Achieving Operational Excellence in Mobile Telecom

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1 A P P L I C A T I O N S A WHITE PAPER SERIES INFORMATION TECHNOLOGY IS AT THE HUB OF THE MOBILE PRODUCT AND IS CENTRAL TO DELIVERING WORLD-CLASS CUSTOMER SERVICE. IT-ENABLED SOLUTIONS PLAY A KEY ROLE IN ALLEVIATING PRESSURE POINTS FACED BY MOBILE TELCOS TODAY. Achieving Operational Excellence in Mobile Telecom

2 MOBILE TELECOM AT RISK WHY INFORMATION TECHNOLOGY IS RELEVANT HOW IT CAN HELP REDUCE RISK AND IMPROVE OPERATIONS: THREE STEPS TO LEVERAGE IT EFFECTIVELY OFFSHORING INCREASE IT ARCHITECTURE FLEXIBILITY RE-VAMP CRM AND BILLING CAPABILITIES CONCLUSION PARTNERING WITH SYNTEL Achieving Operational Excellence in Mobile Telecom Mobile operators in mature western markets are facing operational challenges. Flexibility, speed-tomarket and cost containment are more important than ever before. Information Technology is at the hub of the mobile product and is also central to providing world-class customer service. As such, the underlying IT systems, capabilities and architecture play a central role in enabling mobile telcos to achieve their operational aspirations.

3 IT is at the heart of the mobile solution, particularly in terms of the IT-enabled functionality provided for customer care and billing 1. MOBILE TELECOM AT RISK Mobile operators in mature western markets are facing operational challenges flexibility, speed-tomarket, and cost containment are more important than ever before. Information technology is at the hub of the mobile product and is also central to providing world-class customer service, and as such the underlying IT systems, capabilities and architecture play a central role in enabling mobile telcos to achieve their operational aspirations. RISK FACTORS There are several factors of the mobile telecom industry that put operators ability to succeed at risk. The focus is shifting from customer acquisition to retention in mature western markets (e.g., Germany, UK, US). As mobile telecom penetration approaches saturation in some markets, the game changes to retaining customers and churning other telcos customers, as opposed to acquiring new customers. To succeed in this environment, mobile operators have segmented their customer base and are offering segmented offerings for each (e.g., no-frills vs. global roaming+value-added services such as MMS, internet, etc.) This shift in focus puts tremendous pressure on the underlying IT systems, particularly customer care, billing and provisioning. For mobile operators to succeed in their retention strategies the underlying IT systems must be flexible and the IT architecture must be conducive to rapid product introductions (and changes) with minimal costs. Cost consciousness precedes turnover and market share objectives as many western mobile operators strive to remain viable in an increasingly competitive environment. In this situation, telcos are increasingly focusing on their core competencies and are choosing to partner or outsource along several dimensions of their value chain. Some examples include: Customer acquisition via branded sales partners is common in Germany and other parts of Europe; Many telcos have outsourced customer care and bill generation functions; and Several global mobile operators have outsourced IT applications development and maintenance to low-cost, high quality vendors in India. The telecom technical landscape is undergoing rapid change as operators upgrade from 2/2.5G to 3G, and talk is already underway of an IP-based 4G environment. This evolution of the technical landscape of the core mobile network puts a lot of pressure on IT systems that have to integrate to these telecom technologies (e.g., provisioning systems, rating engines, etc.) The complexity of the problem increases because of the lack of standards and open architectures in the network landscape (most telecom network environments are built on vendor-specific, proprietary technologies). Evolution and commoditization of the basic voice product as customers mindsets shift from the mentality of buying a product to that of buying a solution (which has lots of valueadded services bundled into it). As a result, the post-sale customer service gains more importance, and the underlying CRM and billing systems become quite critical to the mobile operator s success in the marketplace. 2. WHY INFORMATION TECHNOLOGY IS RELEVANT IT is extremely relevant to this discussion because it is at the hub of the mobile product and is central

4 to delivering world-class customer service. Hence, IT-enabled solutions play a key role in alleviating pressure points faced by mobile telcos today. The mobile product can be segmented into three parts: Functional attributes that include the core features of the product, e.g., MMS, SMS, online services, games, ring-tones, etc. Non-functional attributes that are essential for delivering and maintaining the mobile service, e.g., tariff plans, customer care service packages, loyalty programs, etc. Communication attributes that are linked to the core mobile network and enable the voice/data to be transmitted, e.g., BSCs, MSCs, telecommunications switches, etc. As discussed earlier, the mobile telecom landscape is undergoing several changes, one of which is a shift from a product to a solution mindset. IT is at the heart of the mobile solution, particularly in terms of the IT-enabled functionality provided for customer care and billing (e.g., order management, trouble ticketing, cross-selling/up-selling, rating, bill calculation, bill settlement, etc.) Hence, the telco s ability to deploy high-quality, cost effective IT solutions becomes a core requirement for it to succeed in today s and tomorrow s marketplace. 3. HOW IT CAN HELP REDUCE RISK AND IMPROVE OPERATIONS: THREE STEPS TO LEVERAGE IT EFFECTIVELY Given the relevance of IT in reducing mobile telecom pressure points, operators can choose to embark in three areas: a) Outsource key IT applications (development and maintenance) as well as key IT-enabled functions such as billing, customer care, payroll, etc. b) Increase in the flexibility of the underlying IT architecture of core systems of the mobile operator. This is achieved by segmenting the architecture into logical domains, de-layering the architecture via selective encapsulation of legacy systems, and introducing re-usable services between key applications [via an integration backbone, enabled by leading middleware solutions]. c) Re-vamp core customer care and billing functionality by leveraging third-party packages and adopting a pragmatic and cost-effective data and integration architecture. Initiatives in these areas can be applied to varying degrees (and simultaneously if required), depending on the degree of urgency for the mobile operator. OFFSHORING Offshoring typically yields 65-70% cost and productivity gains. Factor cost savings arising from labor arbitrage alone contribute to about 45%-55% cost savings, and additional cost and productivity benefits are derived from better quality of service, wider and deeper talent pools, reengineering and scale advantages. Offshoring favorites along the value chain IT and IT-enabled components of the mobile operator value chain are among the offshoring favorites, and many mobile operators have already embarked on this journey. Specifically high on the list are: Applications development Applications maintenance Help desk Customer care Bill processing Payroll Other areas gaining importance include customer and market analysis, CDR consolidation and maintenance of customer records. Current practices and future projections for Offshoring Independent analysts predict that the offshoring wave has only just begun, and that offshoring volumes will continue to grow at a healthy pace for the foreseeable future. Gartner predicts offshoring (IT and BPO) to grow at 14% CAGR between 2001 and 2008 (see Figure 1). As a further indication to the future growth of offshoring, Forrester Research indicates that offshoring is still in an early innings, with only ~5% of Fortune 1000 having fully exploited IT offshoring as of 2004 (see Figure 2). Six value drivers in mobile telecom Offshoring Cost Savings. This is the first and most obvious value driver due to the labor cost arbitrage between the offshoring location and the host country. Vendors typically offer 40-60% cost savings off the onshore cost base.

5 Figure 1: Offshoring growth predictions Business Process Offshoring (BPO) Worldwide Offshoring Spending ($ Billions) CAGR Percent IT Offshoring (ITO) Source: Gartner Quality Improvement. Offshore vendors are typically masters of business processes and the quality of IT solutions is much higher due to their strict adherence to standards (e.g., ISO 9001) and their strive for continuous improvement demonstrated by Six Sigma and SEI CMMI Level 5 capabilities. Capital Cost Avoidance. The onshore company is able to leverage vendor infrastructure and thereby avoid capital cost expenditures. Pursuit of new IT-enabled products and services. Some of these are not viable at the onshore location, but because of the cheap labor costs, are possible on the offshore location. One example is dialing up individual customers who are delinquent in payments, as done by one of the leading global credit card companies, via their offshore center in India. Broader and Deeper Technical Skill Pool. This enables the mobile operator to deploy new products and services without any constraints due to technical talent shortages. Focus. As a result of the other value drivers, the mobile operator is able to concentrate on its core competencies vs. attempting to become a stellar systems integration company. Figure 2: IT Offshoring: The best is yet to come Percentage of full bystanders Percentage of experimenters Percentage of committed Percentage of full exploiters Percentage of Fortune 1,000 companies 80% 60% 40% 20% 0% Source: Forrester Research, Inc. Only 5% of Fortune 1,000 are fully exploiting offshore.

6 INCREASE IT ARCHITECTURE FLEXIBILITY The IT architecture of the mobile telco is central to its ability to introduce new products and services quickly and flexibly. Since most global operators have legacy IT architectures that cannot be scratched and burned, an innovative way of salvaging and building upon key parts of the architecture is needed. Mobile Telco IT architecture: Best Practice Overview Best practices indicate that the IT architecture of the mobile telco should be aligned with the intrinsic architecture of the telecom product and service. Just as the mobile product has three broad components, the IT architecture should have three broad components that align with this product, and align with the service delivery of this product. The first part of the IT architecture therefore contains all the applications, servers, interfaces and networks that handle functional or value-added services, such as MMS, SMS, games, ring tones, etc. The second part of the IT architecture contains all the applications, servers, interfaces and networks that handle the nonfunctional services such as CRM, billing, provisioning, back-office transactions, etc. The third part of the architecture contains the applications, servers, interfaces and networks that handle communications via the core telecommunications network such as the BSCs, MSCs, etc. By separating the architecture along these three natural domains, each of the three domains can evolve with a certain degree of independence, while remaining in synch with the other two domains, via a set of re-usable services as described below. De-layering The next step towards creating a flexible IT architecture for the mobile telco is to de-layer the architecture by selectively encapsulating select legacy systems. Encapsulation is achieved via XML-tagging and other methods to develop common application programmable interfaces for select legacy applications. Custom-developing a host of reusable services between applications and/or encapsulated interfaces and implementing these services via third-party middleware tools complete delayering. These services can be developed at multiple levels (e.g. at the lowest level, Create/Read/Update/Delete/ [Customer] can each be a service, and any combination of these can be bundled to create a composite service. RE-VAMP CRM AND BILLING CAPABILITIES For mobile operators that are under continuous pressure to respond to competitive moves, having a best-in-class and well-integrated CRM and Billing capability is a must. Strategic drivers and target end-state Typically, mobile operators that are feeling the heat from competition go in for re-vamping their CRM and Billing capabilities, with four main strategic objectives in mind: Provide higher flexibility for the introduction and configuration of new products and services. Enable higher customer-centricity by providing integrated customer care and billing functionality and one view of the customer, across all market and customer segments. Providing higher quality of deployed IT solutions, by leveraging robust capabilities of third party CRM and billing packages. Enabling pre-paid and post-paid convergence, via the integrated functionalities of third party packages. As a result of pursuing a re-vamp of CRM and billing capabilities, mobile operators aim to achieve an end-state where customer care and billing changes can be made very quickly, to respond to market pressures, and customer retention strategies can be pursued more flexibly and speedily. Some publicly known examples There are several global examples of mobile operators revamping their core CRM and Billing capabilities, to bolster their competitive position in the market, and strengthen their business viability. For instance, in 2003, Orange announced publicly that it was undergoing a massive systems rationalization effort (at the time Orange had more than 20 CRM, billing and data warehousing platforms in Europe alone) to streamline business processes, develop an integrated view of its European customer base, and reduce costs by increasing back-office efficiencies. The systems integration project cost Orange more than 150 Million Euros and was considered central to Orange s continued success in Europe. 4. CONCLUSION As mobile telecom operators battle operational challenges, they will benefit from the expertise and support of a skilled IT vendor. Operators can leverage Syntel s extensive industry experience and our unique perspective on the specific process

7 issues and technology implications affecting them, enabling it to successfully implement technologies that meet requirements and optimize operations. Syntel s Solutions for Mobile Telecomm Syntel has developed the IntelliSourcing TM approach where we work collaboratively with you to determine which components of your IT capabilities and business processes you can outsource to us, and which ones you should continue to keep in-house, to maximize your business capabilities, while minimizing your costs. We are so committed to your success and to our delivery of value to you, that we are often ready to structure our services as a fixed-price contract. In fact, more than 50 percent of our IntelliSourcing TM engagements are structured as fixed-price contracts, and are delivering high value to our customers year after year. For these customers, we are managing the full life cycle of their IT applications development and maintenance needs, on a fixed-price basis. In addition to our IntelliSourcing TM services, we also offer a full range of custom development and package implementation services. These services can be brought to bear to revamp your IT architecture and enable your company to introduce new products much faster and cheaper than ever before, so you can strengthen your competitive position in your respective market. You can also leverage these services to selectively replace and re-vamp your core CRM and Billing capabilities, if your challenges in these areas are more pressing. Like the IntelliSourcing TM approach, these services typically have a blended delivery model where part of the work is done onsite at our clients facilities and part of the work is done in one or more of our global development facilities. The combination of our IntelliSourcing TM, custom development and package implementation services enable us to fully address the IT-related pressure points for our clients in the Mobile Telecom vertical. 5. PARTNERING WITH SYNTEL Syntel has provided outsourced IT services for over 25 years. In fact, Syntel was the first US-based firm to launch a Global Service Delivery model in 1992 and leverages this model today to deliver increased time-tomarket, enhanced efficiencies, and quality improvements for a majority its Global 2000 customers. Syntel crafts each solution around its deep understanding of the issues facing mobile telecom firms. Our combined expertise in telecom and several other industries give us a unique set of skills and knowledge base to help operators succeed. Our customer-centric approach and our ability to understand your mobile telecom business set us apart from our competitors. As you get to speak with some of our key clients, you will see that Syntel thinks first of our client s business strategy and our client s imperatives for business success. Around this understanding, we work together to become thought and implementation partners of IT-enabled components of our client s business strategy to unlock value from IT and create ITenabled competitive advantage. Commitment to Quality Sets Syntel Apart Any successful corporation understands that the quality and dedication of the people behind the processes and technology are what stands between success and failure. Quality focus and commitment is a key characteristic that distinguishes Syntel from many other outsourced providers. This focus extends throughout the Syntel organization, and impacts its people, processes, and technology. Syntel follows the widely recognized Six Sigma methodology to continually measure and improve performance and processes. As an integral part of this methodology, it adheres to the DMAIC Define, Measure, Analyze, Improve, Control framework to guide process improvement. Syntel s Global Development Centers in India are assessed at both ISO 9001 and Level 5 of the SEI CMMI (Carnegie Mellon Software Engineering Institute Capability Maturity Model), making it one of just a handful of organizations in the world assessed at these levels. Its delivery performance is benchmarked against the highest capability standards of this model and achieving Level 5 is the ultimate recognition in the IT industry for the maturity of Syntel s software processes. This means Syntel s solutions have been proven to deliver: Faster project timelines, Greater costs savings, Reduced risks, Increased work efficiency, Constant work process improvement, and Greater situational awareness. Syntel s Project Management practices are based on the Project Management Institute s (PMI) Project Management Body of Knowledge, which emphasizes communication, risk management, and leadership. Most of Syntel s Project Managers are PMI-certified, or are in the process of pursuing certification, and all project managers are leaders empowered by Syntel to act in the best interest of the customer s success. Syntel has developed the IntelliSourcing TM approach where we work collaboratively with you to determine which components of your IT capabilities and business processes you can outsource to us, and which ones you should continue to keep in-house

8 aboutsyntel: Syntel provides custom outsourcing solutions to Global 2000 corporations. Founded in 1980, Syntel's portfolio of services includes BPO, complex application development, management, product engineering, and enterprise application integration services, as well as e-business development and integration, wireless solutions, data warehousing, CRM, and ERP. We maximize outsourcing investments through an onsite/offshore Global Delivery Service, increasing the efficiency of how complex projects are delivered. Syntel's global approach also makes a significant and positive impact on speed-to-market, budgets, and quality. We deploy a custom delivery model that is a seamless extension of your organization to fit your business goals and a proprietary knowledge transfer methodology to guarantee knowledge continuity. SYNTEL 525 E. Big Beaver, Third Floor Troy, MI phone info@syntelinc.com v i s i t S y n t e l s w e b s i t e a t w w w. s y n t e l i n c. c o m