After a turbulent few years, telecommunications leaders are looking toward challenges and opportunities that lie ahead. This was the topic of conversation during the CEO panel at Metro Connect 2023 titled “2023 headwinds: What’s the outlook for telecom operators?” Zayo’s CEO Steve Smith was a panelist, offering insight into the ways Zayo plans to weather upcoming industry challenges.
During the panel, industry leaders tackled supply issues, inflation, and security, and what telecommunications companies can do and offer to offset increased costs and uncertainty.
While this panel of telecommunicaions experts focused on the challenges to come, we’ve reframed the topic to identify three opportunities these challenges present.
1. The opportunity to be financially and digitally agile.
Since the pandemic, supply chain struggles have been a hot topic. Supply chain concerns seem to touch every industry from food service to logistics to, yes, telecommunications. Similarly, inflation – partially brought on by and intrinsically linked to supply chain challenges – is a ubiquitous, cross-industry issue. Supply, demand, and pricing fluctuations over the past few years have hurt businesses and created general economic uncertainty.
As a result of these challenges, companies struggle with missed delivery dates, the inability to run projects on predetermined timelines, and the need to set expectations around costs and timelines with customers before losing their business. At the same time, telcos face pressures between margins and topline costs as prices for equipment, labor, and materials skyrocket. All the while, the impending recession causes companies to reconsider their budgets. As budgets tighten across the board, business buyers and consumers seek cheaper alternatives, putting further pressure on telcos’ budgets and cost structures.
But there’s hope for companies determined to endure and come out on top. Research from Bain from the last major recession in 2008 found that telcos that cut costs by raising prices where possible and boosting productivity achieved higher shareholder returns.
“The amount of change that happens in the next 10 years is going to outpace the last 25 years”
– Steve Smith, Zayo CEO at Metro Connect 2023
Companies that emerge from the other end of the upcoming recession stronger than before will address financial instability by assessing risk versus value when budgeting, digitizing wherever possible, and keeping laser focused on customer experience.
Zayo CEO Steve Smith doesn’t envision these cost cuts will slow down soon. He said at Metro Connect, “We’re definitely starting to see the front edge of conservatism in the industry. This will be an interesting first or second quarter.”
In today’s rapidly changing, digital-first age, financial and digital agility go hand-in-hand. Digitization efforts can cut costs in the long run as networks become more efficient, manual labor is automated, and security measures strengthen. Digitization can take the form of migration to the Cloud, adoption of next-generation technologies like artificial intelligence, automating internal processes, or embracing edge networking – to name a few.
Although these digitization efforts themselves often go unnoticed by the end user, these efforts ultimately trickle down into a better customer experience by improving application performance, mitigating network and business disruptions, and bolstering on-time delivery.
2. Up-leveling services with managed offerings.
A downturned economy means that companies everywhere are considering which telco providers they work with and where they get value for their money. However, there’s good news for telcos that offer managed services. One estimate suggests that IT spending on managed services will rise by 18% in 2023.
The fact is, smaller and mid-sized companies may not have the IT budgets or the expertise on their teams to operate like enterprises with bigger budgets and larger, more experienced teams. Perhaps they don’t have the skills in-house to configure and manage their network. Plus, in an era of increasingly complex cyber-attacks, security is a concern. Without dedicated security staff, a company and its network could be vulnerable to attacks.
These companies’ limited IT resources are incredibly valuable, and they don’t want to waste their IT teams’ time with tasks that could be outsourced or automated. In addition, remote work and the migration to the Cloud have skyrocketed in the past year, creating more dispersed networks, and adding a layer of complexity and insecurity.
Here’s where the value of managed services comes in.
By employing a third party to configure, deploy, and manage the network, companies can take a load off of their IT teams and cut costs associated with hiring experts to manage network complexities in-house. What’s more, they can rest assured that their managed service provider’s (MSP) team is staffed with networking experts and offers always-on support to help answer questions and address any network issues as they arise.
“We’ll continue adding in managed services where it makes sense for our customers,” Smith shared at Metro Connect.Zayo’s offerings run the gamut from do-it-yourself solutions to completely managed services. Our SD-WAN solution is a great example of this. For more sophisticated enterprises with large IT teams equipped to configure and manage their own network infrastructure, we can be completely hands-off while offering a detailed view into the network. For those that require a completely managed solution, our experts can assist wherever needed from deployment to management and everything in between.
3. Increasing automation efforts for greater efficiency and cost savings.
As both enterprises and telecommunications companies cut costs and search for process optimizations to save time, technology can fill the gaps. Automation is one such technology that can help offset costs, save time on manual processes, and supplement human labor – ultimately lending to up-leveled offerings and increased customer satisfaction.
“Automation is a big topic for us. We’re in our 15th year of existence. The next phase for us is getting a foundation automated,” Steve Smith shared during the panel, “We’re doing a massive investment to automate just about every business process in the company.” Zayo has invested considerably in the past year in automating our internal IT processes and systems to optimize the employee and customer experience.
“We’re doing a massive investment to automate just about every business process in the company.”
– Steve Smith
Rules-based automation has long been an integral part of the networking process. However, forward-thinking telecommunications companies are now adding machine learning-supported automation to the mix now. Machine learning can help predict network traffic, generate real-time dashboards, and monitor network security, to name just a few applications of the technology.
There are opportunities to improve both network operations and service operations with automation. Telcos can use automation to perform network maintenance and optimization, anomaly detection, and continuous integration/continuous delivery (CI/CD). Service operations automation includes customer and partner management, automating manual tasks, service provisioning, and assurance. All of these optimizations lead to more efficient, more accurate processes.
The aspirational end goal for telecommunications is fully autonomous systems able to learn and improve without any human intervention. However, most telecommunications companies are a far cry from this reality. Less than 10% of the surveyed telco leaders from a study by STL Partners reported being fully autonomous within a single function in network or service operations. Still, the same survey found that telcos could save almost six percent of their annual revenues if they choose to undertake automation efforts.
This technology will undoubtedly transform the telecommunications industry and others as more teams undergo digital transformation and it becomes more prevalent.
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Ultimately, the telecommunications industry faces a tough year ahead. Though the challenges will be many – continued supply chain woes, an uncertain economy, growing competition, and shrinking revenues – the reward will be worthwhile for those able to view these challenges as opportunities. Those able to reframe their outlook and find ways to be financially and digitally agile, up-level their offerings, and increase process efficiency will find success among difficulties.