Now with added video!
Now with added video!
The Nasdaq stock exchange has had a look at Synchronoss’ belated accounts and decided everything is now sufficiently in order for it to be re-listed.
Regular readers of Telecoms.com will be familiar with the accounting soap opera that has plagued cloud services vendor Synchronoss for the past couple of years, resulting in it being kicked off the Nasdaq earlier this year. Accounts were finally filed in July and it will presumably be of immense relief to everyone connected to the company that the man from Del Nasdaq, he say yes.
“This is a major milestone for Synchronoss,” said Synchronoss CEO Glenn Lurie. “Meeting our SEC financial reporting obligations and Nasdaq listing requirements has been a top priority since I joined the company last November, and the lifting of the Nasdaq suspension achieves that objective.”
“We are now exclusively focused on executing on our strategic priorities and laying the foundation for improved growth and profitability in 2019 and beyond. We are in the right place at the right time to prosper as the telecommunications, media and technology industry turns to digital innovation.”
That’s the ultimate point. Lurie can reasonably claim none of the responsibility for the mess created by the previous administration (although he presumably did his due diligence before joining) and now that it’s all sorted he just wants to get on with the day job. That’s fair enough and it would presumably help if hacks didn’t keep digging up the past, but what can you do? You can start trading SNCR on the Nasdaq again from next week.
Private equity firm Siris Capital is selling Enterprise collaboration software vendor Intralinks for $1.5 billion, having bought it for a billion less than a year ago.
It’s starting to look like Siris Capital is pretty good at this capitalism business. In November 2017 Siris agreed to buy Intralinks from crisis-hit mobile software and services company Synchronoss for $1 billion. Synchronoss itself, which also accepted a further strategic investment from Siris, had only bought Intralinks less than a year previously.
Ten months of patient incubation later, with Intralinks now positioned as ‘a leading financial technology provider for the global banking, deal making and capital markets communities’, financial software company SS&C Technologies has decided it’s now worth 1.5 billion. It will pay Siris a bil in cash and half a bil in SS&C stock.
“Intralinks brings a wealth of expertise and a leadership position in the data sharing and collaboration technology space,” said Bill Stone, CEO of SS&C. “Intralinks and SS&C share many of the industry’s largest customers and together we are well-positioned to meet the needs of major banks, alternative funds and other corporations seeking to automate document-centric, collaborative workflows.”
“I have been privileged to lead Intralinks through an exciting period in which we refocused the business on delivering innovative technology to the financial services sector,” said Leif O’Leary, CEO of Intralinks. “Intralinks’ acquisition by SS&C is a testament to the progress we have made toward our strategic objectives, and we are excited to deliver even more value to our customers as a combined business.”
“My colleagues at Siris and I recognize the tremendous work the Intralinks team has done to deliver on its strategic vision and generate profitable growth under our ownership,” said Frank Baker, a Co-Founder and Managing Partner, Siris Capital. “We believe that the combination of Intralinks and SS&C will benefit customers, employees, partners and investors.”
Siris has emerged as a pretty significant player in the telecoms and tech private equity scene. Not only did it rescue Intralinks from a failed marriage and trouser half a billion bucks in less than a year for its troubles, it’s heavily involved in the resurrection of Synchronoss and also owns Mavenir and Polycom.
Having missed the previous deadline cloud services vendor Synchronoss finally filed its restated accounts just before the new deadline passed.
Synchronoss hasn’t filed any accounts since early 2017, when it realised there had been some inconsistencies in its accounts for the previous few years. It resolved to iron out those inconsistencies, then refile historical accounts once that process was complete. That web took a fair bit more untangling than it hoped and as a consequence it missed the Nasdaq-imposed deadline of 10 May 2018 to refile.
Having done so, Synchronoss vowed to finally get the damn things done by the end of June and on the last working day of the month its accountants staggered over the finishing line. The company can be forgiven for using every last bit of time available because it could be sure that when those numbers were finally published a lot of highly-paid bean counters were going to pore over them obsessively.
“We are very pleased to have filed our Form 10-K for 2017 and to have completed the restatement of our financial statements,” said Synchronoss CFO Lawrence Irving. “This was a comprehensive undertaking that involved a detailed and thorough examination of our current and historical financial statements, as well as our accounting policies and work processes. Our next step is to complete the process to resolve any outstanding issues with Nasdaq.
“Our financial performance in the first quarter of 2018 reflects the 2017 impact of transitioning our business, as well as management’s focus on completing the financial statement refiling process. The company wound down its enterprise strategy and re-focused on a TMT strategy that leverages its telecom roots, in addition to transitioning its Digital Cloud business to a premium subscriber model.”
We also had a quick word with Synchronoss CMO Mary Clark who, like the rest of the current leadership team, joined after all this creative accounting took place. “We are really happy to have this important milestone behind us,” she said. “We have a lot of exciting opportunities to pursue and with today’s filings, we can focus on our growth and move forward serving our customers, employees and shareholders.”
There are obviously all the numbers and explanations you could wish for in the full filing, but here’s a summary of the adjustments made to each full year from 2013 to 2016. There were no adjustments to be made to 2017 because no accounts were filed. As you can see the adjustments were pretty significant, but perhaps not as bad as investors were fearing because Synchronoss stock was up 15% at time of writing.
The Digital Transformation World event this week shone a light on quite how far from achieving digital transformation many operators are.
Such is the perceived importance of this concept to the future health of the CSP industry that TM Forum, which has traditionally been more focused on just the underlying technology used by CSPs, decided to rebrand its big show of the year accordingly. Everyone in attendance seemed to agree it’s important, but that certainly doesn’t mean it’s going to happen anytime soon.
First, what the hell is ‘digital transformation’? Like many persistent buzzwords it’s sufficiently broadly and vaguely-defined that it can be applied to pretty much every aspect of corporate evolution. In the context of CSPs it’s generally understood to refer to the necessity of changing the way they do things to match the speed of innovation typically associated with Silicon Valley internet companies. Or, as CEO of consultancy BearingPoint Angus Ward said at the show “How do you create more compelling, differentiated products and services that are harder for other people to copy?”
In this respect digital transformation (which we would abbreviate if it wasn’t for Deutsche Telekom – sigh) can be broadly subdivided into technological and cultural evolution. The former concerns all the cleverness currently underway in virtualizing, cloudifying and automating network management, which was a major theme last year.
This year we felt the discussion focused much more on the cultural side of things, a view shared by many others in attendance. And if you thought the technological transformation was tricky, the cultural challenges can seem insurmountable, so much so that you have to wonder whether it’s even possible.
“That’s our big question,” said Nik Willetts, CEO of the TM Forum (pictured above, delivering his keynote). “Let’s assume for a minute the technology problems can be overcome – if you look outside the industry a lot of them have been overcome by hyperscale internet companies. But if you put all this amazing technology in an environment where people work and procure and think and sell the way they always have, it’s a bit like having a Ferrari engine in a Skoda.”
TM Forum launched its Digital Maturity Model last year and a Digital Transformation Tracker this year, both designed to shine a light on the challenges associated with all this stuff and to help companies go about it. In common with the technological challenges, the culture shift can seem to enormous and daunting that companies need it broken down into manageable chunks to have any hope of making progress.
One person who seemed impressed with this approach was Mary Clark, CMO of Synchronoss, which specializes in providing digital products and services to operators that they can then pass on to their customers. “I was happy to hear a consistent theme of looking at digital transformation in a modular way – breaking it down into manageable chunks that can then be executed upon,” she said.
“Rather than hearing about all-encompassing projects, there is a real embrace of targeting specific areas, setting objectives, and executing in a much more narrow way, giving more opportunity for success. I heard several examples where there was focus put on a specific business area, like enterprise or SMB and the subsequent actions taken to improve the customer journey for standard actions. And then get to it. Then if there are lessons learned there they apply them to another area. It makes the whole prospect of even beginning with a digital transformation project more feasible.”
BearingPoint’s Ward flagged up some research his company has done, segmenting companies by business and this culture type. “It’s quite a nice framework for things like culture,” said Ward. “So asset providers are very centralised, with a business case for everything and slow decision-making. But that is in conflict with the retail side that wants to move a lot more quickly. Also the culture of an asset-intensive business may be very different to one based around intellectual property.”
The customer is always right
Bengt Nordstrom of telecoms consultancy Northstream identified the key cultural challenge as the move to a customer-centric mindset. “A digital transformation project must always start with a customer and business process mindset,” he said. “For instance, how would we like to serve our customers in the future? How would they like to buy and consume our services? What in our ways of working can be improved and streamlined to gain shorter lead times and cost reductions? After such analyses they can investigate how technology can help them to achieve their objectives.”
And it’s not like the operators haven’t got the memo. We spoke to several and they spoke with a common voice. “You’ve got to know what people want to buy; how do you stay relevant and make that pipe something you never leave?” said Ibrahim Gedeon, CTO at TELUS.
“Operators need to offer their customers contextual, useful things and be careful not to appear to be trying to exploit them,” said Erik Meijer, who works in Strategy GPM/Group Innovation at Deutsche Telekom. “What John [Legere] did in the US was to go into the call centre rather than the board room and listened into the calls to understand where the problems are. Then he started to eliminate problem by problem, by asking how he could help them.”
“It’s all a question of still being in the value chain in two, three, five years from now,” said Thierry Souche, CIO at Orange and SVP of Orange Labs Services. “That’s why we put a lot of effort into conversational services and identity. Digits from T-Mobile in the US is a good illustration of this as it allows you to loosely decouple your identity from your number, SIM and device.”
“Ultimately it is about survival,” said Nordstrom. “In a fast-moving ICT world, operators are only relevant as a channel for its various service and product providers and for its customer if they are digitizing their businesses at least with the same pace as they do.”
A few people we spoke to agreed that, as well as introducing digital transformation incrementally, it’s probably a good idea to have distinct, semi-autonomous business units within the company that are largely insulated from the incumbent culture and given longer-term, more qualitative, more collaborative incentives.
“Webscale companies like Amazon focus on smaller product-focused teams with all the right people in them to get the job done and their focus is on an outcome for a customer,” said Willetts. “Compare that to your classical enterprise – telco or otherwise – in which people operate primarily within their siloed department, and it’s completely different.”
Play to your strengths
Another common theme was the need for operators to open up to collaboration with partners that are better at things like apps and digital services than they are. This involves things like open APIs and creates risk, but the risk of not doing so seems greater.
“These days few, if any, innovations, whether they’re service improvements, or new products and services, are solely created in-house,” said Ward, who unveiled some research on partner ecosystems at this year’s show. “So you have to have a differentiating ecosystem of partners and they bring with them different cultures.”
A great illustration of how badly it can all go wrong when a traditional, siloed organization tries to act in an agile, customer-centric way without having undergone digital transformation is the tragic case of Vodafone 360, which saw the telco attempt to combat the OTT threat by launching a walled-gardened hardware and software platform. It had problems from the start as it was a massively inferior experience to iOS and Android and was embarrassingly canned just two years later.
Attempting even minor changes to the culture of large, old organizations is notoriously different. Not only is there a general cultural inertia, but you have levels of management that have built their careers on the old way of doing things and often all the incentive structures are set up to support the status quo. It’s hard to see how operators can hope to do this with the way they’re currently set up. The cruel irony is that they’ve probably got to transform themselves a fair bit just to be able to make a start on full-blown digital transformation.
To paraphrase the Philosopher Sam Harris: the most harm is done by good people with bad ideas and bad incentives. For CSPs to have any hope of achieving the digital transformation they all agree they need, they need to communicate that idea throughout the whole company and incentivize every single employee to implement it. Sounds simple enough, doesn’t it?
Telecoms cloud services provider Synchronoss has missed a deadline for restating its accounts, making it likely that it will be delisted from the Nasdaq.
When we spoke to CEO Glenn Lurie at MWC earlier this year he was excited about getting all this accounting business sorted and being able to focus entirely on the future. By the end of March Lurie and his CFO were still confident of hitting the 10 May deadline. But in the intervening month or so it became clear that the web of Synchronoss accounts for the past few years was just not going to be fully untangled by today.
“We are disappointed in our inability to meet the May 10 deadline for regaining compliance with Nasdaq listing requirements,” said Lurie. “However, we have made tremendous progress and expect that the audit will be completed no later than June 30, 2018. I also want to thank Ernst & Young for the efforts it is making toward completing the task at hand.”
“Our underlying business is solid and sound,” added Lurie. “We have a strong financial profile with ample liquidity. At the end of the first quarter we had approximately $300 million in cash. Further, as evidenced by our recent announcement that we have entered into an agreement to acquire honeybee Digital Solutions, we are aggressively executing our strategy of putting in place the right people, product portfolio and customer base for long-term profitable growth.”
We checked in with Synchronoss CMO Mary Clark and she echoed the feeling of disappointment. These accounts are a massive sword of Damocles hanging over the new executive team that had no involvement in whatever dodgy book-keeping contributed to this situation and you can tell from Lurie’s official statement how desperate the team is to focus on positive stuff.
Clark told us there has been no correspondence from Nasdaq on the missed deadline but the strong implication from previous statements is that Synchronoss will be delisted. While that would be bad, there is presumably a path toward relisting once they finally get their accounts in order. Synchronoss shares fell by around 20% on the news.
The tone of our conversation took on a much more positive tone when we asked Clark about the recent acquisition of Honeybee Digital Solutions, a ‘customer journey’ software specialist that had been created by Carphone Warehouse here in the UK. This acquisition is designed to augment the Synchronoss legacy handset activation business and Clark said she was excited about the technology and talent it will add to the business.
Under Lurie and Clark Synchronoss is crystallising its identity as a B2B2C partner for operators, providing white-label digital products and services for them to pass on to their customers in the hope of adding a bit of value to their experience. This is the message they desperately want to evangelise, but it looks like they’ll have to wait another month or so to be able to.
Telecoms cloud vendor Synchronoss was obliged to offer a business update call in advance of restating historical accounts on 10 May.
The call was a condition of the decision by the NASDAQ to give Synchronoss some extra time to get its historical accounts in order, following its announcement a year ago that it needed to restate at least two years’ worth of accounts because they could no longer be relied upon. It was made clear from the start that 10 May is when the substantial update will come so this one appeared designed to deliver the bare minimum needed to satisfy the NASDAQ.
Having said that CFO Lawrence Irving, who was also Synchronoss CFO from 2001-2014, and whose departure coincided with the start of the more creative approach to accounting, did serve up some reasonably frank admissions at the start of the call.
“We have preliminarily concluded on our accounting positions and are working with our outside auditors as they review our positions and perform audits for our 2015, 2016 and 2017 years and respective quarters,” said Irving.
“In summary, the primary adjustments result in revenue being spread over multiple periods or netted as part of a related M&A transaction. Over the years of 2014 through 2016, we anticipate that approximately $60 million to $80 million of the approximately $1.2 billion of revenue initially recognized will be reversed and recharacterized as part of the consideration paid as part of an M&A transaction, while the revenue timing adjustments will be recognized in different periods, sometimes being spread over a period of years, including 2017 and 2018.”
So it looks like they need to restate 2014 too, around 5-7% of revenues in the period in question were questionable, and even some of the legit revenue will need to be retrospectively moved to different quarters. Irving was keen to stress that none of these adjustments will have an impact on the company’s cash position. In other words, don’t let the past contaminate the present and future.
This temporal containment exercise was taken up enthusiastically by Synchronoss CEO Glenn Lurie, who summarised at length much of what he had said in his interview with Telecoms.com. There was very little reference to the past and a lot of emphasis on all the grand plans he has for taking the business forward. That’s all great, but the whole premise of the call is that the past has to be dealt with properly before the company can move on.
There was at least a Q&A and the first questions came from Tom Roderick, who provided so much insight when we investigated the past few years’ fun at Synchronoss late last year. He focused his questions on trying to get some additional detail behind the company’s signature deals with the big US operators and seemed resigned to hearing nothing more about the accounts until the big reveal in May.
Michael Nemeroff of Credit Suisse seemed a bit exasperated when he asked “don’t even know what your business is anymore. I don’t even know what’s left of your business, I don’t know where the revenue is coming from. Could you just, in real simple terms, tell me what the business is, how many divisions you have?” The long answer seemed to amount to: cloud, digital transformation, messaging and IoT, and that Mary Clark is playing a big part in evaluating the product strategy.
This answer didn’t seem to salve Nemeroff’s frustration, as he followed up with “And I just want to understand what do you want us to take away from this call because we’re not getting any financials. We’re not — I mean, we barely have an idea of what’s going on. What would you like us to take away from this call? And what would you like us to do?”
“The goal of this call was just a business update, and the goal of the call was to make sure we gave yourself, others the opportunity to hear kind of the direction of the company, where I want to take the company as far as strategically,” said Lurie. “We do understand, as we said a couple of times, we really can’t share what we will be able to share hopefully on May 10 and after that. And I think what you’ll hear on May 10 will be a full update that you would expect from a company that obviously has refiled and met the guides that NASDAQ has asked us to meet.”
Sterling Auty from JPMorgan asked about the relationship with AT&T and Lurie indicated he expects to be able to draw heavily on the relationships he has from working there for 27 years which, while probably true, is not really the basis for an ongoing business partnership. Or is it?
And that was that. The easy conclusion to make is that if Synchronoss is able to file clean accounts by 10 May then we’re all good, can put the past behind us and leave Lurie, Clark et al to get on with growing the business again.
That may well turn out to be the case but, to the best of our knowledge the class action civil law suit is still live and will presumably only be assisted by the historical accounting revelations. They might also catch the attention of a regulator such as the SEC, which has a rich history of behaving uncharitably towards people who cook the books.
But Lurie can quite reasonably claim not to be focusing on what he can’t control. The people in charge in the 2014-2016 period will be the focus of any fall out from that period, while he and his new team should be insulated. Equity analysts seem to have given the call a resounding ‘meh’ and are reserving judgment until the grand refiling, so we will too.
Glenn Lurie, CEO of Synchronoss, will host a business update call next week, but we already caught up with him to find out what’s going on at this most intriguing of companies.
We first spoke to Lurie in November of last year last year not long after he had become Synchronoss CEO. In the process of researching that interview saw that the company had both bought and sold a company – IntraLinks – in that same year, which seemed odd. So we did a bit more digging and uncovered a fairly remarkable sequence of events involving Synchronoss in the previous year or two.
At MWC earlier this year we got our first opportunity to speak to Lurie since that follow-up piece and started by asking him what that IntraLinks business was all about. The company had decided to diversify and made the decision to buy Interlinks for $821,” said Lurie. “The decision was about diversifying where they were playing and at the same time they broke off their call centre business called STI and we still have a piece of that. The idea was that the company didn’t feel they were getting the multiples they thought they deserved as a software player in the TMT space.
“Deals like that usually go really well or really badly and that one went badly. There was a massive culture clash between the organizations. The CEO of Interlinks was brought in to run all of Synchronoss and, candidly and respectfully, that just didn’t work. To the credit of the Synchronoss board, it reacted quickly and also noted that it had an asset that wasn’t necessarily growing as anticipated, not fitting in the portfolio, and ten months after buying it, sold it for just under a billion dollars.”
Once the dust had settled, one of Lurie’s first decisions was to accept $185 million of investment from Siris Capital – the private equity company that acquired IntraLinks from Synchronoss and seems to quite like the telecoms sector. This is positioned as a significant endorsement of Synchronoss now, as opposed to a year ago, which was the last time it filed any accounts.
Which brought us onto the matter of how things are going with NASDAQ, with which it is not in compliance thanks to those absent accounts. “I was personally part of a recent meeting with the NASDAQ and they saw our plans, understood the work we’re doing with our auditor, and were obviously impressed enough that they gave us the extension necessary to get it done,” said Lurie. “We can’t go public with everything yet, but we will. I’m excited to go public with the strategy, but for now all the things we can talk about – including the hiring of a number of established industry executives – are showing good progress.”
But why is it taking so long? When Interlinks came in there were some questions asked by that new leadership around what’s called ‘revenue recognition’,” said Lurie. “In the world of licenses, which is what we do, this can be very difficult in the sense that, if you get a license do you take that revenue in-quarter or over the life of the contract? And you work with your auditors to make those decisions. So once there’s a question you have to work through it with the audit committee, which in a sense put us into an audit situation. That takes a while, but once it’s done it puts us in the situation where we can start afresh.”
Another question mark we raised was around Founder and long-time CEO Steve Waldis, who didn’t seem to hit it off with the last guy he brought in to take the reins. I’ve known Steve 14 years, so we have a long-standing relationship,” said Lurie. “We did business together at AT&T since 2004, he’s a great guy to work with – very intelligent – and his reputation inside the carrier world is spectacular. Synchronoss has always been one of those incredible partners, versus just a vendor. When we (AT&T) were working with Steve Jobs, Tim Cook and the team, Steve (Jobs) did not want activation to be in the store in the original iPhone and built a separate activation inside of iTunes. Now we knew that was going to be difficult for a short period of time and our safety net for us at that time was Synchronoss.”
We concluded by asking about the longer-term strategy for Synchronoss, assuming it eventually gets things back on track, starts filing accounts, etc. Lurie sees a big role for Synchronoss, which does a lot of its business helping operators with the consumer cloud, in both IoT and 5G. On the IoT side, he feels his company can be agile and fit into the max how and when operators need them. He also feels many of the key characteristics of 5G play to Synchronoss’ strengths, not least in how it might change the nature of mobile devices.
When you start getting into 5G you get computing on the edge, you have latencies that are going to be almost real-time, you start to question how much resource needs to reside on the device,” said Lurie. “You get a true cloud backup world where now you can draw on the cloud quickly and I think that’s going to give device manufacturers flexibility to be more creative. So as things come out of the device I think we’re going to see another round of innovation.”
Since Lurie is, to the best of our knowledge, still the CEO of Synchronoss, things are already looking better than they did nine months ago. He certainly presented a clear vision of where he wants to go and the endorsement of various canny industry players, as well as the renewal of key contracts such as the Verizon one, announced today, make it easy to believe the worst is behind this enigmatic company. We will know more after the business update call.
Telecoms.com periodically invites third parties to share their views on the industry’s most pressing issues. In this piece Glenn Lurie, President and CEO at Synchronoss looks at why operators must dispense with legacy thinking to become truly ‘digital first.’
Operators embracing digital transformation are choosing to try and re-invent themselves. They have to. It’s a battle for consumers, mindshare, to maintain relevance and resist ongoing disintermediation from OTT players and much more. Now is the time for operators to be bold and go on the offensive. They need to have the courage to do things differently and move away from traditional thinking.
Nowhere is this shift in thinking more important than when it comes to the relationship that operators have with consumers. The customer journey is the first dimension of digital transformation that operators have to tackle. The “ownership” of the customer care experience, while offering additional services and going up the “customer value-exchange” stack is under attack. As we all know, expectations have changed: today’s consumer is constantly asking for more, and operators must be ready to respond, now and in the future.
The old world…
Historically, operators have built close customer relationships by placing emphasis on human contact – being accessible, responsive and flexible. They also measure themselves in terms of what customers think about them, through NPS and Willingness-To-Recommend scores (WTR) – a traditional set of measures, reflecting traditional thinking. Some operators would argue that sending its customers automated surveys over text or email are a good way to demonstrate an ongoing willingness to improve. Still more will say that ongoing investment in expensive call centre/customer care operations, company owned retail stores, and physical indirect distribution to maintain human interaction with consumers are a business necessity. The truth is that these methods are becoming quickly outdated, incredibly expensive and increasingly unnecessary as the customer does not want to do business that way anymore.
…and the new
We need look no further than examples such as Facebook, Apple, Netflix and Google (affectionately known as FANG), whose focus and use of technology to good effect is through providing frictionless digital experiences. When’s the last time you walked into a Netflix store or called a Netflix call centre about a problem with your subscription? When did you ever talk with a human being at Google? These companies go to great lengths to create experiences that empower consumers to resolve issues themselves. They wake up every day not thinking in terms of physical, or human customer interaction, but focus on a 100% digital business. Their mantra is the fewer the customer pain points, the better the service. They invest in optimizing every aspect of their customer journey and self-care environments. They think ‘digital first,’ because their customers do and expect them to as well.
So, what does ‘digital first’ mean? For the FANG community, it’s their defining philosophy. It also defines other digital leaders like Uber and Amazon. For example, Jeff Bezos thinks only about the online retail experience from when an Amazon customer receives a delivery at home. He then works backwards, attacking pain point after pain point through digital technology. For him, each instance of digital innovation is not meant to soothe pain in the customer journey – it’s meant to prevent it outright. With the acquisition of Whole Foods and the futuristic Amazon Go Store, he and the Amazon team have added focus and differentiation in the critical relationship between physical, and digital, to be well positioned for the future customer wants and needs.
This is the difference between the FANG community and today’s operator. FANG in most cases does not have the legacy systems, distribution, processes, T’s & C’s, and regulations, etc. that operators do. They started with a new way of thinking, and built the customer’s overall experience that way, rather than breaking it down to a series of single interactions. The FANG community have been better at putting themselves in the shoes of their customers and thinking critically about what they expect and how they prefer to interact. They then leverage AI, machine learning, cloud technologies and enablement platforms to meet these expectations.
Breaking legacy thinking
What’s stopping the operators from emulating this? Traditional conservatism and a fear of change – maybe – but I think it’s more than that. Certainly, their internal processes, systems and structures as well as concerns over customer impact creates inertia, making change difficult. But the largest gap is people – getting everyone to understand that massive change is needed by everyone in every organization to truly go ‘digital first’. This is hard to execute. They need to feel comfortable that delivering the best customer experience often involves no human interaction. Digital transformation is about passive customer empowerment, it’s about overcoming complexity and reducing cost.
There is no doubt that operators are trying to move away from a culture of complexity when it comes to delivering the best possible overall service experience. A siloed organisational structure has encouraged a segmented view of customer experience based on single interactions about specific services. A period of prolonged M&A has contributed to this as operators continue to integrate new assets and teams into its service offering.
The result? Operators have been unable to leverage digital channels to sell all services to all customers through a simple experience. This has slowed down time-to-market, increased complexity for both the customer and the in-store representatives and increased the cost of customer acquisition and support. Some of the more enlightened and forward-thinking operators are in the process of deploying digital platforms to innovate, compete and take on these issues/opportunities. This includes investing in online portals that give customers the power to order services from a comprehensive inventory that spans their entire offer, at a time of their choosing.
They can also then access a self-care environment to retain complete control and resolve issues themselves. They can have a single experience no matter where they start and end the process, on-line, physical or call centre. The customer benefits from the speed and ease of an interaction their way, non-human, digital-only or a combined interaction. The operator that executes this well sells more services, more quickly and can deliver and support them at a vastly reduced cost.
Imagine significantly reduced acquisition costs, reduced need for physical distribution and massive reductions in calls to care centres. While at the same time attaining a huge lift in close rates, better bundling of services while NPS, WTR and overall customer journey satisfaction scores go up, big time! I would call this the perfect storm for any operator. FANG thinking, operator execution.
Small steps, big results
According to McKinsey, the majority (70%) of operator digital transformation initiatives fail, not only due to an inability to break out of traditional silos and business practices, but also because of an inability to find specific talent to drive new initiatives. I would also say that the inability to encourage existing operators teams to change mindset and behaviors towards driving new initiatives is also a major factor.
While operator silos are gradually being broken down, the search for talent remains just as challenging. Some operators are recruiting heavily from the OTT world, others are looking to form strategic partnerships to drive new ideas and working practices. From experience, the operators that combine the two will be those that achieve the greatest competitive advantage.
These moves represent some small steps operators are taking to become ‘digital first’ and I would suggest there is not a more important priority, focus or action the operator could have. Operators can have the best network, best offers, incredible bundles, etc., but without a world class digital first journey that gives the customer the choice on how they want to do business with them, they will struggle to keep the customer engaged and have the ability to stay relevant in their eyes. Without this they have no shot to grow the customer relationship, drive trust and sell them other products and services.
Glenn Lurie serves as Chief Executive Officer and member of the Board of Directors of Synchronoss Technologies. Glenn joined the Synchronoss team in November, 2017 with nearly 30 years’ experience in the telecommunications and wireless industries. Prior to joining Synchronoss, Glenn was President and Chief Executive Officer of AT&T’s Mobility and Consumer Operations where he successfully grew the nation’s leading wireless and consumer business. During this time Glenn managed sales and distribution, customer care, operations, home entertainment and video services. Glenn and his team were also responsible for the integration of AT&T’s Direct TV and the company’s digital business.