From Telcos to Digitelcos: Why APIs Are Key to Successful Transformation
Customers’ want for a simple yet smooth and personalized digital experience continues to shape market trends in the telecommunications industry.
Hence, telcos are looking to shift from a voice, text, and data-focused business model to a more agile, data-driven operation en route to becoming fully digital.
And in today’s blog post, we will explore how telcos can get there through open APIs, the advantages of a fully digital telco, and how both enterprises and telecoms can benefit from APIs—and meet their customers’ demands.
More Than a Buzzword?
While definitions vary, there is a relatively universal common understanding of what digital transformation should achieve—improve business processes to (re)gain market relevance.
For telcos, digital transformation means overcoming the current shift in customer expectations regarding communication channels.
Data, not text or voice, is already a standard. And it seems unlikely that consumers will be going back to just SMS or voice.
This is forcing telcos to find new ways to make a profit while delivering services to increasingly demanding customers.
More than anything else, digital transformation should be seen as an opportunity for telecoms to plan and execute long-term profitability.
Benefits of Going Fully Digital
Telcos that rewire their business operation will come out on the other side with a number of benefits.
Anticipate customers’ needs
To start with, digitelcos will be able to anticipate and meet consumer demands before the demand even occurs.
In a world where the number of digital natives is increasing, relying on data to customize the digital experience and predict needs will help telcos push up customer loyalty and generate new revenue channels.
Improve internal processes
Then, data-driven digital telcos will be more successful to identify points that need immediate attention.
For instance, they can pinpoint customers at-risk of defecting and reach out to them preemptively. According to a McKinsey study, there have been examples of telcos that managed to cut the attrition rate from 24% to 20% this way.
Optimize operating costs
Data will also allow telcos to better allocate their spending, and there is plenty of evidence to support this claim. McKinsey research found a number of telcos who managed to cut product portfolio costs by as much as 80% and IT expenditures by 25%.
The point is that a digital telco makes good use of data, is nimble, and seizes market opportunities.
But above all, a digital telco is relevant to customers in the long run, as it gives them what they want the most—personalized, smooth, and simple experience.
APIs, or application programming interfaces, allow to program applications that have a programmable interface.
Since telco assets can be digitized and equipped with programmable interfaces, businesses and enterprises can assess telco applications and request a service through the programming interface.
And this helps businesses instantly deliver/request services at scale, with respect to the type of application it might be.
Essentially, open APIs will allow third-party app developers to build services that hook into telecom network assets. APIs are a gateway for telcos to reach out to other industries, such as smart cities, e-care, telehealth, and more.
APIs Benefits for Enterprises
Telcos possess a treasure trove of data, as a result of a long-lasting relationship with millions of users.
Through open APIs that belong to telcos, enterprises could increase their reach, expand into new markets, and offer their services to an enormous customer base, regardless of industry.
Some of the most common use cases are gaming, video streaming, music, e-commerce, mobile banking, telehealth, smart homes, and facial recognition, to begin with.
APIs would allow app developers who either work in these enterprises or are making their own products to use network infrastructure and offer smooth digital experiences to end-users.
For example, a telco could partner with a major sports media company to create direct-to-customer media that users could consume right on their mobile devices. This would bring OTT company new revenue sources and could bring telcos new customers and partnership profits.
A paper by IBM cites numerous use case scenarios where APIs can benefit both enterprise and telco operation.
One such option is for enterprises to use telecom APIs to build B2B offerings. For instance, business customers could use certain platform capabilities, such as billing services or messaging services that could be customized.
Another scenario that further shows just how flexible APIs are is using telco APIs to provide real-time pricing for agriculture, commodities, and securities.
Overcoming API Reluctance
The fact is that some telcos are still reluctant about using APIs.
In most cases, managers fear that opening up their network assets will lead to their demise, as other market players steal data assets/ideas/workforce/competitive advantage.
But the truth is that ultimately, by utilizing the opportunities of APIs, telcos will deliver excellent customer experience and tap into new revenue streams. This will allow them to regain market position and stay competitive in the long run.
Those telcos that do not change the paradigm altogether will be forced to further cut down the prices of their services.
APIs Benefits for Telcos
APIs bring a number of perks to telecom providers. They save time and resources, they are open and can scale, and they are customizable and so provide companies with flexibility. APIs minimize operational complexity and help CSP diversify company portfolios.
Most importantly, they enable various companies, some of which are competitors, to work together, through a platform business model.
Instead of competing through a price reduction, by using APIs various market players can work together to satisfy the demands of the modern customer.
The customer base is large enough for all, so everyone—OTT companies, merchants, and telecoms can focus on providing the best service.
APIs Unlock Customer Data
The only way companies, telcos included, can retain market competitiveness today is through customer satisfaction, which is ensured through a seamless, highly personalized digital experience.
This can be especially expensive for telcos, which often have to manage hundreds of thousands of users, if not more. And since each customer is unique, this requires that telcos spend resources to meet customer expectations.
By analyzing amassed data on customer behavior and by sharing those insights—through APIs—with service providers, telcos would help enterprises and developers create apps/services that benefit customers more and removing key impediments.
This would allow telcos to offer attractive services to their existing and potential customers, earn profits from partnerships, and expand their customer base, thus ensuring their long-term success.