Vodafone eyes service growth from internal AI and IT innovation

Like most tier-one telcos Vodafone has been investing in transitioning its legacy IT systems towards cloud-native component-based architectures and deploying AI to respond more quickly to customer demands. Where it differs from many, though, is in the depth of the strategic technology partnerships it has struck in the last 18 months with Accenture, Google, and Microsoft and its plans to commercialize its internal IT services and integration arm, VOIS.

In an interview with TM Forum Inform, Willie Stegmann, CIO of Corporate IT Services at Vodafone Group, discusses how its large strategic partnerships combine with widescale upskilling and open architectures to allow it to quickly deploy new services, fueled by AI capabilities.

Vodafone’s partnership strategy is not new. When in October 2024 the company struck a “ten-year, billion+’ deal with Google, it came on the back of a 2019 agreement with the hyperscaler to build a data ocean spanning multiple markets.

This data ocean has helped Vodafone draw on real-time data analysis to make proactive recommendations to customers. And although Stegmann describes it as “a challenging journey” he believes it was well worth taking because it paved the way to accelerated AI adoption.

“If you only started [with AI] a year or two ago, you would be very much focused on putting down the foundational building blocks,” says Stegmann. “Over the last two years we've used that capability and our Google partnership to accelerate enabling AI capabilities across Vodafone.” He adds that “the partnership is really bearing fruit now … we are in a position where we can leverage AI at scale and very quickly to serve and acquire customers.”

One notable joint development between the companies is a cloud-based platform called AI booster that allows software engineers to deploy new models quickly and securely. It has already helped create products, including a Generative AI (GenAI) version of the company’s TOBi chat bot, called Super TOBi.

“We've seen a very fast and significant uptake across Vodafone of AI booster,” Stegmann says.

Copiloting change

Microsoft is another key AI partner and in January 2024 Vodafone announced a ten-year partnership and $1.5 billion investment with the company. One of the early outcomes of the tie-up is the roll out of 55,000 Microsoft Copilot seats across Vodafone in conjunction with Microsoft and KPMG.

“We've deployed a very good platform that's very popular,” with employees, according to Stegmann. Internal uses include helping enterprise salespeople respond more swiftly to RFPs.

Copilot usage is also helping Vodafone evaluate how AI will change the way people work and the skills they will require.

“Some of the roles you may need more of and other roles you need less of, and so that [aspect of our] partnership with Microsoft is important.”

And Stegmann expects the payoff from Copilot to extend beyond internal productivity improvements.

A deployment of “55,000 people is significant … and the benefit of that massive learning curve is we can now make [AI-based services] available to external customers at a scale that we haven't seen before,” explains Stegmann.

Partnering on IT telco services

If it succeeds it wouldn’t be the first time that Vodafone has drawn on internal experience of building and using services to generate a new revenue stream: Stegmann points to the example of how Vodafone’s IoT business started as a small internal capability before growing to become a large and successful global business platform.

A key target market is other telcos. However, Vodafone’s approach differs from companies such as Jio and Rakuten that are developing new telco software products and services. Instead, it is tying up with Accenture to commercialize its internal shared IT services arm, VOIS. Accenture is investing €150m in the new shared services entity in return for an undisclosed minority interest.

VOIS employs approximately 30,000 people in Egypt, India, and parts of Europe, including Romania to provide technology integration and business operational support to Vodafone companies in areas such as finance, HR, procurement and supply chain management, explains Stegmann.

“It supports our internal needs, but it also increasingly supports external customers. We want to accelerate commercialization and that's what Accenture brings to the equation; running a commercial shared services enterprise is what they do for a living.”

“There's a very healthy sales pipeline for the shared service business globally,” according to Stegmann, with initial customers including Swisscom in Italy and Zegona Communications in Spain, following their acquisition of Vodafone’s assets in each country.

“In both cases, we've managed to sign long-term deals where we will continue to serve them through VOIS,” explains Stegmann.

Investing in agility

In parallel to partnerships, Vodafone has been investing in its internal IT skills through major initiatives such as insourcing 7,000 software engineers and its leading participation in the development of TM Forum’s Open Digital Architecture [ODA] and the ODA Canvas.

“There's no doubt that our insourcing strategy has really worked for us,” according to Stegmann.

It means teams “are very familiar with our architectures … our integration layers, our testing environments, our customers, all of the different software stacks we have.” As a result, IT teams “don't have to reinvent the wheel every time. It's more of a product focus than a project focus and it's helped us to move so much faster, particularly as they are using TM Forum’s ODA Canvas.”

Vodafone, which has deployed the ODA Canvas in a live, commercial environment in Greece, has found it “makes it possible for our software engineers to [work] on a more componentized basis, to deploy new features, new products, new capabilities, much, much faster.”

Now Vodafone, which chose not to develop own large language models, wants to help develop an Open AI architecture with TM Forum members “that allows us to swap in and out any [language] model … for a particular use case.”

The company foresees adopting “the ODA canvas to enable AI much faster fully seamlessly integrated, that all the benefits of the canvas in terms of manageability, observability, security, privacy automatically available in terms,” explains Stegmann.

“We want AI booster integrated into the ODA canvas and that's work that we currently doing. We are convinced that this is something that we need to do very quickly.”

Stegmann’s belief in collaboration and developing employee skills led him eight years ago when he was at Vodacom to introduce a hackathon that has become an annual event across all of Vodafone’s markets. “It's wonderful for me to see young people given a platform to speak to the highest levels in the organization,” he says. “New teams interact and come together to innovate and solve problems in a very natural way across hierarchies and geographies and that's something I love to see. This is our DNA … our culture …encapsulated.”

Join Willie Stegmann at DTW25 in Copenhagen 17-19 June where he will be discussing AI's Great Disruption.