Outsourcing OSS and BSS

Transcription

1 Outsourcing OSS and BSS Eirwen Nichols, Principal Analyst, Ovum Direct line; +44 (0) TM World, Long Beach, California October

2 Let s get our terms right first Outsourcing Network IT Off-shoring Support services Managed services Take a pragmatic view. Think of it as buying a service in which you don t own all the assets - hardware, software or people 2

3 To outsource or not to outsource? Telecoms service providers outsource far less that other industry sectors in all categories of outsourcing. Why? no cultural acceptance of the idea Immaturity - like all teenagers, a telecoms service provider believes that its needs are different to every other service provider the rate of change in telecoms Objective of Ovum s recent research has been to understand whether this will change and what this means for OSS/BSS applications. 3

4 What operations processes are outsourced in 2004? Fulfilment Assurance Billing Customer relationship mgt X Service mgt and operations X Resource mgt and operations X X Supplier/partner relationship mgt Enterprise IT Eg Spares X Eg Field maintenance, Site mgt 4 The extent of outsourcing in OSS/BSS is very low Eg Financial, HR, Desk top mgt

5 Who outsources? Size and scope of service provider Incumbent Eg Device management Eg Legacy support and maintenance Eg Billing Niche New Prime Old Age of application/system Scale and maturity are important indicators 5

6 Patterns are hard to discern Generalisations are difficult to make - it s a fragmented picture and hard for suppliers to spot The Big Opportunities Generalising, we can say that the most likely place to find outsourcing is in Billing and Customer Care in a North American Tier 2/3 mobile operator Like all generalisations, this doesn t help look to the future. Future market opportunities will be defined by: Internal organisation of network operations and IT. The CIO is increasingly prepared to consider outsourcing the service provider s balance sheet an injection of senior management from a non-telco background 6

7 Drivers for outsourcing OSS/BSS All the usual ones for outsourcing in general, including: Reduce operating costs Make costs predictable Turn fixed costs into variable costs Access to skills Sharing risk Ability to focus management attention on core requirements, eg customers OSS-specific drivers include: speed to market better able to align costs with revenues (although this is weakening) 7

8 Barriers for outsourcing OSS/BSS the OSS is the business and too valuable to outsource OSS is a mess and we need to sort this out before considering outsourcing Complexity and integration requirements are too great Company culture Employment and trade union legislation The lack of credible suppliers 8

9 Trends in outsourcing the network Network outsourcing is on the agenda - takes costs off the balance sheet. Outsourcing of maintenance, management and operations is happening. Ownership of the network is not changing hands Size matters for a telecoms service provider - smaller service providers will be the main companies to outsource the network. The argument is strongest for 2nd tier mobile service providers Greenfield fixed operators are also taking this route - but there aren t many around A strong push from some equipment vendors to take ownership of this sector of the market but it s not proving to be a pot of gold 9 Outsourcing the network does not lead to outsourcing the OSS/BSS

10 Trends in outsourcing fulfilment and assurance Fulfilment and assurance lie at the heart of the business - the core will remain in house Experience CIOs have spotted the opportunity to off shore support and maintenance of legacy applications Enablers for service delivery may be outsourced in the short term as operators seek flexibility and speed to market Service providers will take systems back in-house as they replace legacy systems and move to second generation service delivery platforms The opportunities for business process outsourcing in these areas appear slim 10

11 Trends in outsourcing billing and CRM Billing and customer care are the major areas outsourced by telecoms service providers. Call centre outsourcing is mature and will continue to be a good business decision Consolidation of billing applications and data centres is high on the agenda but this is not leading to outsourcing Real time billing and content billing are changing the requirements significantly and will shift the balance back to in-house Suppliers should focus on virtual operators for market growth 11

12 Trusted suppliers - the need for more choice Software vendors - applications outsourcing eg Convergys, Amdocs Systems integrators - business process outsourcing and applications outsourcing eg Accenture, Wipro, TietoEnator Other telecoms service providers eg T-Systems Network equipment vendors - network and resource mgt outsourcing eg Alcatel, Ericsson Four types of supplier - but still the choice is limited and offerings differ widely 12

13 Will business process outsourcing drive the market? Customer mgt processes Enterprise IT expertise Service mgt processes Network expertise Resource mgt processes 13

14 Where does the balance lie?? In-house provision Outsourced provision Outsourcing suppliers will need to show considerable flexibility in their offerings and pricing to tip the balance in favour of outsourcing OSS/BSS 14

15 Outsourcing OSS/BSS is not a major market Level 3 opportunity in the next five years