lecture on telco managed services

Session 1. Introduction : NW Oursourcing by Vendor and Wholesaler

Part 1 : NW Outsourcing : IntroductionPart 2 : NW Outsourcing : BTWholesale ViewPart 3 : NW Outsourcing Survey Results : by Booz Allen Part 4 : NW Outsourcing by Vendors : Vendors as Network Owners

Dr.Ir.Joko Suryana

Joko Suryana ITB 2011 1

Part 1 : Network Outsourcing :

Introduction

Dr.Ir.Joko Suryana

2Joko Suryana ITB 2011

Network Outsourcing : Background

• Many operators are seeking to streamline their cost structure in response to declining average revenue per user (ARPU). – As a consequence, operators have been scrutinizing their network

operating expenses (OpEx), which typically constitute between 17% and 20% of total operating costs.

• Operators have also begun looking to vendors to :– operate and maintain all or part of their network– move the network to next-generation technologies – help drive down network operating expenses

• Partnering takes a variety of forms, ranging from outsourcing specific tasks to management of all operations and maintenance activities. – Even network sharing and managed capacity options, in which the

operator pays the vendor on a per-use basis, are being considered.


NW Outsourcing Benefit


NW Outsourcing Landscape


Network Outsourcing Types


NW Outsourcing by Operator Interest

• The interest in outsourcing is growing, but operators are confronted with different challenges :– emerging market operators are dealing with strong

growth

– mature market operators face sinking ARPUs and network convergence.

• Consequently, individual operators will each have their specific reasons and rationale for pursuing different network outsourcing arrangements.


NW Outsourcing by Operator Interest


Outsourcing Market Size


Example 1 : Out-tasking Business of Detecon Al Saudia


Example 2: Outsourcing Deal of Alcatel with One in Austria


Part 2 :Managed Network Services

BTWholesale View

Dr.Ir.Joko Suryana

Joko Suryana ITB 2011

UK Wholesale Market


BT Wholesale : Products


BT Wholesale : Customers


Wholesale Market Trend


BT Wholesale Revenue Evolution


BT Wholesale an Established Managed Services Business


MNS in Action : KCON


MNS in Action : Virgin Media


MNS in Action : MBNL


Part 3 :NW Outsourcing Survey Results

by Booz Allen Dr.Ir.Joko Suryana


Outline

• Why Outsource?

• What Gets Outsourced ?

• Who Outsource ?

• Which Vendor ?


Why Outsource ?• More than 90 percent of respondents said their primary goal was to reduce operating

expenses (OPEX).

• Only in North Africa were operators not driven by OPEX reduction; instead, they were motivated by the desire to “remove the headache” of managing large workforces over vast geographies.

• Indeed, many respondents cited better cost control—the ability to manage those large workforces more flexibly as demand changes—as a significant benefit of outsourcing.

• Meanwhile, reducing capital expenses was rarely cited.


OPEX Saving by Outsourcing

• Overall, operators are quite happy with the results of their outsourcing efforts.• Two-thirds of respondents said they had realized their OPEX savings goals for the

most part—no matter what their initial goals were.• Indeed, all of those who reported a savings goal of more than 30 percent reported

meeting that goal, at least in part.


What Gets Outsourced ?• Telecom operators have been outsourcing a variety of network functions, including

the designing and building of new network technologies. • Yet as operators complete much of the work needed to upgrade to faster xDSL and

3G technologies, and business cases for FTTx remain unclear, operator attention has turned again to outsourcing the ongoing “run” operations of their traditional businesses

• For the same reason, outsourcing providers are also concentrating more of their efforts on developing operations and maintenance services beyond core equipment provision.


Willingness to Outsource

• Every telecom operator either has considered outsourcing the three primary areas of field services operations : site operations, maintenance and administration or already outsourced.


Who Outsources?

• Multinational mobile operators and cable companies were the most willing to outsource. • European fixed-line operators were less likely to outsource than mobile carriers, thanks primarily to

concerns that the complexity of fixed-line operations increased the risk of transferring control to outsourcers, and might actually increase costs in the short-term as vendors struggle to manage that complexity .

• Mobile operators in Europe were typically more likely to outsource than those in other regions, where the cost benefits were harder to realize.


Which Vendors ?

• The technical proficiency of candidates is critical to the selection process, but not whether a prospective outsourcer also made the equipment that runs the operator’s network .

• Equally important is whether the candidates maintain a strong local presence, given just how resource-intensive many of these network and field operations can be.

• Indeed, most operators did not view a vendor’s strong presence in neighboring countries as adequate to their needs; operators said they would rather share in-country resources—and savings—with their competitors than risk cross-border resources being stretched too thin.


Part 4 :NW Outsourcing by Vendor Challenges

for Wholesale Operator : Vendors as Network Owners

Dr.Ir.Joko Suryana


Evolution of Telecom Value Chains

• Innovation in the telecom value chain has created a number of now-familiar supply options; could ‘vendor as network owner’ be the next evolutionary step?


Competitive Landscape


Vendor as Network Owner Rationale

• Vendors and Operators have strategic and economic incentives to moving towards a Vendor Network Owner model, which can also promote consumer benefits


Vendors are already financing and operating networks


Vendor Options


Telecom NW Layer : Managed Service View

• The layers of a telecoms network are not all equally suited to the vendor ownership model


Charging Models

• Vendor Network Owners can mix and match different charging models to monetise network


The Risks :Vendors as Network Owners


Key Success : Vendors as Network Owners


Example : 1#


Example : 2#


Session 2. Financial Analysis ( Indonesian)

Analisis FinansialLayanan Managed Service

Dr.Ir.Joko Suryana

Outline

• Pendahuluan– Tantangan Persaingan

• Driver Finansial kebutuhan Outsource Jaringan– Pengurangan OPEX– Optimasi CAPEX– Benefit Finansial dengan Outsource

• Komponen Cost Operator Telco– Berdasarkan jenis : Direct cost, Indirect cost, Hidden cost– Berdasarkan proses bisnis : OSS, BSS– Lebih Detil Komponen Cost Jaringan

• Analisis Finansial sebagai Pertimbangan dalam Keputusan Outsource Jaringan– Komponen Analisis Finansial– Cash Flow Sebelum vs Sesudah Outsource

• Scope Managed Services / Outsourcing berbasis pengelolaan cost

PENDAHULUAN

Tantangan Operator

• Market and business related– Persaingan yang makin ketat– Declining pendapatan voice – Profitability dari layanan mobile

broadband yang masih kecil– Perubahan business landscape– Investasi untuk penggelaran

teknologi baru

• Technology and network related– Pemilihan teknologi– Struktur cost sistem seluler– Scalability dan spectrum– Offered bit rate versus coverage

dan load

Tantangan Bisnis Operator padaLingkungan Kompetitif

High Debt Ratio• High finance fee

Balance Sheet Re-engineering

High OPEX• High Operation cost

Lower OPEX solution

High Churn rate• Intense competition• Inefficient loyalty program

Faster go-to-market

High CAPEX • High investment on new services

Risk sharing

Tantangan Requirement

Alternatif Solusi

1

Balance Sheet Reengineering

Lower OPEX Solution

Faster go-to-market

Risk sharing

Financing Solution

2Hosting Solution

3 Revenue Sharing

4 Outsourcing

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DRIVER FINANSIAL TERHADAPKEBUTUHAN OUTSOURCING

Benefit Finansial Outsourcing

Benefit Finansial Outsourcing : Reduksi OPEX

• Menurunnya ARPU dan tekanan persaingan membuat operator mencari usaha untuk menjaga margin dengan cara menurunkanOPEX yang terkait dengan jaringan.

• Meskipun penghematan biaya bisa diperoleh secara in house dengan perbaikan proses, pelepasan aset dan pengurangankaryawan– Namun hal ini hanya akan berdampak sedikit terhadap prosentase

penghematan sehingga tidak cukup untuk menaikkan EBITDA.

Menurut para konsultan strategi telekomunikasi, seharusnyapenghematan OPEX bisa dilakukan sampai dengan 15-30% atau

setara dengan perbaikan EBITDA sebesar 8 %.

Financial Benefit dari Outsourcing: Dari sisi OPEX

Visibilitas dan Prediktabilitas OPEX

• Dengan outsourcing, service provider akan mempumelihat kedepan dan dengan lebih pastimemperkirakan besarnya biaya OPEX – Hal ini akan meningkatkan kemampuan service provider

dalam melakukan perencanaan bisnis, serta OPEX budgeting sehingga bisa mengurangi resiko bisnis.

• Sebagai tambahan, service provider dapatmengoptimalkan keseimbangan antara service level dengan cost.

Benefit Outsourcing: Reduksi OPEX, Fokus padaCore Business dan Peningkatan Layanan

Benefit Finansial Outsourcing : Reduksi CAPEX

• Selain reduksi OPEX, operator juga dituntut untukmelakukan minimisasi CAPEX atau paling tidak optimalisasiCAPEX untuk mendapatkan perlindungan margin serta aruscash.– Investasi CAPEX cenderung ditujukan untuk infrastruktur baru

• Infrastruktur eksisting harus tetap menghasilkan arus kasuntuk mendapatkan pengembalian modal ( ROI )– Namun demikian, infrastruktur mengalami depresiasi seiring

waktu sehinggan berdampak pada EBIT

Reduksi CAPEX dengan Outsourcing bisa mencapai 5-6 %

Financial Benefit dari Outsourcing: Dari sisi CAPEX

Perbaikan Utilisasi CAPEX untuk PeningkatanArus Kas

• Perbaikan utilisasi CAPEX merupakan salahsatukunci utama untuk menaikkan arus kas suatuoperator

• Managed service dapat mencakup desainjaringan, aktivitas operasi dan optimasi jaringanyang pada gilirannya berdampak pada perbaikanutilisasi CAPEX

Benefit Finansial Outsourcing : Reduksi OPEX dan CAPEX

• Pyramid Research telah melakukan survey bahwa penghematan biayadengan melakukan outsourcing mencapai 22 % baik untuk OPEX maupunCAPEX.

• Semakin banyak porsi yang di outsourcing-kan, semakin besar dampakpenghematannya.

Benefit Finansial Outsourcing : Contoh Penghematan Konversi CAPEX ke OPEX

KOMPONEN COST

Komponen Cost Operator Telco : Berdasar Jenis

• Biaya penyelenggaraan suatu layanan terdiri daribeberapa komponen direct cost :– Direct labour cost– Direct cost dari subkontraktor– Direct cost dari material

• Selain itu terdapat juga biaya-biaya lain, berupaindirect cost :– Indirect labour cost : departemen SDM, sisfo kepegawaian– Indirect cost dari subkontraktor : transportasi, bea cukai– Cost yang terkait dengan pegawai : sewa ruang, peralatan

IT, kendaraan, SPJ– Bunga bank, pergudangan dan training


• Selain direct cost dan indirect cost ada biaya lainnya yang disebutsebagai : hidden cost oleh ketidakefisienan operasional

• Bila proses internal tidak tanggap dan tidak dioptimasi terhadapdinamika pasar seperti : – Makin ketatnya persaingan– Pengurangan margin profit– Munculnya pelanggan tipe baru– Kebutuhan baru dari pelanggan eksisting– Kemunculan teknologi baru– Layanan baru– Pertumbuhan resource internal

• Maka akan mengakibatkan organisasi menjadi tidak efektif danefisien 100 %, sehingga menimbulkan biaya tambahan yang bersifathidden.


• Hidden cost lainnya juga bisa ditimbulkan olehkurang optimalnya kinerja alat produksi, buruknyalevel layanan serta indikator kinerja :

– Buruknya kapasitas

– Tidak meratanya coverage

– Lambatnya troubleshooting

– Kurangnya SDM di lapangan

Akan membawa pada ketidakpuasan pelanggan, berpindahnya pelanggan ke kompetitor sehinggaberdampak pada penurunan pendapatan

Komponen Cost Operator Telco : Berdasar Proses Bisnis

• Pada bisnis jaringan mobile, proses bisnis terdiri dari duakelompok besar :– Front office : sales and marketing

– Back end office : coverage, capacity and functionality

Komponen Cost Operator Telco : Berdasar Proses Bisnis

Komponen Cost Operator Telco : CAPEX dan OPEX Jaringan

Komponen Cost Operator Telco : OPEX Jaringan

• OPEX Jaringan terdiri daribiaya-biaya :– Planning dan optimisasi

jaringan : 23%– Managemen dan operasi

jaringan : 17 %– Pemeliharaan jaringan: 16 %– License fee : 12 %– Sewa site, sewa bandwidth:

23 %– Biaya lain-lain : 9 %

• Dengan outsourcing, total biaya OPEX jaringan akanberkurang sebesar 15-30%

• Dalam contoh berikut, reduksi OPEX – Planning dan optimisasi

jaringan : -6%– Managemen dan operasi

jaringan : -4 %– Pemeliharaan jaringan : -4 %– License fee : -3 %– Biaya Transisi : +1 %

• Dengan outsourcing, total biaya OPEX jaringan akanberkurang sebesar 15-17%

Komponen Cost Operator Telco : OPEX Jaringan

Reduksi Biaya Planning dan Operasi Jaringan

• Direct cost : – Perencanaan , operasi dan pemeliharaan jaringan merupakan

fungsi-fungsi yang menghabiskan banyak anggaran. • Belanja pegawai untuk operasi jaringan membutuhkan 20-30% dari

anggaran jaringan• Biaya ini bisa ditekan, bila dilakukan outsourcing karena MS provider

menggunakan strategi shared service melayani beberapa operator sekaligus.

• Indirect cost : – Operator juga dapat melakukan penghematan OPEX, karena

managemen pergudangan dilakukan oleh shared service yang mendapat pekerjaan outsource dari beberapa operator.

• Hidden cost :– Dengan terpenuhinya KPI dan SLA, maka penghematan hidden

cost juga bisa ditekan

Reduksi Biaya Equipment Maintenance dan Vendor Management

Direct cost :• Reduksi Equipment Maintenance

– Pengurangan biaya juga bisa dilakukan pada reduksi License fee danaktivitas vendor-service support.

– Operator dapat menghemat OPEX hingga 4% melalui outsourcing.

Indirect cost dan Hidden cost :• Reduksi Biaya Vendor Management

– Dengan penunjukkan outsourcing satu pintu, maka interface administratif akan dikelola oleh service provider yang mendapatkanpekerjaan outsourcing.

– Sebagai contoh, Telecom New Zealand telah melakukan penghematanlebih dari 74M Euro dengan menyerahkan managemen 20 vendor kefihak yg menerima outsourcing

PENGEMBANGAN MODEL FINANSIAL

Analisis Finansial sebagai Pertimbangandalam Keputusan Outsource Jaringan

• Analisis finansial menyediakan dua sudut pandang penting :– Analisis spending berdasarkan kategorinya : perangkat hardware,

personnel, fasilitas dan lain-lain– Analisis spending berdasar aktivitas : perawatan, operasi,

perencanaan, optimasi dan lain –lain

• Hasil analisis ini membawa pada identifikasi item apa atau tahapmana yang bisa dilakukan penghematan– Item atau tahapan yang dihemat biasanya terkait dengan indirect cost

dan hidden cost

• Analisis finansial juga diperlukan untuk perhitungan trend spending beberapa tahun mendatang

• Hasil analisis juga harus menyediakan suatu cost baseline dari OPEX dan CAPEX perusahaan untuk menjalankan bisnis dalam beberapatahun ke depan.– Cost baseline ini nantinya akan dipakai untuk mengevaluasi proposal

yang diajukan oleh vendor atau service provider.

Pengembangan Model Finansial

• Setiap pelanggan prospective seharusnya melakukan analisisfinansial untuk memberikan perbandingan teknikal dan bisnis yang dilakukan secara in-house dibandingkan dengan outsourcing. – Analisis ini hendaknya menguji elemen biaya internal seperti :

pegawai, training, transportasi dll

• Suatu service provider penyedia outsourcing hendaknyamengajukan usulan cakupan pekerjaan yang memenuhi persyaratandengan analisi ROI serta penjelasan tentang cost benefit terhadap bisnis baik dalam nilai nominal penghematan sertaparameter indikator kunci ( SLA dan KPI )

• Pada skema outsourcing tradisional biasanya kerjasama dilakukandalam multi-year, namun demikian pada skema outsourcing saatini, dapat dibuat suatu masa payback period dalam satu tahun ataukurang sehingga mendorong level kerjasama dalam jangka yang lebih panjang dengan scope pekerjaan yang makin lebar.

Pengembangan Model Finansial

Contoh Cash Flow Operator ygmenjalankan Outsourcing

Benefit : Sebelum Outsource

• Gambar disampingmengilustrasikan business case dari suatu implementasiprogram efsiensi yang dilakukan oleh suatuoperator.

• Pada tahun awal, terjadipeningkatan upfront.

• Pada bulan ke 18 terjadibreakeven, sedangkan untukmencapai tingkatpenghematan yang diinginkan diperlukan waktuselama 23 bulan.

• Walaupun penghematandapat diperoleh dalamjangka panjang, dampakjangka pendek tidak disukaikebanyakn operator

Benefit : Setelah Outsource

• Gambar di samping berikutkinerja operator setelahoutsourcing

• Kemampuan vendor untukmerealisasikan skalaekonomi dan sinergi sertakemampuan untukmendistribusikan investasimemungkinkan untukpenghematan up front

• Meskipun dalam jangkapanjang penghematan yang diperoleh lebih kecil, perhitungan NPV memperlihatkan hasil yang baik

SCOPE PEKERJAAN OUTSOURCING BERBASIS PENGELOLAAN COST

Scope Pekerjaan Network Outsourcing

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Scope dari Outsourcing berdasarkanParameter Finansial yang Dikelola

• Terkait dengan parameter Finansial (CAPEX danOPEX) yang dikelola terbagi dalam beberapa tipe :

– Tipe out tasking :

• Model 1 : outtasking

– Tipe Managed Operation :

• Model 2 : full technical operation

• Model 3 : site rental and transmission cost management

– Tipe Managed Capacity :

• Model 4 : asset optimization and supply chain management

Scope dari Managed Service berdasarkanParameter Finansial yang Dikelola

Model 1

• Level terendah dari Managed Service adalah Out-tasking, yaitu bentuk awal dari Outsourcing.

• Outtasking merupakan penugasan operator kepadaManaged Services provider untuk melaksanakan tugasoperasi parsial dari fungsi atau proses yang terkaitdengan managemen jaringan atau layanan.

• Pengukuran kinerja dibuat berdasarkan task-based KPI– Dalam hal ini Managed Services provider mendukung

operator untuk melakukan penghematan pengeluaranOPEX yang terkait SDM

Model 2

• Level scope berikutnya dari outsourcing adalah Full technical operation

• Managed Services provider mengerjakan tugas-tugasoperasi jaringan atau layanan secara penuh dengantanggung jawab menjaga end-to-end KPIntukmelaksanakan optimasi, desain dan aktivitaspembangunan.

• Model outsourcing ini merupakan model yang paling banyak digunakan dalam industri telekomunikasi.

• Operasi jaringan yang full ini memerlukan staff transfer darioperator ke Managed Services provider sehinggamemungkinkan reduksi OPEX secara substansialdibandingkan dengan Outtasking

Model 3

• Pada scope pekerjaan level lebih tinggi selanjutnyaManaged Services provider menangani bukan hanyaoperasi teknikal secara penuh, namun juga melakukantugas-tugas Site and transmission cost management mewakili operator.

• MS provider bertanggung jawab dalam mengelolainfrastructure sharing seperti tower, shelter, power danlain sebagainya.

• Model outsourcing ini juga melibatkan staff transfer darioperator ke Managed Services provider.– Oleh karena itu, selain berdampak pada reduksi OPEX terkait

dengan SDM , reduksi lebih jauh juga terjadi pada OPEX jaringan.

– Skema model outsourcing ini juga berdampak padapengurangan capital expenditure(CAPEX).

Model 4

• Scope yang paling luas dari outsourcing adalah Asset optimization and supply chain management.

• Model ini membuat peran Managed Services provider lebih besardalam optimasi coverage dan capacity mewakili operator dengantanggung jawab penuh untuk menyediakan kapasitas jaringan padasaat apapun dan dimanapun.

• Karena penggelaran jaringan sangat terkait dengan demand aktual, maka disini operator bisa lebih pasti melakukan optimasi cash flow dan modal ( OPEX dan CAPEX ).

• Terkait dg jaringan, operator hanya melakukan order dan membayartambahan coverage dan capacity baru yang disediakan oleh MS provider dengan suatu pernjanjian SLA dan end-to-end KPI yang disepakati.

Model 4

• Bagi operator, hal ini berarti terjadi pengurangan resiko danreduksi cost sekaligus atau reduksi OPEX dam CAPEX.

• Managed Services provider bertugas mengelola technical operation, site and transmission cost management, sertacapacity and coverage management dari jaringan yang dimiliki operator.– Staff transfer biasanya juga termasuk dalam skema outsourcing

ini

• Dengan in-depth partnership ini , operator dapatmengamankan efisiensi OPEX serta produktivitas CAPEX karena vendor melakukan optimasi total cost of ownership jaringan.

Session 3.Business Landscape Change and Next

Generation Managed Service

Dr.Ir.Joko Suryana

Outline• Telco Trends

– From Network-centric to Service-centric– Network Infrastructure become a non core-business– Network Infrastructure is a burden rather than competitive advantage– Outsourcing is a must for Service Providers– Telco trends will push service providers to become Telco 2.0 operators

• Future Business Model of the Service Providers– Telecom Services and Content Sales Company– Telecom view vs Internet view Business Models– Non conventional Telco Actors

• Next Generation Managed Services– Build/operate/manage– Managed Infrastructure– Managed end-to-end services operations– Full Outsourcing

• Vendor Selection

TELCO TRENDS

Telco Trends

From Network-centric to Service-centric

• Service providers are moving from a network-centric to service-centric environment to meet consumer and enterprise demand for innovative multimedia applications and services.

• Increasing focus on the end user and meeting this demand requires advanced network deployment.

• But in the current cash strapped environment how can this be accomplished while at the same time achieve reduction in total cost of ownership?

From Network-centric to Service-centric

Network Infrastructure become a non core-business

• Increasingly telecom operators are viewing ownership of the network infrastructure as outside their core-business.

• Driving this trend are the increased speed of innovation cycles, and the pressures of time-to-market.

• In this new environment, the operators are attempting to mitigate the risk of making upfront investments in new technologies before the technology has proven itself in the marketplace.

Network is not Competitive Advantage Anymore

• The fact is that the network is no longer a unique selling point to their customers – rather it is the services offered over the network that is of primary interest.

• So the service providers must walk a tightrope of implementing a broad set of technologies in order to offer state-of the- art services to end-customers, but at the same time being careful not to overload those customers with new offerings and technologies.

Network Infrastructure as a Burden

• It is apparent that the ownership of network assets can increasingly become a burden to today’s telecom operators rather a competitive advantage.

• Network sharing and Outsourcing will become more and more important in the overall telecom business model and will include share all network elements – core, access, transport and service platforms, the legacy network, and new extensions and technologies or lease the network based on outsourcing.

Outsourcing is a must for Service Providers

• A clear indication of this trend is the increasing demand for solutions that include outsourcing, or at least the sharing of telecom network infrastructure.

• Just a few of the indicators that the network is no longer a commodity includes the specialization of telecom carriers into a variety of wholesale segments, such as backbone service providers.

• Other indicators include the increase in co-locating and sharing mobile sites and a trend to leased line unbundling.

• The use of managed and hosted applications is on the rise, as is the trend on the part of the telecoms to look to an outside firm to manage capacity.

• In fact, the entire legacy network can be outsourced. This can occur in a selective fashion – e.g. the transport network of a mobile operator; or full outsourcing of the operation of a legacy network to an independent 3rd party vendor.

Service Providers will transform to Telco 2.0

• Through creative partnering and innovative risk sharing options, new managed services and outsourcing business model options provide the framework for creating a next generation enabled portfolio of services for consumers and enterprises ready for Telco 2.0; without compromising network performance, service quality and security.

Three Different Parts to the Future “Telco 2.0” Operator

Telco 2.0

FUTURE BUSINESS MODEL OF SERVICE PROVIDERS

Future Business Model for Telecom Operators

• In the future, service providers will hardly resemble the companies they were in the late 20th and early years of the 21st century.

• For example, they may position themselves as your friendly “Telecom Services and Content Sales Company.”

• They will no longer own or operate a telecom network infrastructure, and will focus exclusively on customer acquisition, interaction and retention.


• Tomorrow’s service providers will diversify by offering unique services and content in combination with attractive pricing.

• They likely will offer these services and content via hosted platforms they do not own, and will bring their products to the end-customers via a fully converged shared network infrastructures.

• One of the biggest shifts in the transformation of today’s operators will be their evolution from an organization focused on engineering and technology to becoming a nimble marketing brand that delivers innovative and sophisticated cutting-edge services to its customers.

Business Landscape Changes

Transform

• We can see a transition from the “telecom view” to the “Internet view” or a combination of the two.1. In the first case the main

aspect is the infrastructure and services that are added “on top of” the networks.

2. Using the second view the networks are seen as an asset similar to roads, railways, water supply, schools that are needed in order to facilitate markets, companies and the society to function as expected.

Non Conventional Telco Actors

• As identified by a representative for the Gartner group at the Mobile World Congress in Barcelona 2009 other types of actors make large efforts in order to obtain a share of the internet business and to connect customers more closely.

• Examples are :– Microsoft (SW)– Nokia (mobile phones) – Google (internet), i.e. large, global and powerful companies.– Skype

• Therefore, Future Service Providers should offer competitive services to their customers for maintaining the businesses

Wholesale providers need to help retail providers Manage costs and Introduce new services

• Core revenues for traditional players are slow growth or flat– They are looking to manage costs

– They are looking for external help in managing costs

• Service providers need new areas so that don’t lose out to new players– Wholesaler needs to help traditional players introduce

new services

– Wholesaler should as soon as possible offer the managed services and network outsourcing

NEXT GENERATION MANAGED SERVICE

Next Generation Managed Service

• The current uniform outsourcing model is rapidly changing as vendors and operators gain insights from existing deals.

• There are three elements will shape the next generation of managed networks: – First, the combination of network sharing and outsourcing,

wherein multiple operators agree to share active and passive network elements and outsource the operations of those elements to a vendor.

– Second, wider use of asset transfers beyond the current software and test-bed transfers.

– Third, the growth of out-tasking beyond its traditional domain of field maintenance to include mission-critical aspects such as NOC operations and network optimization

Managed Service Scope

Managed Services also Have Changed

• What the preceding makes clear is that the entire concept of “managed services” has changed.

• No longer can managed services be limited to operationally focused and network-centric.

• The main components of the old approach — NOC services, multivendor maintenance and network outsourcing — were sufficient in an environment where point solutions, cost savings and the bottom line were primary considerations.

• But the next generation of managed services, out of necessity, shifts the emphasis significantly to a focus on the end-customer’s services.

Managed Service Transformation

Present

Future

Next Generation Managed Services

• Specifically, next-generation managed services are geared toward achieving business transformation via a services-centric approach.

• The goal is to give customers the services they want, where they want them, when they want them across a variety of devices.

• In striving to achieve this goal, risk mitigation is evolving into a risk sharing approach.

• Greater attention is given to implementing both top- and bottom-line solutions — and to the need for significant, nonlinear reductions in CAPEX/OPEX.

• Instead of short-term tactical advantages, the focus is firmly on long-term strategic gains.

NG-MS : Build/operate/manage (BOM)

• Meeting demand for telecommunication services is an essential part of transformation.

• A qualified partner can help network operators with a comprehensive approach to cost-effectively roll out, operate and manage a new network deployment.

• In the build phase, this typically includes design, planning, engineering, installation, integration, optimization test and turn-up.

• The operate-and-manage phase typically includes monitoring, fault management, field maintenance, repair, and performance and configuration management.

• Eventually, operational responsibility can be transferred to the network operator.

NG-MS : Managed Infrastructure

• In building on the basic BOM approach, a trusted partner can share a portion of the risk in the early years of deployment with the network operator.

• Instead of paying all CAPEX up front before realizing any new revenues, the network operator can share the risk of build-out with the partner by deferring a share of the cost until it realizes subscriber growth.

• This isn’t just a bottom-line solution: The freed-up dollars can be used to build subscriber growth further and faster — and grow the top line in the process.

NG-MS: Managed Infrastructure

NG-MS: Managed end-to-end services operations

• By focusing operations from a network-centric to a services-centric approach, a partner expands operations support beyond the traditional network boundaries to include customer premises devices that control end-user services.

• Thus the “network” now includes devices like IP set-top boxes and IP modems, which are monitored for performance quality and customer-relevant metrics.

• Put another way: Operations processes are extended beyond just the traditional network to cover services-based metrics in a fully migrated, IP-based end-to-end network environment.

Managed end-to-end services operations

NG-MS: Full Outsourcing

• In assuming end-to-end network operation processes and related functions, a partner can help network operators address critical requirements in a services-centric approach to business.

• Full outsourcing can be defined as creating a “virtual” telecom services provider by the combining network operations outsourcing with a transfer of assets to the managed services provider.

• The role of the outsourcing partner is to operate the new “virtual telco” and to manage the partnership of what would typically be multiple parties, where each performs a clearly defined role.

• This results in a tailored, single-sourced solution allows for clear accountability and helps increase the focus on quality, while helping to ensure a smooth transition to next-generation networks and realize long-term financial objectives.

Full outsourcing

VENDOR SELECTIONS

Vendor Selection Flow

Establish realistic expectations about benefits and scope

• Having a clear set of objectives and a business case that can be benchmarked are prerequisites for convincing senior management to make the commitment to network outsourcing.

• Common pitfalls are overestimating savings, inadequately defining the scope of the outsourcing project, and mixing outsourcing initiatives with other infrastructure projects (such as next-generation networking migration).

Establish realistic expectations about benefits and scope

Define a detailed picture of the desired end-state early on

• Operators that successfully execute outsourcing deals define a detailed picture of the desired end-state early in the process—and further validate this with the respective vendors.

• Having a clear understanding of one’s expectations and requirements is central to maintaining control throughout the vendor selection and negotiation process, and then arriving at a satisfactory outsourcing contract.

• Designing the end-state model requires answering the following questions: scoping, operations and process model, KPI and performance model, governance model

• What dispute arbitration mechanisms should be installed : asset model, payment model, 3rd party contract, HR transition model

Use a structured process for vendor selection

• Vendor selection is one of the most critical decisions an operator will make.

• Entering into an outsourcing relationship can provide real benefits as outlined; however, revision of the decision or late vendor changes can be painful.

• Consequently, we advise operators to follow a rigorous and transparent deal-definition and partner-selection process.– The process is characterized by the early development of the desired

end-state by the operator. – A select group of vendors should be involved extensively to validate

and test the end-state, prior to the issuance of an RFP. – These discussions should involve key personnel who will be the

leaders of the organization post-outsourcing. – While the investment in terms of resources and time might seem

initially excessive, a clear and jointly held understanding of the details and alternatives for a future outsourcing deal is critical to future success.

Align and communicate

• Senior management support for the outsourcing initiative and internal communication of the implications for employees are vital to ensuring success.

• Insufficient attention to these elements has often resulted in attrition of more than 20% of operator staff during the process, not to mention needlessly drawn-out negotiations with potential vendors.

• How to align and communicate? – On the first point, we’ve already noted the importance of a sound

business case and end-state model. – With respect to the second point, operators must supply their staff

with early and honest explanations of how the outsourcing deal will be implemented, what these changes will mean for how people do their work, and how job performance will be evaluated and rewarded.

THANK YOU

lecture on telco managed services

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