The telecommunications industry is undergoing transformation at an unprecedented rate. Multiple market forces, such as growing competition from new players and consolidation among existing service providers, are driving companies to reevaluate their business strategies. Meanwhile, emerging technologies such as 5G, artificial intelligence and embedded SIM (eSIM) have expanded the scope of services traditionally provided by telecom companies. Telcos are increasingly collaborating with other players in the industry as well as companies from allied industries to go beyond their comfort zones and meet consumer demand for the new services. However, in a wide partner-led ecosystem, the dependency may cause communications services providers (CSPs) to lose ownership of their end customers. We put forth a strategy that CSPs can embrace to lead market transformation. Service providers can leverage application programming interfaces (APIs) and microservices led digital transformation to stay ahead of not only partners, but also competitors.
The communications landscape in undergoing a digital revolution, which may permanently change existing business models. Consider the example of eSIM technology that has the potential to make the current user journeys redundant and expedite churn. Telecom providers, who had built their businesses around the procurement, distribution and provision of SIM cards at the core of their operations, are now realizing the impact of eSIMs on user experience. A Counterpoint Research report says that by 2025, smartphones will make up about 45% of eSIM device shipments and 100% of smartwatches will be on eSIMs. The technology enables instant network activation and connectivity, eliminating a major portion of CSP operations. CSPs can therefore no longer rely on service quality alone to retain their existing customers. They must think beyond network quality and understand end user behavior across the connected device ecosystem to service existing customers and also acquire new ones.
CSPs have the opportunity to be leaders in the digital ecosystem by defining the right architecture and data models for technologies such as eSIM. They should leverage OpenAPIs (preferably non telecom specific data models) to plug into the partner ecosystem while decoupling their business capabilities using a microservices layer. Capabilities such as digital identity through OpenID Connect, device capability (identifying the device type and its supported features), device swap, payment management, account management and eSIM as a service drive immense business value. Through user-centric digital identity capabilities, CSPs will have the potential to not only target their existing subscribers, but also attract new customers including web channel visitors and family members of the current consumer base.
The key here is the ability to understand user behavior across the open ecosystem and take control of the user journey at the earliest. CSPs should be able to mix and match such business capabilities at runtime to create a personalized user experience. To build such forward-looking business capabilities, CSPs have to revamp their IT architecture to include digital agents including APIs, microservices and business process management (BPM) tools. These agents give organizations the leverage to innovate and the agility to quickly respond to market changes.
CSPs should treat APIs as assets that create business value and not as mere IT enablers. Enterprises can also consider an all-out API-only strategy to bring in a culture that inculcates an API-first mindset. This coupled with microservices platforms can help companies to effectively use their legacy systems while launching new features to market at much faster rates. A use case in which companies can leverage microservices to greater advantage is around data and analytics. When insights are fed to different touchpoints, they can increase the precision of personalization. With the help of microservices digital transformation, CSPs can tailor experiences by predicting users’ next best action. Meanwhile, while APIs become the façade for CSPs’ capabilities, BPM allows organizations to orchestrate customer journeys. The orchestration layer can be lightweight and not necessarily product heavy. APIs and microservices should ideally be free from process orchestration responsibilities to achieve a truly decoupled IT architecture.
CSPs can build these partner neutral capabilities and leverage them to become leaders in the digital ecosystem, which will otherwise be dominated by partners. By effectively using APIs and microservices, CSPs can reduce the time to market, gain more flexibility for customizations and upgrades, and easily integrate services with third-party applications that drives continuous IT led business value.