Telefónica bets on artificial intelligence for its digital transformation

Telefónica is undergoing a digital transformation that will put artifical intelligence (AI) at the heart of its business.

Speaking at the opening keynote at Mobile World Congress today (27 February), Jose Maria Alvarez-Pallete, CEO at Telefónica, explained how Telefónica is putting a “brain” in its network with the launch of AI assistant Aura. However, he warns that the company will need to transform and digitise every part of its business if it wants to take advantage of the opportunity.

He said: “We are not born digital, therefore digitising a company like [ours] is much more difficult that just being more digital.”

The company started the process of digital transformation several years ago to make its physical assets, IT systems and products and services intelligent. Alvarez-Pallete told the audience the process has enabled Aura to be created, calling it a “fourth platform” or the “brain in our network”.

Aura will enable users to manage their digital lives with the company and control the data generated by using Telefónica’s products and services securely. It’s a differentiator, according to the company,which claims it is the first in the industry to provide customers with the possibility of managing their relationship with the company based on cognitive intelligence.

Alvarez-Pallete said: “The network doesn’t sleep, our customers are on the network 24/7 and that means we need to put together all the information that we have in one place and make it clear that it’s their place, their brain, their network.

We are not born digital. Digitising a company like [ours] is much more difficult that just being more digital.

Jose Maria Alvarez-Pallete, Telefónica

“The brain will be able to talk, listen, watch, remember [and] think. All of those powers will be in the hands of the customer. We want the customer to talk to Aura, ask Aura, [for it to] recommend what they need.”

He went on to claim that Aura is “more than” an assistant because of the control that customer will have over the platform. He described Aura as an open eco-system where the customer decides “the size and importance of their digital life” and what they want to do with their information. He said: “If they want to share it with third parties that is their decision.”

Digital transformation as a first step

Alvarez-Pallete told the audience that the steps the company has taken to get to Aura was “not an easy task” and said the digital transformation process is “not there yet”. It required the company to simplify networks, tweak thousands of tariffs, radically digitalise processes and systems and switch off legacy systems.

“The whole organisation needs to be convinced that this is the way to go,” he said. “We all tend to look at ourselves by departments, [such as] tech, IT, HR, and that’s fine but if we are going to take advantage, we need to change our approach.”

AI is “uncharted territory” for Telefónica but the telecom giant also recognised the need for customers to feel empowered by its efforts to create a digital organisation and launch digital products.

He said: “It requires values, we need principles and to make sure [customers] feel secure, they feel we are transparent, have full access to the information in the network and feel the empowerment that it can provide.”