Management Information
Systems
Vodafone:
Managing Advanced Technologies and Artificial Intelligence
Vodafone: Managing Advanced Technologies
and Artificial Intelligence
There are big new winds blowing—in data analytics, automation and
artificial intelligence—and they will not blow exactly in the same way
across all of the organization. In my fleet some boats will gain speed,
while others have smaller sails and won’t capture the same momentum.
The question is whether you allow each boat to go at its own cruising
speed—as we did in the beginning—or if you want to align the fleet and
wrap it into a big program, as we are now trying to do. Aligning the
boats is helpful for the organization, but you also risk forcing them into
a linear speed that ends up being blown away by disruptors.
— Vittorio Colao, CEO Vodafone Group
Vodafone: Managing Advanced Technologies
and Artificial Intelligence
On a grey January morning in 2018, Vodafone Group CEO Vittorio
Colao gazed out of his London office. Having recently launched the
Digital Vodafone program to improve the customer experience and
boost revenue and cost efficiency, Colao was pleased with the quick
early wins.
He mused, “I don’t pretend to be particularly creative or innovative. Like
every other company, we want to have the most engaging digital
customer experience. We want to blend the best of our physical assets,
which tend to be people or retail shops, with a digital interaction that is
easy, instantaneous, but most importantly, personalized.”
Vodafone: Managing Advanced Technologies
and Artificial Intelligence
Colao highlighted the program’s main aspects, “On the customer side,
we are looking to use big data to produce personalized offers for our
customers—which will help us to optimize our channel mix—and to
support customers more effectively and efficiently via chat bots and
artificial intelligence (AI) applications.
On the technology management side, we see scope for efficiency gains
in our network by using real-time analytics to enable smarter network
planning and predictive maintenance. On the support operations side,
we aim to simplify our support activities and automate many of them
through robotics.”
Vodafone: Managing Advanced Technologies
and Artificial Intelligence
Colao reflected on the many ways he had to think about the move
towards increasingly using data analytics, automation and artificial
intelligence. He was preoccupied by three main questions, “How do I
change the organization to incorporate the digital skills to improve the
way the functions work?
How do I incorporate machine learning and artificial intelligence that
improve productivity and slash costs? What is my duty vis-à-vis broader
society: what can I do to give back to society to make sure that we all
create new opportunities for the next generation?”
Vodafone Group
Vodafone Group Plc (‘Vodafone’)—founded in 1984 and headquartered
in Newbury, U.K.—was a multinational telecommunications company
that offered a range of products and services to consumers and
enterprises. (See Exhibit 1 for overview of products and services.)
Vodafone had operations in 26 countries across two geographic
regions—Europe and Africa, Middle East and Asia-Pacific (‘AMAP’).
(See Exhibit 2 for a map of operations.)
Beyond the companies that Vodafone owned, it had 48 partnership
agreements with local operators and was present in 73 countries with
IP-VPN and 118 countries with 4G roaming coverage.
Vodafone Group
Vodafone Group
Vodafone Group
Despite its worldwide presence, Vodafone had a decentralized
structure. Colao said, “I banned the word ‘global’, preferring to say that
we are ‘international.’
Each country has its own dignity and culture, and we are a multi-
country organization with a lot of accountability. With this comes
responsibility—I always say, ‘Guys you have more independence but
you need to bring me ideas, do not sit on your thumbs and wait for
central innovation.’”
Once a new idea emerged, Colao used a combination of carrot and
stick methods to spread it through the organization.
Vodafone Group
He reflected, “I engage in pushing and pulling, giving a public ‘Bravo’ to
a country operation that is performing well, while asking other countries
why their numbers aren’t as strong.”
In 2017, Vodafone registered 516 million mobile customers, 17.9 million
fixed customers and 13.8 million TV customers. 23% of its mobile
customers were from Europe, and the remainder from emerging
markets such as India and Africa.
Vodafone served 1,900 multinational corporates, 90,000 public sector
and national companies, and 9 million small and medium-sized
enterprises.
Vodafone Group
It employed around 100,000 people. In 2017, Vodafone reported group
service revenue of €43 billion, adjusted EBITDA of €14.1 billion and
operating profit of €3.7 billion. (See Exhibit 3 for revenue breakdown
and Exhibit 4 for an overview of Vodafone’s main markets and joint
ventures.)
Vodafone Group
Vodafone Group
The Telecommunications Industry
In 2017, telecommunications was an essential service used by over
seven billion mobile customers and almost one billion broadband users
across the globe. The demand for mobile data services to watch
videos, browse the internet and use various apps had accelerated
rapidly, and, in 2017, 48% of global revenue came from data, compared
to 22% five years previously.
The number of smartphone users continued to grow rapidly. In 2017,
45% of mobile handsets were smartphones, compared to 11% five
years previously. This growth was being driven by rising living
standards and population growth, combined with lower airtime and
device costs. (See Appendix for further information.)
The Telecommunications Industry
Consumer Demand Preferences
Vodafone was carefully monitoring demand in two areas: data and
high-speed networks, and converged solutions. Developments in
network technology innovation were collectively leading to substantial
growth in data traffic.
Between 2011 and 2016, mobile data traffic increased by an average of
75% p.a. and, in 2017, 95% of total traffic on mobile networks across
the globe was data. 5G, the next major step in mobile technology, was
expected to launch commercially by 2020, most likely only in dense
urban areas in Europe, and would enable speeds of up to 1 Gbps
combined with extremely quick reaction times.
Consumer Demand Preferences
This would support the development of new applications, including in
the areas of augmented and virtual reality. (See Exhibit 5 for forecasted
global mobile data traffic 2016-2021.)
In parallel, Vodafone observed that consumers’ demand for bundles of
mobile and fixed services was increasing: the number of converged
customers reached 3.8 million (up from 3.1 million in 2016).
Consumer Demand Preferences
Consumer Demand Preferences
This provided consumers the benefit of simplicity—one provider for
multiple services—and better value. For operators, it provided higher
customer loyalty as well as operational efficiencies.
The same motivations applied for businesses, which were increasingly
taking advantage of converged services that brought together
communications tools that would work across all fixed and mobile end
points. (See Exhibit 6 for fixed, mobile and converged customers.)
Consumer Demand Preferences
Technological Advances in the Industry
Vodafone operated in a fast-moving market, with innovation and scale a
key preoccupation for senior management. Colao explained three key
areas for digital transformation, “The first is ‘Big Data,’ especially data
analytics for marketing.
We started asking, ‘Is the way we are doing marketing correct? How
can we use technology advances like deep learning to better issue
predictive and personalized offers to customers? South Africa is our
best example. I had an eye-opening moment when the guy who was
running this engine said, ‘The important thing is not to allow the
marketers to put their fingers on it.
Technological Advances in the Industry
Because if they start putting their logic above the logic of the machine,
they will ruin the offer.’ But, if I do not allow the marketers to put their
fingers on it, what will they do? Who will be the marketers of the
future?”
Colao further joked, “I have been myself a victim of not keeping an eye
on what the data are telling us. There was one shop in a European
capital city where I always used to drop in to see how it was going and
observe customers.
Technological Advances in the Industry
One Saturday I found it closed, and I called the head of the country and
said, ‘Hey, why is it closed on Saturday?’ and he replied, ‘It’s not closed
on Saturday, it’s closed forever.’ Despite its wonderful city center
location, the data showed that the return on capital was actually better
for smaller shops in less central locations, even if it looked
counterintuitive.”
Colao identified the second area as automation using bots. He
elaborated, “Like all companies, we did a lot of offshoring and
outsourcing of call center type work. At our hub in Egypt, my second
eye-opening moment was when we pitted our best human against the
machine on tasks such as address changes, and the machine
performed seven times faster at a quarter of the cost.
Technological Advances in the Industry
A 28-fold improvement raises hard questions about where and by
whom work will be performed. We have started to bring resources back
on shore for what is not ‘botable.’”
The third area that Colao was closely following was artificial intelligence
(AI). Colao commented, “We are at the beginning, which is very
promising and at the same time very scary.” (See Exhibit 7 for some AI
uptake indicators.)
Technological Advances in the Industry
Technological Advances in the Industry
Is This Time Different?
The general consensus among Vodafone’s senior executives regarding
the scale of these technological changes compared to those of the past
was, “This time is different.”
Colao reflected, “The data processing power and the abundance of
data, combined with the development of neural networks and the ability
to
see
correlations
that
we
couldn’t
before,
unprecedented in terms of business implications.”
is
completely
Is This Time Different?
Various executives picked up on connected themes:
HR Director Ronald Schellekens said, “The reality is that multiple
technologies are hitting companies simultaneously. AI is the least clear
and most ambiguous: If you ask 20 people in a room to write down a
definition of AI, you get 20 different answers.
The overall digitization of Vodafone is a positive thing for our customers
and employees, as they generally prefer not to deal with physical
channels or call centers. But there is some concern around the de-
humanization of the organization if everything is digital, and people still
need a human interface from time to time. But technology removes a lot
of unproductive time which can be spent on better uses.”
Is This Time Different?
Group Chief Technology Officer Johan Wibergh mused on the scale of
the technology changes and emerging expectations for AI: “It was a
major step when the processors came in the 1970s.
You got a personal computer, and it changed a lot of things. This has
been followed by the mobile phone, broadband and the internet. Is this
different? Maybe long-term, but probably not in the short-term.
AI is difficult, and people overestimate what can be done next year but
also underestimate the enormous impact for the next 30 to 40 years
from these emerging technologies.”
Is This Time Different?
Deputy CFO and Director of Shared Services Margherita Della Valle
commented, “The size of the opportunity for cost efficiency is radically
larger than previous opportunities. In shared services productivity
improvement potential would have been around 10% per year in the
last few years.
Now with digital, productivity improvements of 15/20% per year are
possible. In the next 3 years this means halving the unitary costs of our
back office activities. Moreover, if the current bots have the capacity to
do the work of two or three people, we may soon encounter AI that
accomplishes the work of hundreds of people or more.
Is This Time Different?
Thus, we must be fast. I tell everyone that if we don’t deliver the
automation efficiencies first, someone else will and we will lose our
customers. The technological changes are so significant in their
implications that we must act rapidly or we will lose our license to
operate.”
Director of Group Network Operations Miguel Marin spoke too of the
expanding imperative, “New technologies force one to think of a larger
scale substitution of human tasks than before. You can do automation
without intelligence—you have a set of repetitive tasks that are placed
into a flowchart with a deterministic input and output.
Is This Time Different?
Our domain brings together both repetitive tasks and human
judgement. Automation tools are replacing the repetitive tasks, and the
potential exists for cognitive to do the same for human judgment. It is
the combination of automation and cognitive that widens the span of
activities which could one day be conducted by machines.”
Technology Shared Services Director Karine Brunet reflected on her
team’s new role: “Up to 2015, IT was supporting the back office. With
digital, IT is suddenly front and center of customer operations and
shaping how they interact with you. Moreover, our team has new
internal power. Open sourced technology means that you are no longer
tied to a software editor.
Is This Time Different?
You can start to play with natural language processing and deep
learning within your own group. That’s where the value is—getting your
IT closer to your business and rethinking your business processes.”
On the customer products and services side, Head of Digital Products
and Portfolio Management Nina Lange-Richter continued, “Normally
these conversations remain in the IT community, but such is the scale
of the current changes that everyone is talking about them.
Leaders must figure out where to implement new technology and the
business case for it—we want to have a customer experience which
makes sense from the business revenue perspective.”
Is This Time Different?
Schellekens was cautiously optimistic, “The changes are quite profound
but I think they’re also exciting—sometimes there are too many articles
scaremongering around technology trends. There’s so much new stuff
happening, which is a little daunting, but people need to continuously
learn. I see it more as a positive.”
Vodafone executives noted several approaches when it came to
managing their own personal development in the face of rapid
technological advances. Wibergh said, “Personally, I spend at least an
hour everyday just reading and learning. You need to understand what
is going on. It is hard to keep up with everything, especially as AI is
very complex.”
Is This Time Different?
Schellekens said, “I spend more time engaging with HR peers than I
did in the past, to understand what’s happening in the world from an
HR point of view as technologies roll out.”
Della Valle reflected, “I try to learn from the companies and the people
who may be more advanced than I am. For example in the last quarter I
have spent time both on the West Coast discussing how companies
like Amazon and Microsoft manage their operations, as well as in India,
looking at the latest developments introduced by large operations
outsourcers like Accenture or Cognizant.”
Technology Innovation at Vodafone
Vodafone held a 5-year technology strategy, which it updated on an
annual basis covering the areas of connectivity/access, core and
infrastructure, IT, consumer products and services, enterprise products
and services, operations and security. (See Exhibit 8.) Vodafone had
ventured into the integration of big data, AI, and automation in its
services in the form of network optimization, chat assistance for
employees and customers, and the screening of candidates in human
resources.
Wibergh said, “You always need to look at both dimensions: technology
and business strategy. New technology enables new businesses to
disrupt because they can do things in a different way, but there is no
meaning coming from just the technology itself. It is about the type of
business and how you are driving it.
Technology Innovation at Vodafone
Technology Innovation at Vodafone
For Vodafone, robotics and AI pop up in terms of efficiency and
operations across all areas. Automation—simple robotics, screen
scraping—is very simple and widespread; we use smarter AI tools for
certain scenarios.
For instance, we started experimenting in network operations, where
we operate 300,000 base stations, have fiber cables going to 73
countries, and carry 7 terabytes of data traffic per second. You need
complex and advanced tools to understand when something goes
wrong, and our system automatically reconfigures for a lost site. You
can debate whether it is AI or just very smart algorithms that learn and
adjust.”
Technology Innovation at Vodafone
Vodafone adopted a ‘Crawl, Walk, Run’ approach in diffusing new
technologies. Wibergh explained, “When young kids play football, one
kicks the ball in one direction, and everyone runs after it. That used to
be the standard way at Vodafone. We now push ‘Crawl, Walk, Run’
because it is a very effective way of deploying technology.
If you want to do something new, you do it in one place first to test it. If
this crawl phase works, you integrate your learnings and do it in three
more places; that is the walk phase. With continued success and
coordination, you deploy it across the whole company. You still learn
different things when you put it in production and scale it up.”
Vodafone Shared Services
Established in 2012, Vodafone Shared Services (VSS) provided
assistance to group companies across functions like finance, supply
chain, customer operations, sales and marketing, product development,
legal, credit and collection, HR, technology, network and business
intelligence.
VSS operated out of Hungary, Egypt, Romania and India with 20,000
employees. It handled 4 million monthly transactions and supported
over 10,000 end users in 26 countries. In recent years, VSS had
worked to become a strategic partner for group companies, becoming a
key lever for Vodafone to drive cost-saving programs across
decentralized operations.
Vodafone Shared Services
Finance was the first team that started the shared services journey,
beginning with standardized ERP systems and processes. More than
half of VSS employees were based in India. In terms of activities, one
third was in technology, one third in call centers, and the final third
worked in activities across the company.
Della Valle elaborated on VSS growth: “Most of the activities that we
transitioned came from Europe with high labor costs, and rarely is the
migration imposed as part of a group strategy. In most cases, a market
chooses to give VSS the job only if we are better than the normal
outsourcer and they trust us more. It’s a competitive choice, and we
have to constantly prove that we can deliver well.
Vodafone Shared Services
This forces us to be excellent in service, although it sometimes reduces
the scope for universal savings in activities where VSS serves few
markets. We have been very transparent on our performance and
service-level agreements, which builds trust with markets.”
Vodafone had a dedicated technology center in Egypt to provide
software development and other ICT services. The team began with
existing tools, such as scripting, before moving to Robotic Process
Automation (RPA), where repetitive human tasks were replaced by a
robot. Brunet said, “It’s usually very easy to implement as there is no
cognitive complexity.
Vodafone Shared Services
The real risk is that you fail to simplify or standardize the way you
should as the tendency is just to apply RPA on top of an existing mess.
Looking to the future, we are not yet at the stage where the technology
can reproduce learning in different contexts, but that is coming fast too.”
While Vodafone had the largest shared services of any telco, 80% of
the cost base was still in the individual market, where it was more
difficult to penetrate with digital than with shared services.
Della Valle had started to sell digital services to countries for the
activities which were not migrated to shared services.
Vodafone Shared Services
Her team set up a “Robotics Farm”, rapidly scaling up its capacity of
building and operating bots for processes ranging from bank
reconciliations to customer disconnections.
The Robotics Farm included technology but also business experts from
all functions who together redesigned the processes for maximizing
automation.
Vodafone operated 140 bots as of January 2018. Each bot could do the
work of up to 3 people doing repetitive tasks thus freeing more time for
value added activities.
Vodafone Shared Services
But the benefits went well beyond this: bots executed their tasks in a
fraction of the time of humans and error free, significantly improving the
quality of customer service and the strength of the control environment.
A bot cost about €6,000 per year.
Network Operations Shared Services
The operation of Vodafone’s complex technical networks had two core
activities, the restoration of service after interruptions and the
implementation of technology upgrades that had to be done live over
the networks without customer disruption.
Responsible for network, international backbone and central platform
operations across Vodafone, Marin said, “Everything I do to improve my
costs and efficiency benefits the operating companies directly. One of
the challenges we face is operational stability, which is mostly handled
via manual tasks. We will automate them over the next five years,
which will further facilitate intelligent pattern recognition in the data.”
Network Operations Shared Services
Vodafone’s efforts towards predictive maintenance using big data had
borne fruit, enabling up to 70% prediction of future events. Marin
added, “Shedding repetitive tasks reduces costs and raises reliability.
But it is also about being more proactive, which is less expensive than
reactive.”
The network operations team received alarms from the networks that
were transformed into tickets, which the team followed until resolution.
Vodafone aimed to automate the processing of these tickets first. A
second layer of experts dealt with more complex problems that could
not be solved by the first line team.
Network Operations Shared Services
Marin cautioned, “When we automating existing processes, we can’t
just try to replace the human way of doing it. We must reengineer our
processes to create the best fit between automation, cognitive
capabilities and the task.”
The move towards automation would replace up to 80% of human
activities in the first line. Marin said, “We are going to migrate these
jobs and move our workforce towards different roles, reskilling
internally. Our long-term headcount forecast is flat because we will
compensate automation with growth.”
Network Operations Shared Services
Marin saw huge potential ahead for the Internet of Things (IoT) in
network operations:
“If you think of the 500 million customers we have today and the
potential billions of connected things, it’s a completely different scale.”
Brunet added, “The next big bet is IoT: AI is an enabler of IoT, and vice
versa. As the market leader, we need to be bold, whether it’s smart
cities or other applications.”
Technology Shared Services
8,000 people worked in delivering technology services internally, for
either the local markets—where customers were the local market
CIOs—or group functions. This group had grown ten-fold in four years.
Brunet recalled, “If you really want the next levers in efficiency, then you
need to start sharing operations.
We cannot standardize the tools that local markets use; our challenge
is to automate and industrialize operations without standardizing the
products. That’s why we started the robotics and automation journey; it
was the key lever for us to do it. You don’t want to automate something
that could be likened to a plate of spaghetti, so we have three key
pillars: we standardize first, consolidate what we have, then we
automate.”
Technology Shared Services
Historically, Vodafone outsourced around 95% of its business support
system (BSS) and operations support system (OSS), insourcing
technology only when it provided a competitive advantage. The
company made the decision to insource on digital efforts.
Brunet commented, “Consider the ‘MyVodafone app’, which we are
pushing our customers to use. That’s a key point of interaction for us,
and we want to own the IP in order to differentiate ourselves from
competitors.” Della Valle concurred, “It is about establishing a daily
relationship with customers without an intermediary. If we have success
in that, then there are big prizes in terms of increased customer loyalty
and distribution channels savings.
Technology Shared Services
82% of our customers in Italy use the app three times a week and it is
the fifth most used internet app in the country. If we can replicate this
connection everywhere, it will really change the dynamic of our
business.”
Brunet added, “For BSS we’re looking again at where it makes sense to
insource—do I want to insource an old legacy system that is 15 years
old? Not really. But when it reduces our lock-in dependency on a
software editor, then yes. We are looking into open source software to
see how it can complement our framework.”
Technology Shared Services
Lange-Richter added, “The proprietary times of the past are over. We
want co-creation and joint development of the platform that will be
reused by the vendor and by us.”
The issue of price also played a role.
Brunet noted, “Everyone is experimenting, so it’s difficult to know today
whether you’re purchasing at the right price or not. You place a bet.”
Technology Shared Services
Chatbots The center’s automation team provided services to
operations manager where they indicated pressing needs. Chatbots
were one of the most prevalent automation requests.
This reflected a global trend, as Oracle reported that 80% of
businesses wanted chatbots by 2020, while Orbis Research predicted
that the global chatbot market would grow at CAGR of 37% during
2017-2021. According to Juniper Research, chatbots would cut
business costs by $8 billion by 2022.
Technology Shared Services
When the automation center received a request, the first step was to
understand the operation and the key use cases the operations lead
wished to automate.
Brunet explained, “People needed to understand why they wanted to
do this. Was it because of poor quality of service, or because of a cost
issue, or both?
Then we applied some templates that we shared in order to experiment
with varying automation scenarios; one journey could require a high
development workload for a low return while others although cost
effective could negatively impact customer satisfaction.
Technology Shared Services
This technology has a cost, business leaders need to understand the
potential outcomes.”
Once the use case was agreed upon, the automation team built a highlevel technology design outlining where it needed to interface with the
rest of the information systems.
Then a two-site agile team worked in sprints of two weeks to codevelop the chatbot. Brunet said, “My teams were coding, but the
business was driving the transformation in the meantime. We put it on a
platform for it to go through iterative testing.
Technology Shared Services
It required a lot of tweaking because it’s machine learning—it’s like a
child’s brain in many ways, it learns faster but you need to take it
through logical learning steps.” The business identified a Subject Matter
Expert (SME) as a digital coach to fine-tune the robot.
Brunet explained, “When the robot can’t answer, it hands over to a
human agent who answers the request and the robot learns from it. But
we want somebody validating that what the agent did was correct and
that the robot can learn from the right approach.” The business then
decided how to take it into production.
Technology Shared Services
Brunet illustrated, “For example, did they want to do it with a small
perimeter and a number of limited users, or take it to a wider audience
to better measure potential outcomes?” (See Exhibit 9 for workflow
diagram.)
Amelia In early 2016, the center completed its first implementation with
the introduction of chatbot ‘Amelia’ to deal with the support requests of
its internal IT service helpdesk. Wibergh explained, “We basically
started testing and experimenting on ourselves. We looked at requests
that our IT service helpdesk receives such as ‘I have forgotten my
password’ or ‘I am locked out of my account’ and thought if we could
replace IT service agents with a chatbot, we could reduce the number
of people in the internal helpdesk in India.
Technology Shared Services
Technology Shared Services
From an efficiency and cost point of view, it is an interesting case to
look at because the labor cost is still low in India, so how can you do it
better? It was good to start internally; only internal people can get mad
and not customers.”
Vodafone performed this development in-house. Brunet said, “As soon
as we deploy, scale is an issue, because Vodafone very quickly
became the biggest platform in the world. Instead of giving the work to
outside vendors with limited experience in this emerging area, we
recruited our own cognitive engineers, humanizers, etc. and I worked
directly with the software editor, IPsoft.
Technology Shared Services
We agreed that IPsoft and Vodafone would combine resources in each
agile sprint.” Vodafone started experimenting with some of the user
journeys before taking the product live in December 2016.
It further expanded and integrated the chatbot into seven of its back-
office systems.
By early 2018, Amelia solved about half of the problems it encountered,
equivalent to about 160 IT service helpdesk agents. (See Exhibit 10 for
screenshots of Amelia.)
Technology Shared Services
Technology Shared Services
Technology Shared Services
Technology Shared Services
TOBi Wibergh continued, “Then we asked how we can apply this to our
customers. If you take a step back and look at us as a company, we
have around 500 million customers and around 60,000-70,000 call
center agents, both employees and external contractors.
We have to continually make customer interaction better. One thing
was bringing customer service online and making sure it was a great
experience in itself. Then if we could replace some of our call center
agents with an intelligent chatbot agent, we would increase quality and
reduce costs.”
Technology Shared Services
Vodafone pursued three pilots in parallel in three countries with three
different vendors: IBM’s Watson in the U.K., Microsoft in Italy, and
IPsoft in Ireland. Brunet said, “The purpose of the pilot is to learn and
begin benchmarking.”
Wibergh added, “Part of the experiment was picking which one to work
with given the immature technology. With these three vendors, we
implemented roughly similar use cases. We also experimented lifting
the one we did in the U.K. to Spain to learn the complications of moving
languages and similar. Then we did the commercial negotiations. When
you have multiple companies competing, you can make a better
commercial deal.
Technology Shared Services
We chose IBM’s Watson and Microsoft Chatbot, and other countries are
now able to deploy. In this instance we decided to outsource given
IBM’s bigger service business. At the same time we have also built up
internal competencies.”
Vodafone’s chatbot ‘TOBi’ was launched in April 2017 and provided a
fully integrated web chat with the customer. Initially focused on popular
support questions, TOBI’s role was expanded to answer customerspecific questions such as data-roaming charges and phone
capabilities. Upon its launch TOBi was able to answer about 112
intents; just a few months later, he could respond to around 150 or
about 70% of typical queries from customers.
Technology Shared Services
To avoid frustration, the technology used a ‘sentiment’ function to pass
users seamlessly onto a human advisor if the bot could not help or if
they were not satisfied.
Messages from TOBi and human agents remained in the same thread,
allowing agents to read the past history and avoid customer repetition.
Vodafone planned to bring its customer service capabilities to
Amazon’s Alexa, to let customers ask Alexa about their phone bills and
the amount of data they have used, for example.
Technology Shared Services
Brunet reflected:
We learned some significant lessons. When we first started, we
reproduced human dialogue, which was wrong because people don’t
talk to a robot the same way they talk to a person. People also try to
beat the machine, asking ’What is the turnover of Vodafone?’ or ‘How
old are you?,’ and you need to handle that. I insist that the SME for the
agile team be empowered on changing or tuning the process.
If 20 meetings are required for approval, you don’t have an agile team
anymore. So that’s a big responsibility for them and this means that we
need to empower business owners to optimize the process for a better
outcome.
Technology Shared Services
There is joint learning—the business needs to learn about the
technology, and we need to learn about the business. Both teams need
to win mutual respect. We do daily stand ups, and our video
conferencing is on constantly.
Version control and change management are very important; we have
had to remind the software editor that we were not in a startup mode
anymore. But in the meantime the platform provided by the editor was
evolving so fast that we wanted to keep our development on the latest
release to benefit from the latest functionalities. This was in production
at Vodafone, so they could not just decide to change something and not
tell us; nor could they skimp on testing and cause our business to fail.
Technology Shared Services
Wibergh further cautioned, “People think it’s faster and easier to
introduce this system than it actually is. It is very trendy, many
companies are doing it, but it is complex to get it up. We have several
in production, and we have done several prototypes. You can often
have negative Net Promotor Scores (NPS) at launch, which surprises
people. The technology still needs time to mature.”
A team continued to build Vodafone’s consumer products and services
for the local markets as a group function, with particular interest
emerging for Alexa, Google Home and Microsoft Cortana. LangeRichter explained, “We are looking all around, exploring, and sharing
ideas.
Technology Shared Services
This topic is so exciting that people really get into it. Customers are
getting used to interacting with a robot and then they say, ‘Why can’t I
maybe call a Vodafone hotline via Alexa?’ You need to be quick: It took
us two weeks to launch the first skill on Alexa, and in the U.K. it is
already used. Long-term, it’s not clear yet if chatbots will replace or
complement the hotline. We are still observing.”
The customer products and services team worked on a workflow
library, where countries could also see what others had created as a
user flow for a chatbot. Lange-Richter said, “The customer intents are a
bit different from country to country, but the topics are similar.
Technology Shared Services
There should be some reusability across all these different flows, and
our library makes them retrievable. I personally think chatbots will
empower customer interaction with companies at home.
Our key interest is to set up a framework so that the customer care
team can easily build their own flow, looking to us for central
technology. Such a scalable framework would allow different customer
operation teams across all Vodafone countries to do it on their own,
and also leverage and learn from each other.”
In the customer care team, the business case was based on the
number of chats with resolved cases that did not require any contact
with an agent.
Technology Shared Services
Lange-Richter said, “Out of the volume of chat we anticipate, what
percentage are hopefully resolved within the chat? How much volume
can we take away from the classical contact channels and what is the
saving?”
The main KPI that the customer care team looked at was the NPS.
Lange-Richter said, “The good thing about this technology is that you
can configure and easily change the flows; you do not need six-month
release cycles. The NPS is benefiting from the speed we can have in
adapting. We can observe and act quickly.”
Human Resources
Vodafone’s senior management had identified five shifts in its future
leadership needs that needed to be made at the top 250 level of the
company to enable a quicker adoption of technology and digitization of
the company.
Vodafone’s HR function was tasked with creating the optimal conditions
for these shifts to occur.
• The first shift was moving from relying on internal best practices to
focusing more on the external radar.
Human Resources
• The second was moving from a functional organizational model
towards customer excellence and product obsession. Schellekens
commented, “In the old days, our top executives received a mobile
phone and never saw a bill or dialed a call center. We’ve taken away all
these privileges—executives must go to a store to sign up and contact
the call center about problems, just like our customers. I also spend
much more time reviewing our employee HR journeys, to see what the
employee experiences.”
• The third shift was moving Vodafone from incremental planning to
experimentation and a failing-learning-scaling model. Schellekens said,
“If you take our digital accelerators, you can’t kill them with business
cases and continuous reviews, you have to empower them”
Human Resources
• The fourth shift was moving from judgement-driven decision making to
data- and AI-driven decision making. Schellekens said, “If you look at
marketing and customer segmentation, we often made broad
assumptions around behavioral patterns such as ‘Youths behave in a
certain way, therefore this is the proposition we make.’ Today, data
allow us to study underlying consumption and behavioral patterns and
make micropropositions to microsegments. Someone who is 18 can
behave much like someone who is 64.”
• The final shift was a change in culture from a directive and
hierarchical approach to one around empowerment, coaching, trusting
people and holding them to account.
Human Resources
Vodafone’s workspace reflected this approach with open spaces for hot
desking, transparent walls in meeting rooms and elevators and many
lounge areas for interaction between employees. (See Exhibit 11).
Vodafone’s HR function ran training programs for employees on the
latest technological developments. Wibergh commented, “It’s very hard
for a company to keep up and have the right skillset. Things are moving
fast and competence development is vital.”
Schellekens had three HR expertise centers—talent capability, HR
operations function and real work practices—that sought external ideas
and solutions.
Human Resources
Human Resources
Schellekens observed, “We have moved away from decentralized
classroom training towards centralized digital training. We deploy
central academies—in Marketing, Technology, Sales, Retail and
Finance—on our Vodafone University learning platform, which provides
personalized learning to employees.
Every year we identify what the underlying technology trends are and
then refine our training programs using internal and external
resources.”
Human Resources
Vodafone’s top 50 executives took part in an annual 5-day immersive
program on technology in the Silicon Valley. Schellekens commented,
“The main purpose is to mobilize them to start thinking about
technology and new ideas.
It’s to make them realize that Vodafone and the telco industry has been
inward looking and focused on optimization, but there is a lot
happening in the external world that is probably more relevant for us,
now and tomorrow.” The top 250 took part in an annual 3-day program,
which was also very much centered on opening their eyes to the
external world. The training program made the directors touch the
technology.
Human Resources
Brunet happily described her exercise to facilitate this, “They have to
develop a chatbot in three sprints of eight minutes using an agile team
format.
The chatbot is to enable a guest in a robotized hotel to order a coffee. I
put some options, sugar, no sugar, and they play with the language,
etc. You need a minimum viable product. When you have Italians in the
room, they have seven sorts of coffee… can you set up seven sorts of
coffee on your sprint or do you risk going live with nothing?”
Human Resources
Schellekens elaborated, “There are three blocks: the first component is
on new technology, the second part is on agile ways of working, and
the third part is on the underlying shifts in mentality at the top level
necessary to adapt to technological change.”
The top 250 were also assigned ‘digital ninjas’, digital-savvy millennials
from the Vodafone graduate program. Schellekens explained, “We do
reverse mentoring. My ninja keeps me in the real world, tells me about
the latest technology she adopts, popular apps and so on. I mentor her
a little as well on how to build her career. It’s a fun and safe
environment because when you’re in the top 250 it’s harder to admit
that you don’t know certain things, you don’t want to look like a fool,
while you can do that in front of your ninja.”
Human Resources
Vodafone had also begun using automation tools in its recruitment
process. It was testing HireVue, a program that sought to automate the
bias out of recruitment using video- and text-based software to extract
as many as 25,000 data points from video interviews.
The program examined visual and verbal cues and compared word
choice, facial movements, body language, and tone to help employers
find the very best candidate. Schellekens explained, “We have probably
100,000 graduates who are applying for 1,000 jobs. We’re looking to
bring 100,000 applicants down to 5,000 for face-to-face assessments.
Human Resources
The program sorts the candidates into highly recommended,
recommended, and not recommended. The system correlates well with
our
own
internal
assessments,
around
70%
for
the
‘highly
recommended’ candidates. We need to be cautious here because we
are at the early stages, but this is something which will be part of the
future of recruitment.”
In terms of attracting new talent Schellekens said: “Traditionally we
never had a problem attracting people to the company because
Vodafone is a very good employer brand in the footprint where we
operate. But now that we’re moving to new technologies, we have to
compete with Facebook, Google, and Amazon.
Human Resources
We must build the scale and mindset to bring in this talent. In the
analytics areas, it’s tough to hire the super experienced people, but the
reality is that we need to also figure out how to build it ourselves
internally.”
Brunet recruited many talent profiles for the growing Egyptian center,
including humanizers (linguists that tuned the chatbot to communicate
more naturally), cognitive engineers and data scientists. She explained,
“Technology creates lots of new jobs, too, and some are so new that it
is difficult to put together a job profile, for example, for cognitive
engineers. We tailored our own using an iterative approach. (See
Exhibit 12.)
Human Resources
Human Resources
We hire directly in Egypt, taking on a lot of graduates, and I have been
lucky because the attrition rate has been very low. By 2025, every part
of Vodafone will have at least 1-2 data scientists in their team.
Everyone is fighting for data scientists and cognitive engineers!”
Marin also commented, “In some cases, we reskill our people, and in
others we bring in new people. It will be a combination of both.” Brunet
sponsored a Vodafone program promoting the Science Technology
Engineering and Math (STEM) field to young girls by providing coding
training. Executives also spoke at universities and technology
conferences to raise awareness.
Human Resources
Senior management was also taking steps in term of succession
planning. Schellekens said, “We’re trying to insert younger generation
leaders in our CEO population.
Whereas we used to focus on CEO development for people coming
from strategy and finance functional pedigrees, we’ve been changing
over the last 7-8 years to groom CEOs coming out of the commercial
side of the business. They have to be much more technology savvy,
with strong IT systems technology understanding, rather than just
consumer marketing.”
Managing the Organization
Colao considered carefully his role in determining the speed at which
Vodafone should pursue innovation. He mused, “As CEO, the first
question is how much you push versus allow each function to go at its
own pace. If you push too much, there will be resistance.
If you push too early, it will be very easy for the company to conclude
that these things don’t work. It’s a tough CEO question because you
don’t understand enough of the details without the help of people inside
the functions. If you talk to IBM or McKinsey, they tell you that you can
do everything tomorrow, and academics on YouTube preach that
conceptually everything can be done.
Managing the Organization
But the reality is grittier: Can we do everything in all languages and in
all countries? Can everything be done within the existing laws? How do
you create seamless interaction between machines and humans if
things go wrong?”
Colao mused, “My early approach was a mix of leaving each function to
set its own pace, and then provoking them, ‘You guys are not going fast
enough’. The natural tendency of every leader is to be curious, to look
at things, but then also to listen to their teams when they highlight 652
difficulties, why things are not ready now. So, you need to allow them to
explore, and then to challenge them with external information to speed
things up until a young leader emerges who champions the new thing.
Managing the Organization
Now that Vodafone is more mature, we have the worldwide Digital
Vodafone program which covers the pace, the speed of adoption etc.
But in the beginning it’s really a phase of awareness and ownership
that you need to create, because if you start with a program but there
are no pillars supporting it, the program collapses.”
Colao remained wary of potential industry disruption, “We have many
thousands
of
people
working
in
network
development
and
management. Is it possible to be disrupted by somebody who runs a
virtual network? Maybe one hundred people are enough to create a
software layer that works on top of our network, leaving us the difficult
job of managing basic functionalities while they cut costs.
Managing the Organization
It’s very hard to understand where the potential disruption can come
from and what it can be.”
As the most international telco in the world, Vodafone provided ample
fertile ground for learning. Colao mused, “This is the beauty and
uniqueness of Vodafone. As CEO the best thing is to go out and talk to
people.
Every time I do a company visit, I have a meal with talented young
employees with less than two years of experience—any longer and we
have already contaminated them! It’s something I learned in the
military: walk around the barracks before dinner and ask people
informally what is going on.
Managing the Organization
For example, one guy told me that we were falling behind in block
chain, which I had incorrectly associated only with bitcoin. That
conversation made me open my eyes and look into it.”
Colao also spent one week per year in Silicon Valley meeting with key
individuals in the tech sector. He reflected, “I don’t carry out my own
external benchmarking in a super systematic way, I trust my instincts
that when I see something that seems really good, we can copy.”
The Vodafone finance function carried out internal benchmarking
across the group.
Managing the Organization
Colao said, “With 26 companies of all different sizes, we have the
luxury of being able to benchmark who is more advanced, who does
things better, how you can do things differently and so on.” He added,
“Externally Vodafone comes across much better than some of our
competitors in head count terms but worse from an economic point of
view.
This is because when you are multi-country, you fear something
blowing up somewhere, and so you tend to over specify. So in terms of
structural cost, there is a bit more we can do.” Colao took a very datadriven approach: “Coming from McKinsey, Bocconi and HBS, I am a
real analytics kind of person. You need to be on top of the data,
otherwise you lose control of the business.”
Managing the Organization
When communicating with the financial markets, Colao was wary of
making big statements. He said, “Companies tend to talk about the one
great thing that they are doing just to get the short-term boost to their
stock price. I am not too much into that game.
I do not want to talk too much about my programs because why would I
help my competitors? We are here for the long term, and every CEO
should be seen for his or her results. What really captured the attention
of our investors was the last year when they started seeing that we are
expanding margins in a market that is not fantastic.”
Managing the Organization
Colao embraced Zero Based Budgeting (ZBB) as a tool to challenge
preconceived ideas held by executives. He explained, “As CEO, I put
pressure on people with, ‘Hey guys, how can we make another 5% cost
reduction this year?’
The beauty of ZBB is that once a year you ask, ‘Why do I have three
lawyers doing this? Do I need to have twenty people in corporate
security defining whether it is dangerous to travel to Congo? Can we
not automate contract management?’ Inevitably there is the question of
raison d’être of each department, each person and then you rethink
whether you can reorganize in better ways.” In this way, Vodafone
became the first company to stop printing its annual report in color.
Managing the Organization
Colao developed Vodafone’s ‘Youth Program’ to engage more with
society beyond recruiting. The program offered work experience to
young people at Vodafone for periods ranging from one week to three
months. In the first year over 5,000 young people participated, which
Colao planned to boost to 20,000 participants.
He said, “It would be easy to become very protective, but I really think
that we need to take the completely opposite approach. We are part of
society; let’s help society understand the skills that are required, and do
something that will push them in their choice of studies and learning
more towards what will be needed rather than the inertial school
curriculum.
Managing the Organization
My message to my colleagues was, ‘I am not doing this for hiring, even
though there may be some future benefit in recruiting.
I think it is beneficial to us, because it gives us a bit of a fresher
perspective, and it is also beneficial for the world if companies would
open up instead of closing.”
Broader Societal Impacts
Colao was concerned by the broader implications of the scale of
technology changes. He mused, “I’m marginally in the pessimistic
camp. I’m sure that in the long term we will always adjust and find ways
to create new jobs, train new kids and everything else, but I think we
will have 10-15 years during which the shift will not fully compensate.
I am not sure that in the short term the pipeline of skills and
competences can adjust to the new demand. It is a sad thing to let go
of people with older skills who cannot rejuvenate. You have a sales
director who is used to saying, ‘I go into a shop and in five minutes I
understand if the shop is doing well or not.’ Well, that was the old way.
Now there is much more sophisticated data that are better than
instincts.”
Broader Societal Impacts
Schellekens said, “Using chatbots to respond to the queries of our own
employees and customers has implications on the number of people
you need in these call centers. Most of our shared service centers are
in India, where there is always high attrition, so I anticipate that we can
manage that.
But if you step back, similar actions by our peer companies add up to a
profound effect on the labor workforce in general in India. We are open
and transparent about these issues; not talking about it is not an option
in today’s world. We tell employees we need to manage changes in
workforce size, but that there is tremendous opportunity to upskill
people for more exciting work.”
Broader Societal Impacts
Colao believed the impact on jobs would be felt differently depending
on whether markets were emerging or mature:
In emerging markets it is a volume problem; the volume of jobs that will
be created will decrease. In mature markets, these changes will be felt
more in the intermediate management layers, those where experience
and historical memory carry weight.
The career ladder within companies will have fewer and bigger steps,
which poses its own problems. I am more optimistic for countries open
to entrepreneurship, as smart people can always learn something, go
outside and create their own companies.
Broader Societal Impacts
It is more of a problem in countries that are rigid, where there is not
much competition, and there is difficulty in financing and bureaucracy. I
believe this whole digital wave requires a different way of legislating:
quicker, faster and quick amendments of mistakes, because otherwise
you constrain the creation of new entities.
Colao concluded, “Politicians understand instinctively the impact of
technology on business, not in terms of work processes, but in terms of
jobs and household income. It’s amazing how quick they are. And
therefore the political reaction that we are seeing in the world is partly
because they understand well the implications on jobs.
Broader Societal Impacts
Our job as CEOs is to engage with them, and also with academics. I
am a big fan of the golden triangle—policy makers, business leaders
and academics—because we have different angles and timeframes,
and we therefore need to look at solutions together.”
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