With Brownlee Thomas, Ph.D., Forrester Research

Forrester recently attended the Telefónica Leadership Conference 2014, its annual global customer event that brought together more than 600 customers, partners and its Global Solutions leadership team. This year’s event was an exemplary mix of Telefónica and external content, including a keynote live video interview with former US President Bill Clinton on day one, and also a keynote speech by Sebastián Piñera, President of Chile 2010-2014 on day two. Additionally, well known academics presented research findings related to how cloud and social are changing marketing (Jonathan Zittrain, Harvard), and how multigenerational workforces are reshaping business – from how they use technology to interact, and also to learn and transfer skills (Dr. Paul Redmond,  University of Liverpool).

Juan Carlos López Vives, President Telefónica Global Solutions (TGS) and José Luis Gamo, CEO, Telefónica Global Solutions – Multinationals started the analyst relations track of the event by hosting a breakfast meeting with a select group of industry analysts that walked us through the whys and wherefores of Telefónica’s February 2014 reorganization aimed at realizing its ambitions “to become the leading Digital Telco.”[i] Success will ride on industrializing the value proposition of the former Telefónica Digital unit (created as in 2011) – companywide. A management layer that separated the regional/local units from the central organization also has been eliminated:  the Digital, Europe, and Latam units’ activities are being integrated into the Global Corporate Centre. Additionally, a new role of Chief Commercial Digital Officer (Eduardo Navarro to whom J.C. López Vives reports) and a strengthened role of the Chief Global Resources Officer will report to Telefónica’s COO, to whom the CEOs for Spain, UK, Germany, Brazil, and Rest of Latin America divisions also will report. Telefónica Digital has not been disbanded; instead its incubator success and also emerging areas such as machine to machine (M2M) will be industrialized. Its innovations are considered the “seed for the Telefónica of the future” – enabling an evolving B2B2C portfolio that will be developed centrally, but with direct input and feedback from the ‘regions,’ and then deployed companywide with minor modifications to address specific local market conditions. Telefónica also plans to continue investing roughly 1-billion euros annually in R&D including ‘angel’ funding in new incubator programs.

During the two-and-half-day event, Forrester participated in several roundtable sessions, including one with Telefónica’s COO José María Álvarez-Pallete, and one-on-one briefings and demos with executives on managed mobility, marketing, cloud and UCC, and related new and planned services launching in the coming months.

A big challenge that Telefónica will face during 2014-2015 will be ensuring clarity and persuasiveness in its marketing and sales messaging – in particular, as regards progress towards realizing its digital telco business transformation. To persuade multinational user companies to opt in favor of Telefónica as their preferred supplier within and between western Europe and Latin America, it will be particularly important that Telefónica demonstrates its delivery capabilities and profitability/cost efficiencies progress in four areas: 1) industrializing Digital’s successes companywide; 2) investments in new incubator programs; 3) rationalizing and simplifying/standardizing its enterprise portfolio (e.g., Internet and LAN/WAN data and security services, global VoIP and digital/video collaboration);  and 4) putting a robust mobility wrap around them all (connectivity, M2M, management). For example, regarding M2M, Telefónica can build on winning the September 2013, €1.78 billion (£1.5 billion), 15-year contract to deliver smart meter communications services in the UK.[ii]. In addition, on April 2, 2014, Telefónica announced an agreement with Tesla, the electric vehicle (EV) manufacturer, to provide M2M connectivity for the Tesla Model S in Europe. Telefonica and its M2M World Alliance partners will provide connectivity for Model S across multiple countries in Europe, including in Germany and the United Kingdom on Telefonica’s O2 network, in Spain on Movistar, and in the Netherlands on KPN.[iii]

Forrester strongly believes that key strategic imperatives for enterprises including digital marketing, the mobile mind shift, and age of the customer need to be reflected and assisted by telcos. Telefónica has taken a positive big step in that direction with its commitment to digital transformation.

For more details on Telefonica’s reorganization, see the February 26, 2014 press release, “Telefonica Maps Four Strategic Axis Driving Its Total Transformation Into A leading Digital Telco In Terms Of Growth And Efficiency.” (http://pressoffice.telefonica.com/jsp/base.jsp?contenido=/jsp/notasdeprensa/notadetalle.jsp&id=0&idm=eng&pais=1&elem=20613 ) Also see the February 27, 2014 press release, “Telefonica’s Net Profits Up By 17%, Widely Surpassing Its Debt Reduction Objective.” (http://pressoffice.telefonica.com/documentos/nprensa/NP_Results_Telefonica_FY13_EN.pdf )

[ii] For additional information on Telefonica’s M2M smart meter contract in the UK, see the September 23, 2013 press release, “Telefonica Signs €1.78 bn UK Smart Meter M2M deal.” (http://blog.digital.telefonica.com/?press-release=smart-meter-uk-telefonica-decc )

[iii] For more insight into the Telefonica -Tesla agreement, see the April 2, 2014 press release, “Telefonica To Provide Connectivity For Tesla’s European Connected Cars.” (http://blog.digital.telefonica.com/?press-release=tesla-m2m-connectivity