HGC does complex solutions on top of connectivity well. We excel at getting connectivity into hard to connect places. We’ve pulled fibre into weird and wonderful places which allows us to be smart about getting value out of that connectivity. However, that’s traditional telecoms, what we’re looking at now is how to create capabilities for our customers to create their own digital services.
Jacqueline Teo is the chief digital officer of HGC Global Communications, the Hong Kong-based operator that provides domestic connectivity in Hong Kong as well as international capacity. Teo is driving the operator’s strategy for digitisation but the main goal isn’t to create operational efficiency, she tells George Malim, that will come automatically if the company transforms to enable and support a new wave of revenue generative digital services.
Jacqueline Teo: It’s a really wonderful title, all the exciting acronyms – SDN, AI, AR and others – are mine. Since HGC was sold to private equity last year, our investor has made the conscious decision to put a lot more investment into the company where there are opportunities to expand further. The chief executive and the board decided they needed a CDO so they took the original structure, which had a single technology unit, and created the CDO role. This only happened this year and it’s progressive. It means that IT comes with me as a key enabler of all things digital, it means that that the CDO owns the data and the customer experience.
The beauty of this is that I have the line of sight into all the things we need to create the path for digital transformation. This differs from most operators in that they are trying to get across traditional lines of business.
JT: Absolutely. In HGC we have two distinct sides of the business. There’s the large international business that is unencumbered by legacy and there’s the large business in the Hong Kong domestic market which has been there for more than 20 years. In telecoms terms that isn’t that old but we still have the shadows of that historical attitude.
Having said that, the overall HGC culture is quite upbeat. We’re quite lucky that [the support for digital transformation] is top down and we think that’s wonderful because the support is there to start with. It’s very interesting that I, as CDO, report to the CEO. Most CDOs report to CIOs or CFOs.
JT: We recognise this and first asked whether we should pursue a single strategy for digitisation that has something for everyone. There are certain ways in which you can create platforms – not just in technology terms but in skills and resources – that everyone can live off. For example, we’re looking at how to expand our application programme interface (API) capabilities and these are applicable across the business. However, when you get into the specifics of the Hong Kong residential market compared to the international wholesale over-the-top services market your digital strategies necessarily have to be quite diverse.
It’s almost like two-speed IT, it’s two-speed digital. On one hand we’re looking at having a full stack digital platform to fuel all our new digital services. On top of that, we’ll build software defined networks (SDN), probably with network functions virtualisation in parallel. We’re not looking at those capabilities to drive operational efficiency from the start, we’re looking to drive revenue streams from them first, the efficiency will come automatically later.
On the domestic side we do have the challenge of existing platforms and people. Our CEO says that if you pull out one piece of this you are in effect unravelling a ball of wool and will have to replace the whole brain. Anyone who tries to do this one piece at a time is asking for trouble. I think it will be necessary to swap out [complete] platforms.
It’s important that we’re really focused on creating new services and revenues, the efficiency benefits such as zero touch automation are also important but they’re not the primary motivation.
JT: We still have to show dividends and cashflow but private equity ownership gives us new life. They have said show us how you’re going to spend the money and show us the return. We will be expanding our footprint in the Greater Mekong Basin – Vietnam and Laos – and expanding our data centre footprint in particular. In addition, we will continue to invest in mobile infrastructure – we’re the mobile backhaul provider for Hong Kong. We also own four cross-border connections from Hong Kong into south China and are building a fifth cable across that corridor using the new ZHM bridge which, when complete, will span 30km.
We’re investing in infrastructure so we understand the need for operational efficiency and cost efficiency. However, we’re not investing to be efficient, we’re investing to make money.
JT: I’ve heard telcos discussing how to become the next Netflix but I’m pretty sure Netflix doesn’t discuss how to become the next telco. HGC does complex solutions on top of connectivity well. We excel at getting connectivity into hard to connect places. We’ve pulled fibre into weird and wonderful places which allows us to be smart about getting value out of that connectivity. However, that’s traditional telecoms, what we’re looking at now is how to create capabilities for our customers to create their own digital services.
We love Netflix because it brings more traffic and brings us the ability to give the value add to our customers. We’re looking to support OTTs. With our Big Data Exchanges (BDx) all the OTTs can interconnect into the BDx and we offer security and eyeballs. If you think about our region we have WeChat and Alibaba as well as the big media companies so the ability to connect with other people coming into that exchange is what we do well. That’s the essence of being digital, it’s the transparency and flexibility.
JT: It’s not fast enough for us as a company. If you look at HGC’s history, we’ve done more in the last six months than we’ve been able to do in a long time but we don’t feel we’re moving fast enough, even though we are moving faster than others.
I don’t think the telecoms industry in general is moving fast enough. Even with software defined capabilities, the idea and technologies have been around for a long time but they’re only just passing intro production. Our customers are moving faster. For example, the finance industry isn’t waiting for us to become operationally efficient. Smart cities, ehealth and other industries are moving very fast. Hong Kong is a very progressive, very connected world, there’s a lot happening and we need to hurry up.
The article was first published in VanillaPlus.
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