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Telecom executives are under rising pressure to reconcile, plan, and execute multiple transformation agendas all at once: step-change cost transformation, plus making digital-first CX a reality, plus multi-technology re-platforming, plus building the next-generation broadband infrastructure.
As this juggling act continues, “business architecture" will become an increasingly important capability to embrace and master. Done right, Business Architecture can bring order to complexity, and provide leadership with a compass and a blueprint that articulates what capabilities are needed where, when, and why - thereby providing the missing link between strategic and financial plans, and a key tool to gain clarity, speed, efficiency, and scalability.
This article provides more context for the evolving landscape, our perspective on what is next, and several examples, based on our team’s business architecture work with some of the leading telecom operators.
Caught in a quagmire
As leaders around the world grapple with economic uncertainty, geopolitical tension, environmental crises, and rapidly changing tech advances, among other potential risks disruptions, telecom operators face several major challenges specific to their industry:
- Fierce competition in saturated markets, resulting in limited growth opportunities, shrinking margins and a need to rethink the cost base in the core connectivity business
- Rapidly evolving customer expectations, from enhanced digital experiences to seamless connectivity
- Technology transformation pressure on multiple fronts, including major ERP replacements, cloudification of the front and back offices and the network itself, and a fundamental shift of data architecture to enable universal deployment of AI capabilities
- Massive investments to deploy the next-generation infrastructure that can provide the foundation for the coming wave of bandwidth- and network performance-hungry services and experiences, from GenAI to mixed reality entertainment and collaboration to the metaverse
Why telecoms are good at turning things on, but often forget to turn things off
Telecom operators are increasingly caught in a complexity cost trap, driven by: (i) the cost associated with managing an ever-growing stack of legacy technology, which requires substantial resources for maintenance and control; (ii) rising labor costs as labor markets get more competitive, suffer from talent scarcity, and are subject to broader inflationary pressures at play; and (iii) exploding external spend and uncertainty, driven by macroeconomic factors (e.g., exploding energy cost or material shortages along the supply chain).
To escape this trap, telecom operators must tightly link investments to their strategic direction, prioritize cost reduction (with an eye on systemic/ structural cost embedded in their legacy process and technology landscape), and ensure efficient risk management, while continuously adapting to an evolving market landscape. But business architecture is a powerful discipline that can help guide telecom operators through the outlined challenges - and here is how.
Business architecture means creating a blueprint of your current and future business landscape, including the underlying business capabilities and technology-based enablers. Then the specifics of that blueprint should be spread out across three interconnected layers: value creation opportunities (the why), business capabilities (the what), and the underlying information and technology architecture (the how). In other words, your business architecture can help you reconcile your business and monetization models as well as the people, processes, information, and technology required to enact those models in a common, consistent, and logical way.
By making links and interdependencies within and across the layers explicit, your business architecture can provide a clear taxonomy and common language to facilitate investment decisions aligned to the strategic direction and improve efficiency and effectiveness by making elements reusable across business opportunities while holistically renovating the (legacy) technology stack.
How business architecture can help telecom operators simplify and streamline their capabilities and technologies
The keystone of any business architecture is a capability map that organizes capabilities into functional and enabling business capabilities, providing a consistent structure for strategic decision-making. The capability map is further refined into sub-capabilities, allowing leaders to define executive accountabilities in line with organizational roles and responsibilities, creating clear ownership of cost reduction, investment optimization, reuse, and other optimization.
Visualizing and managing the relationships between capabilities and their underlying technology involves a comprehensive view of the dependencies and interactions among various components of the organization, such as processes, data, applications, and infrastructure. This visualization can now be supported by AI tools, which help operators gain insights into how capabilities are supported by the technology stack and identify any redundancies or inefficiencies.
The illustrative blueprint below, which was developed for one specific telecom, groups business capabilities into five domains. The first two domains cover functional capabilities along the value chain, with three additional domains identifying shared enabling capabilities, in the spirit of modularity, re-use, and scalability. The enabling capabilities anchor around the five common business objects: products, customers, employees, content, and partners. Each capability can be decomposed into more granular sub-capabilities, with attributes including value impact, ownership, dependencies, delivery, and Total-Cost-of-Ownership (TCO) economics.
With transparent relationships among capabilities and their underlying technology, telecom operators can better understand the impact and cost of change. Then leaders can make informed decisions about where to invest and which initiatives to prioritize. By understanding the relationships between capabilities and technology, telecom operators also can make informed decisions to consolidate, modernize, or retire legacy systems while minimizing disruption. This integrated approach allows for the prioritization of tech initiatives and the identification of opportunities for technology reuse and shared services.
As a result, operators can better align business and technical strategies, leading to increased efficiency, reduced costs, and improved agility in navigating the evolving digital landscape while delivering enhanced value to customers.
The importance of linking business architecture to strategic and financial planning
To harvest the benefits of business architecture, it must closely align with strategy and financial planning. In other words, it effectively becomes a third planning discipline that bridges and translates strategy into budgets and enables the ongoing dialogue around trade off decisions and adjustments as plans are enacted.
Business architecture also plays a vital role in facilitating effective communication and collaboration across functions, clarifying ownership and accountability. By providing a shared understanding of the organization's capabilities and underlying technology stacks, business architecture enables the different functions and planning processes to work together more effectively and ensures that strategic priorities are aligned across the organization.
Once those strategic priorities are in place, the business architecture must be implemented, which requires telecom operators to establish responsibility and ownership for the discipline within their organizations. This can, for example, involve creating a separate function focused on capability development, or a dedicated team within the strategy function. A new role, such as a chief capability officer or a chief business architect, can be introduced to oversee business architecture and drive alignment across the organization. The business architecture team's responsibilities could include designing and evolving the business architecture, managing the business capabilities throughout their life cycle, and ensuring alignment and common understanding across functions and planning processes.
Finally, to facilitate execution of legacy technology consolidation and retirement - and to fully realize the related cost reduction potential - operators can set up a supporting legacy relief factory (LRF). The LRF cross-functionally manages and executes the product/ technology retirements, working in agile sprints, and can tackle the legacy stack increment by increment, ensuring continuous progress with continuous complexity and cost reduction.
Bringing order to chaos: Embrace business architecture now
In summary, a managed business architecture enables telecom operators to streamline investments by linking them closer to business opportunities, improve cost efficiency by increasing reusability and simplifying the technology stack, and improve risk management by fully understanding interdependencies of underlying technology. Further, the business architecture fosters cross-functional communication and collaboration, clarifies ownership and accountability, and supports fact-based decisions, ultimately increasing agility by accelerating time to market, reducing planning needs, and enhancing delivery.
In summary, to derive real benefits from business architecture, telecom leaders should act on a four-part agenda:
- Develop a comprehensive blueprint that fully articulates the components required to deliver the defined business strategy
- Shape the underlying target tech architecture for future capabilities, maximizing modular, reusable components
- Integrate the business architecture into strategic and financial planning processes and transition to continuous tech demand management and delivery
- Establish a top-management-endorsed legacy relief factory to:
- Continuously review legacy product and tech portfolios, and
- Retire/ modernize the legacy stack with cross-functional, sprint-based execution teams
Our team has gained considerable experience in advising telecom operators in setting up and managing their business architecture and we have learned that as everything in telecoms, business architecture is an evolving practice.
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