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1、2024OPEN DIGITAL ARCHITECTURE:THE NEXT FRONTIER FOR TELECOM OPERATORSODA promises faster innovation at reduced costOpen digital architecture(ODA)is transforming the telecom industry.By standardizing software components and enabling API-driven business models,ODA promises faster development of innova
2、tive new services at reduced cost.However,to fully realize ODAs potential,communication service providers(CSPs)must navigate challenges like security risks,evolving policies,and cultural shifts.Embracing customer-centricity,operational excellence,and strategic partnerships are key to thriving in thi
3、s changing landscape.AUTHORSChristoph UfererMatthew GoddardMichael PapadopoulosVIEWPOINTOPEN DIGITAL ARCHITECTURE:THE NEXT FRONTIER FOR TELECOM OPERATORSWE ANTICIPATE ODA BECOMING A KEY ENABLER FOR GROWTH AND INNOVATION IN THE TELECOM INDUSTRYThe ODA framework,designed by TM Forum and adopted by a g
4、rowing number of telecom operators,provides a blueprint for this,with enterprise architecture that can be implemented across the industry.1 Often deployed on cloud-based infrastructure for its flexibility and scalability,ODA can be adapted to environments such as cloud,hybrid,and on-premises.By stan
5、dardizing back-end(BSS)and front-end(OSS)software architectures,ODA enables a plug-and-play approach to applications,fostering interoperability and fueling the ongoing API revolution in the telecom sector.The framework covers five key areas:(1)governance,(2)business,(3)information systems,(4)impleme
6、ntation,and(5)deployment/runtime,and its implementation means a dramatic transformation for CSPs as they seek future growth.THE IMPACT OF ODA ON TELECOM OPERATORSODA is expected to become a key driver of innovation and growth for telecom operators.Although no major CSPs have fully implemented all OD
7、A principles,leading operators have committed to its principles and are planning implementation(see Figure 1).Vodafone has been a leading supporter of this change:“Vodafone has been at the forefront of utilizing TM Forums open digital architecture and open APIs to enhance the customer experience acr
8、oss multiple channels and unlock new revenue streams.”Scott Petty,Vodafone Group CTO1 Additional information on ODA can be found at TM Forum.ODA is a trend CSPs cannot ignore.As the precondition to truly API-enabled networks,we anticipate ODA becoming a key enabler for growth and innovation in the t
9、elecom industry.ODA comprises an architecture framework,common language,and design principles and defines standardized,interoperable software components organized into loosely coupled domains.These components expose business services through open APIs built on a common model.The APIs unlocked by ODA
10、 promise multiple cost efficiencies and new business models for CSPs,allowing operators to respond with agility in the face of changing consumer needs and zero in on specific customer segments with bespoke propositions.ODAs modular nature and the streamlined deployment of propositions it enables wil
11、l be a key source of competitive advantage in the coming years.WHAT IS ODA?Bespoke software architecture made sense for the integrated telecom business,as competitive advantage could be built across each operating layer.However,this model is no longer fit for purpose.Disintermediated by players spec
12、ializing in particular layers,CSPs risk losing their edge in those layers beyond the simple transmission of data.CSPs need open,interoperable architecture that allows them to react nimbly to evolving customer and market needs.This disaggregation of CSPs technology stack is part of a broader trend.CS
13、Ps have historically been asset-centric organizations that deliver and monetize traditional connectivity,with a focus on efficiency and return on invested capital.Delivery of these services was best done using custom code and operational siloes.The new use cases that came with 4G,5G,and smartphones
14、have allowed other players to enter the CSP value chain,including over-the-top(OTT)players within value-added services and iOS within the operating layer.ODA will help CSPs transition into solution-centric companies disaggregated from their physical and network infrastructure,giving them greater fre
15、edom to decide where to play.VIEWPOINTARTHUR D.LITTLE2OPEN DIGITAL ARCHITECTURE:THE NEXT FRONTIER FOR TELECOM OPERATORSFaster,less expensive development&scalingIn the past,software was created for a CSPs specific architecture.The difficulty and cost of developing such software,and the second-and thi
16、rd-order dependencies they constructed with other value chain layers,caused resistance to changing and updating systems.As systems became increasingly complex,this problem compounded.ODA solves this.With its common architecture,language,and design principles,the switching costs associated with intro
17、ducing a new system to the CSP tech stack(e.g.,sales CRM,interoperability)are significantly reduced.Interoperable components are both plug-and-play and highly automatable.This allows CSPs to treat their tech stack as modular,rather than a monolith.CSPs can flexibly swap in and out software microserv
18、ices at greater speed and better react to changing customer and market dynamics.ODA WILL ALLOW CSPs TO DETERMINE WHICH PRODUCTS AND SERVICES TO KEEP IN-HOUSE AND WHICH TO OUTSOURCEWith formal ODA certification launching in January 2025,ODA,as the key enabler for API-driven business models,will allow
19、 CSPs to determine which products and services to keep in-house and which to outsource.This change will require a mindset shift from CSPs,as future capabilities and product offerings will require deep partnerships with players and providers to fully realize the API transformation.The benefits descri
20、bed below are at the core of the shift to ODA.Source:Arthur D.Little,TM ForumFigure 1.Firms across the telecom industry have committed to ODASource:Arthur D.Little,TM ForumFigure 1.Firms across the telecom industry have committed to ODAVIEWPOINTARTHUR D.LITTLE3OPEN DIGITAL ARCHITECTURE:THE NEXT FRON
21、TIER FOR TELECOM OPERATORSODAs CLOUD PLATFORM ALLOWS FOR FASTER,LESS EXPENSIVE DEPLOYMENT AND SCALINGCost efficienciesODA is projected to be a major driver of cost savings for CSPs.Under the“old”model of proprietary tech stacks,high switching costs drove high vendor software pricing.Moreover,innovat
22、ing on or introducing new elements to these tech stacks is time-consuming and costly.ODA solves this problem.First,products developed under ODA are interoperable and highly interchangeable,owing to the modular nature of the overall stack.This reduces the possibility of vendor lock-in,as incumbent so
23、ftware providers can no longer rely on difficulty of replacement as a competitive“moat.”Instead,they must compete on price and performance.Second,the plug-and-play nature of ODA will greatly reduce the cost of innovating on and adding to the CSP tech stack.With high levels of automation,shorter time
24、 to value,and easier acquired talent(owing to the use of universal design principles),the cost of implementing changes will decrease.We should note that significant investment is required to achieve the long-term cost efficiencies of ODA,as CSPs tech stacks must be overhauled.However,the efficiencie
25、s and additional revenues from ODA implementation will far outweigh these costs.Once developed,ODAs cloud platform allows for faster,less expensive deployment and scaling.In the past,new propositions had to negotiate the finite dimensions of in-house compute and storage capacity,with some limited ou
26、tsourcing of data centers,based on the cloud.With ODA,propositions can be easily deployed and scaled up,helping CSPs become much more responsive to demand,a key advantage.Vodafones ODA adoption provides strong evidence for this,with the technology allowing the firm to speed up product launches,which
27、 boosted digital sales by more than 50%and sales conversions by 30%,with its customer experience(CX)platform becoming a model for Vodafone worldwide.Finally,the cloud-based approach allows CSPs to unlock the benefits of ODA without the need to deploy CAPEX in building data centers and compute capaci
28、ty,an important benefit given CSPs high debt/equity ratios.Business model innovationImproved development times help CSPs innovate their business models.Constraints from inflexible tech stacks and the costly nature of innovating on them led to cookie-cutter business models with standardized pricing a
29、nd plans designed to serve broad customer groups.ODA also facilitates further customer segmentation.With a flexible tech stack and relatively fast implementation times,CSPs can afford to produce bespoke products and packages for customer segments.This lets them offer more competitive products and ca
30、pture more value from customers.Axiata(Jio)is a prime example:its ODA adoption allows the firm to develop go-to-market strategies in days rather than months while reducing IT costs by 40%.Although not widely discussed,the flexible nature of the ODA tech stack will allow CSPs to experiment with new t
31、echnologies and may allow for the creation of entirely new business models.VIEWPOINTARTHUR D.LITTLE4OPEN DIGITAL ARCHITECTURE:THE NEXT FRONTIER FOR TELECOM OPERATORSVIEWPOINTARTHUR D.LITTLE5OPEN DIGITAL ARCHITECTURE:THE NEXT FRONTIER FOR TELECOM OPERATORSThird,the integration of third-party APIs and
32、 other software may introduce vulnerabilities into the CSPs network,threatening its security and integrity.This risk must be carefully managed by operators as they transition to ODA.Evolution of ODA standardsThe telecom industry is constantly evolving;so,too,will ODAs policies and components.By tyin
33、g their code infrastructure to a particular set of ODA guidelines,whether TM Forums or not,CSPs will give up control of their architecture to some extent.Proprietary code as a source of competitive advantage will be a thing of the past.Given the evolutionary nature of ODA policies,CSPs will need ong
34、oing development efforts to remain in compliance.Otherwise,they risk dysfunctional APIs that no longer work with their platform.Ongoing development efforts will be costly,potentially prohibitively so for smaller players.Some CSPs may find that the costly tweaks and changes to the underlying code bas
35、e conflict with their strategic direction or are simply irrelevant to the organization.Regardless,CSPs will be tied to implementing the changes agreed on by their ODA alliance.CHALLENGES&RISKSODA represents a fundamental shift for the telecom industry,in both infrastructure and company culture.Figur
36、e 2 shows where the risks and challenges lie.Data&security First,in moving their networks to the ODA standard,CSPs will inevitably create a larger attack surface,making security more challenging.Few CSPs have a single network design and source of truth.ODA breaks down the data and network siloes wit
37、hin a CSP,and this makes the data and network infrastructure more vulnerable to a serious breach.This must be a key consideration of CSPs during their ODA transformation.Second,ODA introduces automation and AI as a standard element of the network.Although a key enabler to many of ODAs benefits,this
38、presents risks around privacy and regulatory compliance and is particularly important for CSPs that consider security a key differentiator.“Security and privacy are the secret weapons we have in building trust.We havent really monetized it yet.”Ruza Sabanovic,Executive VP,Telenor GroupVNF=virtual ne
39、twork framework;MNO=mobile network operator;MVNO=mobile virtual network operator Source:Arthur D.Little,TM ForumFigure 2.Cybersecurity risks to digital transformationsVNF=virtual network framework;MNO=mobile network operator;MVNO=mobile virtual network operatorSource:Arthur D.Little,TM ForumFigure 2
40、.Cybersecurity risks to digital transformationsEmployees(good&bad actors)Employees(good&bad actors)Users(good&bad actors),end-user&loT devicesInternal enterprise ITCorporate apps,email,Web browsing,social mediaCustomer-facing ITWebsites,call centers,channels,retailTelecom networkVNFs,servers,routing
41、 transport,base stationsTelecom ITBSS/OSS/MANOInterconnection partners(Other MNOs,MVNOs,content partners,aggregators,enterprise customers)Network dataCompany dataEmployee dataCustomer dataVIEWPOINTARTHUR D.LITTLE6OPEN DIGITAL ARCHITECTURE:THE NEXT FRONTIER FOR TELECOM OPERATORSCultural change&skills
42、 gapAs the technology landscape changes,each CSP must ensure its workforce is equipped with the necessary skills to manage and maintain the ODA environment.With its cloud platform,modular nature,and reliance on Kubernetes,many firms will see a skills gap emerge.A successful ODA transition requires s
43、ubstantial investments in training,development,and recruitment.ODA implementation also requires an agile culture that embraces innovation and speed.ODA may require significant changes to the organizations structure,processes,and culture,and resistance to those changes from employees and/or managemen
44、t may hinder the implementation process.Migration risksIntegrating legacy systems with new architecture can be fraught with compatibility issues and data migration hurdles that can lead to unforeseen costs and delays.Moreover,the sheer volume of sensitive customer and operational data involved in an
45、 ODA transition demands meticulous planning and robust security measures to prevent loss,corruption,or unauthorized access during migration.Shifting to ODA requires proficiency in cloud-native technologies and API management,potentially creating a skills gap that necessitates investment in training
46、or recruitment.Culturally,the transition to a more agile and collaborative model can pose challenges.Although ODA champions open standards,the risk of vendor lock-in remains a concern,necessitating careful vendor selection and ensuring seamless integration between various components.The financial an
47、d temporal implications of ODA migration are significant,and underestimating the complexity or encountering unforeseen technical issues can result in cost overruns and project delays.EACH CSP MUST ENSURE ITS WORKFORCE IS EQUIPPED WITH THE NECESSARY SKILLS TO MANAGE AND MAINTAIN THE ODA ENVIRONMENTFi
48、nally,the telecom industrys stringent regulatory environment demands rigorous compliance,ensuring the new architecture adheres to data protection,privacy,and security standards.To navigate these complexities,a phased approach with pilot projects,comprehensive planning,and robust risk assessment and
49、change management strategies is crucial.THE FUTURE OF ODA The future of ODA in the telecom industry will be shaped by several factors,including technological advancements,industry collaboration,evolving customer expectations,competitive market dynamics,and regulatory developments.We expect the value
50、 that ODA brings to CSPs to grow in the coming years.The integration of 5G and edge computing,the application of AI and machine learning,and the expansion of Internet of Things(IoT)and smart city initiatives drive ODA adoption.These technologies help operators offer faster,more reliable,and innovati
51、ve services to their customers,and they increase the value available to be captured by ODA adoption.Industry collaboration and standardization are also on the rise.Since its launch in 2018,TM Forums ODA has seen a steady rise in signatories,including traditional CSPs like Telenor and Deutsche Teleco
52、m;vendors such as Nokia,Salesforce,and Oracle;and hyperscalers such as Google.VIEWPOINTARTHUR D.LITTLE7OPEN DIGITAL ARCHITECTURE:THE NEXT FRONTIER FOR TELECOM OPERATORSThe future of ODA in the telecom industry presents both opportunities and challenges for operators.To succeed,they must adapt and ev
53、olve with ODA trends;seize opportunities for cost reduction,operational efficiency,and innovation;and address potential barriers to adoption and growth.WHAT MUST OPERATORS DO TO SUCCEED?As the market transitions to ODA,CSPs should adapt and evolve by focusing on four strategies.1.Customer-centric te
54、chnology adoption&innovationCSPs can embrace innovation by staying informed about emerging technologies,trends,and best practices in the ODA ecosystem.Being open to adopting new technologies will allow CSPs to achieve the gains in agility,efficiency,and CX that ODA offers.Customer centricity should
55、drive CSPs innovation and technology adoption by conducting small-scale pilots of ODA-enabled services tailored to specific customer segments and then using feedback to refine services before scaling,gaining both experience in ODA build but also better market fit.By prioritizing customer needs and e
56、xpectations in the design and delivery of ODA-based services and continuously gathering and using customer feedback,CSPs can make more informed decisions and drive improvements,ensuring they remain competitive and relevant.Leveraging data and analytics will be crucial insights into customer behavior
57、,market trends,and operational performance should strongly influence decision-making.CSPs WILL LIKELY BECOME INCREASINGLY CUSTOMER-CENTRICWe believe ODA will become an industry standard in the coming years,and that collaboration will be deepened by the need to integrate a growing number of APIs with
58、in the CSP tech stack.As collaboration(and with it the number of APIs)increases,interoperability issues may arise that require robust governance frameworks to manage effectively.This could lead to ODA becoming slower to change,as more signatories mean less agility.CSPs will likely become increasingl
59、y customer-centric.ODA lets telecom operators be more agile and customer-centric in their service offerings,and this ability will become an important competitive edge.Conversely,over-customization may lead to increased complexity and potential operational inefficiencies.Theres little doubt that ODA
60、will change the competitive landscape.Expect new market entrants and disruptive business models,as well as consolidation/convergence of services across industries.This will drive an increased focus on differentiation and value-added services.The GSMAs CAMARA project leads this trend,aiming to enhanc
61、e customer and developer ecosystems via an open,global,accessible API solution.By offering opportunities for collaboration between network and cloud companies to address porting and reproduce API services across operator architecture,steps are already being taken to change the competitive landscape.
62、VIEWPOINTARTHUR D.LITTLE8OPEN DIGITAL ARCHITECTURE:THE NEXT FRONTIER FOR TELECOM OPERATORS3.Workforce&culture developmentInvesting in workforce development is critical to a successful ODA transition.CSPs must equip employees with the necessary skills and knowledge to thrive in the ODA environment th
63、rough training,development,and recruitment efforts.A successful transition to ODA requires new skills and approaches,so encouraging a culture of continuous learning and adaptability will be critical.Fostering a culture of collaboration is also vital.Cross-functional collaboration within CSPs helps b
64、reak down silos and ensures a unified approach to ODA implementation and ongoing operations.This is particularly important for CSPs that have grown through M&As and thus have a diverse workforce.4.Strategic partnerships Developing strategic partnerships with vendors and partners is critical in the A
65、PI-based CSP environment.Few CSPs will successfully fight and win within each layer of the CSP value chain.Instead,they must identify those capabilities and functions too far from the CSPs core operations,or where margins are too thin,and form high-quality partnerships.Once formed,these relationship
66、s will allow CSPs to access new technologies,skills,and methodologies that can enhance overall performance.PROACTIVE RISK MANAGEMENT IS ESSENTIAL TO IDENTIFYING AND ADDRESSING POTENTIAL RISKS AND CHALLENGES2.Operational excellenceOperational excellence requires CSPs to continuously review and optimi
67、ze processes,systems,and infrastructure to ensure maximum efficiency,scalability,and performance within the ODA landscape.In part,this means understanding that adopting agile methodologies and practices enables faster decision-making,more efficient operations,and quicker responses to market changes
68、and customer demands.CSPs must also establish KPIs to monitor the success of ODA initiatives and use this data to drive continuous improvement and demonstrate the value of ODA to stakeholders.Proactive risk management is essential to identifying and addressing potential risks and challenges associat
69、ed with the ODA transition,including security threats,compliance requirements,and operational complexities.VIEWPOINTARTHUR D.LITTLE9OPEN DIGITAL ARCHITECTURE:THE NEXT FRONTIER FOR TELECOM OPERATORSBy focusing on a proactive,strategic approach to the ODA transition,CSPs can position themselves for su
70、ccess in the rapidly evolving telecom landscape.To successfully navigate the shift to ODA,CSPs must:1 Embrace innovation.Actively adopt ODA-related technologies to stay competitive and enhance CX.2 Prioritize customer-centricity.Tailor services and offerings based on deep customer insights and data
71、analytics.3 Drive operational excellence.Continuously optimize processes and infrastructure,using agile methodologies to respond quickly to market changes.4 Invest in workforce development.Equip the team with the necessary skills and foster a culture of continuous learning and collaboration.5 Form s
72、trategic partnerships.Collaborate with vendors and partners to access cutting-edge technologies and capabilities beyond your core operations.Together,these actions will position CSPs to thrive in the evolving ODA landscape.CSPs CAN POSITION THEMSELVES FOR SUCCESS IN THE RAPIDLY EVOLVING TELECOM LAND
73、SCAPECONCLUSION 5 KEY STEPS1 0VIEWPOINTARTHUR D.LITTLEOPEN DIGITAL ARCHITECTURE:THE NEXT FRONTIER FOR TELECOM OPERATORSVIEWPOINTARTHUR D.LITTLE1 1Arthur D.Little has been at the forefront of innovation since 1886.We are an acknowledged thought leader in linking strategy,innovation and transformation
74、 in technology-intensive and converging industries.We navigate our clients through changing business ecosystems to uncover new growth opportunities.We enable our clients to build innovation capabilities and transform their organizations.Our consultants have strong practical industry experience combi
75、ned with excellent knowledge of key trends and dynamics.ADL is present in the most important business centers around the world.We are proud to serve most of the Fortune 1000 companies,in addition to other leading firms and public sector organizations.For further information,please visit .Copyright Arthur D.Little 2024.All rights reserved.