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Connecting to a Better Future

Featuring research from

Reimagining the Telecom Value Chain

Connecting to a Better Future: Reimagining the Telecom Value Chain

From the Gartner Files: Changing Market Dynamics Drive Priorities for Communications Service Provider IT

About TCS

Issue 12

9

15

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Connecting to a Better Future: Reimagining the Telecom Value Chain

The Internet of Things (IoT), mobility, social media, and alternative channels of communication and engagement are driving dramatic changes across businesses. In the telecom industry, Communication Service Providers (CSPs) are already making a strategic shift towards becoming true horizontal service providers in order to leverage the ICT opportunity and drive growth beyond communication infrastructure. CSPs are also realizing the importance of monetizing data and information capabilities to counter the stagnation in core products and services.

These changes didn’t happen overnight: they are the result of a widespread technology transition that began in 2001 and continues even today. During the first phase of transition in 2001-10, CSPs unified and rationalized their infrastructure to an all-IP network through combinations of 3G, long-term evolution (LTE), fiber, and other technologies. The second and current phase of the transformation is about monetizing the all-IP infrastructure and leveraging data through investments in cloud, mobility, Big Data, and IoT. All of these changes, while challenging at one level, give CSPs an opportunity to leverage their capabilities in completely new ways and enhance their revenue potential across the value chain.

New infrastructure and business models allow CSPs to collaborate with suppliers and partners to move up the value chain and explore new markets and revenue streams. The formation of multiple consortiums for global mobility, machine-to-machine (M2M) technology, and over-the-top (OTT) services also points towards a more collaborative and open value chain. Governments and policy makers across the globe are empowering the telecom industry to enable and leverage digitization for social and national growth. Some initiatives in this direction include the National Broadband Network (NBN) in Australia, Bharat Broadband Network Limited (BBNL) in India, and the ban on roaming charges in Europe.

Digital Reimagination™ for communication service providers

Tata Consultancy Services (TCS) recently conducted a survey of over 800 companies around the world to understand the impact of digital technologies on their strategies, investments, and future plans. The survey revealed that most companies across industries are placing greater priority on digital initiatives. The success of these initiatives will hinge on their ability to leverage the digital forces across various aspects of the business. For CSPs, Digital Reimagination™ involves leveraging the digital five forces – mobility and pervasive computing, cloud, Big Data, artificial intelligence and robotics, and social media – to address the changing dynamics of the telecom industry. TCS offers platforms and solutions to help CSPs rethink their strategies across business models, products and services, customer segments, channels, business processes, and workplaces to make the most of their digital investments.

Digital Reimagination™ fundamentally changes the traditional ways of doing business, existing processes, and of course managerial wisdom. TCS has embarked on a journey to create platforms and IPs to help CSPs and enterprises reimagine their businesses and have a positive impact on the six areas mentioned above. Our approach to platformization disrupts the traditional view of products available in the market. For instance, it uses mobility to change from the traditional pricing models based on capital expenditure (capex) to operational expenditure (opex) based models, and also offers an outcome-based engagement model rather than a silo-ed products and services approach. By leveraging cloud and multi-tenancy, our platforms enable stakeholders across the CSP ecosystem to collaborate for greater success. Two such platforms for CSPs are:

• TCS Hosted OSS/BSS Solutions (HOBS): This flexible and agile platform addresses CSPs’ need to simplify and standardize operations. It consists of a pre-integrated suite of operations support system (OSS) and business support system (BSS) applications with pre-modeled processes. The platform is designed to support CSPs in launching new services and products quickly and cost effectively, as well as transforming and extending legacy IT.

Benefits of Digital Reimagination™ for CSPs

Customer experience: Culture of customer centricity

Operational effectiveness: Simplification of products, processes, and systems

Revenue enhancement: Incremental framework and solutions for targeted revenue enhancement across multiple industries

1The Road to Reimagination: The State and High Stakes of Digital Initiatives, TCS Global Trend Study – July 2014, http://sites tcs.com/stateofdigital/

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• TCS Connected Devices Management (CDM) Platform: With this solution, CSPs and enterprises can automate operational processes and enhance customer experience. The solution supports secure, policy-driven, and personalized remote provisioning, activation, management, and diagnostics for smart homes, modern enterprises, network operators, and CSPs.

Our platformization approach and its key principles bring in significant benefits in terms of time, cost, and usability through the use of open-source technologies, cloud and multi-tenancy, agile development models, and automation across processes. It also helps us deliver lean, highly configurable, interoperable, and ready-to-use solutions. Figure 1 summarizes the key characteristics of our platforms.

These platforms can host revenue generating products and services, such as mobile banking and ICT platforms for small and medium businesses. TCS’ platforms also support organizational change social platforms, knowledge management tools, and the latest collaboration technologies. Gartner has also recommended that CSPs ‘instill agile processes and open platforms to improve flexibility and time to market, and to enhance the ability to adapt to market needs.”1

From legacy modernization to transformation into a digital telco

Telecom service providers across the globe are aspiring to expand their core telecommunications business by transforming themselves from telcos to digital telcos. They are looking for new revenue-generating opportunities in adjacent industries such as financial services, eHealth, M2M, cloud computing, safety, video and digital homes, applications, and advertising. At the same time, optimizing investments in legacy services and improving margins are also high on their priority list.

The key difference between traditional telco and digital telco services lies in the solution tenants. On one end of the spectrum, CSPs are looking at simplified and standardized BSS/OSS solutions for supporting traditional telco services. On the other end, there is a growing need for flexible, adaptable, and extendible solutions for digital telco services, due to the evolving nature of service models and partner ecosystems.

In order to support the growing maturity of existing services and enable the next generation of digital services, telcos need pre-integrated, flexible, and adaptable platforms that adhere to industry standards. Satisfying the requirements of both traditional and digital telco services successfully also depends on an ecosystem which is willing to invest and co-create solutions

Source: TCS

FIGURE 1 Key characteristics of TCS’ platformization approach

1Gartner Inc., Four Ways CSPs Can Achieve Platform Efficiencies When Offering Enterprise Digital Services, G00261965, 4 September 2014

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to meet continuously evolving business needs. Reduced total cost of ownership (TCO) and time to market with an evolving partner eco-system will be the key to success in the coming years.

As shown in Figure 2, TCS categorizes the solution tenants under two segments – ‘fit for growth’ for digital telcos and ‘fit for purpose’ to address the needs of traditional telco services and business models.

Platformization of business and operations support

TCS’ pre-integrated HOBS solution meets both the ‘fit for purpose’ and ‘fit for growth’ objectives of traditional telcos and digital telco services respectively. The solution was built based on our experience of working with numerous telecom service providers across the globe to address challenges such as interminable system integration programs, rapid technology obsolescence, limited capex for investment, and the need to launch new products and services quickly.

With the emergence of sell-with, sell-for, and sell-through partnerships, TCS HOBS provides the necessary solution to enable success in the evolving partner ecosystem. It also supports end-to-end life cycle management, starting from on-boarding partners and defining partner products and services, to revenue management and collections.

The HOBS platform also supports next-generation digital business needs and provides a 360-degree view to revolutionize the concept of ‘managing

FIGURE 2 Solution tenants for traditional and digital telco services

and knowing your customer’ (MYKC). The entire application is built on an eTOM SID model (that is, an Enhanced Telecom Operations Map Shared Information Data model) with more than 350 pre-modeled business process. It is based on TM Forum standards and a complete multi-tenanted architecture for converting an IT asset into a potential revenue generator. HOBS uses enterprise grade open source technologies database independence and a shared services model as levers to lower the TCO.

TCS HOBS solution is underpinned by four key propositions:

• Transformation strategy: The focus is on simplifying the business processes for telco operators and using a lean and agile methodology for implementing the solution. The use of pre-built capabilities in a sustained manner will help telcos move away from the traditional approach of BSS/OSS system integration programs.

• Modular design: The design of the core product is modular and extensible to provide the right IT support for the strategic needs of a digital telco.

• Comprehensive and reliable solution: The partnership and ownership model offers end-to-end set-up and management of services based on business and regulatory SLAs.

• Low TCO: Linearity in the cost of the solution linked to revenues through flexible opex-based commercial models.

Source: TCS

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Source: TCS

FIGURE 3 Application portfolio of TCS Hosted OSS/BSS Solution

Figure 3 depicts the end-to-end application portfolio of HOBS.

Key differentiators of TCS Hosted OSS/BSS Solution Comprehensive coverage for business processes readiness

While eTOM provides guidance and standardized level 3 processes, it is not detailed enough to support solution deployment. The actual fulfillment, assurance, billing, and operations processes need to be designed and detailed up to level 4 and 5. TCS’ HOBS process repository goes beyond the requisite level 3 processes across wireline, wireless, data, and next-generation services. For example, the level 3 process— ‘support customer interface management’– in the HOBS platform includes 110 defined transactions compared to just one in eTOM. This reduces the effort required to design, implement, and integrate the business processes for a new implementation or a transformation initiative.

Flexible implementation approach for accelerated deployment

A flexible, modified SDLC deployment model enables accelerated deployment of the solution. The model uses an out-of-the-box implementation approach to leverage the pre-built platform capabilities and minimize the need for customization.

Operations and support framework for continuous improvements

HOBS provides a comprehensive KPI-driven ITIL-based operations and support framework which enables continuous improvement, as well as transparency and consistency in managing performance and adhering to SLAs. It also has a standard reporting solution and dashboards for day-to-day operations, which help track IT performance against business imperatives.

HOBS commercial models

Traditional telco services follow a well-established model with standard and predictable measures and statistics. The commercial model for all traditional services should therefore be based on revenue share, the number of subscribers, or a combination of both. Whereas Digital Telco services are evolving and non-predictable, which needs different and innovative commercials models as per their respective revenue potential, transaction model, business models etc.

Due the constantly evolving BSS and OSS requirements, TCS’ HOBS solution, practices, assets, and body of knowledge are flexible enough to fit the changing requirements of CSPs across the globe.

HOBS offers a pre-integrated, modular, flexible, and standards-based architecture. Combined with TCS’ experience of managing large telco operations, it is the ideal solution to meet the needs of traditional telco services as well as support the vision of non-telco service offerings.

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Rethinking device management for next-gen service delivery The global communication services industry has witnessed a high degree of device proliferation across individuals, homes, and enterprises. While telcos are not new to managing devices, current trends with respect to the device ecosystem are sparking a renewed focus on new and more efficient platforms to manage them. CSPs need to consider these factors in the consumer and enterprise space:

• Devices are the window to services for the end-user and need to be managed better than ever before.

• Addressing service complexity isn’t just about managing end devices but also the devices and nodes in a network topology.

• With telcos’ expansion of service portfolios, they can’t afford to have multiple systems managing multiple devices and processes.

A closer look at the current telco operations in

the context of CSPs’ vision to expand the services

portfolio reveals numerous opportunities for

simplification:

• Processes that are currently being managed separately can be integrated. For instance, monitoring the devices in a network operations center (NoC), delivering a committed quality of service (QoS), and fixing device or network problems involve a host of

Table 1: TCS HOBS enables new commercial models for both traditional and digital telco services

Business Drivers Impacting Commercials Commercial Models

Traditional Telco Services

• Predictable subscriber volumes

• Predictable revenues• Predictable no. of users• Predictable transactions

• Cost based on subscriber volumes – inclusive of licenses, infrastructure, AMC & services

• Cost based on revenue slabs – inclusive of licenses, infrastructure, AMC & services

• A combination of the above

Digital Telco Services • Dynamic subscriber volume changes

• Evolving revenue streams• Evolving revenue sharing

models• Non-predictable no. of users• Non-predictable transactions• Multi-tenant model

• MVNO/MVNE: fixed price / tenant for license, AMC & services

• M2M services: transaction based pricing for license, AMC & services

• BSS for partners: pricing based on no. of users for license, AMC & services

processes. A simpler alternative would be to automate the routine monitoring of devices and their configuration to ensure a committed service level to customers.

• CSPs typically buy and maintain numerous tools even though they have invested significantly in making their networks IP enabled. Devices from various original equipment manufacturers (OEMs) and the subsequent use of multiple monitoring tools, along with element and configuration managers, adds to the complexity. There is an opportunity to consolidate these to a technology and OEM agnostic solution to reduce operational complexity and cost.

• There are numerous possibilities for automation in an IP network, yet telecom operations still require manual intervention for routine issues, resulting in human errors. For example, in most cases, there are dedicated teams for scheduling of device back-up jobs, another team for configuration, troubleshooting, restoration, and monitoring of device performance. The simple solution is to enhance automation using flexible and configurable tools.

Connected Devices Management (CDM) helps

address many of these challenges by simplifying

next-generation service delivery through effective

monitoring and management of all the IP

devices. It leverages cloud-based infrastructure

and effective implementation of architectural

CDM allows CSPs to embrace devices management platforms as a key to service differentiation, automation of operational processes, and enhanced customer experience.

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principles such as multi-tenancy, horizontal

scalability, configurability, distributed access, and

service-oriented architecture. This allows multiple

parties including telcos, enterprises, third-party

service providers, and end-users to benefit from

a common and comprehensive platform. In

addition, CDM also supports configurability and

automation of processes and adequate protocol

implementation for maximum coverage.

A CDM platform therefore enables a telco or an

enterprise to standardize, simplify, and automate

the processes of configuration, activation,

provisioning, troubleshooting, and other in-

life services associated with IP devices. At the

same time, it provides multiple diagnostic tools

to customer support representatives. It also

empowers customers with self-care features,

supports bring your own device (BYOD) programs

and customer-premises equipment (CPE), and

allows a telco to use the services of channel or

service partners.

Platformization of the connected devices ecosystem

TCS’ CDM platform is a multi-tenant and cloud

based IP devices management platform for CSPs

and enterprises. By providing a unified view

for the management of home, enterprise, and

network devices, CDM reduces the number of

processes and tools being used in the telco’s IT

stack. The platform also ensures that a common

set of functionalities are available across multiple

users from different functional departments to

eliminate redundancies and increase efficiency.

The solution provides multi-vendor management

capabilities based on the Broadband Forum

Technical Report 069 (TR-069) standard and

other TR standards. It also provides network

management protocol (SNMP), Telnet, and

SSH support. The platform offers demand-

based decentralized control with centralized

management, ‘as-a-service’, build-as-you-grow,

and pay-as-you-use flexible opex-based pricing

models.

The CDM solution comprises four main

components:

• A core platform comprising of TR-069, SNMP, and Telnet-SSH engines

• A Customer Service Representative (CSR) console: an easy-to-use device diagnostics portal for customer support agents

• A self-care portal which allows end-users to perform basic device troubleshooting

• A BYOD module for supporting devices directly brought by customers

The solution also includes a web-based system

for inclusion, inventorization, configuration,

policy enforcement, and day-to-day management

of CPEs as well as IP network devices. The

right set of tools and data empower customer

services agents: KPIs monitoring, diagnostics

and troubleshooting, common services

configuration templates, and tools for remote

problem resolution. Analytics dashboards and

intelligence enable proactive asset management

and troubleshooting. See Figure 4 for a visual

depiction of the solution.

TCS’ CDM platform solution provides these

following high-level functionalities:

• Management of platform operations with business SLAs, custom reporting, and real-time dashboards

• Discovery of IP devices, topography generation, centralized configuration management with automation based on a command line interface (CLI), and enforcement of baseline configuration on all devices

• Grouping of devices based on multiple criteria and services required, and specific management functions on one, all and specific group of devices

• Recording of every user action and device changes in a centralized change management register

• Real-time view and status of CPEs and network nodes on geographical maps (Google Map and OpenStreet Map) with relevant CRM data

• Ability to white-label and rebrand the product for enterprises, and provide comprehensive access management and control to extend the selective features for enterprises on a common instance of the solution as the one being used by CSPs

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Source: TCS

FIGURE 4 TCS’ Connected Device Management Platform

Transforming the telecom value chain

With the right platforms, CSPs across the globe

can simplify and transform operations and

enhance customer service. TCS’ configurable

and ready-to-use platforms modernize the

legacy environment and reengineer processes

to simplify operations. These platforms also help

telcos bring about radical changes in their IT

systems to launch new products and services

faster and at reduced costs.

With a plethora of new revenue generating

opportunities, we believe the digital

transformation journey for CSPs has just begun.

Platformization still needs to evolve through

integration of multiple components which are

being used separately today; for example, finding

new and better ways to enable transformation

across multiple channels and leverage social

platforms. The possibilities are endless, and our

platforms help lay the foundation for a strong and

healthy future for CSPs.

Source: TCS

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Changing Market Dynamics Drive Priorities for Communications Service Provider IT

As the Nexus of Forces disrupts the communications value chain, CSP IT leaders face the challenge of augmenting their traditional role of business support with the task of turning IT into an innovation engine for growth. We assess how they should respond and what they should focus on.

Impacts

• Due to digitalization and the Nexus of Forces, the telecom market is becoming dominated by dynamic, competitive ecosystems that demand new capabilities from communications service provider (CSP) IT.

• With digitalization rapidly changing the communication services value chain, CSP IT leaders face the challenge of maintaining support capabilities for legacy “core” services, while enabling the new capabilities required for digital transformation.

Recommendations

CSP IT leaders should:

• Examine the IT systems underpinning the digital capabilities that enable “smart utility,” “diversified” and “platform” strategies.

• Prioritize IT initiatives that enable the business to deliver enhanced customer experiences and establish effective service innovation, while realizing tangible process efficiencies.

• Balance the need for cost control and reliable IT with the ability to provide fast-paced innovation that enables the business to respond quickly to market and business opportunities.

• Focus on the future state of the business; identify the business and IT issues that must be addressed to enable successful execution, such as investment priorities, opportunities for innovation, cost management, friction points and constraints.

Analysis

As the Nexus of Forces — the intersection of cloud, mobile, social and information forces — accelerates the disruption of the very communications value chain that enabled it, the challenge for CSP IT leaders is to quickly enable the business model changes required to combat new digital competitors. This requires decisive action.

Digital competitors are early adopters that execute at “customer speed,” change the “rules of the game,” are business-minded, take risks and are measured on market growth. In contrast, CSP IT organizations traditionally operate at their own projects’ speed, are driven by standards, are risk-averse, favor proven solutions and are measured on cost management.

CSP IT leaders must become the enablers and architects of the shift required to address and manage digital ecosystems and services. They face a two-speed challenge since, at the same time as CSP IT is being called on to play a key role in business transformation, legacy systems and processes, which are often unsuited to this task, require modernization.

For CSPs, there are two key aspects to digitalization:

• Digital transformation of the CSP as a member of a digital ecosystem — for example, using digital channels for sales, marketing, provisioning and care

• Diversification to create and enable new digital customer-facing services in adjacent markets

The behaviors and skills that CSPs have mastered for legacy IT are potential hindrances to exploiting opportunities in the rapidly changing communication services value chain.

Figure 1 illustrates how digitalization is shaping complex interrelationships, dependencies, cooperation and competition between providers and consumers of communications services.

From the Gartner Files:

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Our conversations with CSP IT leaders, together with Gartner’s inquiry statistics, confirm that 2014 will be a year of twin goals for senior IT executives: On the one hand, they must respond to ongoing needs for efficiency and growth; on the other, they must shift resources to exploit a fundamentally different, digital paradigm. Ignoring either of these goals is not an option.

FIGURE 1 The Evolving Communications Service Ecosystem

Consumers

Technology & Solution Vendors

App Developers

Media & Content Providers

Products & services Financial Information Intangible value

Device Manufacturers

Sales Channel

Apps

OS Ecosystem Brand

Personal Information

Connectivity

Brand Brand

Value-Added Services

Subsidies

App Store Purchases

Social Networks Connectivity

Personal Information

Content & Services

Information

Enterprises/SMBs

Connectivity

Managed Services

Commission

Communications Service Providers

Royalties

Content

Brand

Sales Channel

Managed Services

Software & Infrastructure

Consulting & Professional Services

Design

Consulting & Professional Services

SMBs = small or midsize businesses Source: Gartner (February 2014)

Impacts and Recommendations

Due to digitalization and the Nexus of Forces, the telecom market is becoming dominated by dynamic, competitive ecosystems that demand new capabilities from CSP ITTo capture digital services opportunities, CSPs must respond with speed and innovation and deal with uncertainty. There are inherent tensions

FIGURE 2 Impacts and Top Recommendations for CSP IT Leaders

Impacts Top Recommendations

With digitalization changing the communications services value chain, CSPs need to maintain support for core services, while enabling new capabilities for digital transformation.

• Balance the need for cost control and reliable IT with the ability to provide fast-paced innovation.

• Focus on the business's future state; identify the issues that must be addressed to enable successful execution.

Due to digitalization and the nexus, the telecom market is becoming dominated by ecosystems that demand new capabilities from CSP IT.

• Examine the internal IT systems underpinning the digital capabilities that enable "smart utility," "diversified" and "platform" strategies.

• Prioritize IT initiatives that enable delivery of enhanced customer experiences and establish effective service innovation, while realizing process efficiencies.

CSP = communications service provider Source: Gartner (February 2014)

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between “doing” IT reliably by safely observing defined structures and process, while also enabling the business to innovate rapidly and adapt to shifting market dynamics.

The impact of digitalization is not unique to CSPs. However, the impact on CSPs’ market model and opportunities for success is disproportionately large, compared with the average enterprise, because CSPs play a role in so many business ecosystems.

Digitalization of the communications services value chain poses additional challenges for CSPs, such as the need to absorb disruptive new business models; to react quickly and scale up and down at “customer speed”; and to explore opportunities and develop solutions that are surrounded by ambiguity. The fact that many competitors, such as over-the-top (OTT) players, inherently function as digital organizations increases the urgency for CSPs to adapt.

The “right” IT approach will be influenced by each CSP’s corporate strategy. Gartner’s research has identified distinct strategic positions that CSPs can adopt. In the past, the choice of long-term strategy was rather clear-cut, as business models were stable, but this is no longer the case. We see CSPs choosing to focus on one of three main approaches:

• Smart utility: A smart utility focuses on connectivity. It looks to reduce costs continually, quickly and by any means possible — including achieving scale. IT is responsible for activities that include enabling the sale of high-quality wholesale products and exposing assets (such as network, billing and management services) in a secure manner. Examples of CSPs taking this approach are Chorus and Nucleus Connect.

• Platform enabler: A platform enabler seeks to be at the heart of future ecosystems. This approach offers the biggest opportunities to evolve as the industry changes and ecosystems progress, but it relies on scale and variety to succeed. Technology investment is in core CSP areas, but there is also much more emphasis on channels and partner enablement. The development and exploitation of back-office systems is a critical differentiator. IT must enable customer intimacy and be prepared to add value to partners through joint billing, APIs, alternative channels and hassle-free onboarding procedures. Examples of CSPs that have chosen this approach are Deutsche Telekom, Telstra, Orange and Vodafone.

• Diversified service provider: Many CSPs have opted for this approach, which sees the CSP move into adjacent industry sectors either on its own or via acquisitions, equity participation and joint ventures. This kind of provider looks to gain “wallet share” from existing customers that see the value of combined offers, as well as from new customers beyond the reach of its traditional services. This approach requires IT innovation as many of the required capabilities cannot be piggybacked on legacy systems, and speed of enablement is crucial. Customer data and experience management must span legacy and new IT architectures. Due to the radical difference in operational and commercial practices, some CSPs, such as Telefonica and SK Telecom, have established new subsidiaries to pursue this approach for specific markets or regions. Others, such as SingTel and New Zealand’s Telecom Group, have fashioned dedicated digital-business units. This approach may make IT funding decisions more difficult to prioritize between business units.

It is important to note that these approaches are not mutually exclusive. For example, the platform enabler position is an expansion of the activities of a smart utility, while a diversified service provider expands on the capabilities of a platform enabler.

Recommendations

• For CSPs whose strategy includes being a smart utility:

• Adopt a lean “service factory” model — whereby products, services and processes are standardized as much as possible — to achieve operational efficiencies.

• Realign internal resources immediately, and revise your development processes and skillsets, to enable offerings based on common components and service-oriented architecture principles.

• For CSPs whose strategy includes being a platform enabler:

• Focus efforts on achieving excellence in relation to the customer experience, use of business intelligence and analytics, and implementing service orchestration capabilities.

• Expose your network, IT and information and analytics capabilities via open APIs for internal consumption, as well as by

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products such as broadband using conventional approaches and methodologies, but will also use agile, fast, just-good-enough techniques to explore, adopt and adapt to new opportunities, such as media, digital payments and other digital services opportunities. They can do this by taking a pace-layered approach, “insulating” layers of capability so that flexibility can be achieved without breaking underlying core systems.

What to Prioritize?

On average, CRM, operations support systems (OSSs), business support systems (BSSs) and other sales and services-related systems account for over 70% of the annual cash expenditure of CSPs on IT. This complex domain affords opportunity to improve overall business efficiency and effectiveness, so it is no surprise that a recent informal Gartner survey of CSP CIOs found that their top IT priorities for 2014 are modernization-related — upgrading OSSs and BSSs, replacing sales and support systems to deliver new capabilities, and retiring legacy infrastructure and applications.

Working with a variety of CSPs, Gartner has identified over 260 IT capabilities in the domain of sales and support that could be considered essential to enabling CSPs to compete successfully in today’s digital markets. These include enabling customer service assurance, campaign management, sales support and product management.

In many cases, the revenue opportunities associated with emerging digital services will not on their own fund new business capabilities. The ability to invest to pursue new opportunities in adjacent markets will depend on CSPs’ ability to reduce operating costs and achieve functional efficiencies. The specific activities to enable this will depend on the CSP’s current level of maturity and its chosen strategic option, but controlling costs and enabling operational change will remain primary drivers.

IT initiatives that contribute to lowering the total IT “run” cost and delivering the highest business impact must be priorities for CSP IT in 2014. Table 1 gives examples.

external third-party developers, OTT players, other CSPs, enterprises, API aggregators and brokers.

• For CSPs whose strategy includes being a diversified service provider:

• Apply lessons learned from digital competitors — use techniques employed for technology innovation, agile service creation and efficient delivery of services.

• Expose capabilities via platforms, but also incorporate capabilities from external partners and developers into consumer and enterprise solutions.

With digitalization rapidly changing the communication services value chain, CSP IT leaders face the challenge of maintaining support capabilities for legacy “core” services, while enabling the new capabilities required for digital transformationCSP IT leaders must strike a balance between delivering safe and reliable IT, and providing a fast-paced, innovative environment that enables the business to respond quickly to market and business opportunities.

Any attempt to meet these needs with a “one size fits all” management plan will fail. Capabilities must be tailored to requirements. IT leaders must develop the ability to accelerate implementation when there is a need:

• For low latency and/or highly accelerated systems or application development

• For a high level of disruptive innovation

• To readjust continually to deal with high levels of market uncertainty

• To create, or function within, an ecosystem

Some CSPs, such as Telefonica and Telstra, already run two-speed IT organizations. This will soon become the norm. For example, CSPs will continue to deliver and support core

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Table 1. Examples of High-Impact Priorities and Initiatives for CSP IT Leaders in 2014

Smart Utility Platform Enabler Diversified Service Provider

Modernizing customer sales and services technologies that enhance a unified customer experience:

Single, enterprisewide, logical customer services view of each customer

X X X

Consistent, multichannel view and management of customer problems

X X X

Mobile/tablet application for customer self-care

X X

Cross-channel process consistency (fulfillment, assurance and billing)

X X

Centralized product catalog for all product offerings

X X X

Automated next-best action (in real time) to address customer requests

X X

Personalized customer care X X

Social network self-service login X

Building adaptability into IT skills and competencies to improve processes and increase agility:

Systematic simplification and standardization of core business processes

X X

Fast-paced, iterative development methods (agile, Lean Startup)

X

Flexible, reusable component architecture

X X

Rationalization of application and infrastructure suites

X X X

Modernizing product creation and management capabilities:

Consistency of data across all channels for product offerings

X X

Validation of campaign effectiveness through A/B testing

X

Centralized product catalog for all product offerings

X X X

CSP = communications service provider Source: Gartner (February 2014)

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Digitalization Impacts Technology Capabilities and Responsibilities

For some time, it has been apparent that the roles of CIO and CTO will change as networks become more software-centric, and this has become clearer with the advent of software-defined networking and network function virtualization. In fact, the roles of CIO and CTO within CSPs are already shifting in this regard, furthered by IT’s move from a business-only support role to an additional revenue-enabling role. Some CSPs, looking to embrace the convergence and digitalization of the communications value chain, have evolved a combined CIO/CTO role into a COO-type function responsible for all network and IT functions, including their operation. A primary benefit of this approach is improved accountability, as the team responsible for designing the service is also responsible for operating it. Examples of CSPs that have implemented this structure are BT and New Zealand’s Telecom Group.

CSP CIOs face the challenge of bridging their traditional role of business support with the need to become a driver of innovation for market growth. They have to build the required capabilities and acquire the relevant skills to do this, while transforming their core IT for the future. Accomplishing this task effectively will require collaboration with the chief marketing officer (CMO) and the emerging role of chief marketing technologist in areas such as analytics, commerce and mobile communications, which are being shaped by digitalization. As identified in Gartner’s digital marketing research, many enterprise CMOs are funding and managing digital marketing enablement activities.

Although past success for CSP IT leaders has been measured by cost management, their future success may well be measured by growth. This is important because strategic change will require redirection of capital to digital initiatives. The strategic vision for IT must correlate to the strategic vision for marketing. In a digital world, the two organizations must complement each other in order to succeed. A clear vision for IT must correspond to the corporate vision and be grounded in market opportunity.

Recommendations

• Prioritize IT initiatives that enable the business to deliver an enhanced customer experience and establish effective service innovation, while also realizing tangible process efficiencies.

• Implement a two-speed approach to resolve the tension between providing “telco-grade” reliability and quality while experimenting with, and capturing value from, new technologies, sourcing relationships and ecosystems.

• Create a technology organization that takes a flexible approach to meeting business needs. Foster strong cooperation and establish feedback mechanisms with marketing and operations teams, as well as with your partners in the ecosystem.

• Implement operating models and governance that aid cross-team collaboration and integrated management. Actively participate in corporate-strategy discussions to ensure that the business uses the IT organization’s insights and capabilities.

Evidence

This analysis is based on discussions between Gartner analysts, interactions with CSPs and many dialogues with major industry participants. It is also based on Gartner’s observations of market trends in telecommunications and adjacent industries. An informal survey was conducted with CIOs from CSPs with both domestic and global operations.

Source: Gartner Research, G00259036, Neil Osmond, Kathie M Hackler, 7 February 2014

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