Embracing Agile

At Digital Transformation World in May 2019, we interviewed and surveyed more than 70 executives attending TM Forum’s annual CXO Summit, which brings together representatives from some of the largest communications service providers (CSPs) in Europe, the Americas, Asia, the Middle East and Africa, and their key technology suppliers. This article looks into some of their responses, while the related report: CTIO Outlook 2020: Transforming operations to monetize 5G covers the findings in more detail. There is a clear direction of travel when it comes to Agile software development (see graphic below for an explanation of what Agile and DevOps entail). CSPs, especially large ones, want to adopt DevOps software development to reduce costs, increase automation and accelerate time to market.

Some large CSPs are using Agile and DevOps for new applications, but using them for legacy products is difficult because of the way the applications have been developed and the complex integration required. Smaller CSPs are less interested in Agile software development because they lack the resources, skills and scale to justify a significant expansion of their own in-house software development.

Agile’s biggest challenges

But so far operators have been relatively slow to embrace DevOps. In our survey of CXO Summit attendees we specified some challenges and asked respondents to choose the most difficult. It’s not surprising that the biggest issue for most CSPs is the complexity of their legacy IT systems (see graphic below).

Many large operators must support thousands of siloed IT systems that have been installed in an ad hoc way over many years to support new equipment and services. BT, for example, is working to consolidate 4,500 IT systems with a goal of getting down to just 700, while Telefónica Group’s digital transformation efforts across its operating companies so far have eliminated more than 2,000 IT applications (35% of all applications), 20 data centers and more than 6,500 physical servers (25% of all servers).

Skills are needed

The lack of software skills within the organization is also a major barrier to Agile software delivery, albeit one that many CSPs are seeking to address. Last year, in our Digital Transformation Tracker survey and report we asked CSPs how many software developers they employed in 2015 and 2018, and how many they expect to employ in 2021 (see graphic). While only 11% of respondents said their companies employed more than 1,000 software developers in 2015, the percentage was expected to increase by 24% in 2021.

What’s the best model?

Finding a good commercial model for adopting Agile software development – one that is mutually beneficial for CSPs and their suppliers – is also a significant challenge. This issue is covered in detail in a recent TM Forum report called Time to kill the RFP?: Reinventing IT procurement for the 2020s. Many CSPs do not even consider working with third-party vendors for Agile development and only use DevOps for projects they can staff internally. When it comes to return on investment in Agile software development, many CXOs struggle to make a strong case. CSPs are still assessing which applications are suited to DevOps practices and which are best delivered using a traditional waterfall approach.

Focus on customers

It goes without saying that every division of a CSP must focus on delivering better customer experience, but the further removed the team or individual is from direct contact with customers, the more difficult this goal becomes. We asked CXO Summit attendees how practical it is to introduce incentives and key performance indicators (KPIs) that relate to customer experience across different teams (see graphic below).

Most CTIOs consider it quite appropriate for every employee to be customer focused no matter how removed they may be from the customer. As such, they believe it is useful for all employees’ bonuses to be based on KPIs that relate to customer experience. Among summit attendees, there was also unanimous support for the idea of decentralizing the IT function and co-locating IT professionals within other divisions and lines of business. The clear finding is that CTIOs are enthusiastic about changing how their roles are viewed throughout the organization and how they align themselves with the requirements of internal customers and end users. The obstacles that they face in fulfilling these objectives tend to be organizational: It is not easy to change patterns of behavior within established teams, dismantle hierarchies or introduce flatter organizations. There is no consensus about the steps CTIOs should take to change organizational structure. One speaker at the summit said he expects 50% of IT executives to make the transition, 20% not to make it and 30% to retire.