Why a new approach will boost cost efficiencies for telcos

TOMORROW

Unlike early expectations , the COVID-19 pandemic had a mostly positive impact on the performance of telecommunications companies . A sudden and strong increase in home office work and a radical increase in virtual communication required larger communication network capacity and quality .

As a result , telecommunications companies were urged to play their part . In anticipation of even stronger client demands regarding virtual communication in the future , telcos need to free up cash to roll out 5G mobile networks and fiber to accelerate their performance .

The most powerful lever to free up cash for these massive investments is boosting cost efficiencies by setting up or – if already existing – optimizing the Shared Services Centers ( SSCs ). Traditional SSCs were a purely transactional organization and a source of savings . Optimized SSCs cover services that are more strategic , customer-facing , and digital , such as Business Intelligence or Digital Services , and can therefore transform into a Center of Excellence . As such , they can deploy economies of scale even more than traditional SSCs and significantly help to boost cost efficiencies . These transformed SSCs will serve as a key driver for competitive advantage and exceptional customer experience in the future .

One of the most successful examples for a transformed SSC is the Vodafone VOIS , which is home to around 22 % of all employees . Set up in 2006 , it was built as a traditional SSC and became the Group ’ s strategic partner and Center of Excellence for Intelligent Solutions , focused on adding value and delivering business outcomes for Vodafone . ¹ Today , their portfolio comprises Customer Operations , Enterprise , Sales and Marketing , HR , Digital Services , Technology Operations , Business Intelligence , Finance , Supply Chain , Legal , Fraud ,

DEUTSCHE TELEKOM

Creation of a dedicated " Process Mining Center of Excellence ", originally developed to improve the purchasing process (" purchasing-to-pay ")

The Center of Excellence helps different business units in identifying weak points within existing processes in order to optimize them in a targeted and data-driven manner

This results in high annual savings in the high double-digit million range and accelerated digitization within Deutsche Telekom

Source : goetzpartners

SSC

VODAFONE VOIS

" Vodafone Intelligent Services " ( VOIS ) acts as an example of successful SSC transformation

VOIS has been transformed from a traditional SSC into a strategic partner and Center of Excellence that creates value and improves business results

The VOIS portfolio includes approximately 13 different business units ( e . g ., Customer Operations , Legal , Information Security )

In total , more than 22 % of all Vodafone employees work at VOIS

Credit & Collection , and Information Security . But what are the main challenges for telcos when taking SSCs to the next level ?

SSCs : The key challenges

The biggest challenge is deficiency in the processes within the organization . Unclearly defined processes without clear responsibilities and unclear interfaces to the line organization can result in a massive lack of efficiency within the SSC . Processes and their shareability need to be transparent . Given the example of the procurement department , standardizable processes such as supplier sourcing , purchasing and supplier management should certainly be bundled in the SSC . Highly strategic processes within the procurement department should certainly be kept within the line organization . But what about procurement policies and demand requirements ? Under what prerequisites can these also be bundled in the transformed SSC ? Transparent processes and clearly allocated responsibilities help to answer this question .

Furthermore , inconsistencies in the organizational design of the SSC can pose a threat to the success of the SSC . Does the setup allow for an effective and efficient execution of the required tasks ? Are spans of control and layers appropriate for the size and the activities of the SSC ?

Attracting the right skillset presents an additional challenge . These days digital competencies and IT skills are crucial to have but hard to find . The ongoing war for talent does not make things easier .

Lastly , the cultural aspect should not be underestimated . Low acceptance of the SSC among employees can cause a massive threat and could result from a lack of management buy-in , from a lack of transparent communication or from concerns about the quality and reliability of the SSC .

So how can these challenges be tackled ?

1 ) 2021 . Vodafone Shared Services .