Managed services the road to operational efficiency
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MANAGEMENT MANAGEM
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MAY 23-26, 2011 | THE CONVENTION CENTER DUBLIN, IRELAND
MANAGEM
MANAGEMENT
WORL
Industry heavy-hitters to speak at Management World 2011
WORLD
Join them and other key players as they unwrap the who, what and how of communications
enabling digital life. Speakers include:
Olivier Baujard, CTO, Steffen Roehn, CIO, Ben Verwaayen,
Deutsche Telekom Deutsche Telekom CEO, Alcatel-Lucent
David Gurle, GM & VP Kevin Peters, CMO, Stephen Shurrock,
Skype Enterprise, Skype AT&T CEO, O2 Ireland
Erik Hoving, CEO, NetCo Rajeev Suri, CEO,
Member of the Board, NSN
KPN International
To register, visit www.tmforum.org/mw2011
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4. MANAGED
SERVICES
Executive summary
It’s disconcerting and unrealistic that so many industry. It is clear that managed services, and
people in the communications industry are still how you use and/or provide them, need to
viewing managed services as primarily being be a fundamental part of strategy, rather than
a way of saving money. It is understandable, deployed in the tactical way they are today.
though, given that Gartner expects average Section 1 looks at the inhibitors to embedding
revenue per user (ARPU) to decline by up to managed services into a CSP’s strategy, which
25 percent by 2014, as the likes of Google vary from organizational structure to perhaps out
and Skype continue to prosper and disrupt the of date ideas about what could and should be
network operators’ established business models. outsourced.
Google is already the fastest growing telco Section 2 suggests lots of new ways of
and world’s third largest (in terms of cable, thinking about managed services and some
fiber infrastructure, WiMAX and global cache sensible steps to take toward their successful
centers) while Skype became the biggest adoption as part of the company’s strategy. It
carrier of international minutes back in 2008 demands a great deal of both the service provider
and now carries 13 percent of international and the organization paying for the service – not
telephony traffic. least of which is giving up control of what have
As traffic volumes and revenue diverge, costs been seen as core activities and allowing a third
will overtake income unless radical action is party to run them in a different way.
taken, and soon. However, as shown in Figure Section 3 puts forward ideas about the role
1-1 on page 5, growth opportunities are limited. that TM Forum could play in moving managed
The central argument of this report is that in services forward, as suggested by some of its
the next few years we will see radical changes members, what it is doing in this area to help,
in the structure of the industry, with none and what it is planning to do.
of the larger operators continuing to offer all This Quick Insights report is based on the
the services they do now, end-to-end. Rather executive roundtable debate on managed
they will provide perhaps two of the following services that took place at Management World
functions: run the networks including broadband, in Orlando in November 2010. TM Forum
act as an aggregated services provider or would like to thank all the senior executives
become a digital life enabler, providing customers who attended for sharing their insights, and in
with services and applications. particular we are grateful to Mary Whatman,
In this scenario, the big question is how executive advisor to TM Forum and founding
managed services will evolve – both in terms of partner, Parhelion Global Communications
what communications service providers (CSPs) Advisors, for moderating the event, and to
choose to outsource and what managed services Alice Harris, director, Billing Services, Qwest
they offer others. Both will be deeply affected Communications, and Ralph Brown, CTO,
by the changing shape of the communications CableLabs, for acting as provocateurs.
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5. Without radical action,
costs will overtake income
Section 1
The need to move from tactics to strategy –
and the inhibitors
The coming scenario Figure 1-1: Strategic mapping of market opportunities, worldwide (millions of dollars)
Clearly the CSPs’ business model needs to
evolve. The average revenue per user (ARPU)
will be declining by 25 percent in 2014, according
to Gartner, as the likes of Google and Skype
continue to prosper and disrupt the network
operators’ established business models.
Google is already the fastest growing telco
and world’s third largest (in terms of cable,
fiber infrastructure, WiMAX, and global cache
centers) while Skype became the biggest
carrier of international minutes back in 2008,
growing by around 41 percent according to
TeleGeography, and now carries 13 percent of
international telephony.
As traffic volumes and revenue diverge,
costs will overtake income unless radical action
is taken, and soon. However, as shown in
Figure 1-1, opportunities for growth are limited.
Consequently, in the future, few organizations Source: Gartner, Inc., Management World Americas Executive Roundtable,
that are network operators now will be Managed Services & Operational Efficiency, Mary Whatman, October 2010
operating at all three levels, described in Figure
Figure 1-2: A CSP’s business model will need to evolve
1-2, according to Parhelion.
Parhelion’s Mary Whatman says, “The core Home community Business community
services operators provide now will change Healthcare Finance
Home
security
Mobile
commerce
Social
networking
Machine to
machine
quickly. They are not likely to be providing
things like IPTV and advertising themselves, Digital life Digital life enablement (customer/partner)
services
they’ll need partners. There are a lot of provider Lifestyle product provider Lifestyle management Personalization
small organizations emerging that provide
specialist services like advertising. They don’t Aggregated Service aggregation enablement
services
necessarily have networks, they sometimes provider Service enablement Content enablement
don’t have a direct relationship with the
customer, just the content.” Network Broadband access enablement
All of which will focus operators’ minds services
provider Fixed Utility Wireless CATV
on how and who they are going to partner
to do the parts they cannot do economically Source: Parhelion-GCA
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6. MANAGED
SERVICES
themselves, which will mean using managed responsibility as a strategic method for
services very differently. The trigger point improved, effective and efficient operations.
will be the changing business model, with a The person or organization who owns or has
country perhaps having only two networks direct oversight of the organization or system
that everyone else will run their businesses being managed is referred to as the offer-er,
over. Already it makes sense to see the client, or customer. The person or organization
network almost as a separate organization, that accepts and provides the managed service
with its own profit and loss. In future, network is regarded as the service provider.
operators won’t just be providing services for Typically, the offer-er remains accountable
themselves, but will be offering the networks for the functionality and performance of the
through a managed services arrangement too. managed service and does not relinquish
Telstra is already moving in this direction. the overall management responsibility of the
An emerging role for operators is as service organization or system.”
aggregators, whereby they expose network One of the big questions is how managed
elements and services to third parties so they services is going to evolve – both in terms
can be used by customers and aggregate of what CSPs choose to outsource and the
content from many different providers to managed services they offer others. Both will
make its carriage as economic and efficient as be deeply affected by the changing shape of
possible. the communications industry.
The digital life services providers will also
partner with others to deliver their services. To
succeed in this area will demand considerable
marketing skills and the ability to launch a lot of
new offers quickly.
Ralph Brown, CTO, CableLabs, comments,
“This implies transformation at a number of
different levels. Not just individual companies,
but regulatory issues around network neutrality,
the whole rights to content for example. What
we are seeing today is a lot of experimentation,
not only on the regulatory front. How you
navigate that is a big question.”
Definition of managed services
The immaturity of managed services within
the communications industry is reflected in the
fact that there is considerable confusion about
exactly what they are.
For the purposes of this report, we have “The immaturity of managed services within the
adopted the Wikipedia definition:
“Managed services is the practice of communications industry is reflected in the fact that there
transferring day-to-day related management is considerable confusion about exactly what they are.”
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7. Better communication structure
could eliminate duplication
Figure 1-3: What areas have you outsourced already? Strategy versus tactics
It is not clear how many operators are looking
80% at their sourcing strategy thinking about what
70%
they’re going to provide in-house, what they’re
going to own and what they’re going to provide
60%
through third parties. There is evidence to
50% suggest that few are looking at it holistically.
Before the roundtable discussion, TM Forum
40%
asked attendees to fill in a short survey, asking
30% what services they were outsourcing already
and what they planned to outsource. (See
20%
Figure 1-3). While the number of attendees
10% was not big enough to be a scientific sample,
0%
it did include network operators from around
the world, and their response to this question
Data center
management
Desktop
management
Network
management
Application
development
Application
maintenance
Contact
centers
Billing
operations
Project
management
Other
seems to bear out the general lack of a
strategic approach to managed services.
When asked what they were planning to
outsource in the next 24 months, the results were
Source: TM Forum roundtable survey Nov. 2010 similar, with only slightly different percentages.
Curiously billing didn’t feature at all in either,
although Whatman says that billing (beyond
simply printing bills) has been outsourced
to a greater or lesser extent by a number of
operators and that a large number of CSPs are
going through billing transformation now. This
is in part because as the value chain develops
and operators update their billing systems,
it involves new technology, structure, and
processes, so many are wondering whether to
hire and train people or determine that billing
really is not a core competency so why not
hand the whole thing over?
Organizational structure creates difficulties
Operators tend to have five or six teams that
look after different contracts, each has grown
its expertise and knowledge base separately
“Operators tend to have five or six teams that look after and they are often ignorant of each others’
role. There is a lot of duplication when they
different contracts, each has grown its expertise and knowledge could help each other greatly and save much
base separately.” time and energy.
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8. MANAGED
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Qwest Communications‘ Alice Harris Figure 1-4: What are the top three reasons for choosing to outsource them?
acknowledges, “I have always been
responsible for billing and my peer in the
payments area is responsible for her vendor Capital avoidance
relationships. Unless we decide to partner, and
we are both in the CFO organization, it might
not happen. At the moment, we make each Customer satisfaction
other aware of the deals that are happening
but aren’t required to partner on an overall
strategy.” Gain new skills
One delegate thinks this is not true in his
organization’s case, saying, “For our large
customers, we will start to put together those
Improve quality
advanced services so that we can provide the
cloud. We are starting to offer Software as a
Service and some managed services such as
Lower costs
security or hosted services.
“We are trying to understand how cloud
services will work and also how to provide 0 0.5 1.0 1.5 2.0 2.5 3.0
those services, especially to our governmental
and big corporate customers. We are looking Source: TM Forum roundtable survey Nov. 2010
at the interfaces and technology to enable the
cloud in around three years from now. That is
our vision. Some customers are demanding it,
so we have to move fast.”
This is an aggressive schedule by any
standard.
Qwest’s Harris says, “That’s a really good
point. We always partner for our external
customers. We’re part of the Networx contract;
that’s part of the U.S. Federal telecoms
fulfillment process. The contract is very
rigorous; you have to be able to supply many
services. Qwest is a big operator; and we
did have to build the digital life and service
aggregation layers for certain products using
supplier partnerships, so we had to build that
type of relationship.”
The group largely agreed that the big
question was why can’t service providers make
this a standard way of doing business with lots
of partners, rather than an exception?
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9. Beware biting off more
than you can chew
Cost is a barrier Scaling up stretches core infrastructure
Jim Matthews, VP enterprise architecture Yet another attendee adds, “When you’re
and strategy, Charter Communications, has deploying 1,000 computers, it’s a different
an answer to that. He says, “For us cost is ballgame and we’re deploying 100,000
a barrier. Setting up these kinds of services computers, so it’s a more complex ballgame.
to offer them properly, whether internally We’re rolling out Ethernet, and some of the
or externally, may require a certain level of network requests we’re getting have over
capital investment and to make the business 1,000 legs. Provisioning them, getting it
case you’ve got to be saving some money activated, doing it properly, getting the whole
or offer something cheaper or better. We’ve order right is a huge task.
done multiple layers of cutting costs through “To get to the level of being able to offer
rationalization over the last four years and these types of services, at this scale, requires
now we’re looking at what could be a capital an organizational will and restructuring as
intensive process to get to the necessary level well as the logistical capabilities. Telcos
of automation and optimization around this.” pride themselves on being very technical,
This is a most interesting comment, given but when it comes to their management
that capital avoidance was given by attendees systems and OSS/BSS, sometimes what they
as the most common reason for engaging in consider adequate is ridiculous. Doing this
managed services. If outsourcing contracts stuff requires a complete shift in how they’ve
are negotiated on a departmental level, then done business. The telcos aren’t in charge any
it can become an expense instead of capital more, it’s the IT people.”
investment. Naturally this depends on how a They conclude, “The case in point is when
company’s balance sheet works but another AT&T finally gave up and gave it all to IBM
delegate argues, “It’s an accounting trick. It’s and Accenture to do. How can you offer a
an artificial wall that makes your CFO happy. sophisticated service at a price that makes
Maybe they want to write off capital assets sense for you and others?”
every year rather than depreciate them over Or as another delegate put it, “If you get to
several years.” the point that you’re responsible for providing
Or maybe many of those who make the managed services across the network, if you’re
outsourcing decisions do so because they can struggling with IT, you’ll struggle more when
outsource a function because it is cheaper, you’re providing services to someone else.”
faster and easier to pay for it from the
departmental budget than have to stand in line
for capital. A powerful reason why outsourcing
decisions should be made at board level as part
of an orchestrated strategy.
“If you’re struggling with IT, you’ll struggle more when
you’re providing services to someone else.”
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10. MANAGED
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Section 2
Sensible steps towards successful
managed services
The definition of insanity manage change well and they control churn.
Operators need to make strategic decisions, In an internal economy, your business is to put
at board level, not departmental level. The a rush on IT – ‘ I need this tomorrow’. Then
dollar value of some of these deals is just so they go to an outsource provider and they say,
high and the impact on business is so real that ‘You’ll get it in three months’. If an outsourcer
they have to be prepared to change. Arguably is going to be effective, they cannot react with
operators need to make more changes than the same spontaneity that internal people do.
their managed service providers. For a start, The same politics cannot prevail, or they can’t
they need to accept them as a true partner, be any more successful than you can.”
rather than see them in a subservient role. Put another way, you cannot have a true
Also, operators will need more than one partnership and insist the partner does the
strategic partner. As Qwest’s Harris says, “If exact same thing the way that you did it. It’s a
I’m a service provider, I need more than one definition of insanity as inevitably the outcome
broadband access enabler. If you’re providing will be the same, and where is the advantage
it for me, I’m just one of many, but I need to in using the managed service?
be number one in your eyes so you look after Operators have always had control of their
me first. Otherwise how do I differentiate own networks, believing that networks are
myself?” their differentiators, and have been able to
Whatman replies, “We are asking those set their own priorities. Hence, handing these
who get into managed services to own it – decisions over to a third party is against their
move it into their big data centers, use cloud, deepest instincts. There is also a great deal of
virtualization or whatever else is needed to resistance to institutional knowledge no longer
make it the best it can be. If you do that, I being held inside the institution.
reap the reward. We, collectively, don’t do this Yet unless we allow our managed service
today. Instead the attitude is ‘You’re taking providers to operate in a different way to the
over my operations and you have to get my practices of operators, the whole thing won’t
agreement about every single change you work.
make. I might not be the expert in your way of Whatman asserts, “We will become
working, but I’m going to force you to do what dinosaurs and we’ll fade away, and the
“You cannot have a true I want to do even though I don’t understand Googles and Apples and companies we don’t
partnership and insist the the implications for the way you operate and even know about yet will be there instead
partner does the exact how that will affect me’.” because they don’t have the baggage we
As one delegate observes, “The only reason have. We need to get rid of it, but it will only
same thing the way that service bureaus can be more effective than work if we map this into our strategy. It’s an
you did it.” you is because they manage very tightly; they emotional issue.”
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11. Transparency is needed to
manage operators’ expectations
Think the unthinkable it over and run it. Both parties have to adapt to
At least part of the answer to this vexed question figure out what’s going on, find that common
is that as operators look at how to make the shift ground, and establish what the right mix of
to the three-tier model (see Figure 1-2, page 5), processes and activities are.”
they are going take a much more realistic look Jay Selva, chief consultant, managed services
at what their core competencies really are and department, GTS, Huawei, supports this saying,
be prepared to outsource functions that once “Using [TM Forum’s integrated businesses
would have been considered far too high risk. process architecture] Frameworx as a base
Anything that can be seen as a commodity has line helps us to understand what’s there and
potential, such as billing, which at the moment where the gaps are. Then we can say, sorry we
is often viewed as a core competency. can’t provide this service to meet this service
The question is, does it make more sense level agreement because you haven’t got these
for senior management to be concentrating processes, for instance. Then there’s also the
on something someone else can do, or to benchmarking piece of the TM Forum, you need
be concentrating on growing revenue by to standardize how you do your business and
developing skills and resources in the digital life use a common language.” (See Section 3.)
sector and raising ARPU? It will be a part of the
process of moving towards the three-tier model, Be realistic
and whichever parts a particular service provider One outsourced IT service provider says,
wants to operate in, they will have to give up “The operator should be willing to come to
some other aspects that they won’t want to. It’s the table, almost from the outset, and say
important that is understood from the start. candidly, ‘Here’s what we don’t do very well
or think we don’t do very well’, then we can
You can’t automate what you can’t repeat help them assess that and figure out what the
Operators need to have a better idea of transformation is going to look like. A lot of
what they want to get out of an outsourcing assumptions get made early on, maybe that
deal. Richard McDonald, technical executive we change everything and fix it for them, and
and distinguished IT architect, IBM Canada, it can lead to a mismatch of expectations. That
comments, “Service provider customers often needs to get sorted out early. It will come, I’ve
have no idea what they want when they start seen it happen every single time, but it usually
out. An old adage from service management is takes too long, probably two to three years into
that you can’t automate what you can’t repeat. the contract, and my experience of IT probably
So, if you haven’t got repeatable processes, if applies in other areas of managed services.”
you haven’t got a repeatable documented way On the other hand, it is a common occurrence
of doing things, it’s difficult for someone to take that the buyer decides on which partner to
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12. MANAGED
SERVICES
choose too soon, and so ends up defining the If price dominates the selection of partner,
solution in terms of what the partner is able to disappointment is inevitable. Yet procurement
provide, rather than what it needs. and supply chain people in organizations are often
mandated to go for the lowest price deal and
You can’t manage partners in isolation while they aren’t the decision makers, it can be
If a strategic approach is not taken, a company very difficult to push a higher cost one through
ends up with different length contracts running because they run the purchasing processes.
concurrently that it can’t get out of. Yet, Interestingly, when we surveyed attendees
according to Whatman, only about 10 percent of again, with the same questions after the
CSPs have an operational agreement in place; roundtable, customer satisfaction had moved
that is an agreement between the partners that into first place, above capital avoidance, as
are running different functions about how they the primary reason for outsourcing, although
work together and who is responsible for what. capital avoidance and lower costs were a close
Without it, how can an operator function as a second and third.
single, integrated organization?
A service provider does not want to spend Penalties and incentives
a lot of time acting as an arbitrator between The operators need to understand the
warring outsource suppliers. An operational outsourcers’ business almost as well as the
agreement ensures consistency across all the partner does because if they fail, the operator
partners, and how the consumer of managed fails too. It also means they can negotiate on a
services deals with changes, disputes and other level playing field. If the partner’s lever is using
events. If agreements are in silos, something is cheaper labor in another country, the operator
bound to be missed. has to understand that’s a big transition and
transformation that will have a huge impact
Buy in talent on its business. Perhaps it will mean that the
Often the people making decisions about helpdesk won’t work well for a little while. How
managed services don’t have the knowledge important is that? Will it damage the business
they need to make them. Operators need to buy and reputation?
in the talent to move to managed services from How do you manage that risk? How do you
people who understand it well. A very small monetize it? How does the customer build a
team can be highly effective. The team should mechanism so that it feels it is sharing that risk?
comprise old hands from within the company The usual way is through a complicated set of
who understand how it functions and new blood penalties and incentives.
that understands how outsourcing works. The The group agreed that it is naïve to think that
combination of the two is the key. all providers can deliver what they claim they
can: often suppliers come in with one or two
Cost is a complicated issue seed people and the rest of the organization
The perception often is that outsourcing a service doesn’t know anything about it. As Whatman
will reap savings of 25 to 30 percent. More says, “One supplier’s first contract cost it $1.2
typically, it works out at 5 to 10 percent cheaper, million in penalty fees. Clearly it hadn’t been
but the buyer should have a lot of additional ready, but such a heavy penalty encourages
reasons for outsourcing, such as greater flexibility. fast learning. We need to figure out what the
12 QUICK INSIGHTS www.tmforum.org
13. Paying heavy penalties
speeds up learning
operators are going to look like going forward. Value added services
How do we get them to learn as much as they A new use of the managed services construct
can as quickly as they can without spending is presenting itself in the aggregation layer of
$1.2 million?” We have to get this right as the new telecom business model, but rarely are
providers of managed services as well as the lessons learned from established managed
consumers, because if the provider fails, its services applied to these new opportunities.
customer(s) fail too. For example, healthcare is most often is most
One delegate says, “You put in incentives often cited as a managed service that could
and penalties, but few companies have much be enabled by operators, such as a service
appetite for the things that hurt. It’s hard to find whereby the patient sits and puts their arms
a partner who is willing to put some skin in the on the chair arms so that their diabetes, heart
game and has something substantial to lose.” and other vital signs information is sent to the
healthcare provider.
Acting on business outcomes There are lots of verticals, like healthcare,
Performance indicators related to business and lots of possibilities for operators to
outcomes are a more sensible base for enable specialized apps that cut across a lot
evaluating contracts drawn up that today of subscribers and sectors. Applying what is
rely on often arbitrary metrics and unrealistic learned from managed services, particularly
penalties. Whatman says, “Operators’ attitude regarding risk management and mitigation, and
is, ‘I want, I want, I want,’ but they don’t penalties based on business outcomes will be
understand the cost and typically they are critical in meeting the expectations of all parties.
poor at knowing what is critically important – a
server for an application that is not customer Allowing for unforeseen events
or business impacting being out of service In the last 10 years, we have experienced two
might not matter, but the accuracy of the bill is major crises, the dot-com bubble bursting in
essential.” 2001 and the global financial crisis in 2008. At
An attendee observes, “If I have to pay a lot the time of negotiating its human resources
of money to get the sort of backup I have, why contract with PwC and engaging CSC to look
am I going to outsource?” Very simply, if the after its other applications, Nortel employed
buyer insists on big penalties, the contract will over 100,000 people and the contracts were
be expensive, and lots of those penalties might based on continuing growth. Instead the
not accurately reflect the potential damage company hit hard times and never recovered. It
a particular failing would do to the business was forced to renegotiate and pull the contracts
anyway. back in-house.
If it costs half as much to have a service The last 10 years has taught us we need to
guaranteed to be up again within eight hours, build flexibility and adaptability into managed
“The last 10 years has rather than four hours after failure, is it a service contracts to take account of unforeseen
taught us we need to good decision to go for the cheaper option? events, but this is very difficult. From the
build flexibility and Of course it depends on what the delay beginning, we need to think about how to
would cost the business in terms of revenue, introduce additional resource or reduced resource
adaptability into managed reputation and customer satisfaction, and credits, and consider at what point we agree to
service contracts” striking a balance between them and cost. renegotiate – five years into the contract or 10?
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14. MANAGED
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Section 3
What can TM Forum do to help?
The message is loud and clear. Managed locations using business metrics to develop
services have to be part of an overall, coherent more understanding of what’s important.”
strategy, rather than deployed tactically. They While the Forum has already undertaken a
have an important role to play in reshaping good deal of work on guidelines for service
the communications industry into one that is level agreements, all the participants agreed
economically sustainable and more fitted to the that they would like more help with how
radically changing marketplace discussed in to address the issues they’ve talked about.
Section 1. For example, to explore to what extent the
Parhelion’s Whatman states, “A sourcing Business Process Framework (eTOM) deals
strategy as part of an overall business strategy with with business-to-business processes that
is the foundation of where you want to go and need to be included in a managed services
it will transform your business and who you contract.
are. It is out of necessity we as an industry Another suggestion was that the Forum
have got to get together and sort this out. should look at areas of most interest
Patience is required by all parties.” concerning outsourcing and help define a
Her suggestion is that the Forum is well request for proposal. While this wouldn’t have
placed to look at both the vendor and operator to cover every point, many felt that it could
side, to foster understanding of what both sides provide a very helpful starting point.
need and want, and try to bring them together. Most of all though, the delegates thought that
At the moment, neither side is getting to the biggest thing the Forum could offer would
common ground and there’s a lot of frustration. be a place for people to share their experiences
Charter’s Matthews says,” TM Forum can and best practices. One attendee from a
expose this for what it is – no free lunch. service provider in Latin America explains, “It
When you get into agreements, if we had is important for us to have more trained people
a really good template that means you can in terms of the concept itself, not just IT or
come up with a service level agreement that network guys, but the business guys and top
makes sense, that measures it from a service management to be able to see exactly what is
perspective, not a component perspective, happening in the U.S. and Europe where is has
then you could reach a workable agreement. happened first. It’s understanding and training
And if you can’t, at least you know what you’re we’d like from other countries.”
getting into. If you sign up for it with your eyes Their view was echoed by many of the
wide open you understand the risk.” delegates who would like to keep up to date
Jay Selva of Huawei, says, “Vendors and with what is going on in other countries, to
service providers speak a different language – see how the roadmap to the three-tier model
we need commonality. Huawei is also heavily is unfolding. In particular, the delegates would
involved in the Forum’s benchmarking program, like to be able to share stories of success
and we need input from operators at different and failure, and from this to devise ways
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15. In language, standards, and
best practice, commonality is key
of supporting the decision-making process, class. Operators are then in a position to tie
how to measure offers from vendors, how to performance metrics to operational costs and
assess risk and establish what processes are make a well-informed decision about whether
required. In short, to help people get through a particular function or service should be
the initial process so it’s as good as it can be. outsourced.
There is also the question of applying Once that decision has been taken, based on
standards to infrastructure you don’t own, empirical evidence rather than assumptions, the
or as one attendee put it, “If I deploy the benchmarking information can be used to draw
Business Process Framework, how does it up effective service level agreements (SLAs) for
apply differently when I own the interface the managed service or services in question.
compared with when someone else owns it?” TM Forum’s Business Metrics Program
An executive from a service provider offers around 100 standardized key
acknowledges, “At the moment we tend to performance indicators and key quality
deal with vendors with a strong arm but we indicators that can be used to monitor and
have to involve them more to take them to my measure business performance on which to
customer with me.” build SLAs. Others will be developed over
Commonality of language, standards, best time because it is essential that all parties use
practice and understanding of each parties’ a common language about what needs to be
needs and abilities is something the Forum will measured between customers and suppliers.
be working on in 2011. Once TM Forum’s Benchmarking and
Already TM Forum’s Benchmarking Program Business Metrics Programs are more highly
enables its service provider members developed to support managed services, the
to measure their business performance, Forum intends to produce a best practice
completely confidentially, against the best-in- guidebook.
“If I deploy the Business Process Framework, how does it apply differently when
I own the interface compared with when someone else owns it?”
www.tmforum.org QUICK INSIGHTS 15
16. SPONSORED FEATURE
Stop going it alone:
Use managed services to enhance the customer experience
Service providers today have little choice and costly workarounds. In this context, transformation projects, as well as cost
but to invest in the customer experience. customers suffer from too many service savings and efficiencies. With managed
Rising customer expectations and interruptions, overly long billing cycles, services, service providers can take
convergent competition put a premium slow resolution for service queries, a lack advantage of four critical enablers of
on a positive customer experience of customer-friendly tools, and too many customer experience that are so often
across all channels at every stage of the problems with ordering and activating hard to develop and optimize internally:
relationship. new products and services.
Driving an exceptional customer The end results include reduced • Global best practices and methodologies
experience is no simple task. Success consumption of existing services, missed • Customer experience-focused tools
rests heavily on the right systems, opportunities for growth, reduced ARPU, • Business process automation and
processes, governance, and continuous declining margins, and customers more optimization
improvement. prone to complain and churn. • Systems innovation.
Typically, service providers attempt to Many service providers try to improve,
meet the challenge with a combination or at least maintain, the customer Enhancing the customer experience
of in-house resources and point solutions experience with a combination of in- through service level improvement
from different vendors. However, the house resources and vendors of point and optimization
results often fall short. solutions. It’s understandable – they Improving customer experience through
Working with a managed services know their own systems and processes managed services is based on a process
partner provides a compelling alternative. best and they try to fill in with different which starts with mapping the customer-
Although cost control has dominated the hardware, software, and service vendors experience-related processes, the
managed services discussion, a growing as the need arises. They want to serve as underlying systems, integration touch
number of service providers have begun their own general contractor. points, and the measurable impact
to view managed services partnerships Unfortunately, this go-it-alone on the end customer. Then, these
as opportunities to enhance the approach too often falls short of what factors are translated into performance
customer experience as well. is needed to succeed. measurements (KPIs) and service level
targets that the managed services
Customer experience challenges in the The managed services alternative provider can be held accountable for as a
connected world Managed services provide a compelling single point of accountability.
The new competitive landscape for alternative to traditional in-house
service providers puts a tremendous approaches to improving the customer Customer benefits
premium on customer experience as experience. Done right, managed services can deliver
a key driver of customer loyalty and Over the past decade, service providers substantial benefits around the customer
competitive advantage. With so many (and others) considered managed experience:
choices available, customers are one services primarily as a way to control and
bad experience away from dropping their reduce costs. • Increased reliability
subscriptions or pre-paid programs and More recently, a growing number • Improved quality
jumping to a better offer. of service providers have begun to • Enhanced choice
All too often, inadequate systems and view managed services partnerships • Accelerated innovation and time to
inefficient processes for marketing, sales, as opportunities for dramatic market.
service, and support lead to uneven improvements in service quality and
service operations, inconsistent customer consistency, launching new operations, To learn more, please visit
experience across different channels, and executing modernization and http://gss.amdocs.com/customerexperience
16 QUICK INSIGHTS www.tmforum.org
17. Customer case study:
Surge protection: Amdocs managed services
ensures smooth handling of top priority product launch
The challenge • First day sales break all records for the About our sponsor:
company, matching the total sold by For nearly 30 years Amdocs Global
• Tier 1 service provider in North America two previous bestsellers combined Strategic Sourcing has been a strategic
counts down the days to a highly over their first three days. partner for leading service providers
anticipated launch of a new • As traffic eases in the following days, worldwide, helping them to accelerate
smartphone. Amdocs initiates a rapid design business growth, enhance their
• Provider conducts extensive tests to review with the service provider to customers’ experience and reduce costs.
ensure its network and sales explore potential upgrades that would We deliver cost-efficient business and
application can handle double their ensure future success at even higher operational management services by
normal volumes. levels of demand. combining flexible financial and delivery
• On launch day, however, customer models with industry-specific expertise
demand surges to four times the Takeaways and an unmatched delivery record.
normal volume, overloading a channel Amdocs Global Strategic Sourcing
partner system and diverting even • Handling the surge in sales and offerings provide a wide range of
more traffic to the service provider’s activation traffic for major product managed services to support business
main sales application. launches is a big test for customer and operational support systems (B/
experience management. Minimizing OSS), service delivery platforms (SDP)
The solution any problems means you’re off and and directory publishing for the media
running with happy customers, a and communications industry. Our flexible
• Amdocs real-time, proactive positive buzz in the market, and an and tailored outsourcing solutions include
monitoring tools and communication important new revenue stream. Let support for IT infrastructure management
processes flag the problem those problems take center stage, and hosting, application management and
immediately and provide constant however, and the hoped-for big day business process operations (operational
transparency and control to the service can easily become a long-term drag on and IT oriented).
provider; responding to immediate revenue, reputation, and renewals. In addition, Amdocs provides managed
need, Amdocs adds capacity to • Maintaining surge capacity, transformation services, enabling service
minimize delays with the overloaded responsiveness, and follow-on planning providers to modernize or consolidate
sales application. capabilities with in-house resources for their systems while saving on operational
the biggest hits is extremely difficult and capital costs.
The result for most service providers. With an Our services are designed to provide
effective managed services partner, value across all environments, based on
• Monitoring and standby capacity however, the challenge can be met Amdocs or legacy in-house or third party
from Amdocs managed services confidently, affordably, and with clear systems.
enables a smooth and successful accountability.
launch experience amid the risk of For more information, please visit
substantial failure. http://gss.amdocs.com
www.tmforum.org QUICK INSIGHTS 17
