CIO Interview: Telefonica’s UK CIO for business talks openly about dealing with Salesforce and about SAAS model challenges and he has some direct advice for his supplier.
What’s it really like when you are in need of business transformation and you commit a major part of your operations to Salesforce SAAS? Telefonica UK gives us a deep dive and has some advice for the SAAS leader.
When you realise your business is in danger and you need to transform, the bet you make on your IT can be the difference between success and failure.
The mobile retail market is high volume, low margin and volatile. In the UK Telefonica saw that it could not remain as a B2C player alone. It had to establish a B2B offering.
Running online technology is a tough call. Brendan O’Rourke (BOR), CIO at Telefonica’s UK business has been doing it for years. And for many of those years he’s been doing it with Salesforce.
We caught up at Salesforce Dreamforce conference in San Francisco.
CBR Q: When did you start working with Salesforce?
Telefonica’s BOR:"We’ve been using Salesforce from 2012 for our digital business, that’s our B2B business. The objective of using Salesforce was to enable the B2B business, initially from a sales and order perspective, to sales to order and sales to cash."
Cloudsense was our partner with a telco specific product for CPQ (Configure, Price, Quote) and order management on top of the Salesforce platform, We’re about 3 years into using Salesforce and we have developed from a fairly simple SFA, order management capability to quite a sophisticated platform that enables our B2B platform to be digital. It is fundamental to be able to sell digital products to our customers."
CBR: At that first point how did you engage Salesforce?
BoR: "It was disruptive. Like many other businesses we had pockets of Salesforce use in the sales teams. When we sat down in 2012 and looked at it, it was a disruptive project. And it was run from the tech department within the business. We had a small scale Siebel implementation which wasn’t very effective. It wasn’t exploited to any level. The decision was that we needed to take the B2B business to a different level in how it managed customers. "
"And it was strategic because we were moving from a company that sold handsets and tariffs – which we sold through our billing system with a customer care front end – to a business which was moving into ICT high end with a requirement to sell both for public sector and private enterprises down to an objective on the SMB side which was to sell services such as Box, Office365, Evernote, and new digital voice services on our network which we bundle with the handsets and tariffs. A telco billing system is great for handling sets and tariffs but not very good for things that don’t have sim cards in them."
"So we needed to create this capability that was to take us into that digital future."
CBR: So you didn’t buy it as a CRM package. You were already making it bespoke?
BOR: "Our first major implementation with Cloudsense was to try to tackle some of this. Not the SFA piece which we could get out of the box but the whole telco CPQ piece was the focus."
CBR: What scale are we talking about?
BOR: "We rolled it out across our retail stores as well as desks so that’s six or seven thousand users, 500 retail stores, full online capability, self service.
When we started we phased it in but the plan was that all of our B2B transactions would flow through. Even [a B2B customer] buying a handset buying a tariff, if that’s the requirement, will go through the platform now."
CBR: You are only a Salesforce CRM customer for the digital business (B2B)?
BOR: "Our consumer platform is completely different. It handles 28 million customers. It is a telco platform. We use Salesforce Sales Cloud, Service Cloud and Community Cloud. We haven’t used Marketing Cloud because we were integrated with another application. [Telefonica uses Oracle owned Eloqua]
And we had a look at the analytics cloud offer [Salesforce Wave] and we have more use for that in the future. We currently have investment in Hadoop and Teradata so that’s our core BI platform at the moment but I see potential in the analytics. And we just had a little insight into the Thunder platform (an event processing platform). I can see quite a lot of interest in that in the telco world.
Q: Salesforce Thunder, is it significant?
BOR: "I think it could be and it will only come out properly next year and one of the big challenges in our world is service management when you sell ICT services, digital services, to customers,
When customers buy from a telco, they expect telco grade service. And I think with something like Thunder where you can collect all the data from all of the platforms and start to analyse service issues I’m more interested in contextual service management than in the marketing story. It is not about offers for me it is knowing about customer service degradation in real time and acting on it. From dropped calls to Office not being available for example.
If people can’t log into MSOffice they want us to act on that and today we’re relatively blind because it is over on another platform. So I can see the integration of that with the salesforce customer data that could become interesting. I think we can solve that problem with many platforms. We can solve it with Hadoop but integrating with the customer data in real time is actually the challenge. And if Thunder is doing that with masses of data from our network and other platforms that is quite interesting."
CBR: Give me an example of how you currently use Salesforce – what benefits you have derived?
BOR: "In the enterprise you can’t get SAAS up and running in a week. We have architecture, integration and legacy. And those things are always going to drive you down a certain path. But compared to the old days of on premise software there is a radically different timescale for change.
To give you an example, it took 2012, 2013, to get it in to get it running and to get people to use it. To get it just for the basic telco service, get it connected to the billing systems. There was a lot integration we had to do. But last year  we took a massive leap forward. We launched our digital SMB product set so essentially we’re integrated to a cloud service platform parallel which is integrated into evernote, box, Office365 a bunch of other cloud applications. And to our own network applications like mobile voice recording and the conference calling app we own. We offer a wifi calling app. These are all new digital voice services. And so in around six months we were able to produce a new customer experience which allowed them to bundle those services with their handsets. This is for groups of handsets within SME use. Buy 25 or 50 tariffs, chose your package to bundle, roll it out. The outcome was pretty substantial. The customer got a better experience buying these services, self-serve plus multi-channel.
Two great outputs, within a matter of months we were seeing attachment rates grow by 8%. Which means our revenue growth was substantial. We became the largest Office365 seller in the UK. And we’re a mobile only operator. We were selling Office365 to the SMB market faster than anyone else, delivered through the experience because people could easily attach those services."
CBR: If you are a telco today or a mobile only telco – where is our growth coming from?
BOR: "It is really going to come from business and digital service. Those are the two growth engines of the future. Our cash comes from the consumer, all 28 million of them, but our growth is from our enterprise and our digital services. So it is a real driver.
We recently launched a product called Business Essentials, and, I don’t know if you know refresh, you buy an air time contact and pay for your handset. So you can switch out your handsets at any time. We’ve launched a similar product into the business market which is different from any other product. It is not a lease which is typically what is offered to business. This is giving them a lot of agility and we’ve enabled that through the same platform. This is done in relatively short time scales to bring to market. These are not multi-year plus roll outs. These are things we’re rolling out on the fly."
CBR: With SAAS what’s the cost to you as a business? Do you have visibility? Can you plan your spend with accuracy?
BOR "To a certain extent. We did some TCO modelling for SAAS. From when we first went into salesforce I would say over a ten year period I don’t think it is significantly cheaper than an on premise packaged software licensed product. I don’t really think cost is where the benefit lies. The ability to spread the cost and not invest a massive capital amount up front is an advantage certainly for some businesses. I think the benefit come from the ability to focus on what matters to the customer rather than worrying about the tin and the hosting and the upgrades."
I can compare it. We run Oracle financials which we run in a managed service model. It is actually hosted and managed by Oracle but I still have to run an upgrade project and spend several millions in just upgrading Oracle financials to the next version. Tomorrow there’ll be a salesforce upgrade launched and I don’t have to do anything. I know I have to spend money to exploit that but I don’t’ have upgrade the tin. I don’t have to upgrade the software version. I don’t’ have to do anything to have the capability there for me to use."
"That’s just the real difference to me. The cost over time are probably similar but the barriers to utilisation, the barriers to our ability to roll the capability to our agents and then to the customer goes away because there’s not this massive project and this massive upgrade cost.
CBR: Are we in the world of continuous features and functions on the salesforce platform? Salesforce says we’d like everyone to move from Force to the App cloud as soon as possible – is that a reality for customers and ISVs?
BOR: "From Telefonica, two points, we are moving from project to release models. Our model, up to date, has been very project based but we’re just at the cusp. We’re just about to move to monthly releases on our Salesforce platform. We’ll be moving ourselves onto this monthly release schedule. Be great it was weekly, but monthly is not bad. The amount of change the business can handle is going to be a limiting factor. They can’t retrain their agents every week. So you have to take that into account. In terms of Salesforce, we were talking today about this in the advisory council, there’s a little bit of, they release new features so fast, they need to explain to enterprises how to get on board and use and take the benefits out of them. Because it is great to release all these new platforms and features every year, we’re still trying to figure out how to roll out the mobile version from two years ago. And a lot of enterprises will be in similar situations not because of Salesforce the platform but just because of the legacy integration.
So the platform doesn’t exist in isolation. And I hope to hear more about how the platform is evolving to help us cope with that because we need to be able to exploit the platform features without having to rebuild integration and data models all the time in the legacy layer.
CBR: Salesforce – look at the speed at which they are moving all these clouds, all these functions, is their strategy coherent?
BOR: "At the top level the strategy is coherent. I see the continuation of the strategy through the process. Actually I like the way they experiment sometimes, it doesn’t always work.
I can see the Lightning evolution [Lighting is the Salesforce component framework for developers] over the last three years. They didn’t get it right the first time. They didn’t get it right the second time. You keep going and to some extent I quite like that. The challenge is to prove and decide what we’re going to bet on and not going to bet on in any particular year."
Q: What can Salesforce do better?
BoR: "Two areas they have to be careful of. One is it is pretty complex – it must be very complex as a business customer, because it is pretty complex as a smart IT buyer. I find the whole array of products and clouds quite complicated. I need to sit down with them and understand. Then you have to go ‘right for our use case what’s the best solution.’ So I think they do need to do something to simplify their offerings in that space.
Some of the vertical solutions help. You can go into a market and say I’m a telco, I want the telco vertical solution. But I think more of the services side of their business needs to be focused on simplifying the product and service mix into a solution. That’s vital.
The other thing they do need to be careful about and it is more about acquisitions – they need to not fall into the trap which others have done which is buying a load of companies, just rebadging to make it look like an integrated solution and then not really getting to grips with the platform integration that needs to happen to make it work. They buy innovation and then say ‘now we sell everything.’"
Salesforce have an opportunity to do a better job because in a way they can hide the integration from the customer. When buying a lot of companies and integrating onto the platform the delivery needs to meet the promise.
Q: Can they deliver?
BOR: "Our job is to work with them and say where do we want to focus. Which of your technologies are important to use. So the IOT cloud is a great opportunity. I’d like to play with it but I’m not sure I want to bet on it yet. I definitely want to play with it but if I look at something like Lightning now maybe it’s time to bet on that in order to enhance the experience of our agents and customers because it looks like it is solidifying. So you have to apply a certain amount of intelligence and talk to people and understand where you need to bet. Strategically they will go from success to success and we want to ride that wave. And use it as a platform to build our customer experience.
Being a digital business, I say to my team it is all about the customer experience. I think I am the custodian of the customer experience inside the business. My job is to make sure the experience customers get with our technology is the best they can possibly have and I can only do that if I can put the resources into that instead of worrying why the service isn’t up or why the platform isn’t running or why the network isn’t up.
We’ve made a big bet on SAAS and Salesforce and I still believe it is absolutely the right answer."