Tech debt hindering telcos agility,cost efficiency & financial growth, Accenture

After a decade and a half of navigating through varied outcomes in IT modernization, CSPs still grapple with unresolved tech debt. A new report from Accenture highlights how CSPs have been building new systems to pursue technical competitive advantage, but still have significant legacy footprints that are barriers to productivity and innovation. In fact, three-quarters of companies surveyed reported 55% or more of legacy tech debt in the last year (2023).

Tech Debt is impacting IT costs and business agility
Based on a survey of 252 leaders within CSPs, Accenture’s “From Survive to Thrive: Achieving Tech Transformation for Communication Service Providers’ Future” report reveals that tech debts are casting a wide-reaching shadow across CSP organizations, impacting business outcomes beyond the IT function. Two-in-three executives admit that their company is struggling with the complexity of IT systems associated with their current product and service portfolio. One-in-three surveyed also highlighted large IT maintenance and operational costs as a top issue due to the high proportion of legacy in their IT infrastructure.

The study found that the financial and operational costs of maintaining the legacy systems are rising year over year. 84% of CSP executives say their company will miss future growth opportunities if it fails to accomplish ongoing IT transformation and 77% recognize that modern IT systems can streamline their IT architecture and lay the foundation for a nimble telco in the future.

However, when it comes to implementation of best practices and advancing towards higher stages of technology adoption, only a handful of CSPs have achieved the advanced state. For instance, 93% cited cloud-first infrastructure as a significant capability, but only 26% are following advanced practices in transforming their operating model. Similarly, with AI, 91% acknowledge the importance of the technology for their business, yet only 22% have integrated it into customer and network operations.

A comprehensive talent strategy
At the core of the transformation is a ‘people-first’ mindset. The study found that only 18.7% of CSP executives are confident that their organization has the right talent to meet the demands of emerging IT needs, while 80% agree their organization also requires a cultural shift. CSPs must focus on developing skills-driven talent with a data-driven approach.

Executive Commentary
“Tech debt is a huge challenge for CSPs that can only be overcome by decoupling legacy systems and building the foundation for a Digital Core capitalizing on the new opportunities generative AI and digital tech offer,” said Mathangi Sandilya, Global Technology Industry Group Lead, Communications & Media, Accenture. “Our research found that companies with lower tech debt have consistently outperformed their peers in terms of IT costs, business agility as well as financial growth so the urgency to accelerate transformation is clear.”

“Investing in modern IT systems, embracing innovative technologies like cloud, data and generative AI, reskilling talent, and implementing open and interoperable technology architectures will pave the way for unlocking IT simplification, agility and cost efficiency.”

CT Bureau