The making of 'Leaner and Meaner' telecommunications operations

The following article is written by Oracle Communications Asia Pacific and Japan, Business and Technology Transformation, Senior Director, Raghu Prasad.

Change is the only constant in the telecommunications operator business. Some of the reasons fuelling an increased velocity of change include: next-generation networks, consolidation in the marketplace, accelerated deregulation, maturing markets, increasing correlation between the IT and network worlds, rising customer expectations, evolution of newer business models and influx of new market entrants.

For the players, different transformation strategies are being assessed such as customer centricity (as opposed to product centricity), multimedia centricity (as opposed to voice centricity), business agility, becoming a fully-fledged ICT service provider, bundling applications and content rather than playing only in pure transport/network ownership layers, developing tailored solutions for the enterprise segment, and other cost and operational efficiencies.

Transformation is meant to create or anticipate a future, place a few big bets, create new competencies and competitive areas, harness new sources of power, understand the importance and impact of evolving technologies, processes and organizational structures, with a vision to sustain competitive advantage.

Evolutionary transformation

The approach towards transformation is evolutionary in nature and comprises both continued support and focus for current business operations and traditional services, as well as delivering a series of new initiatives to the business incrementally over time. This is usually accompanied with changes in organizational culture and processes, deployment of next-generation solutions, acquisition of new skill sets and capabilities through training and new hiring coupled with phased retirement of traditional infrastructures and old ways of doing things.

Being progressive and less disruptive to existing operations and infrastructures appeal to most businesses as they can manage and control the deliveries better, keep risks and complexities low, learn along the way, re-calibrate strategies and make changes as required.

They can also manage financial realities associated with deliveries and be able to realize value early, allowing them to stay competitive at all times, thereby encouraging the business to stay on track with the transformation process.

From an operational perspective, some of the considerations that are usually assessed include: leveraging best practices and usage of new solutions as much as possible from the outset, use of traditional infrastructure for maintaining status quo customers, reduction and scrutiny around any further investments in traditional infrastructure, pragmatic simplification of product offerings, revenue assurance measures are put in place when there is co-existence of both traditional and next-generation solutions, as well as innovative ways for data migration.

Financial perspective

From a financial perspective, it is quite likely that all new initiatives will go through careful financial scrutiny. Depending on operating and external environment, financial contribution from transformation-oriented initiatives may vary, and possibly be far lower than those of traditional services in the near term.

So, besides financial measurements, telecommunications service providers should also take note of the other aspects related to improved understanding of consumer behaviour, service maturity curve for adoption of next-generation services, bundled offers and their contribution to ARPU, possible reduction of churn and the long term advantages gained through the advancement of these initiatives. Business priorities coupled with traditional infrastructures and current modes of business operations go a long way to define roadmaps, phases and milestones.

To ensure success, it is imperative that this roadmap is planned carefully, with top-level management commitment. Also crucial is forging strategic partnerships and engagements with global network and enterprise software solution suppliers who are able to deliver value in a cost effective manner across the entire enterprise value chain through horizontal next-generation solutions suite.

Pitfalls

A cautionary note however, transformational approach does have its pitfalls and it may not be suited when changes in external environment are disruptive in nature.

Such as an accelerated or frequent regulatory changes that may result in emergence of newer competition or quick erosion of competitive advantage, or if the main sources of revenue and bottom lines actually start declining, and so on.

In summary, change is inevitable for telecommunications service providers to combat the external environment, boost revenues and deliver increased value to the customer.

The transformational approach of affecting change may be the preferred option to drive continual innovation for competing effectively in the future, rather than doing nothing and risk becoming irrelevant; or taking too high a risk and adopt completely new ways that come with a high risk factor.