HKT - Enabling the Digital Transformation

Executive summary

The converged telecommunications space is an exceptionally competitive arena, and probably nowhere more so than in the Hong Kong market where the city has 11 fixed operators and four mobile operators.

This crowded market of direct competitors, plus increasing pressure from over-the-top (OTT) providers like

Facebook and Google have pushed Hong Kong Telecom (HKT), part of the broader PCCW group, to tackle digital transformation in order to remain competitive and sustain future business growth.

HKT has a reputation for staying ahead of the telecom curve. Four years ago, whilst its competitors were fighting it out on price, HKT challenged itself to lead the market on Customer Experience, and made ambitious plans to modernize its business in order to fulfill that proposition.

HKT’s transformation, which the company is pursuing in partnership with Huawei, includes replacing systems in three layers: network infrastructure, infrastructure enabling systems and business enabling systems. The approach is a “greenfield” transformation, meaning HKT will eventually migrate all customers to new systems

The operator is currently working on replacing business and operational support systems for enterprise services and next year will begin transforming network infrastructure. Once the company has completed transformation for enterprise customers, it will turn to consumer services.

Customer

In terms of land area, Hong Kong spans only about 1,100 square miles, but the city has 11 fixed operators and four mobile operators. HKT (previously Hong Kong Telekom) is Hong Kong’s largest telecommunications provider with annual revenue of about $4bn, and 19,000 employees globally. Part of the PCCW group, but listed separately on the Hong Kong Stock Exchange, HKT provides local telephony, local data and broadband, international telecommunications, mobile, alongside other telecommunications business such as customer-premises equipment sales, outsourcing, consulting and other contact centers.

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HKT - Enabling the Digital Transformation

Challenge

HKT's digital transformation journey started in 2015 following the acquisition of CSL Mobile Limited by HKT's parent PCCW. Integration and consolidation were understandably needed as part of that acquisition. But, more broadly, transformation was essential for HKT to face down a crowded marketplace that was seeing increasing pressure from over the top (OTT) providers like Google, Facebook and Tencent.

Whilst other Hong Kong operators were competing on price, HKT wanted to take a lead on delivering exceptional customer experience in order to drive sustainable business growth. For example, HKT saw self- service as a key driver for future revenue opportunities – not only with consumers, but also in the enterprise space, where HKT had identified SME as a major growth area.

However, it was a segment that HKT was unable to profitably serve with its existing set-up, which was geared towards large enterprise accounts, and relied on one of its 400 consultants personally managing the sales process. Business growth in this space was being hampered by: lengthy lead and engagement times in service creation, as well as a painfully convoluted ordering process.

HKT was very ambitious its B2B service delivery: The operator wanted to digitize its targeting of SMEs with standardized products and service discovery. Meanwhile, for its larger enterprise customers, it wanted to provide fully automated products sold online through a self-service model. In other words, HKT wanted to

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HKT - Enabling the Digital Transformation offer all its enterprise customers a 'ROADS experience' (Real-Time, On-Demand, All Online, DIY and

Social).

For the consumer market, the drivers for HKT’s transformation change were similar, although IoT was also a specific opportunity that HKT wanted to leverage. The operator was very aware that it needed to prepare for massive growth in IoT connections and be in a position where it could support emerging B2B2C models.

Solution

Like many telcos, HKT had to build new systems to cope with new technologies as the opportunities arose.

However, doing so had given way to a situation where the operator was managing multiple systems that only remotely linked. This lack of integration increased lead time, and had a negative impact on service-delivery

SLAs, as a result of having to provision employees to manually use multiple systems.

HKT recognized that it needed to transition to a digital model if it wanted to match OTT levels of agility – and, ultimately, improve its time to market and service development. To do this, the operators saw three key areas of transformation it needed to focus on: services, business processes and network. Long term partnership with Huawei – they have very strong R&D capabilities, world class. Huawei was selected as a key strategic partner for this project, because of a long partnership where HKT had seen the benefit of

Huawei’s “world class” technology and R&D.

Project Earth is HKT's name for its digital transformation project which, so far, has been concentrated on transforming the user journey for enterprise customers. Huawei’s ‘ROADS’ acronym has defined the experience that HKT is aiming for, and Huawei and HKT have worked collaboratively to assess where the capability gaps are, using Huawei’s sophisticated Digital Maturity Model.

Ultimately, the transformation includes replacing systems in three layers: network infrastructure, infrastructure enabling systems and business enabling systems. HKT is currently working on replacing business and operational support systems for enterprise services, implementing Huawei’s business and infrastructure enabling systems. Once the company has completed transformation for enterprise customers, expected to be completed in Q4 2017, it will turn its attention to consumer services.

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HKT - Enabling the Digital Transformation

In 2018-19, HKT will concentrate on network cloudification, apply SDN/ NFV, prepare for 5G.

Results

Now in its pilot phase, the Enterprise business is now benefiting from a single system for all products and services, as well as an easy-to-use and quick time-to-market Product Catalogue, and online quoting with approval workflow.

Enterprise customers can now select different services from a single portal, reducing time-to-order from an average of three days to about 15 minutes. These customers can pay online, and the order is processed automatically reducing manual intervention and dramatically improving experience. Customers can also login when needed to check order status, activate services and change requirements via the self-service

Customer Portal.

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