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A wave of new opportunity is on the horizon. Are operators ready to compete?

Interview with George Nazi

George Nazi is a managing director at Accenture, leading the Network and Carrier Innovation and Transformation area within Accenture Communications Media and Technology. He comes from the operator side of the business, with more than 20 years’ experience in both the United States and the United Kingdom, where he most notably managed large divisions for British Telecom and Alcatel-Lucent.

You’ve been a CTO of a telco yourself, and now at Accenture you advise CTOs. What do you see as the most exciting opportunity in the communications industry today?

To me, the most exciting opportunity is that the network is becoming more and more pervasive. If we look at the past 10 to 20 years, the network was a specialized capability, perhaps offered by a service provider, and it was a kind of luxury. But today, network capability is a must—at home and at work. There is simply an assumption that things will work. Connectivity impacts every facet of our lives, professionally and personally: If your connectivity stops, so does your car, your health care, your payment and banking, your wearables, your metering, your education, your link to the world.

Almost every household relies on network capabilities, schools rely on networking for homework and communication, and increasing numbers of industries are embracing the need for network connectivity to provide the services they offer. Businesses need to be able to perform diagnostics and software upgrades remotely, and households need broadband, security feeds, and remote telemetry to look at smart metering, for example.

In the Internet of Things (IoT) future, wearable devices will need increasing connectivity, along with other advancements in science and technology—such as artificial technology (AI), analytics, security, blockchain, and 5G. Following Moore’s law over the years, storage and computing are much cheaper now, and these technological changes are creating a combinatorial effect such that it’s now essential to start digitally transforming as quickly as possible.

What’s the risk of delaying that digital transformation?

Clearly, the risk is that operators can be left behind and become less relevant to obsolete. It’s important to have a “current” mindset (whether people, process, technology, or operations) to be able to transition from what can quickly become legacy and grow into the new digital era and stay current with the technology.

I’ll give you an example. Many schools today are providing homework over the Internet so that kids can download it, share their drafts with their teachers, collaborate electronically with other students, and submit the final result. Even textbooks are becoming downloadable, searchable, and collaborative. Teachers are expecting students to use school-provided laptops and tablets, to collaborate with them online, and so if you don’t have that connectivity, you can hinder the education system and even advancements in education.

Also, a lot of the applications that consumers have been using personally are becoming commonplace for business use. An example in the communications space is Skype. For an app like that, if you don’t have the right level of connectivity, your business is severely hindered.

Let’s talk more about connectivity as an opportunity for the telco.

I’ll give you three potential paths toward monetizing connectivity and leveraging IoT possibilities such as wearables. First, in health care, doctors and hospitals are coming onto the network, bringing the opportunity to quickly measure and analyze a person’s health (whether through autonomics or through experts) and report that data back to a caregiver. If you’re a service provider at the hospital, you can provide wearable devices to communicate with a connectivity server and monetize that network. Second, in the financial sector, you could use digital advances in network speed and flexibility to reduce the cost of your peer-to-peer network and leverage that new technology to reduce your capital and create a faster way to do financial transactions between banks and customers. Blockchain relies on peer-to-peer “networks” for the secure transactions. Third, in automotive, you could work with a car manufacturer and create an integrated connectivity with profiles, preferences, analytics and AI—along with an operating system and an embedded mobile edge compute device—inside a car to feed remote monitoring and diagnostics back to the service center. All of this requires connectivity and a method for monetization.

Overall, it’s become an opportunity for telcos to change how the traditional financial and subscription models work, enhancing those, and creating a bigger ecosystem that lets you get into adjacent industries (e.g., transportation, health care, pharmaceuticals, energy, and logistics) by integrating the capabilities inherent in IoT, wearable devices, connected cars, and so on—and leverage the network to monetize it more. With proper monetization, a network will more than pay for itself.

What’s the biggest barrier to success here?

In my view, the biggest barrier is what I call legacy thinking. That’s the traditional stance of many operators, where we end up fragmenting divisions—from sales, to product units, to IT units, to network units, to customer care and field force—each operating in its own silo, and those divisions are too afraid to come together and collectively optimize what they’re doing to provide excellent service to the customer. Companies can remain stuck in that old way of thinking, taking 12-18 months to produce a new product while the competition is releasing products in 8-12 weeks. It can be dangerous to remain in that legacy thinking mindset and fail to adopt new ways of working.

We have stopped seeing the network the way we used to. With software-defined networking (SDN), which lets you move network intelligence from hardware embedded inside switch or router into software, you achieve new levels of flexibility and dynamism. Software gives you the flexibility of a distributed architecture, so you don’t have to think in what I refer to as the five 9s mindset. In the distributed architecture that fits into the cloud, if a link fails, it automatically switches to the next and the next and the next without any human intervention. In the traditional way of thinking, that scenario would add up to great cost and time, compared with the virtualized IoT world where far less hardware and manpower are involved. We need to get away from those traditional five 9s concepts. If you don’t change that legacy thinking into software thinking, you’re only creating bigger hurdles.

Any more thoughts on eliminating “legacy thinking”?

Historically, in the network space, we’ve relied on two or three big technology vendors. In the new world, there are many different new types of vendors: startups, open-source specialists, companies focusing on virtual rather than hardware-based. If you don’t open your ecosystem and rely on a wider ecosystem—some old, some new—you’ll be stuck with a monolithic, old architecture versus a flexible, multivendor, wider open ecosystem that can give you a far richer feature set. The only way to achieve aggressive growth today is to combine it all.

Again, the network is evolving from hardware-based to software-based, virtual environments, SDN and network functions virtualization (NFV). That evolution allows for rapid development and the dynamic capability to deploy the network, because software deployment is much faster than installation over hardware. Web-scalers and platform operators implemented these capabilities 10 years ago, whereas some operators today are only implementing them now! Web-scalers and platform operators can release or produce a new capability (or an adjustment) in a matter of weeks or days, whereas those legacy-based operators are taking a year to a year and a half to do the same thing. So, my recommendation is to adopt platform thinking either by implementing SDN and NFV yourself or by partnering with those platform players and instituting their solution to move faster, and of course, change the way of working and operating into a more agile methodology.

Final thoughts?

What we’re seeing in the next 5 to 10 years is a fast advancement of technology alongside cheaper storage and computing—and it’s allowing a tidal wave of new capabilities such as AI, analytics, security, IoT, blockchain, and 5G. Being successful demands a departure from today’s models and competencies. If you (1) don’t have digital, software-based flexibility in your network, (2) don’t retrain your people with the skills and capabilities they need to work in new operating models like DevOps and Agile, and (3) don’t transform your investment priorities, product set and monetization models … others will take the lead. It’s that simple. So, take advantage of the advances in network science and technology and start transforming as quickly as possible. Help is out there!


 

Accenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialized skills across more than 40 industries and all business functions – underpinned by the world’s largest delivery network – Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. With approximately 442,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives. Visit us at www.accenture.com.

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