For decades, communications service providers (CSPs) have been responsible for meeting certain KPIs to benchmark their network and financial performance against the competition. However, the telco industry is changing rapidly with the introduction of SDN, cloud-native principles, stringent security requirements, new business models, and disruptive market entrants.

In the meantime, operators continue to invest in 5G; and without question, 5G is notably different than previous generations. This isn’t about voice, text, and “Can you hear me now?” any longer. CSPs are faced with the urgency to test, fail, and relaunch services as quickly as born-in-the-cloud service providers, such as Rakuten and Dish. In this dynamic landscape, telcos must offer customized digital services to solidify their position in the value chain – and they need to understand the changing KPI requirements to do so. In fact, if CSPs continue to measure success using the benchmarks and KPIs of yesteryear, they will limit their ability to make the investments required to transform from telco to techco.

Demonstrating telco service value quickly and effectively: It’s a moving target

Dealing with legacy infrastructure, and building software into hardware-based, siloed architectures, is complex – and costly. Still, operators are pressured to evolve into techcos – and they must do so while (concurrently) managing costs and demonstrating the value of new telecom services. How can they prove ROI to business leaders? How can they create new value for customers? How can they show cloud-native investments help the network perform to par? What is par these days?

To help answer these questions, TM Forum, in collaboration with Nokia’s Cloud and Network Services (CNS) group, conducted a global study of 100 CSPs (all C-level executives). The aim of the study was to explore how KPIs are changing as CSPs move away from being viewed as traditional “telco” companies towards becoming “techco” companies. This study also explored how operators plan to benchmark themselves against disruptive CSPs, and other leading B2B2X service companies, such as Salesforce and Spotify.

KPIs are shifting in priority

TM Forum gathered data around operational benchmarks CSPs must consider as they position for the future. According to survey respondents, the top three KPIs that will remain important in the future are:

• Customer satisfaction
• Operational expenses (opex), with capital expenditure (capex) following closely
• Time to market (TTM) for new products and services

Show the business value to drive CX

The fact that “customer satisfaction” tops the list is no surprise. Net promoter score (NPS) will remain a key indicator of network performance today and in the future; but the way in which CSPs deliver other customer-facing services continues to evolve – and that’s where increased investment around security, automation and analytics comes into play. CSPs must continue to focus on what business value they will provide to customers, and providing software that helps secure, automate, and monetize 5G investments will remain top-of-mind this year as CSPs strive to meet KPI goals related to customer satisfaction.

Opex will become a more strategic measure of performance

TM Forum’s study showed that capex is dropping below opex in KPI priority. Capex has remained a tried-and-true measure of operational efficiency for decades because the underlying profitability of a CSP’s business is seen to be its EBITDA margin – earnings which exclude capex.  

However, this survey shows that opex is rising in benchmark importance, even though it’s a more complicated measure of performance. Opex is typically associated with employee count and general costs of running the business; and while it’s often looked to first when belt-tightening measures are underway, CSPs know they need to find – and retain – new in-house talent and software skills to support the evolution to techco.

This human factor is just one of the many points suggesting that opex needs to become more strategic in CSPs’ performance measurement. Forward-leaning CSPs will have frank discussions internally to determine what business value employees are bringing to operations and service delivery.

The takeaway is that opex needs to be a business value indicator if CSPs are to capture the true benefits of new technologies in both network and service operations.

TTM: Necessary to prove agility – and improve value perception

To become a techco, CSPs must deliver services that are hyperpersonalized, reliable, and secure. But they can’t take forever to do so; and if there’s one perception telcos want to change, it’s that they’re slow to adapt.

In fact, to take this point one step further: CSP respondents were asked which KPIs they believe will become more relevant in the coming years. Almost half of respondents believe that benchmark comparisons to the cloud providers and other enterprise service providers, such as Salesforce, will be an integral measure of performance in the future.

This study helps support the claim that meeting accelerated TTM KPIs will be one way to prove CSPs’ agility and value – especially in the wake of the cloud providers’ expansion into telco territory.

CSPs: Know the relevant benchmarks, regardless of your evolution speed

The data is clear – the CSP evolution is well underway, especially at the Tier 1 level in developed parts of the world. But not all CSPs are able to move so quickly and deliberately towards becoming the next AWS, Salesforce, or Google with telco expertise. While roughly a third of operators are committed to becoming “techco” companies, 62% of operators state they’re taking a more measured approach to this evolution.

Still, these cautious CSPs are facing the same external pressure to transform their operations to a more customer-centric paradigm. Knowing how to measure your performance against the competition remains essential to securing value in the today’s digital ecosystem, regardless of evolution speed.

The good news is Nokia can meet you at whichever stage you’re in.

Nokia knows Operational Efficiency for Value Creation

Backed by Bell Labs innovation, and a proven combination of network and software expertise, Nokia is uniquely positioned to help CSPs drive automation at scale across network and service operations; and this will create new opportunities for B2B and B2B2X markets and ensure attainment of operational KPIs.

As part of our AVA Intelligence Everywhere promise, Nokia’s award-winning Digital Operations Center includes Orchestration Center, Assurance Center, and a common Unified Inventory. Our customers can automate operations for cost efficiencies and meet unique KPIs as the design, deploy and assure service at scale. In fact, Nokia helped LightStorm increase its order processing by 500x for faster service rollout.

In addition, Nokia’s AVA NWDAF, AVA Energy Efficiency, AVA Anomaly detection, and AVA Customer Experience Insights has helped CSPs deliver valuable network insights for actionable business outcomes. Earlier this year, Nokia helped China Mobile realize a 20% reduction in energy consumption. Whereas not a top KPI yet, meeting energy efficiency targets is rising in importance for CSPs this year; and Nokia is ready to help our customers exceed their sustainability goals today.

With its successful case studies and customer wins, Nokia is the trusted partner to help CSPs navigate the migration to techco. We will help customers understand how to benchmark operations, accelerate service delivery, and secure a valuable position in the expanding digital ecosystem – today and into the future.