Managed IT Services in Telecommunications New circumstances demand new models www.atosorigin.com
In June 2010, for the second consecutive year, Atos Origin was ranked the world s #1 provider of IT outsourcing services to the Telecommunications sector by Data Monitor. That doesn t happen without vision and execution ability. Telco Managed Services/BVD
The Service Paradox The agility with which telecommunications companies need to identify and act on opportunity, must be matched by all those who support them. This is particularly true for the commissioning, delivery and billing of managed IT services. It is time to re-think traditional approaches. Fixed-term contracts based on pre-set Service Level Agreements (SLAs) cannot deliver this agility. Paradoxically, the rules developed to safeguard the relationships between telecommunications companies and their managed IT service suppliers, have become a barrier in the new telecommunications landscape. Here s why... THE REASON Commercial ambition THE PARADOX IT service providers want to sell more while telecommunications companies want to consume less. Rigidity Clear rules of service and delivery protect both the provider and the telecommunications client, but the same rules are a barrier to agility. THE BURDEN OF CONTROL When outsourced service is based on SLAs, skilled resources are wasted by the need to monitor and manage them. In short, we must move from an engagement model based on what we agreed to one that delivers what you need. Telco Managed Services/BVD 3
Why Change and Why Now? The bond between telecommunications and IT has always been exceptionally close not surprising for an industry whose commercial model is built on the ability to manage hundreds of millions of minute transactions without missing a beat. Today, the landscape has been transformed. Telecommunications companies have set the gold standard for monthly billing based on clear and relatively stable charges but this is no longer enough. Telecommunications companies now do business in a world which changes from one day to the next New devices Security and confidentiality Machine-to-machine Volatile client loyalty Business and consumer Cloud computing Fixed and Mobile Transnational client communities New Media in Entertainment New media in personal and business communications Social Networking Voice and data MVNOs and new entrants Global markets These conditions and opportunities are all highly-dependent on IT managed services. Telecommunications companies have outsourced to the limit over recent years - keeping IT skills in house only when they add differentiating value. But now, the outsourcing approach must change. A new service model is needed. A model which delivers IT service on demand. A flexible model that can be scaled dynamically as business evolves. A shared model designed to help telecommunications companies and their IT partners win together. 4 Telco Managed Services/BVD
Introducing BVD (BUSINESS VALUE DRIVER) IT-related spending in synch with business Atos Origin has developed this model we call it the BVD or Business Value Driver model. It is crafted specifically to create value with our telecommunications clients. Put simply, it looks like this»» With traditional IT service outsourcing, telecommunications companies bought agreed service capacity and capability. Precise business requirement over a three or even five year contract are tough to predict, and the best way to manage this was simply to over-subscribe.»» For the telecommunications company, this means paying for more than you needed and needing to re-negotiate on all significant changes.»» For the IT service provider this created a similar dilemma. First, you have to ensure that capacity is available, while minimizing under-utilization. Second you have to guess what new skills and resources will be needed and when.»» The new model is designed to match service capacity to a» business, rather than an IT outcome.» It is designed to scale and to morph in line with changes in business requirement. Both parties benefit.»» Not only does the telecommunications company stop paying for unused service capacity: it also ensures that available service capacity is fit-for-purpose, and aligned with business goals.»» While at first sight, the IT service company loses service revenue, they gain through the acquisition of high-value and more sustainable service capability. With the BVD, Atos Origin takes full responsibility for entire processes. These are then charged according to actual performance and usage. If for example, we are managing the process of activating new client accounts, our earnings are strictly linked to the number of activations. We call these metrics the Business Value Drivers and we will set them for each client according to individual strategy and responsibility. Although the Atos Origin BVD model is a recent development, there is nothing theoretical about it. The model has been developed in close collaboration with one of our telecommunications clients, and has already been successfully adopted with them. Telco Managed Services/BVD 5
Benefits and Conditions Adopting the BVD IT service model will make a direct and immediate contribution to agility. This is particularly important when the pressure is on to develop, test and commercialize new products. But adoption does demand the willingness to change certain patterns and habits. Three in particular stand out. BVD What must be done? Why must it be done? What are the risks? How do we mitigate those risks? 1. Are you willing to share strategy and business planning? We must anticipate requirements and prepare resources and skills. Confidentiality Atos Origin serves your competitors too. In addition to clear non disclosure practices, we establish dedicated resource. By decoupling sensitive and non-sensitive service delivery we ensure confidentiality and economy of scale. 2. Are you willing to adopt a commercial model based on shared risk/ reward? We must both benefit from the value we create. The client - especially people in IT and procurement must not lose sight of the actual cost of IT service. We maintain parallel reporting streams for BVD and IT service. This allows you to plot the evolution and reward in terms of business value while maintaining a clear view of the cost of managed IT services. 3. How can we design your custom BVD model? We must understand what makes your strategy unique - as each strategy is different, each BVD model is too. It can be tough to keep business and IT strategy aligned especially when business moves so fast. How do we minimize the risk of misalignment? We will ensure that clear performance metrics exist for both business and IT activities. These will be cross-referenced to assure alignment, and will be used as a foundation for planning and development activity. 6 Telco Managed Services/BVD
Effective Transition The success of any new business practice hinges on transition - great ideas will fail to deliver if people underestimate the challenge of change. The Atos Origin BVD model prompts change in partnership, agility and metrics. Rather than the telecommunications company issuing the service specification and the service partner responding to it, both parties now determine the service path according to a shared and reciprocated understanding of strategy. Trust is the key. Partnership agility metrics The willingness and ability to anticipate and respond to changing conditions stops the contract agreement being used as a shield against change. The criteria by which we understand business success, and the means by which we allocate the share of the reward must be defined. Moving from a traditional contract model to the BVD will not happen in a single leap. We will move from models based on pure IT service, through a transitional stage in which IT service components are aggregated according to purpose, and finally to a true BVD model in which the business function becomes the measure, and the TECHNOLOGY component remains entirely in the background. Telco Managed Services/BVD 7
Atos Origin for Telecommunications A Managed Service Snapshot Experience? Yes Our BVD approach is only possible because we understand how the telecommunications business works. You can only define Business Value Drivers with a telecommunications company if you can get deep inside operations and strategy. We understand the three common pressures affecting all telecommunications companies: We also understand the importance of differentiation that new and established players have different strengths; that despite globalization in telecommunications, consumer clients are still predominantly local in their attitudes; that focused segmentation is critical; and that crossover from the consumer market will increasingly shape enterprise usage. cost pressure Core assets Quality of service The ruthless drive to minimize operational cost. The need to identify, protect and exploit core assets, with current customers and brand at the top of the agenda. The imperative of delivering differentiated quality-of-service, with maximum margin. telecommunications companies The BVD Umbrella Atos Origin can (and will) continue to deliver managed IT services to its telecommunications clients using traditional SLA-based models. We will respond to precisely crafted service requests, as always, with focus and with clear statements of cost, performance and delivery process. But we are also keen, even when discussing traditional managed IT service requirements, to consider our BVD model as a more dynamic and more forward-looking approach to service provision. The BVD model then becomes an umbrella for multiple managed IT services, combined to deliver from a business perspective, and offered on the basis of shared risk and reward. 8 Telco Managed Services/BVD
Managed Services from the BVD Perspective High Technology Transaction Services Atos Origin, through its specialist HTTS unit Atos WorldLine, is one of Europe s leading providers of transactions services. Our telecommunications clients are particularly heavy users of these services. In addition to providing highly scalable billing solutions, we provide extensive CRM services, including the end-to-end management of loyalty schemes. Atos WorldLine is highly innovative in its approach to creating value for telecommunications companies. We are currently, for example, using their ability to micro-manage millions of transaction events to handle the contextual meta-tagging which underpins our New Media in Sport proposition for telecommunications companies. Innovation does not compromise industrialization. Our telecommunications clients demand robust and completely secure service, and this is what Atos WorldLine delivers. bvd focus Typical telecom business processes include end-to-end billing, CRM and campaign management. These are charged according to volume. Although all storage, processing and other managed IT service activities are aggregated in terms of process results, they can be reported using traditional SLA-type metrics, if needed for competitor comparison. Cloud Computing Telecommunications companies are amongst the most intensive and demanding users of IT. Ensuring that IT resource remains fit-forpurpose while constantly seeking to drive out IT cost and minimize capital investment has been a constant challenge. Atos Origin s cloud-based managed IT services are changing the landscape of procurement and delivery. By providing processing, storage and applications on-demand, we make pay-per-use a viable reality. Our AtosSphere cloud-based services can be delivered via private, shared or hybrid cloud models, and can be delivered with pin-point focus to individuals, functions and geographies within the telecommunications organization. This means not just instant scalability but also clear visibility of demand and productivity essential for intelligent and focused planning. As more and more telecommunications companies seek to sell cloud-based services to their own clients, sharing the initiative with Atos Origin becomes a compelling possibility. bvd focus Cloud-based services can be packaged and billed according to the usage of the telecommunications company s own organization units. This simplifies planning and procurement, while delivering services which fit changing workforce requirements. This same model can also be used by telecommunications companies seeking to partner for externally commercialized cloud services around core business processes such as Billing and CRM. Telco Managed Services/BVD 9
Firewall Services Firewalling for telecommunications companies is complex and critical. You must ensure that two essentially contiguous torrents of traffic flow continually: client voice and data, on the one hand, and your own control and commercial management data, on the other. Although the logical link between these flows is clear, the performance of one must not degrade the performance of the other there must be no cross-contamination. Atos Origin firewall services clearly separate the core network from the business support systems, using pre-configured gateways to allow data records to be passed efficiently and reliably from the former to the latter. As telecommunications companies seek to create differentiated services using the Internet and social media, the ability to manage these essential services with speed and precision becomes business-critical. bvd focus Atos Origin will establish managed firewall services which are billed on a combination of traffic volumes and design variations. We focus on the strict separation between telephone traffic and the metadata necessary for OSS systems. Data Warehousing and Business Intelligence Atos Origin understands that this is the competitive battle-ground for all telecommunications companies. The ability to extract timely and actionable intelligence from reliable data sources underpins new product development; it underpins the relationships with individual consumer and business clients; and it becomes the foundation for informed innovation on the one hand, and low-risk cost-reduction on the other. We also understand that the process and outcome of each telecommunication company s Business Intelligence process is highly confidential: the expertise of your specialists becomes your differentiator. More than in any other area, our managed IT service contribution in data warehousing and business intelligence must be built on trust and partnership. If we can establish that quality of working relationship, we will ensure that your specialists gain the most dynamic interrogation tools, supported by the fastest, the most focused, and the most comprehensive results. Our data warehouse services combine innovative technologies from Oracle in combination with highly advanced technologies including clusterbased RAM databases. bvd focus The basic BVD metric here is based on transaction volumes. We are also eager to explore extended shared reward models for data warehousing and business intelligence, in which business growth is directly linked to the quality of intelligence. 10 Telco Managed Services/BVD
Next Steps Most of the managed service contracts between Atos Origin and its clients today are traditional. This will not change overnight. We do, however, believe that increasing numbers of new engagements will benefit from consideration of our Business Value Driver model. The choice is not all or nothing : new and traditional models will run side-by-side. Where, however, telecommunications business development is particularly focused on dynamic targeting and rapid trial and experimentation, we ought to talk about the opportunities for a BVD-based engagement. New levels of trust are the foundation of this opportunity, and trust must always be built on credibility. We are eager to engage with telecommunications companies who, like us, believe that shared risk and reward are the future. Let s start now - considering the opportunity and discovering what Business Value Drivers could give your company the edge. Telco Managed Services/BVD 11
About Atos Origin Atos Origin is one of the world s leading international information technology services companies. Its business is turning client vision into results through the application of consulting, systems integration and managed operations. The company s annual revenues total more than 5.8 billion euro and it employs over 50,000 people in 40 countries. Atos Origin is the Worldwide Information Technology Partner for the Olympic Games and has a client base of international blue-chip companies across all sectors. Atos Origin is listed on the Paris Eurolist Market and trades as Atos Origin, Atos Worldline and Atos Consulting. For more information, please contact: marketing@atosorigin.com www.atosorigin.com Atos, Atos and fish symbol, Atos Origin and fish symbol, Atos Consulting, Atos Worldline, Atos WorldGrid and the fish symbol itself are registered trademarks of Atos Origin SA