Lack of digital strategy and skills among service providers
Service providers believe they are not transforming fast enough to meet the demands of today’s digital era. According to a new survey, half of C-level and other service provider decision makers predict that it will take their companies more than five years to transform.
This is not fast enough according to 64% of respondents to the survey conducted for provider of customer experience solutions, Amdocs, by analyst firm IDC. The respondents believe that the communications industry will be outpaced by other industries.
The survey, shows that 46% of service providers still do not have a digital strategy in place. While 89% of respondents highlight the importance of having a chief digital officer (CDO) to lead and drive such a strategy, only 28% have one. Furthermore, 79% of the industry is still executing digital transformation projects as standalone initiatives without alignment to a broader technology roadmap or business strategy.
A lack of clear strategy, together with low digital channel adoption rates and multi-vendor systems environments, are equally seen as the three biggest obstacles to digital transformation, either in terms of slowing down a project, or completely derailing it.
Altogether, 69% of respondents believe that the communications industry has strong technology capabilities but will find it difficult to implement and bring to market digital transformation projects quickly enough. When asked what factor would most help their companies transform into digital service providers, having the right skills to create and implement digital transformation strategies were ranked first and second; the use of customer experience as a design principle for new products and services was the third most helpful factor. All of these were well ahead of having the necessary financial capital, which ranked sixth, together with need for greater cross-unit functionality and collaboration.
To deploy new digital capabilities and accelerate the pace of digital transformation, service providers are looking to share the challenge with partners, the study suggests. In the next 12 months, 41% of respondents say they will invest in managed services as part of their transformation in order to enable solutions for new areas.
In general, IT services vendors are ranked as the most valuable partners for the execution of digital transformation projects, ahead of specialist digital consultants (second) and systems integrators (fourth). Network equipment vendors and strategy consultants came in a distant eighth and ninth place, respectively. These findings suggest service providers are looking for partners who can deliver a wide range of expertise.
Further supporting this, research found that a broad, best-of-suite solutions portfolio covering the IT stack is seen as the second most important criteria in partner selection, after a global delivery model.
Business agility and delivering an omni-channel customer experience are immediate priorities, according to the study. Agility and the ability to deliver a seamless customer experience across channels are the first and third most critical capabilities for service providers’ survival in the digital age, the second being the ability to attract the best talent with new digital skills. Providing an omni-channel experience across services also ranked as third in terms of service providers’ digital transformation business priorities in the next 12 months together with improving customer experience (53% of respondents), after increasing business agility (65%) and increasing revenue from existing services and products (62%).
Said Andy Hicks, research director, telecoms and networking, EMEA at IDC: “The majority of service providers today are actively working to deploy digital technologies to improve their businesses, but this is happening without a unifying top-level vision and strategy. They are also telling us they are struggling to realign processes and re-train staff at the same time, further delaying real business outcomes. They may be able to keep up with other service providers, but they don’t think they can keep up in the broader digital world unless they address gaps in digital strategy, skills and leadership. Our research suggests they will source professional services to bridge some of these gaps.”
Said Eric Updyke, group president of system integration and operations at Amdocs: “As digital transformation is made up of multiple projects and initiatives, it’s clear from this research that companies fear timelines are slipping, and that they have serious concerns as to whether they have enough strategic focus and digital skills to transform fast enough. This is where a partner who brings the right digital skills, expertise, and solutions can come in to support current and new leadership and their IT and business teams to create and execute digital transformation strategies faster.”
