Telcos’ new path to digital excellence

Axel Karlsson, global coleader of McKinsey’s Operations Practice, recently sat down with CEO Martina Klingvall of Swedish mobile virtual network operator Telness to talk about the company’s evolution and her ambitions for its future. In spring 2021, a spinoff from Telness, Telness Tech, launched its entry into the OSS/BSS (operations support system and business support system) telco market with a cloud platform whose global offerings include a “digital telco on demand” and a white-label private branch exchange, or PBX. The concept is that by reducing complexity and total cost of ownership, telecom clients can free up capacity for innovation. Customer satisfaction scores have been high, which the company attributes to its proprietary software platform that delivers digital operational excellence through reengineered, automated processes at both the front and back end.

Axel Karlsson: What was the genesis for a digital telco “out of the box,” and what led you to found Telness in 2016?

Martina Klingvall: I started my career working at one of the world’s largest telcos. During that time, it was clear to me that the industry (both then and now) faced four major challenges. These are:

  1. High costs: Continued price pressure, combined with high capex investments—such as the move to fiber—has put cost management on top of the agenda for most telco CEOs.
  2. Slow time to market: Telcos’ BSS systems, with hundreds of subsystems, often lack the agility to quickly adjust offerings and deliver campaigns based on customer needs. This can lead to the loss of sales and opportunities.
  3. Poor customer satisfaction: The bar for customer experience has been rising continuously thanks to online experiences like Amazon, Spotify, and Netflix; customers are beginning to expect that same level of experience from their telco service providers.
  4. Inflexible tech: Many legacy BSS tech and system-integrator (SI) providers have a reputation for outdated, expensive, and cumbersome solutions, often involving long and extensive integration projects that raise the risk of completely failing to reach completion.

I wanted to do something about these challenges but realized that it was hard to disrupt a huge industry from within, so I founded Telness with the ambition to change standards across the industry.

Axel Karlsson: Certainly not a small task. How did you approach it?

Martina Klingvall: From day one, we built, tested, and proved our digital platform to create a digital telco where operational excellence was at the center of its DNA. In particular, we adopted a number of core principles:

  • A modular and easily configurable end-to-end platform solution (from front-end experience to back-end digitization), ready for rapid launch.
  • Native cloud setup using the latest technology developments.
  • High scalability with computing power ready for both vertical and horizontal elasticity.
  • Embracing digital opportunities to design customer contacts. For example, 80 percent of our service interactions are self-service and 100 percent of sales are online.

Axel Karlsson: What results have you achieved so far?

Martina Klingvall: We launched our own mobile virtual network operator (MVNO) in 2017 in Sweden, and since that launch our results have been highly positive. We’ve achieved 99.9 percent uptime, along with 50 percent lower churn, and customer satisfaction scores that are more than three times higher than our telco peers. We have also established a cost-leading position with 70 percent fewer support tickets, on average, compared to the industry.

Axel Karlsson: What are your plans for the future?

Martina Klingvall: We now want to share our learnings and technology with other telcos across the globe. To help us achieve this goal, we have established Telness Tech, a new platform company, to offer our 100 percent-digital telco platform to others based on a simple SaaS model.

Axel Karlsson: Finally, do you have any advice you’d give to CEOs across industries, based on your experiences launching Telness and Telness Tech?

Martina Klingvall: Creating change at scale requires talented people combined with a mindset prepared to challenge old truths. To help us avoid the same problems we and other companies in our industry have experienced, we hired a CTO who did not have any telco experience. Instead, he had a fantastic fintech and gaming track record—both industries that are digitally mature. He was given the mandate to challenge everything, to focus on our end users, and to give them an amazing experience. This has played a huge role in achieving our customer-experience scores. He has since been promoted to CEO of Telness Tech.

Axel Karlsson is a senior partner in McKinsey’s Stockholm office.

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