Transformation is a long-term strategy and CEOs have to educate the whole company

By:
Alan Burkitt-Gray
Published on:

Transformation is on the agenda for operators, but CEOs have to educate not only their company colleagues but also shareholders, Jim Lu tells Alan Burkitt-Gray

Jim Lu, Huawei

Jim Lu: The big guys’ decision is the most challenging
part of transformation

Transformation for telecoms operators is a necessary strategy. Some are moving fast – mainly the small, nimble companies that are not part of a large coordinated group. However, some have not yet recognised the importance of what is happening.

Jim Lu, president of global technical services at Huawei, has a better sense than most not only why operators need to get moving with their transformation plans but also which ones are hearing the message most clearly.

He is now based at Huawei’s head office in Shenzhen, the Chinese city – close to Hong Kong – where most of the country’s high-technology industry is based.

However, he spent five years based in Warsaw as president of the company’s division covering the Nordic countries plus central and eastern Europe. “That meant I covered 28 countries, though a lot of them were small,” he smiles.

However, that experience means Lu is well acquainted not only with the industry’s giants such as Orange and Deutsche Telekom – both of which have operations in central and eastern Europe – plus Telia and Telenor but also of a range of smaller companies. He names Elisa in Finland, Play in Poland and TDC in Denmark, for example.

Elisa pioneered mobile packages where customers pay according to the data speed they want, he notes.

“Many operators in Europe have found the right way for their transformation,” he says. “It depends on group strategy, but smaller companies can make decisions quickly, and they can transform quickly. For them, the process if very short. However, there are different business situations.”

TDC has been a business partner of Huawei since 2007, he says. “Huawei has helped TDC on network design, planning, operations and development,” he says. But it does vary, operator to operator.

“Different operators have different positions,” he says. When an operator is in only one or two countries, the decision-making process is easier than for a large group with businesses in many countries.

It is not just size. Lu picks out AT&T as a company “with a strong desire to transform”, he says. And, though he didn’t say so, it’s notable that two of Europe’s biggest groups, Deutsche Telekom and Orange, are both customers of Huawei network equipment.


Keeping a long-term view

Technology and organisational structure may be a challenge; he says, “but the most challenging is the big guys’ decision”. He means the CEOs and CTOs of the operators. And, of course, many of them have shareholders to persuade.

The biggest challenges in the large companies are that shareholders tend to look ahead only a few years. So CEOs of many of those operators feel pressured to look only to next year, or the year after that.

Not enough, suggests Lu. “For transformation, we know that we need a long-term strategy. This is important.” CEOs have to start educating the rest of their company and their shareholders about the necessity for such a strategy.

Yes, transformation has uncertainties, he agrees. “I would say that operators’ executive teams need to explain the situation clearly to shareholders – because everything is transforming. We should show shareholders the future – tell them why they need to transform. That is very important,” says Lu.

Lu was speaking to Global Telecoms Business at Huawei’s Operations Transformation Forum, held in the Chinese resort of Wuzhen. It was attended by speakers and delegates from operators around the world: China Mobile, Deutsche Telekom, Telefónica and Vodafone executives were on the conference agenda.

“We planned to invite 300 customers to the Operations Transformation Forum, but more than 600 came,” says Lu. “We have been discussing what is the right way to transform. We want to build a platform.”

As an aside, he quotes a survey: “Now 8% of operators think they have finished digital transformation,” he says, “but 40% think they have just started and the rest think they have just started to think about transformation.” It is definitely on the agenda for operators.

Huawei has set up what it calls the Open ROADS Community to promote operational transformation: ROADS stands for Real-time, On-demand, All-online, Do-It-Yourself, and Social. The community meets regularly, most recently in London the week after the Wuzhen forum.


Taking to the open ROAD

Lu’s colleague Hou Yuzhou – or Joe Hou – says that the Open ROADS Community is “for all operators and their partners across the industry, including labs and research institutes”. The intention is not just to educate the industry, but to plan a path.

“We have many operator customers, and different customers have a different challenge. We try to find a clear transformation path, using different tools,” says Hou, who is vice president of global technical services.

Different operators have different reasons for their operational transformation, he notes. “Some operators will use digital transformation to save opex first. Some operators will say they want to improve customer experience. Some want to offer new digital services. So we will try different solutions to achieve the different goals.”

ROADS, says Lu, is designed to be an open ecosystem. “We want to help our customers with the ROADS experience.” The first operator to partner on the project was Hong Kong Telecom (HKT), across the border from Huawei’s head office.

“Our strategy is very matched,” says Lu. “In the beginning, at the executive level, we talked about digital transformation. The top management team agreed that this is the direction they wanted to go.”

Huawei and HKT built a joint project team, and the operator started learning what exactly is involved in digital transformation and what is the benefit. “After only three months the joint team became very excited,” he says. They realised that there was new business to be generated from digital transformation – and in a short timescale.

“It’s most important that we tell the management of an operator what is the effort involved and what is the outcome,” says Hou. “Everybody knows that this it is not easy. You need to break it down in different phases.” However, the scope is potentially wide, adds Lu. Poland’s Polkomtel – which operates under the Plus brand – “has chosen Huawei to be its business information systems supplier”, but the company’s owner, Zygmunt Solorz-Żak, has a range of other businesses, including Poland’s most popular TV channel. The company “wants us to supply it, not just for telecoms”, says Lu.


Improving operational capabilities

“Operators have had a lot to contend with in this industry. In mobile they have gone from 2G to 3G to 4G” – and 5G is coming soon and on the fixed side they have moved from TDM to IP. “The technology has been intended to improve the network. However, the purpose of digital transformation is to use digital technology to improve operational capability,” says Lu.

“This is one of the biggest differences. Operators need to have the capability for innovation – to innovate new services quickly like internet companies do. They need to dramatically shorten their time to market and to improve their operational efficiency.”

As part of all this, operators have to develop a different approach, notes Hou. “Operators have to train their employees in different skills. Some 80% is still telecoms, but they need to add skills in digital technologies, cloud computing and so on. They need to know how to use this technology. It is important to improve the business.”

“Their knowledge of the telecoms industry is still critical – there’s no need for them all to become Googles.”

Take small steps at first, he says. “Operators provide many services – consumer services, enterprise services, video, voice, data, and so many services.”

What he suggests is that operators will transform by selecting one or two services with which to start, building a greenfield infrastructure for them. “When one or two services become a success they will come back for more services and more platforms,” says Lu.

Huawei is transforming too, he concludes. “Huawei wants to change to become a product and solutions provider, to help customers with their business problems. We do not want to sell products to customers. We want to face this challenge of uncertainties together with our customers.”