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Go for In-house DMO Development if Control is the Main Concern
How quickly do you need to launch the DMO, and what are the opportunity costs?
Do you need a digital transformation?
Branding: Do you have in-house branding expertise for your target market?
Agility and Flexibility: Can your telco continue adapting to changes during the DMO’s development?
The Case for Partnering with an Experienced DMO Partner
Key Advantages of Collaborating on a DMO with a Third-party
Access to Proven Expertise and Playbooks
SaaS Advantage: No End-of-life Risk and Consistent Updates
But What About Revenue Sharing and Brand Control?
Big problems can look deceptively simple.
Should you build digital mobile operators (DMOs) in-house or partner with third parties?
DMOs break free from the limitations of traditional telcos by harnessing modern digital platforms, cloud-based technologies, and advanced data analytics. This innovative approach enables them to deliver agile, customer-centric and efficient services.
As a result, traditional telcos have been building DMOs to answer multiple industry challenges. Rising costs, declining market capitalization, and growing consumer expectations—driven by an increasing number of digital natives in the workforce1—are reshaping the telecommunications industry. Meanwhile, shrinking connectivity revenue is pushing telcos to explore and diversify new revenue streams.2
But the question of building your DMO with or without a partner cannot be answered with a simple yes or no.
Whether or not you build or partner depends on your telco’s strategy, the resources, and capabilities that your telco has or doesn’t have, and how fast you need to launch it.
Let’s start off by looking at the case for building an in-house DMO.
In-house development offers complete control over the whole DMO from the brand experience, resources, and any new capabilities built during its development.
While the learning curve is steep, in-house DMO development reduces your dependence on external parties by giving you control over:
However, if your telco lacks any capabilities required to build a DMO, you need to weigh the opportunity costs of building those capabilities in-house as discussed below.
Whether to build your DMO in-house or with partners depends on time, resources, and strategy.
Telcos that have assessed that they have enough time, resources, and the capability to launch a DMO in-house could consider complete control of the DMO worth the cost. Vodafone for instance, hired 7,000 new software engineers and invested €8 billion in technology and digital projects in 2020 to build their software platforms.
However, not all telcos have immediate access to resources required. While some telcos may be well equipped for launching DMOs, others may need to build up existing capabilities, where opportunity costs need to be factored in.
Here are some common considerations when building a DMO in-house capabilities or working with partners.
Time is often the most critical factor in launching a Digital Mobile Operator (DMO). While some telcos may have the resources to accelerate the process, many face significant hurdles such as the lack of in-house capabilities.
Building the necessary software and upskilling your workforce to meet digital natives' expectations requires substantial time, manpower, and capital investment. These efforts not only delay your DMO’s time-to-market but also tie up resources that could otherwise address emerging opportunities or threats.
Moreover, managing existing operations alongside the transformation adds complexity, stretching your team’s capacity and increasing opportunity costs.3 You need to consider these trade-offs carefully and consider alternative strategies, such as partnering with experienced DMO specialists, to fast-track their launch while minimizing disruption.
This question can be answered via the following two questions:
Launching a DMO requires careful consideration when targeting unfamiliar market segments.
Venturing into new customer niches presents challenges, as some segments may appear to have large total addressable markets but, upon closer analysis, offer only a small serviceable obtainable market that is realistically within reach.
Serving a niche that is unfamiliar to your telco also runs the risk of building a brand that does not resonate with, or worse still alienates your target audience.
In these cases, partnering with external vendors or specialists experienced in your target markets, like digital natives, can give your DMO a competitive edge. These partners bring valuable insights into the preferences and behaviors of these audiences, enabling your DMO to craft a compelling value proposition and establish a strong market position.
As resources are tied up when your telco is building up its DMO capabilities, it could take longer to adjust to market changes than working with an experienced and specialized telco partner.
Be sure that you have sufficient resources to tap into any new opportunities or respond to threats before committing to in-house DMO development.
Building DMOs in-house can be considered if you’ve weighed these considerations and are willing to invest to build any missing capabilities.
But if you have capability gaps and need a fast time-to-market, building a DMO with a partner is the better option.
Working with a partner lets you cover gaps in your in-house capabilities with third-party expertise.
This enables your DMO to have faster market entry, reduced financial risk, and access to cutting-edge digital solutions.
When chosen well, a good DMO partner’s expertise and technology stack can help you set up your DMO’s software quickly without limitations from legacy infrastructure.
With the right playbooks, full-stack software, and experience running their DMOs, the right partner can help you launch your DMO’s new software platform within weeks instead of months.
As a case in point, utilising Circles’ software and playbooks, KDDI’s DMO brand povo launched new products and features in Japan in just 16 weeks compared to a traditionally months-long development cycle, and a first for a digital mobile operator brand in the country.
Leveraging your partner’s software and expertise can significantly reduce operating costs.
Some telco software providers are ‘born digital.’ That means they have built their telco software to be fully digital from the ground up and are not constrained by years of integrations on legacy software. Removing these layers of integrations allows the resulting operations teams to be lean, sometimes with fewer than 20 people.
One case in point is Circles.Life who achieved an 80-90 percent lower cost structure than the industry average using Circles’ SaaS platform, boosting its profitability. The platform also enabled Circles.Life to reach +50 points in NPS score and to be voted #1 in Singapore’s Best Customer Service Award 2023/2024 for the second consecutive year.
Their telco software and lean team approaches can provide your DMO brand with the same efficient operations expenditure.
Partners can complement your expertise through their experience serving your DMO’s target audience. Experienced partners will also bring the knowledge gained from working with multiple operators, allowing for more innovative solutions and faster execution.
Based on their experience and knowledge, experienced partners will have playbooks on setting up digital operations. These playbooks will help you select the right customer segments while factoring in the right product offers and diversified lifestyle benefits to help your DMO diversify its revenue streams beyond connectivity.
One playbook example is Circles’ "Connectivity, Delight, and Beyond" strategy.
Curious about Connectivity, Delight, and Beyond?
Check it out in our ideal telco-to-techco post.
Telco SaaS companies always want to upgrade their software to help keep their clients competitive. This also includes developing updates based on the most requested features.
In Circles’ case, Robin shares:
This means that working with SaaS providers lowers the risk of your software being outdated and not keeping up with changing customer experience needs.
Revenue Sharing Means Your Partner Has “Skin in the Game”:
Sharing revenue with your partner could initially be a concern, but that means your partner has a strong incentive to help you succeed.
This creates a collaborative, win-win scenario while ensuring your partner’s long-term commitment to your telco’s goals.
Concerns about brand identity or data privacy could arise but can be fully mitigated.
Some external partners act as brand enablers by offering branding advice and research while giving your telco complete brand ownership.
Experienced partners will also ensure that your DMO customers’ data remains compliant with local regulations, ensuring it resides within the necessary geo-location and access is strictly controlled.
Choosing between in-house and partner-based DMO development is a strategic decision that hinges on a telco’s unique needs and market positioning.
Both approaches offer clear advantages, but you need to factor in your objectives and available capabilities first.
If you need to build new capabilities, consider whether you need to bring in third-party help or if the opportunity costs are worth full control of your DMO.
By weighing these considerations, CEOs can make informed decisions that accelerate growth and build long-term value for their DMOs.
Ready to jumpstart your DMO development with an experienced DMO partner?
Contact us today!