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Blog Post

Transformation Approach in LATAM Telecom Market is Changing

By Abel Herrera, VP of Sales, Americas • June 8, 2021

Looking at the last 1-2 years, I see LATAM CSPs taking a new approach to technology and transformation. And it is not a minute too soon. Working in the telecom industry, specifically in my LATAM home region for two decades, I have seen how CSPs have handled their technology and IT solutions with a focus on leading the market.

In the beginning, it was aimed at introducing more systems to handle new services and market growth, which was driven by data use increases, new technologies like 3G and 4G, and consolidation of MNO’s with MSO’s and traditional PTT’s. This approach took a toll on operations with its complexity and on customer experience. With growing customer expectations and the need for IT simplifications, many operators embarked on a journey to transform their IT organizations and focus on rolling out multi-play offerings.

The full-blown transformations included a strong emphasis on the consolidation of systems and massive, large-scale investments in long-term projects, most programs included end-to-end, full BSS stacks from only one vendor or integrator. 5-6 years later, less than 30% of the CSPs who started the journey in the region managed to complete it successfully while the rest are still struggling. This situation is not very different from players in other regions.

Should CSPs Stay The Course?

In my engagements with leading IT architects, I hear a growing number of voices stating that this approach is hindering CSPs’ competitive edge. The fierce market competition, new MVNO players throughout the region, growing adoption of OTT services in the market, and anticipated opportunities that will emerge from new 5G services, adoption of IoT, and more. These drivers and competition cannot be faced successfully while CSPs are struggling to complete full transformation projects.

According to some BSS owners, the needs have changed so dramatically that the requirements defined at the start of their transformations are now obsolete. As a result, new requirements are driving the shift to a new strategy — a use-case-based rollout. What has changed?

  1. Cloud is here to stay. 3-4 years ago, cloud technologies, although popular in gaming, commerce, and other consumer industries, were not perceived as robust enough with the required performance for mission-critical enterprise applications. Cloud also required a dramatic change in the way IT organization works — something CSPs were not yet familiar with. But this has changed, and today, cloud technology is a must-have requirement, which was not included in previously initiated transformation programs. Not jumping on these capabilities is leaving CSPs behind.

  2. Vendor monogamy — still relevant? After dealing with a multitude of vendors and struggling with alignment and management (what is commonly known as the spaghetti model), transformation projects, especially in LATAM, tried to go the other extreme. Operators limited relations and solutions to a single vendor in the hope to ease management, investments, and create unification. However, this came at a cost. Dependency on a single vendor for a number of solutions limits access to innovation and new capabilities and the alignment and agility required to support changing needs. The introduction of TM Forum’s Open Digital Architecture program and standardization of integration with common APIs makes it easier for CSPs’ IT organizations to pick and choose from multiple vendors and create a best-of-suite architecture.

  3. Future monetization is unclear. Until recently, the LATAM market was characterized as a growing market. In the last 2-3 years, however, that has changed. CSPs are searching to diversify their offerings and increase their presence in the value chain. It is becoming an even more burning issue with the pressure of ARPU reduction. Also, with the coming introduction of 5G and IoT services, CSPs have the opportunity to offer bundled services from adjacent industries. Since these services are still nascent in the region and their success and monetization uncertain, CSPs are searching for an approach that will allow them to test new services with minimal investments and risk to business continuity and their core infrastructure.

  4. Agility and flexibility are vital. With the growing number of local and global OTT players, change in regulations, introduction of MVNOs in many of the local LATAM markets, and customer demand for digital experiences and innovation, CSPs are struggling to launch new services and constantly search to improve and personalize their offerings. Doing so requires flexibility, simple configuration, and bundling flexibility with a centralized customer experience

Globally, innovative, early adopter CSPs have already taken the plunge and started changing their IT enterprise architecture strategy. CSPs in LATAM are no different, searching for a middle-ground approach that will allow them to answer burning business and market needs. Their recommendations include:

  • Bolster current needs. Introduce use-case-based implementation and expand gradually. With the availability of cloud-native solutions, new delivery models, and implementation flexibility, CSPs can rollout a dedicated ecosystem that will answer a specific use case, such as a new digital brand, fixed wireless 5G broadband experience partner ecosystem, etc. The approach ensures fast time to market while reducing risk to the existing ecosystem and programs. In time, these can be enhanced with additional new use cases and functionalities, leveraging cloud technology and its scale.

  • Shift from big bang to gradual rollout. Leverage the modular capabilities driven by TM Forum’s Open Digital Architecture approach, which enables flexibility to rollout components according to priority and maturity of requirements and business needs.

  • Embrace best-of-breed. With the growing standardization of integration and use of standard APIs, CSPs are empowered to choose from the best solutions available on the market. This applies to each module without compromising on integrations and operational simplicity. Open APIs also facilitate the integration of vertical solutions, such as dedicated CPQ’s, new IoT monetization tools, special partner systems, and others. This is key for increasing flexibility.

  • Innovate and test. Do so for advanced services and commercial models with limited risk. Choose a flexible product that allows enhanced configurability without the need for further development. This becomes the foundation for the innovation of future services and unknown opportunities and for getting ahead of the market with new 5G, partner, and IoT service monetization.

  • Avoid heavy future upgrades and software lifecycle management. New cloud technologies, when following the full cloud methodology, are always up to date and don’t require heavy upgrades or customizations. They take advantage of automation tools and are always on the latest version.

There is no magic answer to the best approach. CSPs will continue to explore new approaches, however, it is evident that with new technologies and changing needs it is a gradual, long journey and not a one-time project.

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