MATRIXX Software describes itself as “the brains behind the digital transformation shift in the telecom industry,” according to Dave Labuda – founder, CEO and CTO – during the latest CTOs on our Doorstep.
We wanted to find out more about the changing telecom industry and MATRIXX Software’s role within it.
A recent study by analysts, McKinsey, highlights the key challenges facing telecom companies, where revenues have dropped an average of 6% since 2010.
They point out that capital spending has remained stubbornly high, at around 15%–18% of revenue, and they don’t believe incremental cost cutting or business as usual improvements will alleviate the resulting squeeze on margins.
McKinsey recommend an aggressive approach to digital transformation, taking advantage of the newest software and hardware to add strategic value, while achieving cost savings.
They believe that modern digital technologies offer the opportunity to streamline business functions, please customers, reduce costs and raise sales.
The smartphone revolution
The telecommunications industry plays an important role in the evolution of mobile communications and the information age. The evolution began with the release of the iPhone, and the industry started to focus on mobile broadband and the smartphone. Eleven years later, phones, devices and networks are a thousand times more powerful. However, most of the vendors have the same software they had 10 or 15 years ago. They didn’t recognise the tremendous shift that was going to occur in the market – a classic case of The Innovator’s Dilemma.
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MATRIXX Software saw this coming 9 years ago, according to Labuda. “We essentially recognised that we needed a very different technology approach in order to address the chaos and the opportunities that the smartphone revolution brought.”
There are three metrics to consider for driving this necessary digital transformation in the telecom industry. By reducing the complexity of the IT infrastructure, power consumption and people consumption, telecom operators can thrive and compete in the mobile era.
Customer satisfaction driving digital transformation
Customer satisfaction is one of the main metrics that CEOs are being held to by their boards or investors. When it comes to customer satisfaction, there are all kinds of studies that say that happy customers spend more money, happy customers don’t churn, happy customers recommend you to their friends. In every business, in every industry, there’s a huge understanding that happy customers make for a more successful business.
That’s what’s driving a lot of the digital transformation investment, and it’s occuring across entire industries.
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“We see it all around the world where the telecom operators are trying to engage with the customers to sell to the customers, to provide a transparent view to the customers, to really up their game to match what the OTT players have established as an expectation in the world these days,” said Labuda.
New revenue streams driving digital transformation
New revenue streams are also pushing telecom operators to innovate and transform.
“What you see in the industry is mobile operators, fixed line operators, cable operators and media entertainment companies all merging in all kinds of different and interesting ways,” continued Labuda.
This is an effort to create more of a lifestyle experience and provide a broader, richer, more complex set of offerings. This leads to greater customer retention and expansion, and is exactly what companies like Amazon are doing. “They’re trying to surround your life so you can basically never leave,” said Labuda. “And we see the operators doing the same thing.”
Margin driving digital transformation
The third metric driving digital transformation in the telecom industry is margin. There is a tremendous pressure on margins, because the voice and texting revenue is largely fading away.
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“If you look at the business model that operators had for many, many years, where they had these massive complicated siloed IT systems, they had huge call centres and every time you wanted to do something, you had to call a call centre and that cost somewhere between $6 and $15 depending on where the call centre is. Everything was designed to be really expensive and they didn’t care, because they had 40% or 50% returns.”
“Now, all of a sudden, there’s a lot of margin pressure and they’ve got to optimise that business model.”
Digital transformation ROI
Those companies using MATRIXX Software’s platform saw some interesting returns on investment, and highlight the need to adopt a solution that helps drive digital transformation.
• 5% growth in post-pay ARPU at Telstra, including real-time balances, on-demand data top-ups and new roaming packages.
• 20% increase in roaming revenues for Vodafone NZ after introducing a roam-like-home proposition.
• 4% of subscribers purchase on-demand roaming passes every month at Swisscom.
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• 95% cheaper than competing solutions at Telstra.
• 90% reduction in deployment cycles for new plans at Vodafone NZ, from over 3 months to just 2 weeks.
• 23 point increase in NPS for Telstra customers in data disputes; 11 point increase for the company, overall (over a 30 month period).
• 30 point increase in NPS after iD Mobile abandoned batch systems and deployed.
• 43% decline in credits and write-offs for data services; 50% reduction in regulator escalations; 40% decrease in data related complaints into Telstra’s call centre channel.
• 10% increase in total subscriber additions for Vodafone NZ after launching market-leading shared family plans, with slider sharing controls.
• 26% successful migration of Swisscom subscribers to premium post-pay plans with inclusive roaming entitlements.
“The telecom industry is starting to realise that it needs to move,” said Labuda. “Market efficiency is an unstoppable force.”