Swisscom: how to transform a telco
Delivering innovation in the Swiss and greater European telco markets is no easy task. Customers want more capabilities at the lowest possible cost. And scores of local and international players are fighting to meet these exacting demands.
Enter Swisscom. No stranger to innovating in its market, the technical department of the telco has initiated no less than five transformation streams that will not only enable it to better meet the needs of its customers but will also usher in a new age of automation and seamless functionality. Business Review Europe speaks to Egon Steinkasserer, Head of Innovation at Swisscom, to discover in depth how the company transformed its All IP, Agile & DevOps, Operations, Cloud, and convergent networking capabilities.
He says: “What is true for all transformation initiatives is that they are driven by changes in the market and in technology. It is not that we are transforming for the sake of transformation. When we look at the market in Switzerland and the Telco market in Europe everything is going to be segregated, these are mature markets where cost pressure becomes increasingly important.
“The demand for good services on the consumer and enterprise side is high, so data rates are increasing. Pricing wise, the willingness to pay for connectivity is getting smaller. Of course there’s lots of competition from other telos and OTTs like the WhatsApp’s of this world, who have got lots of revenue from providing services free of charge.
“The other is the technology,” Steinkasserer explains. Like many innovators in his position, he recognises the transformational potential that quickly evolving technology can have and is keen to make this work for his company and his sector. He says: “The technology revolution is getting faster and the number of new technologies that are emerging is getting bigger. They are leading to increased efficiency and excellence. Increased speed and agility are the key elements that drive this process.”
What does Swisscom provide? For residential customers, Swisscom offers a range of products that help people stay connected. These include the latest in mobile telephones and tablets, internet, television services, fixed networks and telecommunication services. The company supplements this offering with a range of hardware accessories that includes everything from smartwatches and protective cases, to headphones, speakers, and photography gadgets. It also has an exclusive range of deals designed to entice mobile users under the age of 26.
On the business side, Swisscom’s main offering comprises Cloud offerings, IoT solutions, M2M communications, green ICT services, Mobile ID authentication, and All IP, whereby all phones, internet and TVs can communicate together on one network. These services have been adapted to suit the niche needs of a variety of specialist industries, including start-ups and SMEs of varying shades, and a variety of large scale, high-net-worth businesses. These include TV and radio broadcasters, CCTV, and digitalised healthcare.
For the technical department of Swisscom, and Steinkasserer as its Head of Innovation, the transformation stream with the most far-reaching impact is currently taking place across its Agile/DevOps segment, due for completion in 2019. He explains that the reasoning behind this is to achieve three major goals in the business.
“Our key goal is to be more efficient in both product and service delivery,” he says. “Another goal is to become faster at reacting to the needs of the market or developments in technology. We accept the fact that we can’t plan everything; we have to be faster to adapt to changes that are driven by the outside world.”
Swisscom’s third goal was set when the company fully realised that the company could leverage its agile transformation to increase employee satisfaction in this area of the business. Empowered to drive innovation and change from the bottom up, teams in the agile arm of the business have freedom and responsibility to make decisions and deliver company-wide change.
Steinkasserer adds that, true to the spirit of agile, teams are encouraged to measure success over very short timeframes. “Every two weeks they have a small gathering looking at successes; we have deliverables that can be looked at in just two weeks. There’s lots of peer pressure but there’s lots of satisfaction on the other hand.
“The fact is, we are getting much faster and innovative, in the sense that we are fast to adopt to new technologies and changes in the market. We are adopting the ‘let’s try things out’ mentality, rather than planning roadmaps of the next few years.”
With exciting innovations coming to the market all the time (many with the potential to completely transform a particular revenue stream) there can be much uncertainty in the telco sector. By figuring out what works and what doesn’t early on, Swisscom is able to have the pick of innovation while ensuring that any larger capex required down the line is backed up by practical experience.
Swisscom has developed a unique maturity model with regards to DevOps and Agile. The evaluation occurs along two axes DevOps - Capabilities (X-axis) and Waterfall vs. fully-fledged Agile (Y-axis). Hence on one hand it’s measured how comprehensively a team adopts Agile best practices compared to a Waterfall setup. And on the other hand the degree of automation considering all the DevOps pillars is taken into account. “I have not seen a maturity model like this one before,” he says. “I like this idea that everybody can be a champion. Even if the team is not yet capable to adopt and deploy all the fancy new things that are out there. For example, a Waterfall team can increase efficiency through full test automation and be an “Optimization Master”. Our model is a powerful idea to drive transformation at multiple speeds.”
Alongside the All IP/DevOps transformation, the company is also exploring a number of avenues with cloud technologies. Alongside developing a cloud to deal with legacy workloads, the company is also developing an application cloud and a telco cloud.
“It requires lots of thoughts and enduring transformation work to realize the efficiency gains cloud technologies promise. We have efficiency and hardware gains,” Steinkasserer explains. “This is because we are moving away from dedicated hardware to shared commodity hardware. But the biggest cost saving has to come out of the fact that the whole level of automation stepwise is increased dramatically. This journey has a lot to do with transforming from hardware oriented solutions to software.”
“Huawei and Cisco, for example, are our strategic vendors in the wire line environment. With Huawei, we launched a joint innovation and collaboration agreement which gives us full access to some of their R&D teams developing the next-gen wire line technology. Dell EMC VMware is strategic to us within our enterprise cloud. We made a strong investment in their technologies. Together with Ericson we build our telco cloud for VNF workloads. With them we have established a joint mobile group, bringing our wireless network to the next level.”
“Both consumers and enterprise customers expect our networks and services simply to work. All the time. “To make this happen Swisscom has created a strategy and story to bring operations to the next level, based on three pillars: “ON Device”, “Always ON” and “ON Demand”. It is crucial that experience is measured and monitored as end users perceive it (“ON device”). They embrace multiple initiatives that focus not on theoretical KPIs and SLAs but on the perceived availability of services (“Always ON”). Moving to a software defined datacenter, adopting SDN, NFV and other cloud native technologies lays the basis to provide resources and capacity “ON demand”. And all this is accompanied by a huge shift towards DevOps.
Instead of resting on its laurels as a dominant force in the Swiss telecommunications market, Swisscom has taken a daring move to transform a significant portion of its operations. This is a move that will not only enable the company to keep ahead of the curve in perhaps the world’s most competitive telco markets, but will also allow it to save significant amounts of money from automation and future-proofing.