How Telecoms Can Change

This is another chapter from the "Mobile as a Software Explained" paper. The whole paper can be downloaded and read here.

In this chapter we focus on the fundamental problem stopping change in telecom, the organization, budget and planning processes. Technology is not the barrier to change.

In summary:

1. Telecom companies need to adopt new practices by rethinking their organization, skillsets, and financial and strategic planning. This includes changing budget allocation and aligning the organization around these budgets.
2. Traditional telecom networks are organized around vertical "stovepipes" for different parts of network investments, with operational costs consuming 70%-90% of the top line, while modern software-first approaches are horizontal in nature and built on disaggregated, platform-level thinking.
3. Horizontal business capabilities allow organizations to allocate budgets more efficiently, enabling each layer of the business to focus on its specific skillsets and optimize operations, CapEx, and processes.
4. Aligning budgets and organizations for each layer enables continuous industrialized improvements, such as increased innovation and faster deployment for software, while minimizing SKU choices for hardware supply chains improves financial performance.
5. Rakuten's experience shows that optimizing each layer along three dimensions—number of people, equipment and tooling investment, and time taken to perform delivery—can result in dramatic reductions compared to traditional approaches.

To adapt to new practices, telecom companies must overhaul their organization, skill sets, and financial and strategic planning. This begins with re-allocating budgets and aligning the organization accordingly.

Traditionally, telecoms have been organized around vertical "stovepipes" for different network investments. Modern approaches focus on horizontal, platform-level thinking, allowing each layer to manage independently while interacting with other layers through data accessibility and open interfaces.

This new approach lets organizations allocate budgets to horizontal business capabilities and enables each layer to optimize operations, CapEx, and processes. By aligning budgets and organizations for each layer, continuous improvements and increased innovation can be achieved.

Rakuten's experience demonstrates that optimizing each layer along three dimensions—number of people, equipment and tooling investment, and time taken to perform delivery—can lead to significant reductions compared to traditional methods.