Application management services for telecommunications: Driving transformation and growth

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1 IBM Global Services Application management services for telecommunications: Driving transformation and growth Buoyed by growth in wireless and support services, the overall telecommunications market internationally is poised for a healthy 10.3 percent compound average growth rate (CAGR) through Telecommunications Industry Association Introduction Name an issue, and it probably applies to the telecommunications industry. Customer churn...a volatile, highly regulated market...fierce competition... surplus bandwidth...proprietary systems...exhausted capital...crushing debt. In this environment, success is no longer about survival of the biggest; it s all about survival of the fittest: those prepared to optimize existing assets customers, capital, networks and applications alike and put those resources to work to support and grow the business and optimize ROI. This means being well prepared to capture and keep the best, most profitable customers... reduce financial pressure...anticipate, spot and adapt dynamically to market fluctuations...integrate processes and applications across the enterprise... strengthen links with partners and suppliers and optimize IT assets in a way that promotes an adaptable, self-healing and self-funding infrastructure.

2 Application management services for telecommunications: Driving transformation and growth Why application management services? Essential to reaching these goals are a company s applications the lifeblood that courses through networks, and the platform upon which service providers compete, thrive and profit. Effectively managing these resources is increasingly essential in a marketplace measured in realtime and dependent upon dynamic service, response and performance. In the telecommunications arena, application management is especially daunting. Unpredictable fluctuations in capacity and demand, continuous technology advancements in wireless, Internet, voice, data and video, plus the complexities of managing and safeguarding legacy systems and next-generation networks all must be taken into account. Add to these issues the intricacies of customer and partner relationships, and one can see why application management has become so critical to telecommunications service providers. It s a reality that cannot be circumvented; it requires a careful strategy and a clear roadmap. Few can go it alone. Telcos currently spend between five and ten percent of their revenue on non-core functions like human resources, finance, billing and IT support. IBM Business Consulting Services Analysis In what has become a market pressure cooker, telecommunications service providers wireless and wireline alike are feeling the heat. As they work to reclaim and retain customers, extend their reach, reduce risk, grow the business and seize more profits, these companies face some daunting challenges, including: Winning and retaining good customers Prior to deregulation, customers had little if any say in choosing a telecommunications service provider. Today, they can switch service providers at will motivated by lower rates and the promise of better service. Unfortunately, as they struggle to cut costs, many service providers continue to view customer relationship management (CRM) as just one more item on a long list of expenditures, rather than a mutually beneficial, profit-driven area of the enterprise. Grappling with market downturns Seeking new sources of revenue is hard in a market wrestling with a challenging regulatory environment, increasing competition, consolidation and, in some cases, bankruptcy. Growing one s customer base is simply not enough to stay solvent, much less profitable. Companies must work at doing a better job of leveraging the assets they already have customers, partners, networks and applications to drive growth and profitability and open new revenue streams. Utilizing bandwidth An oversupply of bandwidth has left the industry with an abundance of capacity, and customers with an overload of what many consider commodity services. Acquiring and retaining customers, profiting from network investments and increasing revenue streams 2

3 is thus a huge challenge. Unless service providers learn how to fully utilize and profit from their network assets, they will continue to drive up costs and drive down profits. A host of benefits for service providers Working with the IBM AMS telecommunications team, service providers can: Optimizing legacy systems As more and more applications make their way to the edge of networks, telecommunications service providers must figure out how or if to utilize these investments, including proprietary back-office systems that can stymie new initiatives. Conserving capital In the aftermath of acquisitions, network buildouts and numerous other expenditures, service providers are finding it hard to secure capital and gain management approval for new and future initiatives a dilemma that makes it difficult to generate new revenue and build cash flow. By preparing and equipping the business including automating and integrating businesses processes and services service providers can reduce costs, heighten productivity and reduce capital outlays. Outsourcing non-core tasks to a trusted partner is another way to conserve capital while keeping up with IT advancements. Given these heavy demands, a company s applications should be ready to respond at any point in time to virtually whatever demands come their way. Typically, this involves consolidating, upgrading and replacing applications on a regular basis a time-consuming and complex task that must take into account both business and IT variables, as well as cost. Application management services help enable service providers to handle this task in a way that fosters always on performance, security features, service and economy. Improve organizational responsiveness and productivity by linking seamlessly with suppliers and partners in realtime Integrate the enterprise by connecting applications and operating platforms across networks Achieve differentiation by developing advanced, customized applications for consumer and enterprise markets at less cost, and with a faster time to market Retain customers and increase customer satisfaction by utilizing customer data to align expectations with products and services, better understand customer profitability and value, automate services, and reduce churn Cut costs by outsourcing non-core, labor-intensive processes to a trusted partner with worldwide reach; reinvest savings in new initiatives Save enough money from aging legacy applications to fund new, on demand applications that can deliver critically needed business value Optimize resources and conserve capital by utilizing global resources to provide services at the point of delivery across cultural, language and currency boundaries, and time zones. 3

4 Application management services for telecommunications: Driving transformation and growth IBM Application Management Services: Transforming the infrastructure IBM Application Management Services (AMS) approaches a service provider s applications as strategic business tools that can be used to fundamentally improve how the company operates and communicates. AMS addresses the entire application management process from oversight and execution to maintenance, enhancement and transformation. Our expertise applies to virtually every type of application from legacy mainframe systems to newer wireless and Internet applications, as well as package solutions from some of the world s leading software companies. Telecommunications service providers can call on us for assistance with a single application, a subset of non-core applications, or their entire application portfolio. IBM AMS brings demonstrated technologies, solutions, intellectual capital and a strong heritage of leadership and expertise to the telecommunications industry. These capabilities enable us to help companies foster business change and reduce operational costs through carefully managed applications all supported by proven methodologies, tools and skills, including those from IBM Business Consulting Services. The IBM AMS telecommunications team, part of IBM Global Services, comprises IT professionals and telecommunications consultants with deep experience in the industry. Today, these resources are helping telecommunications companies transform their application portfolio into an on demand, service-focused business environment. Prior to assuming any level of application management, IBM AMS professionals work closely with a company s staff to thoroughly assess the organization s technology and business challenges. Although we adhere to a structured methodology, we also know that every telecommunications company has different (and evolving) requirements, and model our services accordingly. This helps assure an optimally integrated, security-rich and Web-ready application environment that aligns technology and business strategies in the best and most cost-effective manner. Global Optimization As one of the world s largest providers of application development and maintenance services, IBM has developed a global optimization model a set of processes, tools and facilities that are designed to provide economical, uninterrupted support and a single point of accountability for telecommunications service 4

5 providers around the world. We employ these assets to help service providers reduce labor costs while mitigating the risks associated with utilizing global resources. Our reach, as well our proven migration methodologies, give us the flexibility to effectively transfer work to different countries if political or economic conditions dictate at a moment s notice, and at little or no extra cost to our clients. IBM offers service providers a unique solution for determining global resources. Developed by IBM Research, this tool enables the IBM AMS team to analyze resource needs, evaluate costs and confirm the availability of IBM professionals who best fit a client s requirements. We can also model several resource options by examining the feasibility and geopolitical risks of using global resources determining the optimal skill mix and limiting the costs of travel requirements and project ramp-up. This underscores our commitment to ensuring the economy and availability of key skills. The IBM AMS telecommunications team oversees the various aspects of global relationships including cultural, language and currency differences. This offers an increased feeling of confidence, more economy and more flexibility, since our services can be delivered quickly, Real-world results Telefónica de Argentina S.A. (TASA), a subsidiary of Telefónica S.A., based in Spain, is Argentina s largest telecommunications company. Since 1992, TASA has supplied cutting-edge telecommunications facilities and products to individuals, companies and institutions. TASA s Application Development and Maintenance (ADM) Services were supplied by more than 30 different providers. As a result, the company s application development and maintenance function was not only scattered, but also very costly. The company called on IBM to provide support services for TASA s legacy business applications a task that involves managing three major application areas comprising 40 percent of TASA s application portfolio. Since contracting with IBM, TASA s Application Development and Maintenance costs have been reduced by 30 percent; production support ticket resolution time has decreased by 80 percent; customer query average resolution time has dropped by 91 percent; and software requirement aging has been reduced from months to 60 days. 5

6 Application management services for telecommunications: Driving transformation and growth Real-world results Telstra is the leading Internet service provider and the largest telecommunications company in Australia. It is also Asia s largest international carrier of voice and data. Telstra has one of the best-known brands in Australia, and in 2002 was rated #108 on the Fortune Global 500. FieldMate, Telstra s system for disseminating maintenance and installation information to field engineers, was limited in functionality and operated on the slow and aging DataTac network. FieldMate was costing Telstra heavily in terms of maintenance and productivity. Telstra needed to replace the existing solution to reduce cost and improve usability a task that required an IT service provider that understood the telecommunications field service market and could rapidly deliver an integrated e-business solution. Telstra contracted IBM to develop a custom wireless solution to manage the flow of information from the job dispatch system to Telstra field engineers. Based on IBM WebSphere technology, the IBM custom e-business solution significantly enhances Telstra s field services operation. Field Mobile Computing (FMC) now uses industry-standard devices and platforms to replace customized, expensive-to-maintain field devices. Reliance on telephone-based dispatch centers to update service information has been almost eliminated. Tickets of work download 75 percent faster, enabling staff to spend more time fixing problems. The new application is a world first in field force automation deploying to a Windows Pocket PC platform utilizing emerging technologies. reliably and economically virtually anywhere, anytime, around the world in any time zone. We have in place a comprehensive, consistent and streamlined set of application delivery processes that we deploy across all of our delivery centers. Furthermore, using our proven migration and steady-state processes, we help ensure a smooth transition, as well as effective delivery and support of applications. Additionally, by executing a consistent set of mature processes across our global delivery center locations, we can achieve high levels of productivity during steady state. An ROI framework IBM has developed a sophisticated ROI toolkit that can help telecommunications service providers gain a reliable estimation of concrete returns they can expect from any or all of their application transformation initiatives. Prior to starting work, IBM utilizes this toolkit to form various application scenarios. This provides information to assist in decision making, and can be leveraged during the actual transformation process to track results and regularly evaluate cost to benefit. 6

7 Global Testing Centers The IBM global testing organization provides telecommunications service providers access to leading-edge test centers for enhancing application development. These locations offer a comprehensive range of testing services to address a service provider s specific objectives, including a full range of application testing services, accessible worldwide. Companies can take advantage of these services to help maintain greater stability, reduce costs and improve productivity. Our testing services, which can be employed separately or together, encompass Test Process Evaluation; Requirements Validation; Systems Integration Testing; Performance/ Stress Testing; Test Automation; National Language Support; e-business Testing; Test Project Management; and Full Test Outsourcing. A globally consistent set of processes, methodologies and tools The IBM AMS telecommunications team employs a proven management system and an integrated, highly disciplined approach to software and systems engineering. What s more, we continually test our processes and tools to confirm compliance with evolving standards and assure rapid, cost-effective delivery of services and a faster ROI. Real-world results CSG Systems, Inc., based in Denver, Colorado, provides worldwide customer care and billing solutions for the telecommunications industry. In August of 2002, CSG Systems acquired the billing and Customer Care software offering named Integrated Customer Management System (ICMS). The opportunity incorporated the ICMS (now called CSG ICMS) technology as well as the existing set of customer contracts around the globe. To minimize business risk, CSG wanted to have a very predictable cost for maintaining and supporting these existing customers. The company selected IBM Application Management Services to maintain the application software package. Furthermore, when CSG acquires a new customer, IBM is available to provide software installation and customization services to CSG for that new customer, anywhere in the world. In this agreement with IBM, CSG acquired 40 new customer contracts and a new software product to offer in its marketplace with very predictable support costs, while minimizing the requirements for new support staff. CSG s relationship with IBM and the associated maintenance agreement allow it to rapidly respond to customer needs and market opportunities. 7

8 Application management services for telecommunications: Driving transformation and growth IBM AMS Offerings for the telecommunications industry IBM Application Management Services offers a continuum of complementary offerings, including advisory services, that can be deployed individually or together. These services extend from management of a telecommunications service provider s entire application portfolio to toe in the water offerings relevant across a particular set of applications. IBM Application Portfolio Management Services (APM) involves a comprehensive evaluation of a provider s application portfolio taking into account business, industry and technology priorities to help an enterprise thoroughly and continually understand the value of its applications. With these services, IBM provides ongoing assessment, transformation and management of a company s application mix to confirm that the client is focused on the right applications for the business, and that those systems will receive the appropriate allocation of money and resources. ROI scenarios help forecast the probable benefits of application transformation, and can be used to track and measure returns on an ongoing basis. IBM APM is a flexible offering encompassing an end-to-end focus on portfolio assessment and portfolio transformation. IBM Application Portfolio Management Services-assessment helps telecommunications companies gauge and coordinate their current application environment and business strategies and identify transformation opportunities. The goal is to prioritize overall IT needs, including the IT infrastructure, systems architecture and high-level functional requirements. IBM Application Portfolio Management Services-transformation utilizes results of the portfolio assessment to implement an objective, prioritized blueprint for aligning and overseeing a company s applications; identifying key business drivers and monitoring their effect on the application portfolio; providing governance over transformation projects; and measuring the business value of those efforts against identified objectives. Portfolio transformation helps reduce redundancies and ensure optimum productivity, and is especially relevant for companies that have undergone mergers and acquisitions. IBM Legacy Transformation Services Many telecommunications service providers have allocated a significant portion of their IT budgets to supporting legacy applications. When simultaneously faced with fewer dollars, growing competition, dwindling resources and larger expectations, companies must carefully examine how to reap the most value from these critical assets. Legacy transformation thus becomes key to supporting new business initiatives, linking IT strategies to business goals, reducing network bottlenecks and optimizing ROI. IBM Legacy Transformation Services is a modular offering that can help telecommunications companies incrementally 8

9 transform legacy applications to adapt to the evolving needs of the business, the network, customers, employees and partners: IBM Legacy Transformation Services for consolidation and migration focuses on streamlining the legacy portfolio to reduce operating expenses. IBM Legacy Transformation Services for application integration assists companies in incorporating their legacy applications with other enterprise software package and home grown alike to achieve near-realtime access to critical business information. IBM Legacy Transformation Services for Web enablement takes legacy applications to the next level bringing them online to optimize communication and information access among employees, customers and partners. IBM Legacy Transformation Services for application renovation documents, extracts and centrally manages the business rules held in legacy applications turning these resources into reusable, network-based processes that can be leveraged over time, via a standardized architecture, to provide more dynamic response to changing business and market demands. IBM Accelerated Solution Delivery Services IBM has in place Accelerated Solution Delivery Centers locations that apply a set of best-of-breed techniques to speed product development and reduce time to market. This methodology has been proven to trim application development cycles by as much as 67 percent, and development costs by as much as 30 percent. The Accelerated Solution Delivery center can be ideal for developing applications that are key to a service provider s core business and need to be delivered with an exceptionally short cycle time. IBM Package Application Services offers a way for telecommunications companies to accurately predict and manage the costs, risks and resources related to ongoing maintenance and support of package applications, including Enterprise Resource Planning. IBM Package Application Services provides comprehensive and cost-effective management of leading software packages such as SAP and PeopleSoft with the skills, expertise, processes, tools and methodologies needed to maximize the quality, performance and economy of these applications. These services furnish flexible and continuous support crucial to realizing the expected return on a company s application investment. Ongoing application support and maintenance, as well as optional implementation and user help desk assistance, are delivered by IBM professionals highly skilled and experienced in package applications. This enables telecommunications service providers to concentrate more on the core business and less on the daily aspects of application management including IT, industry and process requirements. 9

10 Application management services for telecommunications: Driving transformation and growth Moving to an on demand business model: The key to the future IBM believes that successful telecommunications service providers will move to what we call an on demand business model. IBM Application Management Services can help service providers transform into an on demand business armed with new levels of efficiency, flexibility, scalability and responsiveness. The on demand business model provides a highly transactional environment that is designed to give telecommunications service providers the ability to launch new products faster and increase speed-to-market. An on demand telecommunications infrastructure is designed to be flexible and scalable enough to respond rapidly to virtually any customer requirement, market opportunity or external threat. Service providers that employ this model will exhibit four characteristics: Variable By utilizing pricing structures that enable higher levels of productivity, cost control, capital efficiency and financial foresight, companies can remain flexible and financially sound, despite market fluctuations. Focused Companies that focus on the core business and the best customers are more willing to call on partners to help ensure best-in-class capabilities. By doing so, service providers can concentrate on areas that deliver the most value and the most profits. Resilient Service providers that adopt a flexible, realtime operating environment supported by self-healing systems are better equipped to confront market and operational downturns and support business continuity. Responsive Prepared to sense and react in realtime, based on one view of customers, employees, suppliers, partners and competitors. The result? New efficiencies... more personalized service...and an integrated, highly dynamic enterprise. IBM Application Management Services is an important step in the journey to becoming an on demand telecommunications service provider. 10

11 IBM Custom Application Services focuses on delivering continuous innovation, improvements and ongoing maintenance for one or more of a service provider s Web-based applications. These services are designed to increase the value of custom-built applications while helping to reduce the cost of maintaining them. With IBM Custom Application Services, telecommunications service providers can draw on the IBM e-business expertise to help accelerate time to market, improve application quality, reduce risk and lower ongoing costs in a significant, predictable way. IBM assumes responsibility for evolving, enhancing and maintaining selected applications according to specified service-level agreements and can, if necessary, manage the end-user help desk. IBM Custom Application Services can also encompass the development of an application from requirements definition through implementation. IBM Application Management Advisory Services assists service providers in identifying and evaluating options for increasing the value of application development and maintenance. IBM Application Management Resource Services supplies and manages a service provider s application development and maintenance resources, including the provision of supplemental staff to help develop, enhance and support a company s application portfolio. We offer access to a vast reserve of experienced IBM professionals to help telecommunications service providers access additional staff and specialized skills on an as-needed basis. These resources can be drawn from a local pool of IBM talent, or from a variety of IBM locations worldwide. IBM AMS telecommunications consultants are also available to help companies optimize the value of subcontractors and predict the need for those resources over time. Find out more IBM Application Management Services is a world leader in helping telecommunications service providers make the most of their application environment. Our highly skilled, globally based AMS professionals, including industry and IT experts, deliver IBM AMS services to our clients worldwide supported by data centers and IBM Business Partners across the globe. To learn more about IBM Global Services and IBM Application Management Services, contact your IBM sales representative or visit: ibm.com/services 11

12 Copyright IBM Corporation 2003 IBM Global Services Route 100 Somers, NY U.S.A. Produced in the United States of America All Rights Reserved IBM, the IBM logo, the e-business logo and WebSphere are trademarks or registered trademarks of International Business Machines Corporation in the United States, other countries, or both. Microsoft and Windows are trademarks of Microsoft Corporation in the United States, other countries, or both. Other company, product and service names may be trademarks or service marks of others. References in the publication to IBM products or services do not imply that IBM intends to make them available in all countries in which IBM operates. 1 International Telecommunications Market Expected to Resume Growth at Double-Digit Rates, Telecommunications Industry Association, April 11, G