Realities of Outsourcing: 14th in a Series of Webinar Presentations. Telecommunications Sourcing. October 11, 2007

Transcription

1 Realities of Outsourcing: 14th in a Series of Webinar Presentations Telecommunications Sourcing October 11, 2007 All Rights Reserved 2007 Glenn Richards Partner 2300 N Street, N.W. Washington, DC tel: glenn.richards@pillsburylaw.com Joseph Nash Consulting Principal 2300 N Street, N.W. Washington, DC tel: joseph.nash@pillsburylaw.com

2 Overview Types of Transactions Technology Trends Multi-national Deals Competitive Marketplace Challenges The Process Regulatory Issues Deal Trends 1

3 Voice and Data Wireline Wireless Managed v. unmanaged Network integration and professional services Equipment Annual Spend - $200,000-$30 million Types of transactions 2

4 Technology trends VoIP MPLS Where is the customer edge Miles are only miles sometimes Satellite Wireless Re-emergence of data centers Move to best practices for productivity and controls Consolidation, rationalization, virtualization Cost of computation vs. cost of communication Managed services Routers, appliances and PROCESSES (e.g., Provisioning, security, etc.) Combating internal threats through scaleability Best practice tools and process fit (ITIL, BS20000) Who is the overarching service delivery manager Customer, Carrier, IT supplier Who runs problem, change and incident management Tools, process, delivery model and governance model plug n play 3

5 Multi-National Deals Regulated monopolies Global Service Providers underlying capabilities (consistent availability of services) The wide vs. deep conundrum Is your carrier really as local globally as you are Managing local service providers and local challenges Single or multiple agreements Billing, currency and foreign exchange issues Recovery of taxes Import/Export 4

6 Competitive Marketplace Verizon/MCI more restrained than MCI pre-merger AT&T slowly trying to become integrated BT hungry for international business Sprint? Qwest Niche providers Level 3, AboveNet (data centers/ collocation/dark fiber) Convergence Competitive pressure from other sectors Wireless AT&T, Verizon Wireless, Sprint, T-Mobile 5

7 Tariffs, contracts and service guides Unique Aspects of Telecom Transactions Dual federal and state regulatory structure Reliance on third party providers (e.g., ILECs, equipment providers) Corporate structures make it difficult to have a sole point of responsibility for all services 6

8 The Process Development of base case what do we have today? Status of existing contracts Transition costs Sourcing strategy Value Chain RFP/RFQ Analysis of RFP responses Vendor selection Contract negotiation Contract review 7

9 Some words of warning Getting your arms around the As Is configuration data can be grueling but achievable Much of the value creation opportunity frequently lies in (i) getting voice under control and (ii) preparing for or actually implementing some degree of convergence Data center consolidation makes any-to-any less valuable for data than for person to person flows In many cases, frame to MPLS is a cost wash for data (same speeds, same sites, same POPs) Converging voice has the opportunity to reduce the number of access facilities and disintermediate the LEC for some traffic flows Unfortunately, with many clients we find getting voice supply side information very difficult and demand side data all but impossible Voice is frequently technically and managerially unmanaged Control is local office, country, region The number of suppliers involved may be un-addressably large Getting a bottoms up, accurate number for what is being currently spent and the information needed to figure out what the new solution will cost may not be achievable. Take care in managing expectations 8

10 Working the market If you are going to take the time for a competitive sourcing make it really competitive Tell the suppliers what you want ---- not how to do it Make them engage their best and brightest on your opportunity Use their pursuit dollars to architect a solution to your problem Understand what is really important to you, communicate it to them and make your evaluations with your needs foremost in your minds Help the suppliers get it, answer their questions, have a mid-response checkpoint and let them know what you like and what you don t It is hard for them to backpedal on the solution and service levels when they bring it to the party Use their uncertainty of what their competitors are doing to ensure that the risk follows the dollars Make sure when they take the work (and the compensation) that they take the risk along with it Segment your configuration and understand what needs good enough and what are the crown jewels. Ensure the solution aligns with the segments 9

11 Rational Implementation Schedules Preventing Buyer s Remorse Installation SLAs and penalties (bonuses for meeting deadlines) Designation of project manager and account teams; customer consent prior to changes Regular meetings and reports Pick the right managed services take over model WITO vs. run off, ramp up 10

12 Regulatory Issues Regulation of VoIP Inter-carrier compensation USF (and administrative charges) and other telecom taxes and surcharges State v. federal regulation v. closed countries New wireless spectrum 11

13 Deal Trends Commitments a thing of the past? Shortfall charges Termination for convenience Individual circuit or service termination charges Rate Reviews Business downturn/change provisions Service levels and penalties Management of Local Service Providers Data Protection Acceptance that burden is shared Recognition of regulatory obligations 12

14 Audits Billing and operational (SAS 70) Health care, financial institutions Hosting Supply and demand favors the vendor Force Majeure/Disaster Recovery Deal Trends Vendors and customers more sophisticated following Katrina 13

15 Glenn Richards Partner 2300 N Street, N.W. Washington, DC tel: glenn.richards@pillsburylaw.com Joseph Nash Consulting Principal 2300 N Street, N.W. Washington, DC tel: joseph.nash@pillsburylaw.com Questions and Answers All Rights Reserved 2007