Digital Transformation & Maturity

Cost center legacy stalling CSPs’ IT transformation and future growth

I arrived at TM Forum a little over a month ago and have been hugely impressed by the amount of work underway to develop telco IT systems that can support the visions many CSPs have for their futures. Having been in the telecoms industry for 20 years, I was of course aware of the importance of operational and business support systems (OSS/BSS) in running a telco effectively. Indeed, one of the reasons I joined the TM Forum staff was because I understood that IT would become ever-more important as CSPs address new markets with the internet of everything (IoE) and deploy new technologies from 5G to artificial intelligence (AI). However, I was unprepared to discover just how fundamental IT transformation is to success.

A flexible, real-time, integrated and ‘integratable’ IT system is not just nice to have, or a necessary evil; it is an essential part of building new value propositions. In a recent white paper Revenue management: Essential for monetizing current and future services, we identified how core BSS functions and their evolution are integral to the development of future services. The critical point is this:

IT cannot just be viewed as an inevitable cost. It is an essential enabler and most importantly, it is a revenue driver. However, few CSPs see it that way.

 

Cost center thinking leaves IT playing catch up

IT or operations more generally are viewed as a cost center and therefore success is measured in terms of cost efficiency, or to put it another way, how much cost can be taken out of the process. Compare that to marketing teams whose success will be judged by key performance indicators such as net subscriber additions, upsell, average revenue per subscriber, uplift, etc., or simply how much revenue they add. The result of this is that strategy, marketing and product teams can push developments and innovation, and IT is expected to react to and support these developments at the lowest possible cost. Such a reactive IT policy constantly leaves OSS/BSS professionals running just to catch up.

IT vendors large and small push the relevance of their products for digital transformation, customer centricity, real-time operation, and any other buzzword or hot topic of the day. However, the buyers of IT products generally have little influence over the development of the high-level strategies these ideas relate to. The person responsible for upgrading a rating engine or billing system can only be reactive. They must meet create a system that meets new demands, usually in an incredibly tight time-frame and under major budget constraints.

The most common refrain heard about all IT systems is how slow and expensive they are to change and they are one of, if not the greatest barrier to realizing the greater visions of the organization. This thinking needs to be turned on its head.

Imagine instead if an overhaul of IT systems was viewed in the same way as the next generation of an access network. In this light, IT becomes an enabler, not simply a cost. And the kind of functionality gains that can be enabled from an IT transformation trump those provided in the access network every time.

5G needs IT transformation but IT transformation offers more than 5G

Take 5G as an example. 5G offers improved throughput, greater capacity, ultra-high reliability and availability, improved efficiency, and lower latency. All are excellent improvements that promise to create valuable services for consumers and unlock new revenue streams for CSPs.

However, 5G’s attributes mean little to consumers without IT systems to bring them to life. If the correct management and policy control for quality of service isn’t in place, how will a CSP be able to ensure a driverless car or medical app benefits from the 1 millisecond latency and seven nines reliability and availability 5G promises? Moreover, how does the operator ensure customers are charged and billed accordingly?

Now, think about this the other way around. If IT systems are transformed so they integrate and operate in real time, then different service options could be available to the connected car depending on location, time of day, rate of traffic flow, driving mode, and so on. Furthermore, the kind of service flexibility, targeting and management that can be created from IT transformation, doesn’t require an access network upgrade; revenue growth can be made without it. Or to put it another way, 5G needs IT transformation to drive growth, but IT transformation doesn’t necessarily need 5G to achieve growth – although it would undoubtedly benefit from 5G enhancements.

And before someone screams net neutrality, there are reasons this is largely irrelevant. Firstly, and most importantly, a service needs to run over the internet for net neutrality regulation to apply, but the vast majority of mission-critical services won’t because the internet doesn’t have the guarantees necessary to make services reliable. Secondly, the requirement for network performance to match the needs of a specific service is exactly why net neutrality legislation in many of its current forms doesn’t make sense – but that’s a discussion for another time.

This discussion is all about the need to see IT transformation as a central enabler of revenue growth, and for that to happen it is essential that IT expert voices are heard at every level and in every stage of strategy development.

IT lacks enough high-level representation

For the last five years, I have been focusing predominantly on the wholesale and indirect lines of telco business, which like IT, is often overlooked and always undervalued. From this experience I have taken one major lesson: Only when a business unit is adequately represented on the board do ideas become reality. However good the case may be, no representation means little investment or support. And IT units are significantly under-represented on the boards of most telcos. That must change, as should the make-up of transformation teams.

IT needs to be included at the beginning to drive thinking about what is possible, and here I must be critical of IT professionals:

For too long when called upon to be part of telco strategy and development projects, IT professionals often act as contrarians. Perhaps this is understandable given their general experiences, but they must lead the change of mindset towards their business and show what can be done, rather than list what can’t.

CIOs and their teams need to lead not follow business transformation. This is what we see happening in other industries and what we as CSPs support, but within the CSP business the same is often not the case.

TM Forum works tirelessly to provide IT professionals with the tools they need to transform their businesses. Catalyst proof-of-concept projects demonstrate what the future might look like; standards define how to work effectively; toolkits provide examples of best practice, guides and measurement; models define where you are and where you need to be in development of new functionality, and so on. In joining TM Forum’s Research & Media team, I have committed to adding another string to that bow. My colleagues and I are here to help the IT community find its voice, build a clear and compelling narrative for IT transformation first not last, underpinned by solid and insightful analytical building blocks CSPs can use to create an effective business case.



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    About The Author

    Senior Analyst

    Catherine Haslam is an analyst with 20 years’ experience in providing insight, analysis, and consulting services to decision-makers within CSPs. Haslam joined TM Forum in October 2016 from Ovum where she specialized in third party enablement, international service evolution and wholesale strategy, and led successful strategy consulting projects on the impact of OTT on CSP revenues. As a freelance analyst and journalist, Haslam helped develop an entertainment-focused practice at analyst firm STL Partners and set up the Asia arm of the Light Reading news service. Prior to this she worked for the GSMA where she was responsible for setting the agenda for the Mobile World Congress, speech writing for and providing background research to the management team, and advising on technical initiatives. She also held senior editorial roles including Group Editor for Mobile Europe.

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