Learn to read the digital wind: A group CIO’s perspective of the state of the telecoms nation

Phil and ChrisOne of my highlights from the last Great Telco Debate was my informal interview with Phil Jordan, former Group CIO from Telefonica, about his 20 years in the telecoms industry. We talked about the highs and lows of the role, the relative role of the CIO, telco transformation and the state of the market. Here are some of the key topics and themes:

Highs and lows of a telco CIO

  • Phil believes the industry should be proud of being at the heart of building the digital economy and helping people run their digital lives
  • Almost every day for Phil had 4 highs and 5 lows: One of the lows is that telecoms is a much-maligned industry and ‘we’ do a great job of kicking the proverbial out of each other when we gather for an industry forum such as the Great Telco Debate. ‘We’ continually complain about how difficult it is and how poor ‘we’ are at servicing customer needs.
  • A low, especially recently, is how frustrating it can be getting the industry to shift gear. We are running out of time to remain relevant and at the centre of driving the digital revolution
  • The vast majority of time has been spent fighting internally with colleagues over the digital transformation of the organisation rather than fighting with competitors, dealing with regulators or building relationships with suppliers

The relative role of the CIO

  • Telcos were traditionally run by network people and IT was very much an afterthought, resulting in overly complex systems. According to Phil, very little architectural integrity exists in telcos. IT was a system of record but is now moving to be the differentiating factor with the network becoming the underlying product. The network is, of course, the biggest asset but it is not a source of differentiation. Phil suggest that the real differentiator is the leveraging of customer data. This is a huge transition for telcos to move from an engineering mentality to actually serving the customer. All this places huge technical, skills and leadership demands on the organisation.
  • It is still difficult to operate at a pace within the telcos but they are gradually realising the new innovation paradigm. From the CIO perspective, running the network with a handful of suppliers, looks easy. The IT side, on the other hand, has literally thousands of suppliers. And, the CTO is the one person in the telco who understands the network.  Everyone thinks they understand how IT works or should work!
  • The shift to ‘X as a service’, along with changing suppliers relationships, is indicative of the shift in balance between CTO and CIO.
  • There has been a degree of complacency with the telcos and their suppliers. There seems to have been a ‘hand break’ on virtualisation because it represents the end of an era for so many parties both in inside and outside of the telcos. “Virtualisation is turkeys voting for Christmas. Having said that, it isn’t a straight route. In sailing terms, it needs a bit of tacking and jibing across the direction of travel in order to get to the end destination – and we need to learn to read the wind!”
  • Telcos have been guilty of not understanding the innovation agenda and where it has been coming from.

Transforming the telco into a digital business

  • Transformation is difficult because it was easy running a telco when profits were high, competition low and everyone knew their place! The commercial and technical leadership used to “rock up and run the business”. All of a sudden there are new competitors, margins are shrinking and innovation is coming from other places. This requires a different kind of leadership.
  • It is noticeable how many telco executives come from management consultancy, finance or law whilst the hyper scale companies are led by tech entrepreneurs
  • According to Phil, the role of the CIO is very much one of being a story-teller and explaining how things work to the different LOBs, OPCOS and levels of management. The CIO, in many ways, has a better end-to-end understanding of the way the business runs. This is because the CIO can’t get away from everyone asking him how everything worked. So, in short, a major problem exists at the top of telcos not understanding the way the business runs and not really understanding the art of the possible when it comes to technology
  • Phil believes that transforming a major telco is 3-4-year job and “anyone who tells you it is less is lying or have never done it before”.

The state of the market

  • On the consumer side, the risk of being marginalised is real. The motion for the debate was that we will buy our broadband from Google and Amazon in the future. We probably won’t even buy broadband directly, but included in services from a variety of companies, including the OTTs.
  • On the business side, there are enormous possibilities as business models emerge that require connectivity. One of the problems is that telcos think they should be running Facebook. The problem is that the money is in B2B, IoT and AI.
  • We need to build offerings into the emerging digital business models. Wholesale was the poor relation because its margins were considerably lower that the highly profitable retail and business service. As those margins ‘head south’, wholesale may well look more attractive!
  • Telcos run the risk being relegated to mere utility bandwidth. Does this mean we will be part of a much smaller industry in the future? Phil believes there will be a consolidation around the connectivity market with the leveraging of data providing the new impetus, innovation, and support for the customer experience. If the telco can give control back to the customer regarding their data, there is potentially a different relationship. Having said that, there is still a major role for the telcos to play in the digital world, society, and lifestyle whatever the ecosystem and relative roles.

Phil is now launching his retail career at Sainsbury’s. He suspects that the wafer thin margins of the high street will have the focus most definitely on the usage of data and building a clearer understanding of the customer and their behaviour. Perhaps he will bring these lessons back into telco in the future!

You can watch the full interview  from the Great Telco Debate here

Thank you Phil for your insight, openness and humour. The industry will miss you.

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