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Legacy tech integration issues impede telcos’ digitisation ambitions

Research finds a worryingly large number of operators indicating that when it comes to digital transformation, integration with legacy technology is their largest gating factor, followed closely by data security concerns

Although the telecoms industry has seen soaring demand for digital services throughout the Covid-19 pandemic, research commissioned by mobile technology specialist Upstream has found that telcos are finding some significant obstacles in their path to digital transformation.

The road to digital study, which looked at how telcos are migrating from physical to digital operations, was conducted by the Technology Innovation Council. It aimed to highlight the growing opportunity for telcos to grow their customer base and broaden their revenue streams throughout the Covid-19 crisis if they were willing to embrace digital.

The study questioned executives from 56 telco operators worldwide about their plans for digital transformation. Each provided insight into the benefits and challenges of digitisation, how they use data generated from digital sales, and how they create revenues from physical and digital channels. The regions covered were Asia-Pacific, Europe, Latin America, North America, and the Middle East and Africa.

The study ranked concerns around technology integration and the management of security and data as the primary obstacles to pursuing a digital-centric future. Perhaps somewhat worryingly, it found that over 70% of telcos would struggle to integrate digital channels, while other key concerns were around short-term profit loss, data security and the potential for poor customer experience.

Despite more than 65% of telcos developing a clear roadmap to digitisation, with 75% ready to increase their investment in digital channels, many were still heavily reliant on physical channels to sell their products and services to customers. Some 73% of companies said integrating new platforms and technologies with existing channels would be too difficult an undertaking and might result in short-term gaps in top-line profits if customer experiences were disrupted.

“Telecoms operators have experienced the greatest challenge in a generation, but that challenge has brought with it great opportunities”
Dimitris Maniatis, Upstream

In addition, just over half (54%) of telcos claimed that, while implementing newer technologies would be manageable, complying with modern security standards and regulations and becoming more vulnerable to cyber attacks would make the path to digitisation more difficult.

While only a third of operators worldwide said finding the right talent was hindering their plans for digital development, the majority of such businesses were located in emerging markets such as Latin America, Africa and the Middle East. This, according to the survey, highlighted a pronounced skills gap between developed and emerging markets, with the latter still struggling to find the skills needed to facilitate digitisation.

Just under half (46%) stated that cost was the biggest issue to realising transformation ambitions, suggesting that the path to digitisation was desirable and investment is ready.

A surprisingly low number of telcos viewed return on investment (ROI) as a barrier, with only two-fifths of respondents expressing concerns that a return might not be easily established. Given that the telecommunications industry is traditionally very ROI-focused, the report authors said this suggested there was a great deal of confidence in the path towards digitisation if the aforementioned barriers could be overcome.

In conclusion, the report said the findings implied a phased approach towards digitisation was in the best interests of telcos worldwide to ensure interoperability between technology and services and maintain what was described as a “seamless” customer experience.

“Telecoms operators have experienced the greatest challenge in a generation, but that challenge has brought with it great opportunities,” commented Upstream CEO Dimitris Maniatis.

“By working hard around the clock to keep families, friends and businesses connected while meeting unprecedented demand for connectivity, operators have seen first hand what can be gained from digital transformation. By bringing their long-term plans for digitisation forward, they can do more to help and connect communities while dramatically improving customer engagement, automation and profitability.”

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