should set clear goals and lead from the front – timing is critical.
Gegenheimer shares a healthy skepticism with other executives about the

likely success of major transformation programs, as he thinks that a large
percentage of them fail. To his point, McKinsey & Company conducted some
interesting research19 across a range of industries into success factors behind

FIGURE 7-1 : ANALOG VERSUS DIGITAL CULTURE
POTENTIAL SERVICE DIGITAL CULTURE
CUSTOMERS ■ Pushes products into the ■ Pulls ideas from the market
CUSTOMERS
AND DEMAND market ■ Driven by customer demand/
AND DEMAND
■ Driven by purchasing and anticipating customer needs
supply
■ Strong hierarchy ■ Flat hierarchy

■ Slow decision making ■ Rapid fact-based decision
ORGANIZATION
■ Process and task orientation making
■ Defined tasks ■ Result and product
orientation
■ Empowered employees
■ Understands needs of long- ■ Understands needs of digital

ATTITUDES standing customers and how customers and how to adopt
AND WAYS OF
to fulfill them new trends
WORKING
■ Orientation toward status ■ Orientation toward
quo, past lessons and innovation, improvement
accepting constraints and overcoming constraints
■ Accepting complexity ■ Driving simplicity,
■ Experience and stability consistency and
count transparency
■ Homogenous teams, ■ Potential, vision, curiosity,
working within departmental motivation, flexibility and
silos adaptability count
■ Career progression within ■ Mixed teams working
defined paths in cross-functional and
■ Focus on planning and integrated communities
optimization ■ Strong collaboration
■ Rapid, unpredictable career
progression
■ Focus on rapid launch and
learn
Source: Booz & Company 2013

major transformation programs and the reasons that many fail. They put the
average success rate at less than 40 percent, but also found that by applying
some basic principles, the average success rate can be doubled to around 80
percent.
There are two dimensions to McKinsey’s observations on increasing the odds

of success:
n Timing – the failure rate of major change programs is highest when a

company is in a defensive position and reacting to events, and lowest
when an already successful company is proactively striving to do even
better. While this seems to contradict the common wisdom that it should
be easier to transform a company when its back is against the wall, this
advantage is usually outweighed by the difficult circumstances that the
company is in – management is often fighting fires daily to keep the
business on track while trying to implement fundamental change.
n Leadership factors – while these are somewhat obvious, McKinsey

found that their absence was the major cause of transformation program
failure. For example, establishing well-defined stretch targets for the
transformation program is the single biggest success factor – scoring
a massive 167 percent in success odds between companies that did
and did not set them. Strong CEO involvement is also critical with more
than 100 percent improvement in the odds of success, while clear
organizational structure for change and frontline ownership improved
success rates by nearly 75 percent.
SENIOR LEADERSHIP TEAM
“It all comes down to one thing: leadership attitude.” – David Moffatt
While the CEO’s role is critical, the roles of the senior management team
are also vital to success in digital transformation. These roles can vary from
company to company due to factors such as: the current position and/or
desired degree of transformation; the strengths and weaknesses of the

individual managers; and organizational culture. The argument for having

people in some or all of the roles described in this chapter is that doing so
clearly identifies responsibilities. The counter argument is that the roles can
create an ‘us-versus-them’ environment, which is to be avoided.
CEOs must determine the roles of the senior

management team and whether responsibilities should
be allocated to individual members or are team-wide.
We suggest new roles in the digital enterprise, such as chief digital officer
(CDO) and chief customer officer (CCO), but these titles can vary widely
from company to company. Gartner, for example, refers to chief data
officers,20 while many companies use chief customer officer, others prefer
chief client officer (OptumHealth), chief experience officer (Cigna), executive
vice president, member experience (USAA), or chief global customer and
marketing officer (Dunkin’ Brands).
CHIEF EXECUTIVE OFFICER

A company’s CEO must understand customers, know how to motivate
stakeholders and challenge a company to excel. “The boss has to be
unreasonable and be good at it,” says Ben Verwaayen, former CEO, Alcatel-
Lucent and BT.
David Moffatt former CEO, Lebara Group, states, “Leadership is an

institutional quality. It isn’t about the measure of one individual leader. It
doesn’t require a cheerleading CEO; it requires really good data analytics, a
really good understanding of the customer needs, and the capacity to make
capital allocation decisions that support the creation of shareholder value.”
“That doesn’t require somebody who’s a football coach,” Moffat adds. “What
it requires is somebody who’s a master conductor, who can bring in different
elements of the orchestra at different times and have them work together.
And that doesn’t have to be somebody with a loud voice or a big presence.
It does need to be somebody who’s agile in their thinking, very technology-
literate and thoughtful about how risk is managed and value is created.”

CHIEF DIGITAL OFFICER

Chief digital officer, sometimes called chief data officer, is a relatively new
role. According to Gartner,21 there are more than 100 CDOs serving in large
enterprises today in more than a dozen countries, 65 percent of them in the
U.S. and 20 percent in the U.K. Banking, government and insurance are the
top three industries with CDOs, in that order. The research firm predicts that
by 2015, 25 percent of organizations will have a CDO.22
The CDO is an important addition, often responsible for the company’s digital
business models, including how those models work plus the management
and delivery of digital assets. Based on how the senior management team
is organized, the CDO may also be accountable for digital users’ experience
and establishing and managing the company’s omnichannel/multichannel
approach (see Chapters 3 and 4).
CDOs are beginning to emerge in the communications sector with Telefónica

recently announcing a new role of chief commercial digital officer, to create
new business opportunities and grow revenues from the group’s digital
assets.
CHIEF CUSTOMER OFFICER

Also a relatively new role, the CCO is responsible for all aspects of customer
experience management throughout the customer lifecycle and looking at
everything from the customer’s perspective.
Many CCOs are trying to move their companies from an ‘inside-out’ view of
markets and customers, to an ‘outside-in’ view, driving change from product
centricity to customer centricity. In the inside-out approach, a company looks
at products and processes and identifies how they fit with what the customer
wants. In an outside-in approach, a company puts itself in the customers’
place and strives to change products and processes to meet their needs.
In a customer-centric company, the CCO fosters:
n an outside-in approach to products and services;

n a deep understanding of the customer across the entire lifecycle;
n empowerment at the point of interaction;
n efficient, tailored business processes;
n cross-company consistency;
n operational transparency; and
n data-driven decision making.
Some CEOs we interviewed view the role of CCO as one of cross-company

program management, where an independent CCO works across all of
a company’s departments to motivate, manage and measure customer
experience, and to foster necessary cultural change throughout the company.
Others believe customer experience is ‘everyone’s job’, and after agreeing
on key metrics, each part of the company should be left to deliver on its own.
Most agree that reward should be tied to accomplishment, with perhaps as
much as 40 percent of a senior manager’s bonus being tied to customer-
specific metrics.
CHIEF MARKETING OFFICER

In a traditional environment, the CMO typically focuses on marketing, not
technology. The role includes understanding the intersection of the company’s
business strategy, existing and potential customers, products and services, and
the company’s internal and external channels.
However, the role of the CMO is in flux, partly because of the transition to
become a digital business. If a company has a CDO or a CCO, some of the
CMO’s traditional responsibilities could be assumed by those executives.
Conversely, if a company is attempting to transform to become a digital
business and does not have a CDO or a CCO, the CMO may be asked to take
on those responsibilities.

There is also growing intersection between the role of the CMO and the role
of the CIO. For example, a spate of articles in magazines such as Forbes23
have stated that within five years CMOs will spend more on IT than chief
information officers (CIOs). Few if any CMOs, however, want to get involved
in tactical IT initiatives, such as reducing the number of corporate data
centers, and they certainly don’t want to fund these initiatives.
The tension between the CMO and CIO is most acute when CMOs think an
initiative is strategic to the company in general and to their organization in
particular. Mobile commerce is a good example. Bank of America predicts
that $67.1 billion in purchases will be made from mobile devices by European
and U.S. shoppers in 2015,24 which makes mobile commerce important to
the marketing organization. Big data is another initiative that CMOs see as
strategic as they are trying to determine how to leverage big data to target
existing and potential customers with more tailored offers.
CHIEF INFORMATION OFFICER

A CIO is usually involved with re-engineering business processes, identifying
and developing the capability to use new tools, and identifying and exploiting
the enterprise’s knowledge resources. Many CIOs head the drive toward a
digital approach and moving towards creating and monitoring business value
from IT assets. CIOs typically drive crucial IT projects, which are essential to
the strategic and operational objectives of an organization.
Increasingly the CIO needs business skills to relate to the organization as a

whole, as opposed to being a technological expert with limited functional
business expertise. The position is as much about anticipating trends in the
market with regard to technology as it is about ensuring that the business
navigates these trends through expert guidance and strategic IT planning
which aligns with corporate strategy.
We examine the role of the CIO in greater detail in the accompanying guide in
this series: Becoming an agile business.25

CHIEF TECHNOLOGY OFFICER

The CTO oversees current technology and creates relevant policy with
sufficient business knowledge to align technology-related decisions with an
organization’s goals. A CTO’s functions can vary from company to company,
and sometimes overlap with the CIO.
TAKEAWAYS
Whatever the roles, the executive team pulling in the same direction is key
to the success of transforming to, and running, a digital business. Some
creative conflict is inevitable and good – it demonstrates commitment and
engagement – but don’t tolerate in-fighting at the top. This wastes a lot of
time and energy, and creates damaging divisions in the workforce.
How successful each individual is depends on empowering the role holders

to do their jobs.
Cross-functional executives need the backing of all executives to eliminate

conflicting departmental goals and incentives. For instance, procurement
staff is likely to have targets and incentives based around how much money
they can save in upfront costs. Opting for a less expensive managed service
contract than the one the CIO recommends, say, is a false economy if it
restricts flexibility, leading to poorer customer service or longer lead times
for new services. Both are likely to impact overall profitability and ability to
compete.
People are territorial and inclined to stick with the way they’ve been
accustomed to doing things. Tackle these issues through education (clearly
and consistently communicating what the changes are designed to achieve)
and with tact as far as possible, but forcefully if necessary. Being a leader
isn’t a popularity contest.

18 Please see Building a Digital Culture: How to Meet the Challenge of Multichannel
Digitization, www.booz.com/media/file/BoozCo_Building-a-Digital-Culture.pdf
19 Corporate transformation under pressure, McKinsey Quarterly 2009.

www.mckinsey.com
20 blogs.gartner.com/mark_raskino/2013/11/06/5-facts-about-chief-data-officers/
21 blogs.gartner.com/mark_raskino/2013/11/06/5-facts-about-chief-data-officers/
22 www.networkworld.com/community/blog/gartner-do-you-have-chief-digital-
officer-you%E2%80%99re-gonna-need-one
23 www.forbes.com/sites/lisaarthur/2012/02/08/five-years-from-now-cmos-will-spend-
more-on-it-than-cios-do/
24 www.businessinsider.com/bii-report-why-mobile-commerce-is-set-to-
explode-2013-1
25 www.tmforum.org/howto

#8.
WHAT TO
DO NOW
WHAT TO DO NOW
Even ignoring the impact of digital business, the pace of business

change and the churn in successful companies is intense. The evolution
of digital businesses will accelerate that pace. As a result of these market
forces, start with a plan to respond the changes in your traditional business
and how to transform the business successfully to become a digital
enterprise at the same time.
Remember what McKinsey found: Don’t wait until you’re in trouble. The
problems won’t go away, and the longer you delay, the less chance you have
of succeeding
PICK A CHAMPION AND A TEAM

Most of the decisions that a CEO needs to make relative to the
transformation are impacted by factors such as the company’s current
position in the marketplace, corporate culture and the strength of the senior
management team.
With these issues in mind, choose a transformation champion or champions

to lead the transformation. It could be the CEO or the entire senior
management team; the board or a board member; or the senior leadership
team or just one of its members.
Then pick a supporting team, which might include a chief digital officer or
chief customer officer. If the CEO determines that those, or other, roles
are needed, will they be carried out by individual members of the senior

WHAT TO DO NOW
management team or be a team-wide responsibility? This is a crucial decision

– much of your success will depend on leadership from the top team.
GET THE BOARD ON BOARD

David Moffatt, former CEO, Lebara Group, says that the CEO must “help the
board get aligned with the management team about the imperative, but more
particularly, the actions, and where the gaps are. Be prepared. Help the board
be prepared for the dynamic shifts that happen along the journey, because
customers change their preferences, competitors act differently, and the
regulatory environment sometimes changes. So, stay dynamic to that. And
then, of course, as the CEO, you are accountable for the specific timeframes
and outcome delivered for the capital you deploying to bring about this
transformation.”
TURN THE VISION INTO AN ACTIONABLE PLAN

As part of responding to the challenges that Moffatt identified, establish
a vision for the transformation that makes sense for the company, in part
based on its starting point – where the company stands on the time-to-
transformation versus profitability curve (see page 19) – and the resources
available for transformation.
Use a decision tree to help establish that vision (see page 23), then flesh
it out by starting with where you want to be and working backwards –
beginning with the customer.
Make sure the vision for the digital transformation clearly identifies what
types of services your company will offer and what types it won’t. The vision
must address thorny questions such as whether or not the company will sell
customers’ [anonymized] data to third parties.
Draw up an implementation plan – see the steps recommended in Chapter 4

to get started. It doesn’t have to be perfect and your end goals are unlikely to
be crystal clear. And if they are, they will almost certainly change over time as
the market shifts along with customers’ expectations. Use an Agile approach

WHAT TO DO NOW
to your projects, which are collectively designed to bring about transformation

– and check constantly on your progress towards your overall business goals.
Remember the executives biggest responsibility is orchestrating the

series of steps, taken on several fronts at once and bearing in mind inter-
dependencies, to bring about radical change overall. Timing and prioritization
are fundamental to success.
CULTURAL CHANGES AND COMMUNICATION

Determine the degree to which the corporate culture must change – and
think long and hard about how you are going to do it. You must carry the
company with you, through consistent and constant communication of
what the company is trying to achieve, why the changes are necessary and
why everyone needs to support them – and ultimately why they matter to
everyone.
People need to understand – through ‘fear’, as discussed on page 12 – that

the option of things continuing as they are is just not viable. At the same time
– through ‘love’ as explored on page 13 – explain how a brighter future will
bring big benefits to the employees themselves, as well as to customers and
other stakeholders.
FOUR PILLARS OF WISDOM

As part of creating that vision, CEOs must also consider the four pillars of a
digital business:
1. Business agility and rapid innovation
2. Operational agility and effectiveness
3. Customer centricity
4. IT and data centricity

WHAT TO DO NOW
Use Figure 2-4 (on page 28) to work out what your company needs to
become better at in the four core four competences of a digital business. In
many cases, becoming more sophisticated means speeding up. For example,
it demands:
n going from a quarterly software release cycle to a continuous process;
n implementing new products and services in weeks or months instead of

years; and
n moving from where IT innovation occurs on hardware cycles to where it

occurs on software cycles.
Simplification is essential: Accelerate transformation by rationalizing your

product portfolio, which will allow you to simplify all the processes, systems
and infrastructure that support them. This will also enable much greater levels
of automation, which done right, allows much greater automation (which
among other things translates to better customer service through self-care
and self-service) and cuts costs.
This simplification will also make it easier to integrate with partners, which
you’re going to need to deliver digital services. Think about who you are going
to choose and why, and the ramifications for margin due to revenue sharing.
Who’s responsible when something goes wrong and how will you fix it so
customers don’t suffer? Among other things.
IDENTIFY POSSIBLE ROADBLOCKS

Beyond creating a vision, identify possible obstructions and develop a
strategy to mitigate those factors. While factors will vary by company, the
most common characteristic is a lack of urgency – something you need to
inject right across the company and its external stakeholders.
Another factor that typically impedes change is complexity. As we said above,

simplicity is the key. Get rid of everything you don’t need and anything that
isn’t bringing value to the company.

WHAT TO DO NOW
DON’T WASTE TIME AND MONEY
Finally with urgency and simplification as perhaps the two biggest driving
forces, take advantage of all the help available to you, such as the collateral
and activities offered by TM Forum. The Forum’s standards-based tools
and best practices have developed and continue to evolve through the joint
efforts of thousands of engineers, architects and thousands of experts across
many disciplines who form work groups to quickly address particular business
issues within our unique Collaboration Community.
Those tools and best practices have been implemented by service providers
of all types and sizes, operating in diverse markets, to achieve quantifiable,
tangible, business benefits. All of the Forum’s collateral is available to Forum
members, free, for them to deploy in line with their particular goals. The
materials are supported by the online communities, which are a source of
help and inspiration, as well through an extensive library of case studies,
training, three major events, held in Europe, Asia and America throughout the
year, as well as research and publications.
Our assets might not deliver exactly what you want, but they will be a very
good starting point and get you going, fast.
We very much hope you have found this guide helpful. Any comments,
suggestions or queries should be sent to Annie Turner, Editorial Director,
TM Forum via aturner@tmforum.org.

NOTES

C-SUITE
HOW TO
GUIDE
TRANSFORMING TO
A DIGITAL BUSINESS
This isn’t yet another book
outlining how the digital
revolution is fundamentally
changing everything, although
that’s true. It’s a pragmatic guide,
for the CEO and team, about what
you can do to ride the digital wave
instead of drowning in it – and,
most importantly, how to do it.
www.tmforum.org

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C-SUITE

Copyright © 2014 TBC

No part of this publication may be reproduced, stored in or introduced into

The companies that succeed in the digital economy will be customer-centric,

Becoming a digital business isn’t simply about getting new products to

A companion title to this guide, designed to help C-suite executives, is the

4 TRANSFORMING TO A DIGITAL BUSINESS

In this guide, we identify key concepts and issues relative to a digital

Several TM Forum members and friends of the Forum kindly agreed to be

TRANSFORMING TO A DIGITAL BUSINESS 5

The term ‘digital business’ is relatively new, has no universally accepted

CEOs must transform their businesses by taking advantage of the

n Costs are dramatically lower in a digital environment than an analog one.

TRANSFORMING TO A DIGITAL BUSINESS 7

n Bringing together the various parts of an organization in a customer-

Put another way, digital businesses can create competitive advantage

n Information availability – harnessing big data and analytical techniques

n Innovative processes and technology – to create, produce and deliver

n Global reach to new markets – that otherwise would be too costly to

Harnessing technology is an elementary part of digital transformation, but

8 TRANSFORMING TO A DIGITAL BUSINESS

FIGURE 1 -1 : THE FOUR STRATEGIC PILLARS OF A DIGITAL BUSINESS

BUSINESS OPERATIONAL IT & DATA CUSTOMER

Source: TM Forum, 2014

TRANSFORMING TO A DIGITAL BUSINESS 9

CEOs must manage the transformation to a digital business by changing

BEWARE THE RISK OF ‘INCREMENTALISM’

10 TRANSFORMING TO A DIGITAL BUSINESS

TRANSFORMING TO A DIGITAL BUSINESS 11

CEOs must find an effective transformation champion and

Several of the top executives we interviewed stress the importance of

Whoever the champion(s) is or are, Verwaayen defines their two main

THE ROLE OF FEAR

12 TRANSFORMING TO A DIGITAL BUSINESS

Eastman Kodak was founded in 1888 and held a dominant position in

THE ROLE OF LOVE

TRANSFORMING TO A DIGITAL BUSINESS 13

CEOs should use a combination of love

THE POWER OF CROWDSOURCING

The heart of TM Forum always has been our unique Collaboration

While our original heartland was telecommunications, our membership and

14 TRANSFORMING TO A DIGITAL BUSINESS

HOW FRAMEWORX WORKS

Frameworx is updated continuously (consolidated into two formal updates a

n The Business Process Framework is a comprehensive, detailed process

n The Information Framework defines the key elements of information

n The Application Framework comprises application building blocks,

n The Integration Framework defines key application program interfaces

TRANSFORMING TO A DIGITAL BUSINESS 15

Innovation isn’t about what you’ve invented or implemented; it can be about

Appoint a champion to convey a sense of urgency to all stakeholders (fear)

1 Professor Richard Foster of Yale University quoted on the BBC www.bbc.co.uk/

4 Please see Embracing Digital Technology: A New Strategic Imperative, www.

16 TRANSFORMING TO A DIGITAL BUSINESS

TRANSFORMING TO A DIGITAL BUSINESS 17

There is an old maxim that says no time is wasted in planning. This is

FIGURE 2 -1 : TIME TO TRANSFORM VERSUS PROFITABILITY

TRANSFORMING TO A DIGITAL BUSINESS 19

Looking at the communications sector, if we were to place mobile network