Vodafone CTO: Insourcing is key to the techco transition

• Top-level telecom industry decision-makers have gathered at the DSP Leaders World Forum 2023 in Windsor
• The sessions are being co-hosted by senior network operator executives
• The opening debate, focused on the transition from telco to techco, was co-hosted by Vodafone’s CTO, Scott Petty
• He shared his thoughts on the key foundations for techco success in his opening address to the forum
• Bringing software engineering talent in-house is a vital move, stated Petty

WINDSOR, UK – DSP LEADERS WORLD FORUM 2023 – If telcos want to successfully transition into techcos, they need to change the way they operate and develop their own teams, especially by insourcing talent and investing in engineering in order to innovate and unlock new revenue opportunities, stated Vodafone Group CTO Scott Petty (pictured above, far right) here today.

Co-hosting the opening session of this year’s DSP Leaders World Forum – entitled ‘From telco to techco: The impact of next-gen operations on skills, talent acquisition and retention’ – at the luxury Fairmont Windsor Park hotel, Petty addressed some of the key challenges faced by the telecoms industry and shared his insights on how network operators can adapt for future success. 

Telcos need to change the way they operate, as they can no longer “simply rely on outsourcing models and the vendor partnerships models we’ve had in the past,” noted the Vodafone CTO during his opening DSP Leaders address. 

He highlighted four “key foundations we need to get it right,” starting with investments in in-house software engineering. 

He noted that Vodafone initially began shifting towards more agile operational processes back in 2017 with a focus on building apps and channels, as well as leveraging “agile technologies”.

But “as we added more developing capacity [to the team], we actually lost productivity [and] our quality declined,” he said. “We started to challenge it – is this really a good idea, should we just be outsourcing again, leveraging externally?” 

Vodafone soon identified that its main problem was that it hadn’t been “investing in software engineering capabilities”, he explained. Once the company began to invest in the right talent, it witnessed an increase in productivity, “overachieving our business case” – see Vodafone creates pan-European tech team, plans to add 7,000 software experts by 2025.

Petty also emphasised that telcos need to modernise their technologies rather than rely on “monolithic stacks”, and invest in open-source capabilities, so that telcos can manage their own source code and how they deploy new technologies.

“And fourth, but most important – we need to insource. We need to have our own engineering talent… if we’re going to manage these ecosystems of technologies and capabilities,” Vodafone’s CTO noted.

Petty also stressed the cultural element of the shift to becoming a techco: “The journey from telco to techco doesn’t just apply to new products and services – it actually applies to the entire organisation. It’s about cultural change and driving these efficiencies across the whole organisation, driving new ways of working and adapting,” he said.

This brings “a whole set of challenges: How do you attract the right talent? How do you keep that talent? How do you build technical career paths and enable them to move throughout the organisation? And most importantly, how do you manage productivity?” he asked. “You no longer have external vendors where you can manage the KPIs [key performance indicators] – these are your people. How do you ensure that you’re getting faster and better every year – how do you manage your own quality? Those cultural changes are super important if you want to be successful in the journey, to unlock [new] sources of revenue growth and drive operational efficiencies.”

The scope of the journey towards techco

Petty explained that the path from telco to techco requires not only a focus on the development of new products, services and capabilities but a journey that touches the entire organisation, and it’s one that takes time. “Creating a new source of revenue, getting into the market [and] winning that revenue doesn’t happen overnight, it can take many years. If I look at our internet of things (IoT) business, we’ve just approached €1bn in revenue – that’s a good source of revenue growth for us as an organisation – we’ve been working at it for 14 years. If I think about private networks, 5G services – they’re going to take time to really move the needle from a revenue point of view,” he acknowledged.

Another really important pillar, he said, is about focusing on telcos’ internal business optimisation – including looking at process optimisation, “leveraging our data ocean, applying machine learning (ML) and artificial intelligence (AI) to everything we do in our business to drive operating efficiencies.”

“We’ve unlocked more than €500m in savings by applying these techniques to our purchase-to-pay processes” and bringing a smart capital expenditure (capex) approach to the way Vodafone deals with network anomaly detection, energy management, and driving efficiency across the organisation. “We also look at… digital trends – how do we service and sell to our customers in a more efficient way through our apps, through our e-commerce platforms, leveraging our chatbots and agents to be able to sell and service our customers better, to win market share and, of course, develop operating efficiencies,” explained Petty.

And there’s a broader financial angle to the transition to becoming a techco too, as the capabilities such a move brings are “critically important” at a time when operators want to develop and offer new services in an industry that faces challenges with return on capital. “You need to create the… efficiencies to have the money to invest in those new products and services,” said Petty, adding that if this doesn’t happen, over time “your financial teams will lose the patience to build those new products.”

To follow all of the DSP Leaders World Forum 2023 sessions as well as the Extra Shot programmes and behind-the-scenes reports, register here. 

- Yanitsa Boyadzhieva, Deputy Editor, TelecomTV