The Future-Proof Telco: New Models for Service Creation

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1 The Future-Proof Telco: New Models for Service Creation Telecoms operators that compete on service creation and service agility are the ones that are ready for the future. Today s telecoms market demands faster service creation and a more responsive approach to delivering for. This is why operators that are built to last are creating a business culture focused on service creation, deployment and monetisation. Scott Goodwin, CEO, Weavesys

2 The Future-Proof Telco Telecoms operators can future-proof their businesses with an agile approach to new product development and service creation. To do this they are adopting and exploring new services models that play to their strengths and deliver a competitive advantage. The telecoms operator of the future creates, delivers and monetises new services faster than its competitors. It leverages its brand and deep knowledge of its, shaping and packaging its service offering to meet their needs. The speed at which the market is moving with new players, technologies and challengers makes a new services model a necessity. The networks have been built, now it s time to make the most of them. It is products and services, including over the top applications, rather than connectivity that will define the next ten years in telecoms. The challenge is how to develop these products and services quickly and efficiently while getting the return on investment from monetising them. Competing operators as well as Over the Top (OTT) providers all want to take market share and sell more services. It is the players that can approach this services-based competition with a model that manages their legacy systems and delivers new innovations that will lead the market. The opportunity is there for operators that want to be leaders in service creation. The question they have to answer is: How do we get there from here? The telecoms operator of the future creates, delivers and monetises new services faster than its competitors. It leverages its brand and deep knowledge of its, shaping and packaging its service offering to meet their needs. Weavesys - The Future-Proof Telco / 1

3 From Legacy to Leader The operator of the future is an organisation that understands how to manage its past. Most operators have a legacy of systems and processes that are the result of a patchwork of mergers, acquisitions and evolutions of technology. Each new element has added a layer of complexity that effects how new services are developed and maintained. From deploying an entirely new service to altering one that already exists, legacy systems can constrain an operator s service agility. A legacy of integrations across OSS and BSS mean that when a new service is created or updated this often has a knock-on effect on a number of processes. It can impact frontline customer service, billing, retention, sales as well as other functions. A major challenge is that over time most telcos evolved to have an array of services that are supported by a vast number of legacy platforms. Launching new services often require changes to numerous platforms and interfaces which takes a lot of time and resources. Operators need to find ways to overcome these rigidities to meet the increasing demand for new innovative services, says Benoit Reillier, Managing Director at Launchworks Ventures and industry veteran. What operators face in trying to correct this with unified platforms and processes is a lengthy and resource-intensive overhaul of their internal systems. This might be popular with internal engineers but the CFO sees it as lump sum cost impacting the P&L. Business is about profitable and sustainable growth but operators are increasingly constrained by quarterly result targets and some seem to be sacrificing the future to meet short term priorities. If you played the long game, you d sit back and say, What do we need to do to be successful? We need adaptable responsive service creation and service agility. That would allow us to be ahead of the game but to do that we d have to invest a significant amount of budget and resource and recognise that the costs associated with many legacy platforms are sunk, says Reillier. No operator is keen on taking on large integration projects when throughout the year they will need to invest in network expansion, product launches and fire fighting activities of a competitor. Unfortunately, the challenge remains the same. A major challenge is that over time most telcos evolved to have an array of services that are supported by a vast number of legacy platforms. Launching new services often require changes to numerous platforms and interfaces which takes a lot of time and resources. Operators need to find ways to overcome these rigidities to meet the increasing demand for new innovative services. Benoit Reillier, Managing Director at Launchworks Ventures and industry veteran. So what can operators of today do? What options exist for them? If operators don t invest in new intelligent plaforms then outsourcing and partnering are viable options, says Reillier. If it is available, why not ride on the back of someone else s state of the art technology, which allows you to do the service creation and keep the billing and all other systems in line and consistent. Weavesys - The Future-Proof Telco / 2

4 The Creation Cycle In addition to the cost of overhauling internal systems to prepare for a faster moving market, there are internal costs for developing new services as well as often challenging lead times. Within some businesses, service development can take months. This is manageable when competing with another operator in a similar situation but in a larger market that includes agile OTT players this can be problematic. A month lead time for service development no longer matches customer expectations. It is even more removed from customer demand when the internal development team can t get started on the development for six months or a year. By the time the service is ready to deploy and sell, the market could have moved on or worse, seen a competitor deploy something that makes the newly created service obsolete. This is especially worrying when there is a significant development cost associated with the creation of a new service. Operators allocate time and resource for a service with no guarantees of monetisation. It is difficult to recoup high internal development costs through higher prices for. This can lead to expensive and out of date services with no hope of monetisation, the worse possible outcome for any operator. The Operator Opportunity When the risk and return model for the creation of some services is out of balance, businesses need to look at other options out of necessity. As Reillier notes, there s an opportunity to explore alternative models such as partnering and outsourcing the creation of new services to speed-up development times while managing risk. It is a way to ensure that the operator is ready to deliver what its want today but also into the future. Many operators are recognising that the legacy model isn t delivering what today s want. They are being challenged to be a leader in services and are assessing where their strengths lie as well as evaluating where they can offload the risks and challenges of service creation. You can outsource the mess for less. Third parties can be helpful if an operator is not an expert in an area or doesn t want to invest. That raises questions within the business about what is core and non-core that need to be answered. With this in mind, outsourcing is a reasonable way to explore new opportunities and develop new services, says Camille Mendler, Principal Analyst at Informa. This is one way to try to innovate and create things that can t be accounted for within an operator s corporate structure. You can outsource the mess for less. Third parties can be helpful if an operator is not an expert in an area or doesn t want to invest. That raises questions within the business about what is core and non-core that need to be answered. With this in mind, outsourcing is a reasonable way to explore new opportunities and develop new services. Camille Mendler, Principal Analyst at Informa. A telco that is committed to flexible service creation and delivery can look to unify its OSS and BSS and service development not through allocating internal cost and resource but by acquiring it from an end-to-end service delivery platform. An operator that outsources service creation and delivery can become a new entity that is free of the month development cycle and able to demand something unique from partners who are experts in their field. This is a mindset shift for some operators but one that benefits the customer and the bottom line. What outsourcing service creation and delivery does is put the control in the hands of the operator to demand an end-to-end solution that will help it to compete with new services. An operator that is committed to flexible service creation and delivery can look to unify its OSS and BSS and service development not through allocating internal cost and resource but by acquiring it from an end-to-end service delivery platform. Most operators do not want to make the investment required to deploy new, more agile OSS and BSS from external vendors to facilitate the rollout, management and monetisation of services and they don t have to. Weavesys - The Future-Proof Telco / 3

5 New Models, New Partners The challenge then becomes to find partners that can add value and help the operator to meet business objectives. Where some operators have used third party providers for certain functionalities or features, there is a risk of creating more complexity rather than simplifying service creation. What is paramount is that the outsourcing partner can provide a complete solution while delivering unique expertise that may not exist within the operator. Operators need to offer more valuable applications and services to their, however, they may not have sufficient experience and expertise to develop and deliver a wide range of valuable applications. Therefore, partnership is critical to the success of operators application business, says Phil Braden, Senior Vice President Technology & Applications at PCCW Global. Partners that can simplify the service creation process, create cost-efficiencies and deliver ROI help a telecoms operator to stay ahead of competitors and grow its margin. Braden adds that for PCCW Global, the opportunity is in using partners as an efficient way to develop new services then adding them to a mix of internally developed services. In this way, PCCW Global can maintain the development of core services while gaining new agility from working with partners for the development of additional services. An operator s outsourced services partner can be contracted to design a new product including its features and functionality but also the customer experience that goes around it. This answers the question of how it will create, fulfil, manage, bill and deliver an end user experience that is aligned and cost effective. The partner or supplier can create the service then the operator can deliver it under its brand, seamlessly. This means operators can adopt fully formed services beyond individual units of functionality or features. They can use expertise in OSS and BSS as well as customer experience. To compete in the future, telecoms operators will look at the simplest and most cost-effective way to sell more services and that may be from a mix of partner-created services as well as internally-created services that they want to keep closer to home. The opportunity to differentiate your business is there and future success will be linked to service creation and delivery as well as the flexibility operators can offer their with new services, says Braden. Operators need to offer more valuable applications and services to their, however, they may not have sufficient experience and expertise to develop and deliver a wide range of valuable applications. Therefore, partnership is critical to the success of operators application business. Phil Braden, Senior Vice President Technology & Applications at PCCW Global. Product-As-A-Service in IP Telephony Nowhere is the outsourced services model more relevant than in the IP telephony market. There are over 500 telecoms operators worldwide that have adopted Broadsoft s BroadWorks VoIP application platform with its suite of unified communications, call centre and hosted PBX capabilities. The platform has enormous service potential with opportunities to monetise the platform with a unified approach to OSS and BSS. This is where the sweet spot is for operators that own the BroadWorks platform but have been challenged to monetise it. An outsourced service creation and delivery partner can package and repackage BroadWorks capabilities and help the operator to drive new revenue and better serve their from a platform they already own. Operators are seeing their enterprise customer base become increasingly dynamic in what they ask of their voice service provider. While their SME may not be asking for hosted IP telephony, when they serve enterprises and the public sector it is increasingly asked for. These kinds of want to enable mobile workers, allow for more flexibility in procuring services and ultimately determine for themselves who controls the services they are using. This means the operator needs to offer services that are more dynamic and ready to meet these new demands. They need to offer voice services that support this requirement for agility. The quickest way to do that is to leverage the power of IP telephony and have an outsourced partner create and deploy services on their behalf. They can brand them however they see fit then deliver them to their quickly and efficiently. This allows them to monetise their platform, provide new services and deepen the relationships they have with while growing their businesses. As new versions of the BroadWorks platform are delivered, it is the responsibility of the outsource partner to support these changes and ensure the operator is delivering an optimum service. The outsource services model future-proofs the business and reduce its risk. Weavesys - The Future-Proof Telco / 4

6 Product Development -The Old vs The New The Legacy Approach The operator buys a concept based on a feature set rather than a service or capability. All the effort is applied to the enablement of a concept that is compromised due to legacy, resource and the rapid evolution of functionality and technology. Look up boxes Detailed RFP's are cascaded across vendors defining a range of features and functionality Box is selected Legacy Service Deployment The wait Response is often protracted as there are many moving parts in which to integrate The compromise The problem with a compromise A generic service proposition accompanies a scaled down forecast. P&L of the product line is updated and re-evaluated The decision Go to market with an outdated offer or wait and go with the latest functional release. New requirements are provided to IT and SI who hope to work into a phased delivery plan Time lines are unworkable Detailed requirements Look up boxes or cost The is prohibitive wait In The the problem meantime with documents are issued to the The decision resulting in a compromise internal IT or external SI for winning a vendor compromise demonstrates Outcome system Detailed integration RFP's elements are Response is often protracted new functionality within Go to market with an outdated cascaded in order to across provide vendors a as there are many moving A latest generic software service release, proposition offer ROI of or the wait new and service go with is the Priorities change defining service. The a range box requires of features parts in which to integrate which accompanies is inaccessible a scaled based down latest below functional expectations. release. billing and provisioning, functionality on current forecast. requirements P&L of the Compromises mean the full Generic services are chosen customer & service product line is updated power New of the requirements service is are never that can cover large segments, management as well as and re-evaluated realise. provided The to operator IT and SI fails who to Box is selected ie. A The shotgun compromise approach. a range of processes to keep hope pace to work with into its a service phased Phased delivery is negotiated be monetised release plan and is often Time lines are unworkable delivery plan Detailed requirements supplanted by the promise or cost is prohibitive documents are issued to In the meantime the of a new box resulting in a compromise internal IT or external SI for winning vendor demonstrates Outcome system integration elements new functionality within in order to provide a latest software release, ROI of the new service is Priorities change service. The box requires which is inaccessible based below expectations. billing provisioning, on current requirements Compromises mean the full Generic services Agile are Service chosen Deployment customer & service power of the service is never The Service-Enabled that management as well as Approach can cover large segments, realise. The operator fails to ie. A shotgun approach. a range Understand of processes to Channel preparation Enable service keep Create pace segments with its service Phased delivery is negotiated be monetised release plan and is often The process involves a proven methodology, starting with and competitors, defining a proposition, Define a manageable Relevant Make supplanted preparing products by & the the services promise organisation Find and out what developing drives the a business. number Service of distinct enablement groups is separated, enabling the Design service provider Product easily to focus available of a new on and delivering box easy to services based on and customer how much demand. of Support Price purchase for (potential) they value the benefits of Scale Channel the competitor s offerings Understanding competitors Understand Research what the competitors are doing, why Find they out are what doing drives it and the what they may and be how doing. much they value the benefits of Gather the competitor s benchmarks offerings from other related markets Understanding competitors Research what the competitors are doing, why they are doing it and what they may be doing. Gather benchmarks from other related markets Legacy Service Deployment Choose targets Estimate attractiveness Channel for each segment preparation and which ones to target Define a manageable number of distinct groups Choose of position Define how you want to offer customer value and differentiate Choose targets from the competition Estimate attractiveness for each segment and which ones to target Agile Service Deployment Choose position Define how you want to offer customer value and differentiate from the competition Billing Provision Service Creation Literate offer to optimal position Enable service Relevant Create a promise Design Product Support Tell your Price Scale what your Channel company stands for Billing Literate Tell Provision your offer what to your Service products stand optimal for Creation position Create a promise Tell your what your company stands for Tell your what your products stand for Customer care Give good Create reasons not segments to leave Make products & services easily available and easy to Customer purchase for loyalty (potential) Reward for usage and for Customer care staying loyal Give good reasons not to leave Customer loyalty Reward for usage and for staying loyal Weavesys - The Future-Proof Telco / 5

7 Future Growth When the service creation, development and delivery is pushed outside of the operator s OSS and BSS stack, they are free to focus on finding the services need and ensuring they have the right portfolio to meet their needs. They have the relationship with their and can serve them through attaining the best expertise and services available. Outsourcing service creation makes sense in today s market and it will be key to creating sustainable growth in the long term, says Scott Goodwin, CEO at Weavesys. Development costs can be eliminated as well as allocation of internal resources. This brings clarity to the overall return on investment and monetisation of services. The risk versus revenue is back in the operators favour and it gives them the tools they need to succeed today and into the future. It also manages risk in terms of scalability and flexibility. The outsourcing partner can be responsible for scaling the services it provides to meet the needs of the operator. In this way, the operator can sell and grow without constraints and is not responsible for the maintenance of the service or the quality issues associated. A future-proof operator can be more aggressive in how it delivers bespoke services and segments the services it offers, says Goodwin. "When the service sits outside of the operator the possibility for being creative and deploying new services open up and telcos can reorganise what they sell, how they sell and who they target. They can use their strengths to deliver what their want without compromise and that ensures they are ready to compete well into the future. When the service sits outside of the operator the possibility for being creative and deploying new services open up and telcos can reorganise what they sell, how they sell and who they target. They can use their strengths to deliver what their want without compromise and that ensures they are ready to compete well into the future Scott Goodwin, CEO at Weavesys. Weavesys - The Future-Proof Telco / 6

8 Weavesys Ltd enables communications service providers to quickly grow their businesses and improve profitability. Our ntwine solution simplifies processes to deliver what want, when they want it. ntwine is a fully integrated, management application that brings together all the disparate elements of modern Operations Support Systems (OSS) and Business Support Systems (BSS). ntwine provides a simple way to bring new services to market quickly. ntwine is a software wrap for the BroadWorks range of VoIP applications that automates complex processes and enables service providers to scale their business and create tailored service packages. It offers significant control and flexibility over provisioning and managing the services they want. Weavesys Ltd is a wholly owned subsidiary of Syntelligence, a privately owned holding company. For sales or a demo, contact us on +44(0) or visit