Leveraging Managed Services To Increase
Your Competitive Edge
BY JOE BOVA
Are you efficiently addressing your network and business challenges?
Outsourcing solutions can help you reduce your overall business cost and
let you focus your resources on core business issues.
The telecommunications industry has weathered rough seas in the past few
years but today it is facing the dawn of a new and exciting period. Telecom
services have permeated the globe, impacting local cultures at unprecedented
levels. Consider the high cellular penetration and new mobile applications
being rapidly consumed in Europe and Asia.
Broadband access in the form of DSL has passed the 10-million subscriber
mark worldwide, with some operators now aggressively deploying advanced
access technologies even before the lifecycle has run the gamut on the
current technology generation. Mobile data applications are coming to the
fore, and wireless data networks promise to change the way we access and use
Todayï¿½s service providers are preparing to improve business balance sheets
and to capture new revenue streams. In order to accomplish these goals there
is an array of network and business challenges that must be addressed:
ï¿½ Wireline and wireless networks need integration to provide transparent
ï¿½ Multiple parallel networks need to be consolidated to reduce operating
ï¿½ The overall business strategy must be streamlined and focused on critical
customer segments to gain market share.
All of these tasks must be done with reduced capital and operating expense
budgets, and achieving operational efficiency for carrier organizations is
the highest priority goal in todayï¿½s stringent financial environment.
Outsourcing partnerships are a vital solution that service providers can
leverage to increase their competitive edge. Service providers have
first-rate options to outsource a wide range of operational or support tasks
to networking partners, enabling the organization to focus its time and
energy on executing its business strategy. Outsourcing services help service
providers reduce their overall costs and enable the organization to turn its
focus to improving profitability. As a result, service providers can
increase the competitive gap and improve market share with renewed vigor.
Outsourcing options that service providers are examining today are focused
on sets of services that assist with the design, engineering, installation,
management, and optimization of the carrierï¿½s telecom infrastructure. These
services are used by top tier carriers around the world today, and the
outsourcing market is expected to grow significantly as carriers adopt more
services. According to some industry estimates, todayï¿½s outsourcing market
is $9.3 billion.
The types of services that carriers can leverage include the following:
Operations and Support
Network performance is no longer the competitive differentiator it once was.
Operators are realizing that the cost of developing the technical expertise,
processes, and platform tools that can ensure networks continue to operate
at ï¿½five ninesï¿½ of availability can be shared across multiple networks.
Outsourcing this function to service vendors allows carriers to retain
state-of-the-art people, process, and platform support on a shared cost
basis. Further, capital constraints dictate that carriers examine projected
obsolescence and replacement plans of core elements of their technology
platform. They must weigh the cost of operations and maintenance against
replacement and migration expense. Outsourcing asset management, operations,
and technology obsolescence planning to specialized service vendors can help
squeeze valuable service life from legacy equipment.
The keys to customer retention and revenue growth are price, feature and
service availability, and service quality. Making advanced feature sets such
as integrated messaging platforms, virtual private network, prepaid and
advance spending limits available at competitive prices can be less risky if
a carrier relies on a hosted application provider.
Revenue Expansion and Recovery
Discovering stranded assets that can be redeployed to support new customers
and identifying customers that are not being billed are two outcomes of
assessment activities that result in revenue recovery. Serving new customers
more quickly expands revenues by enabling billing cycles to start sooner.
With a streamlined network and operations process, you also gain a
competitive edge in the ability to launch new services quickly. Your
outsourcing partner should bring these tools to you much more quickly and
effectively than a traditional supplier.
Certainly the reduction of operational expenses is a critical goal in
todayï¿½s environment. Outsourcing processes that are resource intensive for
highly trained staff can save time and therefore staffing costs. Leveraging
a vendor partner for projects that proactively identify and resolve network
failures and fault conditions help minimize future outages and reduces fault
incidents. Removing operational layers and process overlaps by accessing an
outsourced provider that has an existing delivery platform helps to
facilitate cost reductions while assuring Day 1 network quality.
Network Performance Enhancement
Outsourcing services can identify constraints that impact current network
performance and identify critical issues before they impact the network. By
right-sizing and optimizing the network you can gain such benefits as
improving customer retention, reduce network downtime, reduce service
degradation events, optimize customer applications, and optimize network
Streamline Business Model
Many aspects of operating a service provider defocus the organization and
can lead to a perpetual state of firefighting. Competitive service providers
must have time to focus on strategic market issues to develop attractive
services. By streamlining the network and operational aspects, the
organization as a whole can support forward looking corporate strategy
SUCCESS FACTORS FOR OUTSOURCING
Choosing a partner for outsourced services is an important decision that
must be examined from several aspects. The right partner will provide you
with not only technical expertise but also a proven framework for working
together. Some of the things that should be examined when looking for an
outsourcing partner include the following items.
Alignment of Expertise: As mentioned before, some
non-telecom vendors offer IT-based outsourcing services that initially focus
on maintaining servers and support systems and sometimes begin to add
networking pieces. While IT expertise is an important talent base, it is
vastly different from managing telecom networks. Just as you wouldnï¿½t want a
heart surgeon performing brain surgery, having an IT oriented company manage
a wireline or wireless network successfully is a high-risk proposition.
Experience: Similar to getting the right expertise, choosing a
partner that has been supporting a number of customers for a number of years
is important. Ideally the vendor has been supporting other carrierï¿½s with
customer bases and networks similar to yours as well as supporting networks
that are larger and different from yours. A breadth of experience gives you
the opportunity to leverage your partnerï¿½s knowledge as your network grows
and strategy evolves.
Multivendor Support: Carrier networks are multivendor
environments. Your outsourcing partner should have expertise that supports
not only its platforms but other leading platforms as well. Without
multivendor support, outsourcing contracts are little more than basic
maintenance agreements for branded platforms. The vendor should be able to
remotely manage or support all your platforms covered in your networking
Risk Management: Managing relationships while acknowledging
risks is a hallmark of a mature services provider. Planning for a range of
circumstances is key to a win-win arrangement. Some risks can be planned
for, such as staff changes, scope changes, resource access, etc. Other risks
are uncontrollable -- such as government intervention, natural hazards, and
environmental events. An outsourcing arrangement should assess the
likelihood of various risks and include assurances and contingencies in the
overall plan. Identifying potential issues upfront is critical to a
Alignment of Business Objectives: Benefits of successful
outsourcing arrangements go beyond simple cost reductions. The ï¿½low hanging
fruitï¿½ has long ago been picked. Committed cost reductions must be put in
the context of greater business objectives. In other words, will this
arrangement help to grow revenues, free up resources to work on future
business enhancements, increase customer satisfaction and retention and
improve ROI. Choosing a services partner that can add value and align with
these goals is just as strategic as the choice of a critical technology
Performance: Defining performance metrics and expectations is
another key aspect in entering an outsourcing arrangement. Service
agreements should be enforced by penalties, but should also offer incentives
for overachievements. Metrics should be clearly linked to service quality,
network accessibility, and ultimately tangible benefits to the business.
Your expectations for each of these areas should be clearly set and managed
by your vendor partner.
Today service providers are under pressure to find winning business models,
and that requires being willing to adopt new approaches to running telecom
networks. Carriers need to execute business strategy flawlessly to thrive.
By outsourcing aspects of the network and service operation, overall
business costs can be reduced while the organization gains a sharper focus
on the business strategy.
Outsourcing services help service providers by extending their resources and
offer sound expertise that can be leveraged to increase competitive edge in
the new telecom environment.
Joseph P. Bova is vice president, Managed Services at
Lucent Worldwide Services.
With more than 14,000 technicians, network designers, consultants and
program managers, LWS serves the worldï¿½s largest service providers in more
than 50 countries on five continents. In fact, the majority of Lucentï¿½s top
50 customers call on LWS to help keep their networks running.
To The November 2003 Table Of Contents ]