It_in_Telecom

| IT and Telecom: Nurturing each other and transforming the World | | | | | The planning commission’s vision of telecommunications in 2020 is a vision of information society built on an edifice where IT and telecommunications merge. Due to rapid technological convergence IT flourishes on the telecom-network and in turn permits modern day telecommunications to use sophisticated IT-software. Hardware is a common platform for both IT and telecom. Internet kiosks, telekiosks, telecottages and cybercafes have emerged in important roles in expanding community access popularizing IT among the masses and promoting domestic market. However, their expansion crucially hinges on the growth of telecommunications infrastructure. In India, a spectrum of technologies has been unleashed to connect remote villages, which includes Wireless in Local Loop (WLL), wireless cum wired technology developed by C-DOT , radio systems, switching systems of different capacities integrated with underground cables, CorDect and medium capacity satellite systems. Trends shaping the Telecom Industry Here are eight trends which are changing the shape of current Telecom Industry - Source: BCG As the successes of Google, Apple, and others demonstrate, tremendous opportunities abound in the broader technology and telecom space. But in order to capture them, carriers need to make hard choices about strategy and business models. With no more cash cows left to milk, carriers must build new sources of competitive advantage. Changing Telecom Business Model Source: BCG Relevance of Information Technology IT is at the hub of the mobile product and is central to delivering world-class customer service. Hence, IT-enabled solutions play a key role in alleviating pressure points faced by mobile telecom companies today. The mobile product can be segmented into three parts: • Functional attributes that include the core features of the product, e.g., MMS, SMS, online services, games, ring-tones, etc. • Non-functional attributes that are essential for delivering and maintaining the mobile service, e.g., tariff plans, customer care “service packages”, loyalty programs, etc. • Communication attributes that are linked to the core mobile network and enable the voice/data to be transmitted, e.g., BSCs, MSCs, telecommunications switches, etc. As discussed earlier, the mobile telecom landscape is undergoing several changes, one of which is a shift from a product to a solution mind set. IT is at the heart of the mobile solution, particularly in terms of the IT-enabled functionality provided for customer care and billing (e.g., order management, trouble ticketing, cross-selling/up-selling, rating, bill calculation, bill settlement, etc.) Hence, the telecom companies’ ability to deploy high-quality, cost effective IT solutions becomes a core requirement for it to succeed in today’s and tomorrow’s marketplace. Risk Factors There are several factors of the mobile telecom industry that put operators’ ability to succeed at risk. • The focus is shifting from customer acquisition to retention As mobile telecom penetration approaches saturation in some markets, the game changes to retaining customers and churning other telecom companies’ customers, as opposed to acquiring “new” customers. To succeed in this environment, mobile operators have segmented their customer base and are offering segmented offerings for each (e.g., no-frills vs. global roaming + value-added services such as MMS, internet, etc.) This shift in focus puts tremendous pressure on the underlying IT systems, particularly customer care, billing and provisioning. For mobile operators to succeed in their retention strategies the underlying IT systems must be flexible and the IT architecture must be conducive to rapid product introductions (and changes) with minimal costs. • Cost consciousness It precedes turnover and market share objectives as many western mobile operators strive to remain viable in an increasingly competitive environment. In this situation, telecom companies are increasingly focusing on their core competencies and are choosing to partner or outsource along several dimensions of their value chain. Some examples include: – Customer acquisition via branded sales partners is common in Germany and other parts of Europe; – Many companies have outsourced customer care and bill generation functions; and – Several global mobile operators have outsourced IT applications development and maintenance to low-cost, high quality vendors in India. • The telecom technical landscape is undergoing rapid change As operators upgrade from 2/2.5G to 3G, and talk is already underway of an IP-based 4G environment. This evolution of the technical landscape of the core mobile network puts a lot of pressure on IT systems that have to integrate to these telecom technologies (e.g., provisioning systems, rating engines, etc.) The complexity of the problem increases because of the lack of standards and open architectures in the network landscape (most telecom network environments are built on vendor-specific, proprietary technologies). • Evolution and commoditization Evolution and commoditization of the basic voice product as customers’ mind sets shift from the mentality of buying a product to that of buying a solution (which has lots of value added services bundled into it). As a result, the post-sale customer service gains more importance, and the underlying CRM and billing systems become quite critical to the mobile operator’s success in the marketplace. How IT can help reduce risk and improve operations: Three Steps to leverage IT effectively Given the relevance of IT in reducing mobile telecom pressure points, operators can choose to embark in three areas: i. Outsource key IT applications (development and maintenance) as well as key IT-enabled functions such as billing, customer care, payroll, etc. ii. Increase in the flexibility of the underlying IT architecture of core systems of the mobile operator. This is achieved by segmenting the architecture into logical domains, de-layering the architecture via selective encapsulation of legacy systems, and introducing re-usable services between key applications [via an integration backbone, enabled by leading middleware solutions]. iii. Re-vamp core customer care and billing functionality by leveraging third-party packages and adopting a pragmatic and cost-effective data and integration architecture. Initiatives in these areas can be applied to varying degrees (and simultaneously if required), depending on the degree of urgency for the mobile operator. Need of the hour * Increase in IT Architecture Flexibility The IT architecture of the mobile telecom companies is central to its ability to introduce new products and services quickly and flexibly. Since most global operators have legacy IT architectures that cannot be “scratched and burned”, an innovative way of salvaging and building upon key parts of the architecture is needed. * De – layering The next requirement for IT architecture for the mobile telecom companies is to de-layer the architecture by selectively encapsulating select legacy systems. Encapsulation is achieved via XML-tagging and other methods to develop common application programmable interfaces for select legacy applications. Custom-developing a host of reusable services between applications and/or encapsulated interfaces and implementing these services via third-party middleware tools complete delayering. These services can be developed at multiple levels (e.g. at the lowest level, “Create/Read/Update/Delete/ [Customer]” can each be a service, and any combination of these can be bundled to create a composite service. * Revamping CRM and Billing Capabilities For mobile operators that are under continuous pressure to respond to competitive moves, having a best-in-class and well-integrated CRM and Billing capability is a must. Strategic drivers and target end-state Typically, mobile operators that are “feeling the heat” from competition go in for re-vamping their IT architecture, with four main strategic objectives in mind: • Provide higher flexibility for the introduction and configuration of new products and services. • Enable higher customer-centricity by providing integrated customer care and billing functionality and “one view” of the customer, across all market and customer segments. • Providing higher quality of deployed IT solutions, by leveraging robust capabilities of third party CRM and billing packages. • Enabling pre-paid and post-paid convergence, via the integrated functionalities of third party packages. As a result of pursuing a revamp of CRM and billing capabilities, mobile operators aim to achieve an end-state where customer care and billing changes can be made very quickly, to respond to market pressures, and customer retention strategies can be pursued more flexibly and speedily. Opportunities for the Telecom Operators * One-Stop Shop for Customers Many customers, especially consumers and small and medium-size enterprises are looking for trusted sources to help them sort through new services and products. * Global End-User Service Provider Operators could develop global services, such as salesforce.com, a cloud-based customer-relationship-management (CRM) service. To pursue this approach, operators would need to target clearly denned customer segments and translate deep customer insight into great products and service. They would also have to achieve scale in research and development in order to have a strong innovation pipeline. Finally, they would need to develop a powerful global brand. * Platform Provider Platform providers would supply specific functionalities to other companies. Amdocs Limited, for example, provides CRM, billing, and operations support for mobile operators, while Gracenote has created a database of artists, titles, and other music-related information that enables consumers to manage their digital collections. To pursue this model, carriers would need to develop efficient state-of-the-art global operations. (See the sidebar, "Going Machine to Machine," for an example of a potentially attractive business for carriers involving machine-to-machine connectivity.) Convergence: Up to the level of IT/ Telecom software development Traditionally, software development in the telecom industry and software development in the information technology (IT) industry have followed separate paths, reflecting the unique business models, operational requirements, and deployment scenarios of the two domains. On the one hand, telecom software has been oriented toward the stringent latency, scaling, robustness, and regulatory requirements associated with large voice networks and wide area networks (WANs). IT applications, on the other hand, impose less stringent runtime requirements than telecom and are oriented more toward graphical user interactions, business integration capabilities, and transactional models. As the telecom and IT industries continue to converge, there is increasing pressure for underlying software technologies to also converge, driven by several market trends, specifically: * End users increasingly expect seamless integration and interworking among their public, enterprise, and residential web- and voice-based services, such as click-to-call from web pages, context-sensitive voice, and calendar-based service control. * Core telecom services are being standardized via IT interfaces, such as the Web-Services-based Parlay-X application programming interfaces (APIs). * Telecom operators and vendors recognize the cost disadvantages of relying on a software industry that is based on a small number of specialized software developers, and are eager to apply lower-cost IT industry programming models to telecom. * Traditional voice operators face new competition from Internet service providers implementing disruptive voice offerings, and to compete are looking for ways to integrate new and innovative low-cost services into their networks. * Telecom operators are looking for common telecom and IT service creation and composition capabilities to reduce the complexity and cost associated with introducing new services. As a result, there have been several attempts to use common software design methodologies and development tools across both the telecom and IT domains. Increasing demand for Integration of IT and Telecom Here is a survey conducted by McKinsey. The respondents were more than 50 European CIOs and industry experts. The survey sought to assess their priorities for IT and telecom services. As per the findings of the survey – CIOs seek to reduce costs and complexity, many of them say they would prefer to purchase end-to-end service-level agreements from providers offering a combination of IT and telecommunications services rather than contract for each separately. They want standardized services that can be developed inexpensively and delivered wherever their employees conduct business. Most service providers still fall far short of addressing the needs of CIOs. While 98 % of those in sample agreed that they would like to purchase integrated IT and communications services that offer "distinctive value," few providers have sufficient skills in both domains to offer a complete package. Thus an opportunity exists for companies that can deliver both types of services- In particular; for telecom providers that can boost their IT skills and for IT service providers that can expand into networking and telecommunications. The trend toward broad service agreements is marked by a shift away from contracts that specify technology brands and toward agreements that outline service levels instead (“99.5 % availability of SAP payroll applications per user," for example). The emphasis on services has the effect of reducing costs, since providers can standardize hardware and software, increase utilization through shared environments, and pass the resulting savings on to customers. In addition it allows IT leaders to focus on the needs of the business rather than on technology. Increasingly, IT and telecom decisions are being made within a single department reporting to the CIO. Above all, the responsibility of managing the end-to-end integration of IT and telecom services passes from the customer to the vendor, thereby freeing CIOs to focus on strategic priorities. The cost savings can be substantial- as much as 20 to 40 % of the operations budget. To meet this rising demand for integrated end-to-end service agreements, providers should seek out partners with the necessary skills. Telecom companies, which bring strong credibility in network management and security, may want to partner with complementary IT players or consider major acquisitions. Conversely, IT services companies should explore partnerships with players that have strong network-management skills. The integration of IT and telecom services would represent an important change to the industry’s landscape and to the service offerings available to the IT leaders.