In a video-taped keynote address, John Chambers, CEO of Cisco, encouraged members of the TM Forum to be more than plumbers who move bits around--and build business models around--the customer experience. He said now is the time because of the opportunity presented by the second phase of the Internet. But it was Sol Trujillo, CEO of Telstra and Paul Reynolds, CEO of Telecom New Zealand, who spoke in person about the challenges and rewards of doing so through major business transformation efforts.
Chambers said that top line opportunities are almost unlimited, but that the approach to seizing them must be through collaboration. “Collaboration gives us the chance to bring new revenue models to market quickly,” he said.
Chambers emphasized, however that the role of the service provider will change and that service providers should not lose sight of the importance of quality management for the new environment, that this is their ultimate role.
“If you can’t manage it, you can’t monetize it,” Chambers said.
Actual service providers talked about re-inventing themselves to become the leaders of content and communications services, thwarting Chambers’ opinion.
Trujillo silenced his critics by turning around Telstra despite what he described as the worst regulatory climate in the world. Telstra, a company that had admittedly lost its technology leadership, was losing revenue on all fronts and was on the verge of being sold off in pieces.
“Dramatic change was required. We had to place some billion dollar bets like shutting down our CDMA network,” Trujillo said. “That was not a popular decision and not everybody welcomed it.”
Now, halfway through his company’s business and network transformations, that network is closed. And with the help of IBM, Brightstar and others, the company has realized $150 million in savings in its supply chain. It has also built an ecosystem that Trujillo called “the standout feature of the company’s transformation” and raised average wireless revenue per user by $20 per month. The company even saved its Yellow Pages by taking it mobile.
“These kinds of products are not dead. When you add value and create an experience, people will use it,” Trujillo said.
Trujillo said he has been trying for years to train the whole industry about the customer experience being the key differentiator and now he has an example to prove it.
“Differentiation is the most powerful word I can think of. It is everything in the market place...now, you can almost do anything you want, anywhere you want in Australia and now when I come to the U.S. or Europe it is like taking a step back in time.”
Some of the keys to a successful transformation, Trujillo said, are to take your people with you as you migrate to an IP environment, to build an ecosystem, transform your supply chain and focus on the customer experience by organizing your company around the customers’ needs.
Paul Reynolds, CEO of Telecom New Zealand, is not as far along on his transformation plan as his colleague from Australia, but he said his company is moving further and faster along this path than anyone else.
He, too, is putting the customer experience at the heart of the transformation initiative. However, he is struggling to serve people with “quite sophisticated Western European tastes in a country with little scale to support those aspirations,” he said.
As a provider in a country with only a few players, Telecom New Zealand enjoys higher margins than providers in more crowded markets, but that makes the consumers more demanding. It was a demand the company was failing to meet when Reynolds came on board in October of 2007.
“The quid quo pro is that customers must get a good deal and feel they are getting services they have come to know in their travels across the world,” Reynolds said. “New Zealanders are famous for their competitive spirit and prowess. They expect to win on the world stage and it is no different for its telecom companies. We have to win, too”
Reynolds is leading the transformation of NZT in order to overcome losses in revenue and customer satisfaction as well as its perceived arrogance and a conflict with its government.
The conflict culminated in a forced separation of its operations, which Reynolds saw as an opportunity to drive its customer-focused transformation now underway.
His strategy and advice are to invest in both long-term health and bottom line growth while meeting the needs of shareholders.
“It’s not about a long wait during transformation followed by a big-bang [return on investment],” Reynolds said.
His goal is to get the PSTN switched off altogether, but efficiency can be gained in other areas. The company has moved approximately half its customers from its legacy network to an IP network, increased bundling from 45 percent to 75 percent of customers and grew online sales from 1 percent to 25 percent. It also focused on reducing its provisioning time form weeks to days and is taking 300 legacy systems out of the network.
NZT has an aggressive timeline. Quoting race car driver Mario Andretti, Reynolds said, “If everything seems under control, you’re just not moving fast enough.”
