Follow the data: An interview with ETIS Council Member Uldis Tatarcuks of Lattelecom
Friday 18 January 2019
Posted by: Michele Lalic
In the digital space, opportunities are boundless. For telcos, that brings great promise—for new revenue streams, new ways to serve customers, new paths to success. But it also brings challenges. What projects are most worthy of attention and funding? What is the best way to see what is working and what is not? Is it better to build or buy the necessary capabilities? How can we work faster?
Uldis Tatarcuks, the CTO at Lattelecom, describes how his company keeps its digital agenda on course—and the roles that customers and data play in steering the way.
The fixed side of the telco business tends to struggle more with churn than the mobile side. As a fixed-only player, how does Lattelecom approach this challenge?
We’re not the typical fixed-only provider in that we have a strong presence in the mobile space. We have a lot of over-the-top applications that put us on mobile screens: our own television solution, a customer self-service app, even a specific application for electricity service. Customers can communicate with us, manage their accounts and features, and even get services from us from mobile devices. In that regard, we are similar to Netflix. We can reach customers and do business with them via mobile without actually owning a mobile network ourselves.
That’s a unique model.
Unique for telcos, perhaps, but many companies worldwide are using this model. Netflix is a big example. So is Facebook. We are just following the trend, leveraging technological capabilities to the greatest extent possible.
One can actually see this in the TeBIT data. It shows that Lattelecom generates a significant portion of its revenues from areas outside traditional fixed and mobile businesses. What are your focus areas, and what role does technology play in developing such business models?
We don’t expect to see huge growth in our core business lines, like fixed voice and broadband access—maybe a few percent a year. So to grow, we need to add other types of services that resonate with customers. For us, the current focus areas include over-the-top television, smart home solutions, and electricity, as well as data centers and cloud services. But we are investigating all areas. As for technology, its main role is to give customers the best user experience. Our electricity offering, for example, is fully digital. Customers can quickly connect or disconnect, change plans, and access any data they need. That kind of simplicity and convenience—enabled by technology—becomes a differentiator. Customers stick with us not just because we provide reasonable prices but also because our services are very easy to use.
You noted that Lattelecom has built a mobile presence via apps. Is there an advantage to having a collection of apps—say, one for each service—rather than one mega-app that covers everything?
This is a question we are asking ourselves and investigating. Right now, we have a central application through which customers can manage communications with us for all services they purchase. But we also have some separate applications, such as the app for our electricity service and an OTT app for content. We need to understand more—through usage patterns and behavior—which approach customers prefer. My guess is that we will probably have even more applications in the future, as customers are adopting increasingly segmented lifestyles. With separate solutions, you can align better with specific needs and preferences. So I expect that as we head deeper into the digital world, we’ll have a list of applications.
And as you head deeper into that world, what is your approach to finding and seizing new digital opportunities?
Our main focus is on identifying functionalities that customers would like to use. Focus groups and usage patterns and statistics are helpful here, shedding light on what might be of interest. Then we try to deliver a minimum viable product just to get that feature or function moving and to check whether our perception of what customers want is correct. If it isn’t, then we drop the project. If it is, then we continue developing the solution, moving quickly through second, third, and fourth releases, and so on.
You talked about services, but do you create content, as well?
Yes, we do have our own content. We are producing two TV channels ourselves and also giving our content an on-demand functionality, as many customers prefer that style of viewing. So we are killing two rabbits with one shot: providing unique content but also delivering it in the ways that users want.
Lattelecom is also looking at the smart home market. Have you launched anything in that space?
We’ve launched a few pilot projects. For example, customers can monitor their heating system or the CO2 environment in their home. We definitely think the smart home space is going to grow. Electricity prices are rising all the time, and customers are very willing to investigate opportunities for savings. We need to be, in effect, a good consultant to our customers, providing tools that show them how to run their homes better. Our approach is to add one small thing that is useful to the customer—like monitoring CO2—and grow from there. From our perspective, it’s very important to work like this, as it lets you be a lot faster and a lot more flexible than if you embark on a grand project to release something in a year. We’re going much, much faster than that.
Of course, all of this requires investment. Invariably, there will be a lot of different projects—enhancements, cost reduction initiatives, and so on—competing for a slice of the capex pie. How do you tackle this challenge within Lattelecom’s IT organization?
You really have to work more like a startup. You have to experiment, try new things, and constantly monitor how they are working out. Typically, if there is a business case for a project, we’ll get money for a three-month period. Say €10,000 to €30,000. Then we continually check to see if the project is reaching its goals. Only the projects that are succeeding will get additional funding. This lets us experiment, quickly kill the projects that aren’t succeeding, and focus our efforts—and our funding—on the initiatives that are working out much, much better.
What is your approach to building up digital capabilities—for example, in front-end design and digital content development? Do you build them internally, or do you rely on external sources?
We decided to keep all the critical capabilities internal. That’s why we started to hire app developers, user experience developers, user interface designers, and so on. Having them inside our organization has enabled us to move significantly faster than we moved two years ago. But we need to build up still, and we are actively looking to hire more digital talent.
That talent is in great demand, and other telco operators have told us that they are struggling to build the internal resources they need for their digital agenda. Is this a challenge for Lattelecom, as well? How do you attract talent?
It’s certainly tough to attract new digital talent to a legacy telco organization. So our approach is to demonstrate very visibly that we are not the organization they may think we are. For instance, we are very active participants in hackathons. We go out to universities. We tell students what we are doing. Very quickly, we saw that everyone was quite surprised to see what we are doing. They believed we were only broadband providers or only dealing in cable, with no interesting projects. So we put a lot of effort into clarifying exactly who we are and what kinds of exciting projects we are working on.
What role do KPIs play in your digital agenda? Do you have specific digital KPIs that you track?
Yes, we use KPIs to closely monitor how our digital projects and channels are performing. Are we getting more sales? What are the chatbot communications rates? At the beginning of a project, we set goals; and then we use KPIs to keep a focus on them. We’ve been doing this for a couple of years now. We believe that all companies will be increasingly data driven. You’re going to be more data driven next Monday than you were this week. So we collect data and analyze it and learn from it. And in this way, we can quickly make any changes we need to make.
To what extent are key digital KPIs tracked on a management level? Is there something like a KPI dashboard that you share weekly or daily?
We have a meeting with the CEO every week, bringing together the business departments and technical departments, and following up on the key data we’re tracking. What are our digital sales? How are our chatbots performing? This attention from the top management helps a lot, as we can make decisions based on how things are performing. We can set a plan for this week, and then next week we’ll see how it is working and make further decisions. This focus on data lets us drive our digital agenda in the right direction. It lets us get smarter.
Interested in learning more? You can access the full report here.
A collaboration between ETIS and The Boston Consulting Group (BCG), TeBIT is a benchmarking study analyzing business and technology drivers in the telecommunications industry.
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