Nokia Siemens Networks Network management to service management - A paradigm shift for Communications Service Providers

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1 White paper Nokia Siemens Networks Network management to service management - A paradigm shift for Communications Service Providers Service management solutions enable service providers to manage service life cycle efficiently and enhance customer experience.

2 2/19 Table of contents Executive summary Communication service providers face key market challenges A holistic approach to service management is necessary for success Service providers struggle with service management capability gaps Service providers achieve many benefits from third-party service management solutions The Nokia Siemens Networks service management solution Conclusions Appendix: Service management capability definitions... 18

3 3/19 Executive summary Network management is often focused on the network layer, enabling communication service providers (CSPs) to monitor and track network outages and issues, call drop rates, and mean-time-to-repair response in a reactive manner. However CSPs face key challenges that are driving them to reassess their existing business support systems, operational support systems, and service management capabilities. Key factors causing these shifts include an increasingly competitive landscape, seamlessly deploying new services to customers, stagnant revenue streams from legacy services and addressing customer churn rates. Managing seamless, cost-effective service deployment and proactively identifying the location and cause of problems in this competitive environment requires CSPs to take a holistic end-to-end approach to service management. Taking this approach enables service prioritization and resolution priorities to be identified and evaluated based on the impact on customer experience. In many cases, CSPs are challenged with successfully fulfilling these important service management capabilities, and seek assistance from third-party vendors like Nokia Siemens Networks. To help communication service providers succeed in this rapidly evolving environment Nokia Siemens Networks, built on experience working with CSPs throughout the world, has expanded into the service management space. Capabilities in this extended view of service management include service alarm correlation, service modeling, service problem and incident management and service quality management. These broader service management capabilities enable CSPs to efficiently deploy, monitor, and track the status of next-generation voice, data and MBB based services such as , gaining, video and other similar wireless communication services. Service management capabilities address CSP requirements by creating service views, providing the capability to address service problems, allow CSPs to manage service quality throughout the lifecycle for a particular service or set of services. It also provides the capability for the management of third party SLAs, service inventory management and new service launch support. By leveraging these service management capabilities, service providers can provide customers with a differentiated service experience and a competitive advantage.

4 4/19 1. Communication service providers face key market challenges A dynamic marketplace brings forth a plethora of challenges for communication service providers (see Figure 1): Network management capabilities are not sufficient for long term success. The rate that customers switch or churn between service providers for individual products and services averages 7% but these percentages vary widely. A key factor impacting churn rates is how the customer perceives the quality of service delivery. If individual components in the network layer are running effectively, the CSP may believe that an 80% QoS is being delivered to customers. However the customer may feel they are only getting 8% on the agreed upon QoS. The discontinuity in actual versus perceived QoS performance often leads to reduced customer confidence, declining loyalty, and loss of business. Service management capabilities bridge this discontinuity gap and provide logical connections between the network layer, IT layer and end-user service experience by providing a holistic services view. Many CSPs are evolving into an all-ip network architecture that supports voice, data, and video services over fixed and mobile networks on a single platform. Fixed mobile convergence and IP multimedia subsystem (IMS) environments enable service providers to deploy new types of services over traditional telecom devices, mobile devices, and home entertainment devices. Finally, BSS/OSS and IT system convergence is occurring as CSPs identify ways to improve operational efficiency and reduce costs. In the legacy telecommunications world, IT, BSS, and OSS requirements for individual services were supported in separate and often redundant silos of activity. However, now most CSPs recognize the benefits of converging their IT and communications technology initiatives to streamline operations, improve process efficiencies, and reduce cost of IT, network, and communication services operations. Competitive pressures and reduced revenues drive innovation. Will communication service providers be relegated to becoming a transport pipe? In many markets, traditional communication service providers face competition from cable companies for consumer and small and medium business voice and Internet access as well as from software vendors such as Yahoo! and Google and Facebook who are focused on making traditional communication providers the transport pipe while they collect high-growth application revenues. Wireless service providers also experience increased competition for wireless data services from other cellular operators, from municipal Wi-Fi networks, and from emerging broadband service providers. To counter this downward revenue pressure, communication service providers are deploying new network technologies (e.g. 4G/LTE) to support new applications and services. CSPs are also looking to rapidly launch these new services to counter declining traditional revenues.

5 5/19 A rising tide of CSPs are launching new smartphones, new mobile broadband offerings and data hungry applications. These innovations are leading to unplanned and unmanaged network capacity which is ineffective and will lead to exponential increases in operational expenditure for CSPs. Efficiently deploying new services is critical. CSPs seek to deploy new voice, video, data, wireless, and multimedia services to customers over fixed and mobile networks, however inability to cross-sell and upsell services to customers is driving increased demand for service management capabilities. These service management capabilities enable CSPs to identify which new services are available and can address each customer s unique communication service usage profile. Delivering these multifaceted services requires CSPs to predict, monitor, analyze, and measure network and service performance more closely, and to implement real-time processes for provisioning individual services and bundles of services. Billing systems must also be overhauled to provide integrated billing. Figure 1. CSP business challenges NSN believes service management elements enable CSPs to address these key challenges. For example, service life cycle and service fulfillment management solutions enable carriers to provision and activate new services and service bundles by delivering on order, inventory, process, provisioning, and activation management processes. In addition, service quality management elements enable communication service providers to proactively evaluate network capacity and resource availability as well as ensure adherence to committed service-level agreements.

6 6/19 2. A holistic approach to service management is necessary for success In a legacy communications environment, network service management capabilities supported basic voice and data services and focused on optimizing network performance and tracking network-based KPIs such as mean-time-to-repair but the full impact of network related issues on customers were not monitored (see Figure 2). In today s complex communications environment, CSPs must deploy a wide variety of services including mobile broadband, location-based services, SMS, and MMS. Managing seamless, cost-effective service deployment and proactively identifying the location and cause of problems in this new environment is complicated and incorporates various BSS, OSS, IT, and network elements. To successfully navigate the complex service environment, NSN recommends CSPs use a holistic end-to-end approach to service management which enables service prioritization and resolution priorities to be identified and established based on the impact on customer experience. Figure 2. Why service management? To validate service provider demand for and implementation of end-to-end service management elements and solutions, Nokia Siemens Networks commissioned Forrester Consulting to field a study to 30 communication service operations professionals located in 13 countries in the Americas, Europe, and Asia Pacific Results from this study validate that a majority of surveyed communication providers include a wide variety of activities in their definition of end-to-end service management. In fact, 80% of survey respondents agree or strongly agree that service management is part of the broader concept of customer experience management.

7 7/19 Service management is a part, a rather big part, of the whole customer experience. It includes service support and delivery, both of which impact the end customer experience very significantly. (Manager of strategic programs, fixed line voice service provider, Australia) Service management is the natural progression [of network management]; you have to be able to monitor and measure customer experience and also to service it. Automating processes and operational issues should have a favorable impact on the end customer because the two concepts are related. (Network manager, cable and satellite communications service provider, Germany) Today how important are the following service management elements to your business? Very important Important Process management Service problem management 33% 43% 57% 37% Service performance management Order handling & management 33% 33% 40% 37% Service quality & impact analysis Service inventory management Service provisioning & activation Service traffic management 17% 17% 23% 20% 50% 50% 40% 33% Service catalogue 10% 20% Figure 3. Service management elements Source: A commissioned study conducted by Forrester Consulting on behalf of Nokia Siemens Networks, May 2011.

8 8/19 Following are the critical elements that NSN recommends communication service providers include in an end-to-end service management solution Service problem and incident management identifies recurring issues. Traditional service problem and incident management focuses on monitoring network resources used to deploy voice, video, data, and wireless services. However, in the current telecom environment, these capabilities must extend beyond the network layer to include value-added customer-facing applications (e.g. video gaming, mobility services, and applications) that leverage network resources. By using service problem and incident management solutions, operators can obtain detailed insight into network and BSS/IT service issues and conduct root cause analysis in real time. Service quality management supports SLA and QoS delivery. Service quality management capabilities enable telecom service providers to proactively evaluate network capacity and resource availability and address these issues in a timely manner. Using these service quality management functions enables communication service providers to evaluate and adhere to committed service-level agreements (SLAs) for particular communication services. Constant monitoring of network and service capacity and availability are vital to delivering on these SLA agreements. Service fulfillment management enables provisioning and activation of new services. Service fulfillment management includes service configuration and activation which enables dynamic provisioning and activation processing, change management, and release management. These configuration and activation services enable CSPs to dramatically reduce the time required to deploy and activate services in some case cutting service activation time from days to hours. In addition, service providers can minimize the impact of change management processes on services and applications. Business analytics provide end users with unique customer insights. Business analytics are often a key component of service life cycle management. Business analytics solutions provide corporate marketing and promotional teams with real-time reports and analysis into customer usage patterns and service adoption and can be used to evaluate the impact of marketing campaigns. By using business analytics insight, CSPs can cross-sell and upsell new types of products and services to address the unique requirements of individual customers. In addition, business analytics solutions provide end users with easy-to-access service level reports in real time through customer portal sites.

9 9/19 Service inventory tracks and identifies application and service availability. As firms deploy new types of bundled services (voice, video, and wireless) it is critical to have service inventory knowledge to determine if a service can be deployed to a customer. Service inventory is a centralized repository of information that identifies the specific types of services and components that a customer qualifies for based on network capacity, service availability, and technical requirements. This dynamic repository includes information on wireless, voice, and data networking assets, as well as details on circuits, services, devices, routers, switches, and user profiles. Service modeling provides network and service management insights. Service modeling provides the visibility bridge the network layer and the service layer. Through end-to-end visibility, CSPs can deliver on not only the already established network SLAs but can begin to deliver on SLAs on services too. Other types of capabilities that may be included in service management solutions are billing operations and customer interface management capabilities. See Appendix for a detailed description of each element of endto-end service management.

10 10/19 3. Service providers struggle with service management capability gaps CSPs consider a wide range of elements as critical parts of service management solutions. In fact, at least half of the interviewed service provider executives identified 10 important service management solution components. In many cases, service providers are challenged with successfully fulfilling these important service management capabilities. The top five service management challenges faced by CSPs are summarized in Figure 4. For each element of service management identified, please rate how challenging it is for your organization to currently support. Service provisioning & activation 7% Service quality & impact analysis 7% Service problem management 30% 13% Service performance management 17% Process management Figure 4. CSP service management challenges. Includes very challenging and challenging responses Source: A commissioned study conducted by Forrester Consulting on behalf of Nokia Siemens Networks, May CSPs must address service problem and incident management issues. Service problem and incident management is an issue facing many communication service providers. Many CSPs have chosen to focus on the network level, monitoring and evaluating voice, video, data, and wireless network resources, choosing to address network KPI s. On the other side of the house IT teams have been focusing on IT deliverables and finally the business has been focusing on customer sales objectives. However, in a rapidly evolving telecom environment it is not effective to have these siloed views. CSPs are beginning to expand capabilities to include value-added customer-facing applications such as video gaming, mobility services, and mobile applications that leverage not only network resources but IT resources and also resources in the application layer. Service

11 11/19 problem and incident management solutions enable operators to capture insight into network and BSS/IT service issues and analyze the cause of these issues in a more holistic manner. Service performance management is also challenging for many service providers. Many service providers identify service performance management as a challenge. Service performance management elements include fault management, monitoring network quality, evaluating service performance trends, and comparing these service performance results with agreed upon quality of service (QoS) or service-level agreements (SLAs). NSN believes that as communication service providers expand the breadth of applications and services deployed over many different types of networks, successful service performance management will be particularly critical in enabling CSPs to adhere to committed SLAs.

12 12/19 4. Service providers achieve many benefits from third-party service management solutions Now is the time to make the necessary investments to stay competitive. Service management capabilities are currently used by many communication service providers, which highlights the important role these elements play in addressing the needs of CSPs. Only 7% of those interviewed, were not interested in investing in service management capabilities. The below quote summarizes the sentiment of many CSPs interviewed and the urgency many face to fill gaps in their service delivery capabilities. CSPs are looking to bridge the gap between network management and service delivery. CSPs understand that they need a holistic view of service utilization. There is a key trend going on in the CSP environment today. Operators are more and more trying to look to the services they offer to customers. We have to understand the services users are demanding. If I offer a BlackBerry service, service management means that I no longer only look into the BES hardware uptime and availability SLAs. I now look at the performance of my BlackBerry data service at an end-to-end basis. This is service management. It allows us to provide service SLAs to the end-user. (CTO, wireless communication service provider, India) With the complexity involved in now monitoring and managing several layers, many CSPs that are in the process of implementing service management are not doing it alone. They are asking for assistance from third-party vendors like NSN to help them implement service management elements such as customer interface management, service problem and incident management, service inventory management, and service quality management (see Figure 5). As well as help in service management elements, CSPs are also looking to third-party vendors to provide assurance on not only service visibility but also on service uptime and availability guarantees.

13 13/19 Which service management elements are sourced from a third-party vendor? 40% 40% 37% 37% 37% 37% 33% 23% 20% Figure 5. CSPs seek assistance from third party vendors Base: 30 communication service operations professionals working for CSPs Source: A commissioned study conducted by Forrester Consulting on behalf of Nokia Siemens Networks, May 2011 Communications service providers expect to achieve a wide range of benefits from using third-party vendor service management elements (see Figure 6). A key benefit of using third-party vendors is that third-party vendors have specialized expertise and vendor innovation capabilities. CSPs look to third-party vendors for help addressing gaps in their internal knowledge around the technology requirements needed to support end-toend service management requirements. They re also looking to leverage learnings and knowledge that third-party vendors gain through extensive experience with a wide range of other CSP clients. Other key benefits of using third-party vendors include increased operational efficiencies and the ability to resolve problems as well as address industry regulatory requirements. But primarily, by using a third-party vendor, CSPs will be able to focus on strategic business initiatives such as marketing, growing the customer base and launching new services. CSPs will be able to make better business decisions based on the visibility they gain from service management. The benefits we would expect [from a third-party vendor] would be more in terms of efficiency; financial and non-financial. We would like to see a multidimensional benefit around price and operational efficiencies. (CTO, wireless communication service provider, India)

14 14/19 5. The Nokia Siemens Networks service management solution Nokia Siemens Networks has extensive network management experience, working with more than 150 communication service providers throughout the world and adding seven new subscribers per second through these network management services. To address the increasingly complex environment facing communication service providers, NSN expanded its management solutions to include additional service management solution components and address the clients with a holistic approach. If you are thinking of sourcing from a third party provider please rate the importance of the following on a scale of 1-5 where 1 is not important at all and 5 is very important. 5- very important not important at all Overall expertise (in technology and/or business) 83% 17% Experience with my industry or business vertical 77% 17% 7% Price or cost savings 73% 27% Experience with industry-specific business processes 73% 23% 3% Capability with specific services we seek 70% 30% Proven tools and methodologies 63% 30% 7% Process maturity (ITIL, etom) 53% 33% 13% Research and analytical capabilities 50% 30% 13% 7% Figure 6. Third party vendors increase operational efficiencies Source: A commissioned study conducted by Forrester Consulting on behalf of Nokia Siemens Networks, May 2011 In addition to these service management capabilities, NSN also offers business support and application management elements focused on helping service providers address application, mediation, charging, and other types of IT and BSS-related KPIs. By incorporating network management insight, as part of end-to-end service modeling, CSPs can commit to internal key performance and quality indicators as well as external service-level agreements. In cases where there are gaps, root cause analysis is possible through the use of service modeling technologies. This comprehensive suite of service and network management solution capabilities enables NSN to equip communication service providers with a broad portfolio of service management solution capabilities. Service providers have the flexibility to purchase individual service management elements to fill specific capability gaps or to outsource a complete end-to-

15 15/19 end service management solution to a third-party vendor. Outsourcing endto-end service management solutions enables service providers to: Improve the availability, performance, and integrity of business services and processes. Gain visibility and manage the end-to-end customer experience and deliver new high-value service and product offerings to customers. Reduce downtime, improve audit reporting, and reduce associated risks from lack of network and service layer visibility. Differentiate capabilities based on service deployment efficiency and improve the end user experience. Achieve tangible benefits such as a reduced customer churn rate, a reduction in subscriber retention and acquisition costs, improvements in end-user satisfaction rates, and increased revenues. Figure 8. NSN service management offering The NSN service management portfolio offers CSPs the flexible option of using various delivery models for their end-to-end service management requirements, including implementation, operation, outsourcing, and managed services. Through the service, CSPs gain access to: Service modeling: Provides network and service management insights to help CSPs deliver on internal key performance and quality indicators as well as external SLAs and enables root cause analysis to identify gaps

16 16/19 through service modeling techniques for efficient service problem management and quality management. Service problem and incident management: Aimed at extending capabilities beyond the network layer to include value-added user-facing applications such as video gaming, these services provide CSPs detailed insights into network and BSS/IT service issues and help conduct real-time root cause analysis. Service quality management: Support delivery of service level agreements (SLAs) and ensure Quality of Service (QoS) by enabling CSPs to proactively evaluate network capacity and resource availability, helping them address these issues in a timely manner. Service fulfillment management: Includes service configuration and activation help CSPs dramatically reduce the time required to deploy and activate new services. Business analytics: Provide CSPs with unique subscriber insights such as consumption patterns to help them cross-sell and up sell new types of products and services. Service inventory management: A centralized repository of information that identifies the specific types of services and components that a subscriber qualifies for based on network capacity, service availability, and technical requirements. It also provides an experienced dedicated services organization and has a history of success delivering network and service optimization solutions. By partnering with a third-party vendor such as Nokia Siemens Networks for service management solution requirements, communication service providers can leverage these specialized skill sets and technical expertise as well as gain access to a range of solution elements that enable efficient delivery of a holistic end-to-end service management process.

17 17/19 6. Conclusions Service management is the complete transformation of our business processes. It is now the most important strategic initiative for me. No longer is it all about network uptime or CPU utilization. We need to focus on the customer. (CTO, wireless communication service provider, India) The forces driving communications service providers to intensify their focus on end-to-end service management solutions are clear: the intensely competitive communications landscape, declining revenues from legacy services, and increased pressure to deploy new types of services and service bundles to customers is forcing CSPs to reassess their end-to-end service management capabilities. Where should CSPs start with their service management activities? The starting point will vary based on the specific issues the communication service provider is addressing. If the CSP wants to quickly and efficiently deploy new services to customers, the focus may be on enhancing service inventory and service fulfillment capabilities to help reduce the time required to identify, deploy, and activate new applications and services for customers. In comparison, another service provider may outsource all of its network and service management requirements to Nokia Siemens Networks. This outsourcing approach enables the CSP to efficiently and cost-effectively deliver network and service management solution functionality throughout the end-to-end process. It s also important to recognize that these service management capabilities often impact activities in the networking, IT, and BSS/OSS business units, requiring collaboration across multiple groups in the service provider organization. Irrespective of where CSPs start with their service management requirements, Nokia Siemens Networks has extensive experience working with CSPs worldwide and providing expertise to help CSPs evolve their end-to-end service management strategic initiatives.

18 18/19 Appendix : Service management capability definitions Service Management Capability Billing operations Business analytics Customer experience management Customer interface management Customer QoS/SLA management Device management Order handling and management Process management Resource Inventory management Resource problem management Resource provisioning & activation Definition Supports capabilities to capture and consolidate information from all billing systems to provide customers with a view of relevant billing information in a timely and accurate format Unique subscriber insights such as consumption patterns to help them cross-sell and up sell new types of products and services. Providing the end-to-end experience for customers as they interact with the company, starting with getting information on new products or services, ordering the product or service, provisioning the service, and addressing customer service and support issues, all in a consistent, accurate manner Supports capabilities to enable customers to interact with the communication service provider through any channel they choose, such as online, call center, IVR, mobile, etc., and ensure consistent, accurate delivery of information across all channels Reports, portals, and dashboards used to help internal personnel and external customers monitor and evaluate quality of service (QoS) and SLA compliance in real time Provides capabilities such as inventory view of devices, service parts planning, defective device monitoring, returns tracking, service logistics, device exchanges, loaners, and repair management End-to-end tracking and monitoring of the order handling process Analysis and identification of the steps and activities necessary to complete a specific end-to-end process required to provision services Identification of availability of various types of products, expertise, and resources in order to ensure the timely deployment and provisioning of products and services to customers Reports and dashboards to track gaps and issues related to the actual versus. planned use of people, assets, and technology Process of identifying the location, availability, and qualification of various assets, personnel, and services necessary to complete an end-to-end process as well as provisioning and activating the specific product, service, or application

19 19/19 Service catalog Service fulfillment management Service inventory management Service modeling Service performance management Comprehensive, centralized, itemized listing of the requirements and availability of all products and services available to customers Includes service configuration and activation help CSPs dramatically reduce the time required to deploy and activate new services A centralized repository of information that identifies the specific types of services and components that a customer qualifies for based on network capacity, service availability, and technical requirements. This dynamic repository includes information on wireless, voice, and data networking assets, and information on circuits, services, devices routers, switches, and user profiles are among the many communications assets tracked by this module. Provides network and service management insights to help CSPs deliver on internal key performance and quality indicators as well as external SLAs and enables root cause analysis to identify gaps through service modeling techniques for efficient service problem management and quality management Includes service-level agreements (SLAs), fault management and performance management associated with particular services Service problem and incident management Service provisioning & activation Service quality management and impact analysis Service traffic management Service problem and incident management includes monitoring network resources used to deploy voice, video, data, wireless services as well as monitoring value-added customer-facing applications that leverage network resources (e.g. video gaming, mobility services and applications). Aimed at extending capabilities beyond the network layer to include value-added user-facing applications such as video gaming, these services provide CSPs detailed insights into network and BSS/IT service issues and help conduct real-time root cause analysis Support delivery of service level agreements (SLAs) and ensure Quality of Service (QoS) by enabling CSPs to proactively evaluate network capacity and resource availability, helping them address these issues in a timely manner Tools to proactively monitor, track, manage, and predict spikes and variances in network capacity and service usage

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