Digital services have impacted the providers in three major areas: revenue generation, enhanced customer experience, and cost optimization. Increase in revenue generation through the use of modern upsells and giving digital services to the customers is a win-win situation for entrepreneurs. In addition, there is an increase in operational efficiencies and cost savings. Gartner says, the shift “demands a greater fusion of business and IT capabilities among executives.” Digital IT has improved customer experience, which, as a result, has had a positive impact on multiple key performance indicators - encouraging average revenue per customer, and reducing churn, for example. According to Gartner, digital business may have a new set of metrics to estimate success and modern incentive schemes for sales to enhance customer experience. This will significantly impact the growth of success. We shall go over all these points in brief in this blog post.
Before learning about the digital era, it is important to understand the concept of two-speed IT. Although two-speed IT once was a concept that any IT department felt obliged to include in strategic planning to allow the projects to implement quickly, without being distracted by balances and checks to maintain critical business IT operations, there were many downsides to it. Over the past decade, CIOs and IT leaders have experimented with two-speed IT in order to drive business agility. The result showed a number of downsides overlapping the advantages.
Pull the Plug on Two-Speed IT
By separating the management of client-oriented front-end networks from deal-oriented and back-end processes, two-speed IT enabled companies to create their digital inventions while sticking to traditional IT for complex back-end processes. The digital world was expected to bring new changes to the IT sector by making a connection with traditional IT. The approach was seen as a compromise that could delay the progress of the companies.
Disadvantages of Two-Speed IT
A Disadvantage in the Talent: One of the most critical issues that CIOs face today is developing or recruiting top talent. Two-sped IT was found as the major reason for top talents getting stuck with the slow group. They had a zero percent chance to switch to other opportunities. This led to talent drain. With two-speed IT, it was harder to acquire new talents.
Hurry Up and Wait: Due to the slow, traditional test and release cycle of two-speed IT, many fast-moving projects were delayed.
Inefficient End Stage Testing Process: In the traditional test and release process, testing is done at the end of the process. This was more time-consuming and expensive as all the errors were rectified at the end of product development.
The Rise of the Digital Enterprise
These days we can think of IT organizations as a cloud-first and mobile model from the digital world. Adopting digital and Agile approaches can speed up software and engineering innovations, enabling the organization to grow and run with the speed of customer expectations. With the help of cloud computing, we can seamlessly combine cloud services with multiple developments.
The rise of the digital enterprise has had a huge impact on the IT industry. According to Gartner, Communication Service Providers (CSPs) create new revenue streams and improve consumer engagement with the help of digital transformation.
How Does Cloud Computing Enhance Agile Development?
- It promotes work without interruption through the ability to perform unlimited testing. It also helps in staging servers to the development team.
- It allows developers to experiment through fast innovation by enabling faster testing and builds.
- It generates a number of environments for testing all the features, which allows team members to work on different parts of the code.
- It helps in enabling readily available and secure source code that can be scaled. Thus, companies can scale up to thousands of developers without adding to their infrastructure.
- It helps in automating feedback at all stages of a project. The instant feedback generated is valuable to the Agile methodology.
Digital Enterprise Services Opportunity
As per Gartner’s prediction, in the year 2017, 8% of the global revenue for CSPs will be generated from digital services. These digital enterprise services (DES) involve consumption or usage of offerings like Over-the-Top (OTT) streaming video, machine-to-machine (M2M) services, and Internet of Things (IoT). Since 2013, the growth rate of these services has increased at the rate of 30%. On the other hand, traditional services have grown by only 2%. Thus, it has become important for organizations to enter the world's digital economy.
According to Gartner, one of the biggest growth opportunities for CSPs in digital services are VOD and IPTV with a projected $40.6 billion worldwide CSP revenue opportunity this year. The next big opportunity will be mobile Payments and Remittance. These services have generated revenue equal to $13.4 billion.
Four Tenets of CSP Digital Transformation
According to Gartner, these are Four Tenets of Digital Transformation for CSPs:
- Strategy – Prioritize objectives, articulate vision and goals, develop a plan for digital transformation to encompass overall business strategy.
- Technology – Initiate open ecosystems, move from products to platforms, and adopt bimodal IT.
- Process – Methodologies and tools to increase agility, data, and customer centricity.
- People – Recruit more talent, and promote collaboration and teamwork.
- Establishing strong capabilities in product development.
Initiating open platform strategies.
Defining a distinguished value proposition and optimizing the customer journey.
Augmenting talent with IT expertise.
Implementing cubicles of excellence for service domains.
Developing deep industry vertical skill.
Developing a bridge for strategic partnerships and alliances.
Revising performance and incentive metrics.
Realizing organizational synergies.
Demonstrating stakeholder value.