Presentation at Light Reading's Software Driven Operations event, 2019

1. © 2019 Heavy Reading
Software-Driven Operations
Introduction & Heavy Reading Presentation
James Crawshaw
5 November 2019

2. © 2019 Heavy Reading
Telephone (Industry) Between (Two) Worlds
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• The global telecom industry generated $1.9
trillion of revenue last year, down 1.3% YoY
• Telecom capex fell 2% to $339 bn (17% of
revenue)
• In contrast the Internet Content Providers
(GAMAFAT) grew revenue 19% to $113bn
and increased capex by 39% (8% of
revenue)
• CSPs are the bridge that connects
consumers and enterprises to the cloud
• But competition/regulation keep return on
investment close to (historically low) cost of
capital

3. © 2019 Heavy Reading
▪ Like most mature industries, telecoms is paralyzed by loss aversion
▪ Commonly known as “Move Slowly and Don’t Break Anything!”
▪ Why is this difficult to change?
▪ Problem: A new OSS will cost $10m up front.
▪ There is a 50% chance that the new OSS will lead to an annual cost saving of
$2m. Discounting this over expected life of 15 years gives a present value of
$20m. After deducting the upfront investment the net present value is $10m.
▪ But there is a 50% chance that it will only save $0.5m per year i.e. a present
value of $5m or -$5m net of investment cost.
▪ Do you support the investment?
▪ Probability weighted outcome is +$2.5m but humans tend to weight negative
outcomes more heavily than positive ones
The Communications Industry Needs a Culture Change
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4. © 2019 Heavy Reading
Q1. You are hired to run a small unit of a large telecom operator. Do you:
▪ A: Continue running things as before and generate a guaranteed annual profit
of $1m
▪ B: Change systems and processes such that there is a 60% chance of a $2m
annual profit but a 40% chance the unit generates a $0.5m loss
Q2. You are transferred to run a struggling unit of a large telecom
operator. Do you:
▪ A: Continue running things as before and generate a guaranteed annual loss of
$1m
▪ B: Change systems and processes such that there is a 60% chance the unit
loses $2m p.a. but a 40% chance it makes a profit of $0.5m p.a.
Move Slowly and Avoid Breaking Things
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5. © 2019 Heavy Reading
▪ “Each manager is loss averse regarding any outcomes that will be
attributed to him. In an organizational setting, the natural feeling of
loss aversion can be exacerbated by the system of rewards and
punishment. In many companies, creating a large gain will lead to
modest rewards, while creating an equal-sized loss will get you
fired.” Richard Thaler, Misbehaving.
Loss Aversion
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0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
1 2 3 4 5 6 7 8 9 10
Standarddeviation(variability)ofreturns
Number of projects in the portfolio
Market risk
Portfolio risk
Portfolio Effect
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PANEL: BUILDING THE TELCO CLOUD

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Building the Telco Cloud - Blockbusters
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Introduction - When public cloud migrations go wrong
Cloud adoption projects
Source: Survey by iLand of 400 IT professionals
• Some say they have less control
over their application estate when
it moves to public cloud
• Some say the complexities of
migration were more trouble than
they are worth
• Many admit to lack of planning
• Failed to understand application
dependencies
• Failed to test before deploying
• Security issues
• Virtualization issues

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Introduction – When public cloud migrations go well
• Verizon Visible: “Scaling with our customers makes much more
sense than just rolling in millions and millions of dollars spent on
hardware.“ - Adil Belihomji, Head of Technology.
• 3 UK: IT costs drop 30% by moving OSS/BSS to public cloud

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Audience Poll Question 1
What proportion of your (or your main customer’s) BSS estate is in
public cloud today?
• 0-5%
• 6-10%
• 11-15%
• Over 15%

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Audience Poll Question 2
What is the main obstacle to public cloud adoption for BSS?
• Security issues
• Cost issues
• Skills issues
• Risk issues
• Other

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Audience Poll Question 3
Which BSS application is the top priority for cloud migration?
• Customer management (CRM)
• Revenue management (billing)
• Order management
• Product management (catalog)
• Other