TMForum has published its third ‘Digital Transformation Tracker’ a semi-annual industry survey to assess how advanced CSPs are in their digital transformation (DT) plans. Things are improving but not as much as TMForum had expected – or perhaps hoped.

TMForum is a global association of operators (CSPs) and vendors that historically has worked on operations issues, but today describes itself as driving “collaboration and collective problem-solving to maximize the business success of communication and digital service providers and their ecosystem of suppliers”.

You can read the interactive report here and review the webinar by registering here.

Generally the results are – to my mind or perhaps to my expectations – positive. More operators say they are in formal DT processes this survey than in the previous survey. Every time, fewer say they have no plans. One quarter of those surveyed say they are already well along the path and have seen benefits. None said that DT is not needed (versus 1% a year ago) and only 7.5% say they are aware of the need to change but have no plans.

Those results were better than what I expected.

(There are no regional results – as a survey of operators and vendors the sample size is not that big – but 16% of those surveyed come from Latin America.)

There was also an improvement in what I would call the ‘realistic expectations’ department.  The number of respondents who said their strategy was either being “Platform players working with partners…” or “Best in class connectivity partners” was up 4 percentage points to 39%. And the percentage of those who still think they can compete with Amazon and Google was down 3 percentage points.

That is, the number of chartered accountants that think they can become lion-tamers is moving in the right direction.

There was a shift as well from “Best in class connectivity partners” to “Platform players” and I do not think that to be entirely unrealistic. Within the context of players that concentrate on infrastructure delivery, being a platform player is a good place to be. Some may even succeed. The question will be what platforms need to be delivered locally? (Without protectionist regulation that is.)

Also showing realism was a slight increase in those seeing flat to declining traditional revenues although there was also migration to ‘Solid growth in TV, IoT and ICT services’. ‘Solid growth’ is always a good thing to say. It is ‘life affirming’ in some sense. We want to think that our endeavors will have ‘sold growth’. But what exactly does ‘solid’ growth mean? And if it is faster in real terms than GDP growth (my personal definition), why do operators think they are positioned to capture this?

True, there were some concerning results.

The question about whether DT will succeed is starting to split into two camps. Those who are pessimistic went up as did those who are optimistic. The middle is disappearing. Since a pessimist is an optimist with better information, this may be a good thing: DT is better understood. More glass half-full: 10% went from ‘Neither optimistic nor pessimistic’ to ‘Optimistic’ but only 6% went to ‘pessimistic’.

The really awkward stuff comes when the results from the operators is compared to the results from the vendors, talking about their operator clients.

The TMForum asked “Have you made the business case for network virtualization?”. Among the operators, 39% said “No”. But 61% of the vendors said that the operators had not made the case.

This may be because of different definitions of a business case, like the operators defining “having a business case” as “having money to spend on NFV”, whereas the vendors are expecting a more comprehensive plan with harder numbers.

(A really perverse scenario occurs to me: what if the operators are saying “Yes, we have a business case” because they have budget to do something but they are implementing with non-traditional partners (open source, Accenture, etc) and telling their traditional vendors “Sorry, no business case” instead of “Sorry, no PO for you”.)

A more disturbing gap comes from the optimism question: vendor optimism has declined, and pessimism has increased as well. (Maybe because they didn’t get the PO?)

One of the ‘promises’ of NFV – some would say fantasies – for operators is the ability to break their dependency on traditional vendors. Perhaps unsurprisingly, 52% of the latter do not believe CSPs have the expertise to go it alone; 45% believe CSPs will continue to be “hugely reliant on vendors because they have greater expertise and access to economies of scale”.

I might have expected both numbers to be higher. It would be human nature for those working in vendors to think that their clients could “NEVER” abandon their traditional relationship.

Only 12% believe that their operator clients will transition to being ‘tech companies’ but in some sense operators are losing faith in that scenario as well (see above).

But the tenor of the webinar was negative. The speaker, TMForum Chief Analyst Mark Newman, had clearly hoped for faster adoption, for more change from survey to survey, for more evidence that operators had clearly bought into the digital transformation story. (Maybe TMForum should save money and move to an annual survey.)

The study found evidence of Agile development methodologies and DevOps being adopted by operators but more within the IT group than the Network group. (Shock! Horror!) The delivered webinar highlighted organizational tension between these two groups that goes back at least to the punched-card era.

This is hardly surprising. What frustrates TMForum, I assume, is that it sees the operators slipping away in the race to rise above the ‘pipe provision scenario’, failing even to qualify as legitimate ‘platform providers’. (How many of those who say they will be ‘platform providers’ are merely doing local distribution and limited integration like hooking clients up to AWS?)

Here is a telling quote that TMForum got from a Light Reading study of 6 major CSPs, 3 network equipment vendors plus Google and Facebook:

“While the operators’ collective spending on R&D declined by 12% over the four-year period, the vendors’ spending increased by 108%, and Google’s and Facebook’s increased by 185%. In 2017, for every dollar the CSPs spent collectively on R&D, Google spent 5$.”

Are we really surprised?

The webinar identified some of the major barriers to network transformation including culture and regulation. Most operators’ legacy is heavily regulation that punishes error and discourages risk taking. That creates a strong culture that would prefer to move slowly on projects that could have a profound impact on the operation.

If vendor’s box fails, it is the vendor’s fault. Your boss will yell at you while you yell at the vendor but you do not have to fix it yourself.

If your team develops its own voice app over an ONAP base and it fails, there is still only one throat to choke but now it is yours.

Patience may be called for in a low-failure tolerance atmosphere like a traditional CSP.

But as well, I can’t tell patience, from fear.

(Title Reference: Robert Palmer Gotta Get a Grip on You Part 2 off his 1976 reggae-inspired album Some People Can Do What They Like. Warning: The cover art is not politically correct for modern times.)

 

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