Betting on Digital

Digital Evolution: Oi case study

A report from The Economist Intelligence Unit Betting on digital The successful launch of an online portal has given telecommunications company Oi the confidence to pursue an ambitious digital transformation initiative

For many organisations, the impetus for digital transformation comes from customer demand. As The Economist Intelligence Unit identified in its “Digital Evolution” research project, sponsored by Accenture and Pegasystems, 50% of companies involved in digital transformation initiatives cite “evolving customer needs” as a key driver. Global telecommunications giant Oi is a case in point. Five years ago Oi—the largest telecoms company in Brazil, South Africa and Portugal—began a journey to transform the way in which it interacts with customers through digital means. “For us, digital transformation means being able to provide a seamless experience, no matter the device; experiences that are easy to use, fast and fun,” says Abel Camargo, the company’s digital director. However, as Mr Camargo explains, this transformation has challenged the organisation to rethink not just its customer-facing technologies but also its organisational structure and business-process

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❛❛ design. “It also means excelling in both digital and leadership capabilities, rethinking and improving Digital business processes, customer engagements and business models,” he notes. transformation And while it is by no means easy, the organisational transformation required to achieve the digital demands experience that customers expect offers ample rewards, Mr Camargo believes. “Ultimately, this leads rethinking to increased productivity, which translates into cost reductions for the business, increased customer business satisfaction and retention, and generates higher revenues.” processes, models and the Starting small company’s The potential benefits may be large, Mr Camargo says, but Oi’s digital transformation started small, culture, and with an opportunity to reduce inbound queries to its customer call centres. Thanks to customer that takes time surveys, Oi knew that there was “latent demand” for digital solutions that would allow customers to and a lot of resolve billing and other service-related queries by themselves. effort. To meet that demand, the company launched “My Oi” in 2010. Comparable to an online banking ❜❜ service, My Oi is a web portal that allows customers to manage all of the products and services they Abel Camargo Digital director, Oi buy from Oi and to access their customer records. The launch was a “tremendous success”, says Mr Camargo. Today, more than 70% of the company’s 75m-plus customers use the service. The success strengthened the resolve of Oi’s C-suite to embark on a company-wide digital transformation. In particular, it boosted the confidence of departments such as sales, marketing and customer service, which were most directly affected by the introduction of My Oi. From there, “it really was easier to decide to increase our bet on digital,” Mr Camargo says. This buy-in has proved essential, he adds, because senior sponsorship is imperative. At Oi, the CEO, chief marketing officer and customer service officer are key “sponsors” of the company’s digital transformation. Most obviously, these sponsors are in a position to commit investment for new digital projects. But they are also able to drive the company to think beyond organisational silos and legacy business practices. “They motivate the company teams to think differently, to see other ways to address business questions,” Mr Camargo says. For example, one crucial component of Oi’s transformation initiative was the decision to physically locate its design, development and digital teams together. The company has also brought its IT teams closer to the business functions through more frequent meetings—although this is still a work in progress, Mr Camargo admits, and these teams are not yet located in the same office. Meanwhile, the company is exploring how best to deploy an agile working process, with the IT department playing a central role. “Digital transformation demands rethinking business processes, models and the company’s culture, and that takes time and a lot of effort,” according to Mr Camargo. “Despite the challenges, more digital projects have been delivered year after year, so we think digital transformation is gradually changing the way we do business.”

Future plans Since the early success of its portal project, Oi has undertaken a number of significant digital initiatives. In 2012, for example, it launched what it calls its “Next-best Action” project, a system which analyses customer data to determine what kind of product or service customers in various circumstances are most likely to buy next. The system was initially rolled out to marketing strategists. “By knowing our customers and their needs, our marketing strategists could move from their natural product focus and adopt customer-centric thinking when setting up campaigns,” explains Mr Camargo. Since then it has been rolled out to customer-service employees and is now being integrated into digital channels too. Thanks to its Next-best Action project, Oi now retains an additional 6% of its most valuable customers, and the average revenue per customer has improved as well. Key to the project’s success, according to Mr Camargo, was starting simple, understanding customers’ requirements and paying close attention to data quality. The company has also launched a suite of mobile apps, which collectively were downloaded 10m times in August 2015. The most popular of these is Oi WiFi, which allows customers to access the company’s wireless Internet network and has been downloaded by nearly 4m users. But there is still much work to be done, Mr Camargo says. For example, although 60% of Oi’s customers said in a survey that “the portal experience is decisive in explaining the offer and influencing buying decision”, only 7% of company sales are currently made through digital channels. Oi’s current goal is to deliver an omnichannel customer experience, with a seamless customer journey across devices and both online and offline channels. Future plans include setting up a “device lab” to investigate the potential to digitise the company’s business-to-business products and services, Mr Camargo says. He adds that Oi will also be reinforcing its analytics department to “make the most of the ‘big data’ we have”. The ultimate aim is for digital channels to account for 20% of total sales and for 70% of total customer care in the next five years, while at the same time ensuring that customer satisfaction and retention continue to grow. To achieve all of this takes C-level commitment to cultural, financial and leadership transformation, Mr Camargo says, a clear and practical strategic plan and “an insanely great, passionate and capable team”. Beyond that, he adds, digital transformation simply comes down to resilience, hard work and determination.

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