How an Agile, Fullstack Operating Model Reduces Telco OPEX by up to 70% for DMOs

With thin margins and slow growth in connectivity revenue, telecom operators are always looking for ways to reduce operating expenditure (OPEX).

In a recent 2024 report about 139 telecommunications network operators worldwide, total annualised OPEX increased by 0.4 percent to US$1,510.8 billion in Q1 2024 from US$1,504.8 billion in Q1 2023. Revenue meanwhile, grew a modest 0.1 percent to US$1,774.9 billion compared to US$1773.1 billion in Q1 2023.

Under pressure to improve customer experiences without breaking the bank, how can an agile, full-stack operating model support telcos? It turns out that your choice of telco software has direct impacts on multiple OPEX areas, as shown below:

This article shares how full-stack software supporting a digital native-focused digital mobile operator brand can stack up financially compared to industry benchmarks.

IT & Cloud: Full-stack SaaS Software Cuts Allows for Leaner IT Teams

Changing to full-stack software will directly impact your telco’s institutional logic. In this case, institutional logic refers to the close interrelation between organizational processes and the limitations of existing software that causes those processes, be they efficient or not.

Legacy telcos used to be able to grow incrementally year after year. As a result, their software builds multiple complex layers of integrations and custom software every year, dubbed ‘spaghetti’ by telco product insiders.

Managing multiple layers within legacy systems leads to increasing complexity, requiring larger IT teams and driving up operational costs. System upgrades become lengthy and expensive, as they not only involve your IT workforce but also incur additional fees from software integrators for every upgrade request.

From our 5-Year industry, total cost of ownership benchmark, US$15 to 25 million is spent on maintenance and upgrades while US$30 to 100 million can be spent on change requests. 

This is one area in which pre-integrated full-stack SaaS reduces OPEX.

By switching to full-stack telco software with pre-integrated functionality, your telco works with one primary software vendor for upgrades and maintenance. This can result in lean IT departments with as few as 20 people, compared to legacy telco IT teams with around 100 people.

From our internal benchmarks from McKinsey & Company and validated by third parties, this single-vendor approach can result in a 40 to 50 percent lower total cost of ownership versus a legacy multi-vendor approach.

Sales & Marketing: Streamlined Product Catalogues and Personalised Digital Marketing

Full-stack telco SaaS solutions also come with data analytics that draws on every customer touchpoint and martech stack to use the insights generated. 

Legacy telco solutions are technically integrated, but customer data can be scattered across different data silos. This leads to data analytics projects to find and consolidate the data into an integrated data lake, which can be a long and expensive undertaking.

On top of that, the long process of making changes to legacy telco platforms can slow down new product launches. This makes it harder to launch timely marketing campaigns in response to consumer signals.²

Full-stack telco solutions have integrated data lakes that draw from all customer touchpoints to be analyzed by built-in data analytics and machine learning platforms. These reports' insights and consumer segments can power customized online marketing campaigns. With all the integrations being centered on one vendor, updates to the system and product launches can be launched in just a few days. 

Streamlining your product catalog is another benefit of an agile full-stack approach to running your DMO. Using templated product definitions, your telco can use a single template supporting many offer combinations. 

This solves the legacy telco issue of ending up with separate products for every product permutation, leading to thousands of products in your catalog. The result is offering simplified and flexible offerings to reduce backend overhead.

From our experience, these options can help to save up to 3 to 5 percent of revenue in cost savings.

Customer Operations and Central Functions: Automating Tasks and Streamlining Customer Experiences

To keep teams lean and costs low, full-stack software designed with digital mobile operators in mind should automate tasks as much as possible. 

For customer-facing operations, full-stack software can enable the following strategies to reduce staff workloads and save costs by 1 - 2 percent of revenue:

For central functions, automating tasks such as back office processes while reducing the number of integrations to manage is part of how the full-stack model can keep teams lean. Robin Langdon, Circles’ Platform Evangelist, has this anecdote:

This approach has resulted in 3 - 4 percent of revenue in terms of cost savings.

Conclusion

In today’s competitive telco landscape, every percentage of OPEX savings matters. A full-stack telco operating system offers significant advantages, including streamlining IT teams, automating workflows, and enabling rapid product launches and targeted marketing campaigns.

By adopting agile, customer-centric software, your telco can deliver great customer experiences while achieving substantial cost savings by eliminating the inefficiencies of legacy software.

As the operator of Circles.Life, a DMO brand, we’ve designed our software and processes to maximize efficiency. This isn’t just about reducing costs—it’s about equipping your telco to become more adaptive and resilient, ready to thrive in today’s ever-evolving market.

Want to know more about how our solutions can lower your telco’s OPEX costs?
Reach out to us today!