SUITABILITY OF TELECOMMUNICATION MANAGED SERVICE MODEL IN SRI LANKAN CONTEXT
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1 SUITABILITY OF TELECOMMUNICATION MANAGED SERVICE MODEL IN SRI LANKAN CONTEXT MASTER OF BUSINESS ADMINISTRATION IN MANAGEMENT OF TECHNOLOGY L.M.R. SOMAWEERA Department of Management of Technology University of Moratuwa December 2010
2 LIBRARY ^thiversity 0? MORATUWA. SRI LANK - MORATUWA SUITABILITY OF TELECOMMUNICATION MANAGED SERVICE MODEL IN SRI LANKAN CONTEXT By L.M.R. Somaweera Supervised by Eng. Kithsiri Samarasinghe The Dissertation was submitted to the Department of Management of Technology of the University of Moratuwa in partial fulfillment of the requirement for the Masters of Business Administration. Department of Management of Technology University of Moratuwa December 2010 University of Moratuwa
3 Declaration I hereby certify that this dissertation does not incorporate any unacknowledged or previously submitted material for a degree or diploma in any university, to the best of my knowledge and it does not contain any material previously published, written or orally communicated by another person except where due reference is made in the text. Somaweera L.M.R. (MBA/MOT/09/9036) Date: This is to certify that this thesis submitted by Somaweera L.M.R. is a record of the candidate's own work carried out by her, under my supervision. The matter embodied in this thesis is original and has not been submitted for award of any other degree. Eng. Kithsiri Samarasinghe Senior Lecturer, Department of Management of Technology, University of Moratuwa. Date: 26/ol/2oU n
4 ABSTRACT This study focuses on telecommunication access network operation and maintenance related Managed Service. Original Equipment Manufacturers (OEM) are promoting Managed Service Business as a new service line. Telecommunication Operators are also considering outsourcing access network operations and maintenance to a reliable external party while keeping control of the operation. Telecommunication operators have been pushed to reduce their operational expenditure to face ongoing competition. The purpose of this research is to identify a suitable business model for Managed Service business in Sri Lanka. The broader objectives of the study are (1) Identifying driving forces for Managed Service in the Sri Lankan context, (2) Developing a business model for Managed Service Business and (3) Proposing new regulatory policies to develop industry via Managed Service. The development of this dissertation is mainly based on the information gathered through various groups such as Telecommunication Operators, Managed Service Providers (MSP) and TRC. A qualitative method known as context analysis is used to analyze the text provided in open ended questions. Following noteworthy findings were observed from the analysis. a) Operators and MSPs are driven by different factors with regard to Managed Service business. The perception of functional managers in operator side towards outsourcing of network operations to MSPs is also different to that of the operator's strategic layer. b) MSPs should hold a carefully designed business model considering technical, financial, organizational and service domains to continue with a consistent business. c) TRC needs further study on Managed Service business. Hence the industry and academic institutions has to launch more research projects in this area to find out new avenue telecommunication managed service industry can contribute to development of the country.
5 ACKNOWLEDGEMENT I am heartily thankful to my supervisor, Mr. Kithsiri Samarasinghe for all his support and enthusiasm toward the "suitability of telecommunication managed service model in Sri Lankan context" research topic. He provided a great deal of encouragement and guidance by providing valuable information related to the study. This thesis would not have been possible unless the friendly support received from Hasitha, Baherathan, Saumya, Sachintha and Nadeesha, my MBA batch mates, who always encouraged me not to give the research up. The time I worked with them is precious and really enjoyable. Mr. Ajith Liyanage has made available his support in a number of ways. He is the one who advised me to study Managed Service area. He explained potential benefits, capacity of having a good Managed Service model. Mr. Ajith spent lot of time giving interviews and information with me. Thank you again. I owe my deepest gratitude to lecturers of MBA MOT program, especially who lectured for Research Skills subject for sharing valuable knowledge and experience. I am indebted to many of my colleagues, especially Team RF at GTL, to support me by reading the dissertation and correcting mistakes. Also my wife encouraged me to finish the study giving her fullest assistance. Lastly, I offer my regards and blessings to all of those who supported me in any respect during the completion of the project. iv
6 ABBREVIATIONS 4G ARPU BOI BSS BTS Capex HR IDC IP IT ITU KPI LAN LTE MS MSP NOC O&M OEM Opex RNC SLA TCO TRC VHF VPN WiMAX WLL Fourth Generation Average Revenue Per User Board Of Investment Base Station Subsystem Base Transceiver Station Capital Expenditure Human Resource Internet Data Centre Internet Protocol Information Technology International Telecommunication Union Key Performance Indicator Local Area Network Long Term Evolution Managed Service Managed Service Provider Network Operating Centre Operation and Maintenance Original Equipment Manufacturer Operational Expenditure Radio Network Controller Service Level Agreement Total Cost of Ownership Telecommunication Regulatory Commission Vary High Frequency Virtual Private Network Worldwide Interoperable Microwave Access Wireless Local Loop
7 Contents ABSTRACT ACKNOWLEDGEMENT ABBREVIATIONS iii iv v Chapter 1 INTRODUCTION Background Identification of the Problem Research Objectives Scope and Limitations Significance of the Study Chapter Outline 6 Chapter 2 LITERATURE SURVEY Telecommunication Industry Today Global Trends Sri Lankan Trends Managed Service Definition for Managed Service Telecom Managed Service Growth Managed Service Role for Telecom Sector New Trends in Managed Service Key Elements of Next-Generation Managed Services Business Model STOF Model Outsourcing Models Drivers of Managed Service 24 Chapter 3 METHODOLOGY Introduction Conceptual Model Operationalization and Variables Sample of the Study Method of Data Analysis 35
8 Chapter 4 GTL CASE STUDY Introduction Operational Structure Organization Chart Authorities & Communication Matrix Managed Services Operational Plan Managed Services Operation Process Flow Chart Resources Estimation GTL Resources Partners/Subcontractors Quality Management Subcontractor/ Partner Quality Risk Assessment Observations 44 Chapters RESULTS Introduction Reliability Test Demographic Data Telecommunication Operator Data (Functional) Operator Perspective (Functional) Outsourcing Strategy Operational Position Current Performance Operational Finance Operational Efficiency Employees Business Environment Operator Perspective (Strategic) MSP Perspective Drivers of MS in Sri Lanka Barriers for MS in Sri Lanka Special Remarks Regulatory Perspective 64 vii
9 5.7.1 MSP's Policy concerns TRC View - Expert Opinions Proposed Ten Years Development Plan - TRC Business Model Technology Domain Organizational Domain Service Domain Finance Domain 72 Chapter 6 CONCLUSION Conclusions Recommendations Further Research 79 REFERENCES 80 Annex A: Telecommunication Industry Overview 81 Annex B: Questionnaire 83 Annex C: Questionnaire - Strategic Levels 90 Annex D: Questionnaire - MSP 92 Annex D: Questionnaire-TRC 95 viii
10 List of Figures Figure 1-1 The Structure of Value Chain : Source (Nokia, 2005) 3 Figure 2-1 Mobile Telephone Subscribers per 100 Inhabitants, Source:ITU 9 Figure 2-2 Global ICT Development Source: ITU 9 Figure 2-3 The Circle of Managed Service Growth 14 Figure 2-4 Telecom Equipment Vendor and Operator Value Chain 14 Figure 2-5 Positioning of Managed Service Vendors Source: Light Reading 16 Figure 2-6 Managed Services Solutions (Lucent, 2009) 18 Figure 3-1 Conceptual Model 27 Figure 3-2 Outsourcing Levels 29 Figure 3-3 Managed Service Drivers 30 Figure 3-4 Managed Service Business Model 30 Figure 4-1 Organization Chart 37 Figure 4-2 Operational Regions 39 Figure 4-3 Managed Service Process Flow Chart 40 Figure 4-4 Risk Management Process 43 Figure 5-1 MS Drivers and Strategy 47 Figure 5-2 Types of Outsourcing Activities 50 Figure 5-3 Barriers for Outsourcing 51 Figure 5-4 Likert Scale 52 Figure 5-5 Drivers of MS in Sri Lanka 61 Figure 5-6 Barriers for MS in Sri Lanka 62 Figure 5-7 Barriers according to MSP 63 Figure 5-8 managed Service Business Model 68 Figure 5-9 Technology Domain 69 Figure 5-10 Organizational Domain 70 Figure 5-11 Service Domain 71 Figure 5-12 Finance Domain 72 Figure 6-1 MS Business Model 76 ix
11 List of Tables Table 2-1 Managed Service Types 12 Table 3-1 Variable Table for Operarator functional layer 32 Table 3-2 Variable Table for operator strategic decision making layer 34 Table 3-3 Variable Table for MSPs 34 Table 3-4 Variable Table for TRC 34 Table 3-5 Data Sample Summary 35 Table 5-2 Correlation of Q9 components 47 Table 5-3 Experience Distribution 48 Table 5-4 Age Distribution 48 Table 5-5 Gender Distribution 48 Table 5-6 Management Position Distribution 49 Table 5-7 Education Level Distribution 49 Table 5-8 Managed Service Preference 51 Table 5-9 Descriptive Statistics - Operational Position 53 Table 5-10 Relation: MS Preference vs Operational Position 53 Table 5-11 Descriptive Statistics - Current Performance 54 Table 5-12 Relation: MS Preference vs Current Performance 54 Table 5-13 Descriptive Statistics - Operational Finance 55 Table 5-14 Relation: MS Preference vs Operational Finance 55 Table 5-15 Descriptive Statistics - Operational Efficiency 56 Table 5-16 Relation: MS Preference vs Operational Efficiency 56 Table 5-17 Descriptive Statistics - Employees 57 Table 5-18 Relation: MS Preference vs Employees 57 Table 5-19 Descriptive Statistics - Business Environment 58 Table 5-20 Relation: MS Preference vs Business Environment 58
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