P. 1
IT Service Management in Telecom Companies - Panacea for Reducing Margins

IT Service Management in Telecom Companies - Panacea for Reducing Margins

|Views: 3|Likes:
Published by Parth Joshi

More info:

Published by: Parth Joshi on Nov 07, 2012
Copyright:Attribution Non-commercial


Read on Scribd mobile: iPhone, iPad and Android.
download as PDF, TXT or read online from Scribd
See more
See less






IT Service Management in Telecom Companies
Panacea for Reducing Margins


2 Folio and accompanying text

3 IT Service Management in Telecom Companies

The Indian telecom industry has come a long way in achieving its dream of providing affordable and effective communication services to its customers. In the last decade, India has become a major base for the telecom industry worldwide enabling Indian telecom companies to become truly global players. The Indian telecom sector has gone through many phases of growth and diversification. Starting from telegraphic and telephonic systems in the 19th century, the field of telephonic communication has now expanded to make use of advanced technologies like GSM, CDMA, and WLL to the great 3G Technology in mobile phones. The Indian telecom market has been characterized by fierce competition in which a number of major players together with an even larger number of smaller players have been battling to increase subscriber numbers, and most importantly, market share. As telecom is a technology driven industry where IT plays an important role in sustaining growth, the telecom companies are compelled to strengthen their IT Services Management (ITSM) framework in alignment with the telecom environment and its challenges. The challenges before the Indian telecom companies are huge and a good ITSM framework is likely to enhance profit margins and provide a competitive edge over other service providers. The objective of this whitepaper is to emphasise the growing business need for ITSM in the telecom industry, highlight some of the critical challenges being faced by telecom companies and how an effective ITSM can help meet such challenges. We hope that this whitepaper can help organisations understand aspects of ITSM, assess their current ITSM capabilities and provide them with a rationale for taking their existing ITSM procedures to the next level. Akhilesh Tuteja, Executive Director, IT Advisory




Indian Consumers: Driving the Growth


Realising Telecom Market for Indian Operators


Evolving IT Services – Driving Business


The Ten Commandments of ITSM


Outsourcing: Propellant or Drain


Winning New Frontiers


Safeguarding Income Streams to Enhance Efficiency




KPMG ITSM Service Offerings


4 IT Service Management in Telecom Companies

Indian Consumers: Driving the Growth

The Bird of Gold Flies Again - Indian Consumer Market Scaling New Heights India, supported by its strong economic growth, represents one of the fastest growing consumer markets in the world. The fundamental forces of long term economic growth such as demographics, urbanization, and rising education levels are affecting growth in Indian incomes resulting in increasing spending power, which translates into growing household consumption. The Indian consumer market is set to scale new heights. According to a study by McKinsey Global Institute on the rise of India’s Consumer Market in May 2007 , India will climb from its position as the twelfth-largest consumer market today to become the world's fifth-largest consumer market by 2025. Aligning with the growing potential of consumer market in India, the Indian telecom sector has experienced a tremendous growth in the last few years.

5 IT Service Management in Telecom Companies

Although only about 1 in 20 of the first 2 billion mobile subscribers live in India, as many as 1 in 4 of the next billion subscribers will be Indians, according to a new report from Boston Consulting Group. However, the report points out that reaching these subscribers profitably will demand radical changes in products and business models on operator’s part3

India has become the fourth largest telecom market in the world1 after China, Japan and South Korea and has surpassed the United States to become the second largest market in mobile telephony in terms of subscribers (260 million at the end of March) after China2. Indian Telecom – A Growing Consumer Need The Indian telecom industry has experienced significant growth in the recent years and constitutes about 3 percent of the national GDP The Indian telecom . market is vibrant, price-sensitive and with high-growth potential. According to a recent study by Gartner, the total cellular services revenue in India is projected to grow at a Compound Annual Growth Rate (CAGR) of 18 percent from 2008-2012 to exceed USD 37 billion, with more than 737 million mobile connections by 2012, growing at a CAGR of 21 percent in the same period. India along with other BRIC (Brazil, Russia, India and China) countries is likely to become home for over 1.7 billion mobile users by 2012. As per a recent study by Gartner4, in the next 4 years, cellular market penetration in India would increase to 60.7 percent from 19.8 percent last year.


- Telecom Overview - 10 April 2008 3The Hindu Businessline.com 4The Hindu Business Line - 03 July 2008

6 IT Service Management in Telecom Companies

Realising Telecom Market for Indian Operators

The Indian telecom market can be characterized by reducing Average Revenue Per Use (ARPU), low tele-density, falling tariff rates and increasing Minutes of Use (MoU). With a subscriber base of over 260 million, the industry operates at an ARPU as low as 264 (INR / Sub / Month) for GSM subscribers and 159 for CDMA subscribers. Also, the MOU for the telecom subscribers has increased from 471 in March 2007 to 493 in March 2008 reporting a percentage growth of 4.67 .
Figure 1: Analyzing the Indian Telecom Market

Source: KPMG

7 IT Service Management in Telecom Companies

Figure 2: Performance Indicators for Telecom Industry5

The telecom industry in India boasted of the highest mobile usage in the world, nearing around 500 minutes per subscriber per month, with some of the lowest mobile tariffs and ARPUs in the world, resulting in reducing the profit margins. The telecom operators are continuously striving to manage the reducing margins. It can be seen from the trends, why telecom companies are typically focusing on the following aspects to manage their operating margins: • • • • • Increasing tele-density Optimizing operating costs Increasing customer focus and managing the churn rate Infrastructure sharing Diversification of telecom services.

In their continuous endeavor to manage the reducing margins, telecom companies have been taking steps to reduce their operating costs and increase their revenues. Business Process Outsourcing, Infrastructure Sharing, IT Outsourcing and Revenue Assurance are some of the significant steps which telecom companies have taken to reduce their operating costs (shown in Figure 3 below) along with diversification of telecom services, increasing the network coverage area, focusing on customer satisfaction to increase the subscriber base, and hence revenues.

Figure 3: Service Management Reducing Operating Cost

What are the main challenges facing the sector as we go forward? “The challenge of the day is to search for new cost effective ways to roll out telecom services in rural areas. It means one has to choose proper and effective technology for deployment and leverage on the use of available infrastructure to reduce cost and time of role out of services. Those service providers who create the right business would emerge winners and the rest would remain spectators. ” - Nripendra Misra , Chairman TRAI6

Source: KPMG

Telecom being a technology driven Industry, it is essential for telcos to mature and enhance their Information Technology function from being just an enabler to a full blown IT service organisation that is instrumental in providing the required advantage to a telco in meeting the margin enhancement goals. This calls for telcos to design and implement frameworks that address aspects like strategy, design, transition, operations and improvement of IT services. For ensuring the effectiveness of the initiatives that telecom companies are taking to manage their reducing margins, it is important to ensure the effectiveness of the IT Services supporting these initiatives. Telecom companies need to scale up the capability and maturity level of their IT Services from a business support function to a strategic function enabling the business to move up the telecom value chain.
5 TRAI 6SME Times

quarterly reports - 10 July 2008

8 IT Service Management in Telecom Companies

Figure 4: ITSM Maturity Across Telecom Companies in India

Source: KPMG

Figure 4 depicts the phases of IT Service Management evolution in an organisation, where IT Services grow from a product focus procedural approach of service delivery to an innovative approach of contributing to the value chain of the organisation. IT Services in telecom companies are being managed in a complex manner with limited standardisation of processes, primarily focusing on customer needs and having a limited focus on contribution to the business. An effective IT Service Management is seen as the need of the hour to manage the reducing margins which is one of the primary concerns that telecom companies are dealing with across the globe. While the increased competition in the Indian telecom industry will drive telecom operators to focus on various ways and means to seize the reducing margins, customers and partners will be closing watching how telecom companies improve their business process efficiencies. An effective deployment of IT Services will play a key role in ensuring higher efficiencies as desired by customers and partners alike.

9 IT Service Management in Telecom Companies

Evolving IT Services – Driving Business

IT Services are designed and implemented to meet business challenges and to bridge the gap between capability and achievability of the business requirement. With the growing business expectations from IT Services, IT is transitioning from a support function to business function. ITSM helps organisations to mature IT to the level of IT Governance which is aligned with the Corporate Governance structure of the organisation. To satisfy the growing expectations, it is vital to have an effective framework for managing IT services. What is IT Service Management (ITSM) - IT Service Management is a discipline for managing IT Systems and Services to satisfy customer’s requirements of IT’s contribution to the business. It helps organisations to manage end-to-end IT services providing roadmap for transformation of IT into a strategic partner to the business. Adopting ITSM framework and aligning it to the organisation’s business environment provides huge potential benefits that include:

10 IT Service Management in Telecom Companies

• • • • • • • •

Reduced operating costs Improved quality of IT Services Improved customer satisfaction Improved productivity Improved management and monitoring of third party services Improved compliance to legal and regulatory requirements Integration of business strategy with IT service strategy Improved implementation and management of IT services for dynamic, high risk, volatile and rapidly changing business needs.

An effective IT Service Management revolves around the core practices of Service Lifecycle Management which include: • Service Strategy – focuses on the identification of market opportunities for which services could be developed in order to meet a requirement on the part of internal or external customers • Service Design – focuses on the activities that take place in order to develop the strategy into a design document which addresses all aspects of the proposed service, as well as the processes intended to support it Service Transition – focuses on the implementation of the output of the service design activities and the creation of a production service or modification of an existing service Service Operations – focuses on the activities required to operate the services and maintain their functionality as defined in the Service Level Agreements with the customers and Continuous Service Improvement – focuses on the ability to deliver continual improvement to the quality of the services that the IT organisation delivers to the business.

An ITSM framework needs to be defined in accordance with the business requirements and operational drivers of the organisation to exploit the potential benefits of ITSM to the fullest. The diagram below depicts the congruency between ITSM and Business Strategy and Operations.
Figure 5: Congruency Between ITSM and Business Strategy and Operations

Source: KPMG

11 IT Service Management in Telecom Companies

The Ten Commandments of ITSM

IT Service Management is a strategy for managing the IT infrastructure through a customer focused, service driven methodology, enabled and supported by leading practice-based IT disciplines. A primary focus of ITSM is to enable IT to be a more effective service provider across the enterprise. Although managing technology itself is critical, it is not necessarily the primary focus within an ITSM framework. ITSM addresses the need to align the delivery of IT services closely with the needs of the business. The 10 Commandments of ITSM, which can help telecom companies to meet their challenges and to align IT Operations and Strategy with the changing business requirements, are defined as follows.

12 IT Service Management in Telecom Companies

Service Strategy 1. Thou shall innovate and plan to outpace competitors and meet demands – Strategy and Demand Management is a process to understand and influence the demand for services and to define, develop and market these services to satisfy the demand 2. Thou shall plan and monitor expenses – IT Financial Management is a process of defining and managing value of the IT Services being delivered along with their budgeting, accounting and charging requirements. It acts as one of the decision making processes for the development and delivery of IT Services Service Design 3. Thou shall sustain what you are bestowed with and shall endeavor to grow – Service Continuity and Capacity Management is a process to manage the capacity and performance of the IT Services being delivered to pre-determined and agreed level and to help ensure service continuity at a level to support minimum business requirements following an interruption to the business 4. Thou shall collaborate to nullify ones incompetence – Supplier/Partner Relationship Management is a process to help ensure that suppliers/partners and the IT services they provide are managed to support agreed service levels and business expectations 5. Thou shall secure what others entrust to you – Information Security Management is a process to secure business information and help ensure that it is effectively managed in all services and service management activities Service Transition 6. Thou shall strive to adapt to changes – Service Change and Configuration Management is a process to help ensure that changes to any IT Service and / or IT Asset used for providing IT Services are recorded, evaluated, authorized, prioritized, planned, tested, implemented, documented and reviewed in a controlled manner to help ensure its integrity across service lifecycle 7. Thou shall share and develop knowledge with the stakeholders – Knowledge Management is a process to help ensure that the right person has the right knowledge, at the right time to deliver and support the services required by the business Service Operations 8. Thou shall hasten to resolve all queries and troubles – Incident and Problem Management is a process to restore normal services as quickly as possible and eliminate recurring incidents to minimize the adverse impact on the organisation 9. Thou shall improvise on thy operations continuously – Operations Management is a process for managing the IT operations required for delivering the agreed level of IT services to the business Continual Service Improvement 10.Thou shall watch what you are delivering and shall strive to improve service quality – Service Level Monitoring and Improvement is a process to maintain and improve IT Service quality, through a constant cycle of agreeing, monitoring and reporting upon IT Service Levels. An effective management of IT Service around these 10 commandments can help ensure the evolution of IT Services as Business Enabler to Business Driver.

13 IT Service Management in Telecom Companies

Figure 6: ITSM Servicing Business Requirements

Source: KPMG

14 IT Service Management in Telecom Companies

Outsourcing: Propellant or Drain

Outsourcing provides significant leverage to companies that are burdened with activities that may or may not be their core business. Potential benefits from strategic outsourcing are reduction and control of operating and hardware costs, reduced time to market, acceleration of benefits from re-engineering, access to human capital and skill sets that may not be available locally, access to good practices, a knowledge base and sharing of risk. In order to deal with the increasing competition, telecom operators are leaving the technology-related aspects of their business to external consultants and are focusing upon providing new services to their customers. The potential of IT outsourcing in telecom was highlighted when Bharti Tele-Ventures signed a 10year deal with IBM worth approximately USD 750 million. While outsourcing activities are catching on across many sectors in the country, the telecom segment, perhaps, comes across as the most lucrative of the lot.

15 IT Service Management in Telecom Companies

Outsourcing for Agility



“By working along with us to our transform go-to-market strategies and reinvent our internal processes, IBM has been a partner for the innovation that we see as essential in our ability to sustain our rapid growth.”
– Dr. Jai Menon, Group CIO, Bharti, Enterprises and Director (IT & Innovation), Bharti Airtel7

• •

Lower Total Cost of Ownership (TCO) of services Service Quality: Improved quality of services by contracting out the service with new service level agreement Knowledge Management: Access to intellectual property, wider experience and knowledge Operational Specialisation: Access to leading practice that would be too difficult or time consuming to develop inhouse Risk Management: Outsourcing process to people having better capability to mitigate the risks Standardisation across Organization: Standardised business processes, IT and application services

Business Alignment: Inadequate understanding of the business with the outsourcing organisation Common Interests: The business drivers and interests are not aligned with the outsourcing party Quality of Service Delivered: Inappropriate procedures defined to monitor and improve the services delivered Staff Turnover and Knowledge Management: Inappropriate procedures defined to manage the knowledge resources of the organisation Information Security: Access to company’s internal and confidential information to a third party Synergy between different outsourcing organisations

Some of the well-known outsourced service arrangement models in the telecom industry have been discussed here. Infrastructure Sharing – Partnership among Competitors

“...one should make sure that infrastructure is not duplicated. Even if one is pioneering, it should be shared. We should incentivise infrastructure sharing not just in rural areas but urban also. For example, one could look at giving clearances such as that of SACFA on a priority to those operators who are sharing infrastructure...” Nripendra Misra, Chairman TRAI8

Infrastructure Sharing is facilitating rapid rollouts of services, wider coverage and increasing affordability leading to market expansion. This is also facilitating operators for faster coverage of rural area and roll-out of services in a faster and more cost-effective manner. Some of the direct potential benefits of infrastructure sharing are: • Improvement in the quality of service through better coverage • Improvement in the aesthetics of the landscape • Reduction of the costs involved in infrastructure creation • Faster roll-out of service and • Affordable tariffs for subscribers But at the same time, some of the typical challenges associated with the management of shared infrastructure are: • Capacity Management • Relationship Management between tenants • Sharing of operating costs • Managing service levels • Managing regulatory and legal obligations • Capacity planning of the infrastructure and • Infrastructure development to support proposed Value Added Services



Case Study on Bharti - 11 May 2008 - 05 June 2006

16 IT Service Management in Telecom Companies

Mobile Virtual Network Operator A Mobile Virtual Network Operator (MVNO) is a mobile operator that does not own its own spectrum and/or network infrastructure. Instead, MVNO's have business arrangements with traditional mobile operators to buy MoU for sale to their own customers. One of the challenges being faced by MVNOs worldwide is to manage the quality of their services to the customer with infrastructure that is not managed by them. This would require an effective Service Management and Service Improvement processes which are also incorporated in the commercial agreement between the MVNO and the Network Operator. Also, MVNOs are dependent on incumbent mobile operators providing them with telecom network to develop and design new Value Added Services. This impedes MVNOs to offer an advanced and differentiated set of services to its customers, restricting them to get a competitive edge on other telecom operators with their own network. A strong Supplier/Partner Relationship Management process is required along with an effective strategy development and management process to overcome such impediments. The major potential benefit to traditional mobile operators cooperating with MVNOs is broadening the customer base (sell additional MOUs) at a zero cost of acquisition. It is likely that incumbent mobile operators may continue to embrace MVNOs as a means of deriving revenue to offset the enormous cost of building 3G networks. This, in turn, may further increase the pressure of reducing margins on the MVNOs. To overcome this situation, MVNOs need a strong IT Service Management framework which can help them reduce their operating cost and increase the revenue margins. At the same time, the incumbent network operators need to monitor their network capacity and should define their growth plans to help ensure better utilization of the network resources. A network might also be underutilized in certain areas, especially as technology grows to meet faster growing demands, which can be shared with an MVNO. ITSM Managing Outsourcing Challenges Outsourcing of services to third parties exposes the organisation to some critical business, operational and security challenges such as: • Infrastructure Planning and Development • Synergy between business strategy and available service portfolio and service levels • Defining a governance framework for an effective Supplier/Partner relationship • Securing Information Assets being accessed by third parties • Monitoring, managing and improving service levels Based on our understanding of outsourcing environment and the risks associated with it, figure 7 depicts the challenges to be dealt with in an outsourcing arrangement and how an effective IT Service Management framework may help deal with them. Some of the critical service management processes, which are required to face all such challenges, may be identified from the 10 commandments as: • Strategy and Demand Management • Supplier/Partner Relationship Management • Service Continuity and Capacity Management • Information Security Management • Service Level Monitoring and Improvement

17 IT Service Management in Telecom Companies

Figure 7: ITSM Managing Outsourcing Challenges

Source: KPMG

18 IT Service Management in Telecom Companies

Winning New Frontiers

While the West has seen stagnation in the telecom user base, India has been one of the fastest growing telecom markets. In order to manage the operating margins which are becoming a serious concern for telecom companies, companies are striving to expand their market base, instigating a fierce competition among telecom companies to capture a bigger pie. Some of the critical steps which telecom companies have taken to get benefits of economies of scale are: • Acquiring other telecom companies • Diversifying telecom services • Developing new value added services But this is not an end to the problems being faced by telecom companies. In the last one decade, the Indian Government has undertaken vigorous steps to pave the path for future development and growth of the telecom sector.

19 IT Service Management in Telecom Companies

Some of these reforms, like unrestricted entry of the private sector in basic and mobile services, Mobile Number Portability (MNP), Conditional Access Systems, and Unified Service License etc. have further agitated the competition in Indian telecom industry. Mobile Number Portability (MNP) – An opportunity in disguise? With a recent TRAI mandate on the implementation of MNP Indian mobile users , may soon have the option to switch their service providers without changing their mobile numbers. The introduction of MNP is likely to catalyze the existing competition in telecom sector in India and hence would compel the service providers to further improve their quality of service in order to retain existing customers and attain new subscribers. Thus, MNP would trigger a new and ferocious battle for customers in the wireless world that may be fought not only through retail outlets, call centers, and customer service, but also through back-office operations and technology. A strong strategic and demand management is required to develop and maintain the existing infrastructure to meet the growing demand of service quality and diversity.
Figure 8: Focus Areas for MNP

Source: KPMG

Telecom companies are apprehensive about how better service can be delivered and are wondering about the size of investment required to put systems in place to cut down the resulting ‘churn’ in their subscriber bases, due to the introduction of MNP Some have argued that the costs involved in introducing MNP could lead . to a significant increase in call tariffs. The rationale for mandating the implementation of MNP is to promote competition among wireless carriers, as well as to provide customers with greater choice and freedom in selecting carriers while maintaining their current wireless identity—the telephone number. Critically, it also helps conserve the shrinking pool of telephone numbers available to wireless carriers. The implications of number portability are serious. The Indian wireless industry is already facing severe competition and that the introduction of MNP would divert resources from essential core business activities such as improving network quality and reach, improving customer service, and initiating new products and services. To manage competition telecom companies need to have a strong operational and strategic balance to cope with the situation.

20 IT Service Management in Telecom Companies

Mergers and Acquisitions – Acquiring Competition The Indian telecom market is one of the fastest growing telecom markets in the world. With the stagnation of telecom market in the west, the Indian telecom market has magnetized foreign investors in the last one decade leading to a multitude of Mergers and Acquisitions (M&A) in the Indian telecom Industry. M&As have been a regular feature of Indian telecom Sector. The spurt in the M&A activity is also on account of convergence of telecom with other media and entertainment industries. The M&A are being seen in the market as part of a much needed consolidation in the fragmented industry, which would continue to see smaller regional mobile operators swallowed up by the big players in a push to cut cost and boost their market share. There are large number of technological and integration issues arising out of these mergers and acquisitions posing another operational challenge for the telecom operators. These include the identification of quality of the infrastructure assets, support, maintenance and upgrade of infrastructure, integration of billing systems, customer care systems and grievance systems.
Figure 9: ITSM for Effortless M&A

Source: KPMG

An acquirer may deal with all such challenges during the transition stage by putting strong and effective service management processes in place, such as: • Service Change and Configuration Management: This would help an acquirer to integrate the acquired infrastructure with the existing infrastructure while helping ensure reduced adverse effects on the quality of the services, better alignment of the acquired IT Services with business requirements and stable transition, etc. Service Continuity and Capacity Management: This would help an acquirer to plan the infrastructural capacity and accordingly integrate the acquired infrastructure to help ensure Business Continuity and optimize Returns-onInvestment Knowledge Management: This would help an acquirer to put together the existing information with the information acquired which includes access to intellectual property, wider experience and knowledge to get an edge over the competition

21 IT Service Management in Telecom Companies

Incident and Problem Management: This would help an acquirer to minimize the adverse impact on business operations due to integration of the acquired infrastructure with the existing one and to help ensure restoration of normal service operations in case a service gets disrupted due to the integration of infrastructures Operations Management: This would help an acquirer to ensure operational efficiency and effectiveness even during the transition phase when the infrastructure and services are being integrated.

The processes would help the acquirer to ensure smooth integration of the infrastructure and / or technology acquired with its own infrastructure / technology (Figure 9). Value Added Services – Leading with Content Mobile Value-Added Services (VAS) are those services that are not part of the basic voice offer and are availed of separately by the end user. They are used as a tool for differentiation and allow the mobile operators to develop another stream of revenue. Mobile VAS currently accounts for just 9 percent of the telecom companies revenue in India and has tremendous potential for growth with the mobile subscriber base growing at a scorching pace. Operators are facing cutthroat competition and with the call rates in India being one of the cheapest in the world, the margins are very low. Therefore they are looking at VAS as the next wave for growth. There are several major challenges which need to be overcome for initiating a sustainable growth in VAS for telecom. Some of these critical challenges are: • Identifying and Managing Content Service Providers Content service providers are a kind of outsourced service providers. A strong Supplier/Partner Relationship Management and service level management process is critically required to overcome this challenge Lack of Infrastructure There are lot of services which can not be introduced because the infrastructure is not developed enough to support these services. A strong strategy and demand management, capacity management and IT Financial Management is required to meet this challenge Absence of Utility Services These are those services which have a high practical value. But currently due to lack of familiarity and awareness from the end-user and lack of investment, effort and marketing from the supplier’s side very few such services are available in India. It is necessary to develop a strategy to build and manage demand and accordingly build the infrastructure to provide such services Transparency in Revenue Sharing Transparency is a big issue faced by the entities in the Mobile VAS value chain. The market is highly unregulated and there is no transparency in terms of contact payouts and royalties. This affects the content development market with lower incentive to the developer to provide higher quality content. There is also a need for a strong Supplier/Partner Relationship Management process with both operator and the content developer so that service can be developed to benefit both parties.

22 IT Service Management in Telecom Companies

ITSM Managing New Market Potential In the last one decade, the Indian Government has taken up certain vigorous steps to pave the path for future development and growth of the telecom sector. Some of these reforms, like unrestricted entry of the private sector in basic and mobile services, have introduced competition in Indian telecom industry. It has become inevitable for the telecom companies to accelerate their pace in terms of capturing and developing new markets. But in their quest to capture market, telecom companies can’t avoid certain operational and technological challenges which need to be addressed for a sustainable and continuous growth of telecom market, such as: • Strategically innovating to capture the market • Planning and developing technology and network infrastructure • Identifying and developing new services • Managing content service providers • Planning and managing transformation and development. An effective management and planned development of services and/or service capability of IT and networks is essential to address all such challenges. Based on our understanding, establishing a strong ITSM framework is a prerequisite to combat such challenges. Some of the fundamental service management processes required for the purpose may be identified from the 10 commandments as: • Strategy and demand management • Supplier/Partner Relationship Management • Service continuity and capacity management • Service change and configuration management • Incident and problem management • Operations management. The diagram below depicts the importance of these processes and how they assist in capturing new markets.

Figure 10: ITSM Managing New Market Potential

Source: KPMG

23 IT Service Management in Telecom Companies

Safeguarding Income Streams to Enhance Efficiency

Achieving operational efficiency is one of the other fronts where telecom companies observe tremendous potential to manage their reducing margins. Margin enhancement, revenue assurance and cost management are becoming more important than ever before. Information Technology is at the hub of the telecom industry and is also central to providing world-class customer service. As such, the underlying IT systems, capabilities and architecture play a central role in enabling mobile telecom companies to achieve their aspirations. One of the critical techniques of boosting operating efficiency is to enhance IT Operational Competence through means of automation, optimization of IT infrastructure and environment, and aligning IT services to the changing business requirement etc. The IT Operations Efficiency will help telecom companies achieve: • Lower IT operating costs • Security and scalability

24 IT Service Management in Telecom Companies

• • • • • • • •

Focus on core business Consistent, reliable monitoring and reporting Increased application and system reliability IT and business process alignment Fewer exceptions/unforeseen complications Enhanced service levels IT simplification/automated management New capabilities

There are several factors of telecom industry which affect the operators’ ability to succeed, which are driven by technology and technological innovations in the industry. These can be improvised by achieving IT operational efficiency. Some of these factors include: • Customer relationship management • Regulatory compliance • Information security and data privacy • Billing and collections. As the telecom companies are nearing saturation in some of the telecom markets, their approach toward Customer Management is changing from customer acquisition to customer retention. Industry Consolidation and Technology Convergence is further acting as a catalyst for the need to improve CRM operations. To succeed in this environment, telecom companies have segmented their customer base and are offering segmented offerings for each category. This shift in focus has put tremendous pressure on the underlying IT Systems, particularly customer care, billing and provisioning. For mobile operators to succeed in their retention strategies the underlying IT systems must be flexible and the IT architecture must be conducive to rapid product introductions (and changes) with minimal costs. Also, to improvise their CRM operations, telecom companies are striving to create a single view for their customer. This would require the linking of call center databases, Internet orders and inquiries, customer prospect lists, accounting files, and other databases to create and implement one view for the customers. Telecom companies need a CRM solution around the entire customer lifecycle processes such as marketing, loyalty and retention, order management, customer care etc.
Figure 11: Schematic Depiction of an Efficient CRM Approach

Source: KPMG

25 IT Service Management in Telecom Companies

Some of the areas to be addressed by this solution across the telecom services and the communication channels with the customers are depicted in Figure 11. A strong IT Service Management framework is required for the effective implementation, management and improvement of this approach resulting in improved IT Operations Efficiency. Information Security and Data Privacy Recent advances in information and communication technology have led to a significant increase in the amount and details of Personally Identifiable Information (PII) being collected and processed by telecom operators. As the Indian telecom companies are venturing into international market which requires extensive transfer of sensitive and confidential information across locations, security concerns about data leakage and misuse need to be addressed. Also, there are certain geographies which have international acts and regulations like EU Directives which mandate information security and data privacy. Hence, telecom operators are required to build and maintain a strong environment to secure and protect corporate information throughout its lifecycle, wherever it exists and in whatever form. It has become a critical requirement, therefore, for telecom companies to protect the confidentiality, integrity and availability of all the information and information assets across the organisation. One of the pre-requisites to ensure this is to define and effectively implement an information security management system across the organisation. An effective IT Service Management is a stepping stone to achieve this objective and in turn improve IT operational efficiency. Regulatory Compliances The Indian mobile market has been characterized by fierce competition in which a number of major players together with an even larger number of smaller players have been battling to increase subscriber numbers, and most importantly, market share. The sweeping reforms introduced by the successive Indian governments over the last decade have dramatically changed the telecom environment in India. The India government has been playing a major role in restructuring the country’s telecom sector.
Figure 12: Evolving Telecom Regulatory Regime

Source: KPMG

26 IT Service Management in Telecom Companies

Over the years, a number of positive regulatory changes have been introduced and implemented forming a basis for the future development and growth of telecom sector. Though the regulatory changes in the last one decade have strengthened the telecom sector in India, but at the same time have given way to number of challenges for the telecom operators. Some of these challenges and areas of dispute are: • Ensuring compliance to the statutory rules, orders, regulations and guidelines • Interpretation and classification of services • Inadequate regulations and / or guidelines on Infrastructure sharing e.g. large number of clearances, absence of a uniform structure of levies, permitting organisations to set-up / build-operate-lease active infrastructure • Preparing for regulatory regime with convergent networks • Compliance with the numbering plan • Calculations of Access Deficit Charges etc.
Figure 13: Aligning ITSM Maturity with Organisational Benefits

ITSM Managing Operating Efficiency Given the increasing competition in the telecommunication market, enhancing operating efficiency is a key element for achieving greater revenue and enhancing market position. Operating efficiency — through sustainable process improvements — is no longer simply a mantra, but an essential way of doing business and, if implemented properly, a true source of competitive advantage. Operating efficiency has a direct impact on the customer’s satisfaction. In order to maintain high customer satisfaction, operators need to constantly evaluate the performance of their service offering. Since telecom services are primarily driven by IT, it is essential to plan, develop, manage and monitor IT services to enhance telecom service and improving customer satisfaction. Effective IT Service Management, is therefore one of the critical techniques of enhancing the operating efficiency of the organisation. Some of the critical ITSM processes required for this purpose may be identified from the 10 commandments as: • • • • • IT Financial Management Service Continuity and Capacity Management Information Security Management Service Change and Configuration Management Incident and Problem Management

Source: KPMG Figure 14: ITSM Managing Operating Efficiency

Figure 14 depicts these processes and how these should be integrated to enhance operating efficiency for telecom companies.

Source: KPMG

27 IT Service Management in Telecom Companies

In the last few years, the Indian telecom sector has experienced a tremendous growth. It is the fourth largest telecom market in the world after China, Japan and South Korea. The telecom industry in India may be characterized by: • Increasing competition • Stringent regulatory requirements • Growing customer expectation • Diversified service portfolio The volatility across the industry is leading to reducing tariffs, increasing MoU and reducing ARPU resulting in a reduction in the operating margins. Developing and implementing IT services aligned with the changing business and operational requirements can help telecom companies to cope with the volatility and enhance the operating margins. As business is becoming increasingly dependent on IT to deal with its growing business and operational challenges, it is vital to manage the IT services in line with the business requirements.

28 IT Service Management in Telecom Companies

Figure 15: ITSM Converting Threats into Opportunity

This is essential to help ensure that IT Services deliver operational and service excellence. Some of the potential benefits from an effective ITSM are: • Enhanced customer satisfaction • Improved quality of business operations • Improved quality of services • Diversified and managed service portfolio aligned with customers’ requirements • Improved operational efficiency • Cost-justified IT infrastructure and IT services • Ability to adapt quickly to new requirements and market developments. An effective management of IT Services can also help business to convert some of its threats into opportunities. Telecom companies will be tested on this, for instance, as they face MNP and MVNOs. MNP – It exposes telecom companies to the threat of customer churn. With improved and diversified services to customer and effective customer relationship management, telecom companies may attract subscribers from other operators, converting the threat of customer churn to an opportunity of customer acquisition. Improved and diversified services and effective customer relationship management are some of the outputs of effective ITSM. MVNO – Telecom companies are exposed to the threat of increased competition with the entry of MVNOs. At the same time, it also provides an opportunity to lease-out its un-utilized network capacity to an MVNO generating a separate stream of revenue for the business. An effective ITSM can help telecom companies improve their network performance and services to lease-out the network to an MVNO. It may therefore be concluded that an effective ITSM is vital for telecom companies to succeed in a volatile and challenging telecom market in India, and get a competitive edge over other telecom companies.

Source: KPMG

29 IT Service Management in Telecom Companies

30 IT Service Management in Telecom Companies

KPMG ITSM Service Offerings
KPMG provides the following services in the field of IT Service Management: ITSM Process Maturity Assessment / Process Effectiveness Review • Identify current levels of process maturity to set the future development agenda • Specific assessment in areas such as Change and Release Management to ensure processes and controls are appropriate and effective Internal Audit Support • Specialist ITSM knowledge to support Internal Auditors in scoping and executing effective audits in relation to IT operational processes • Develop and Assess ITSM strategy, vision, business case and roadmap • Ensure sound basis for an ITSM program, encompassing all aspects and components required ITSM Tool Selection • Management of full vendor selection project lifecycle, leveraging KPMG’s knowledge of solutions offered • Define requirements specification • Undertake scoring and product evaluation • Support in vendor selection and negotiations Enterprise Tool Optimisation • Maximising the value of enterprise tools, by mapping and consolidating data and processes into a single bespoke model Certification and Compliance Readiness • ISO 20000 pre-certification assessment and remediation • Definition and implementation of IT controls in support of CoBIT or SOX compliance Development of End-to-End Support Model • KPMG recognises that many IT Services today span support groups and vendors, causing inconsistency, lack of ownership and confusion • Support models ensure that ITSM processes are mapped and responsibilities between each party documented and understood across organisational and geographical boundaries PMO Support and Project Management • ITSM is a complex area that touches business processes, people and technology. Organisations often lack the capacity to manage complex programmes, and this vitally important activity can be undertaken by experienced KPMG programme managers

Acknowledgements Contributors to this report include Nitin Shah, Ashu Jain, Shubhi Sood, and Shilpa Rastogi - all a part of IT Advisory Services in KPMG in India.

KPMG in India
Mumbai KPMG House, Kamala Mills Compound 448, Senapati Bapat Marg, Lower Parel, Mumbai 400 013 Tel: +91 22 3983 6000 Fax: +91 22 3983 6000 Delhi Building No. 10 8th Floor, Tower B DLF Cyber City, Phase - II Gurgaon 122 002 Tel: +91 124 307 4000 Fax: +91 124 254 9101 Pune 703, Godrej Castlemaine Bund Garden Pune 411 001 Tel: +91 20 305 85764/65 Fax: +91 20 305 85775 Bangalore Maruthi Info-Tech Centre 11-12/1, Inner Ring Road Koramangala, Bangalore 560 071 Tel: +91 80 3980 6000 Fax: +91 80 3980 6999 Chennai No.10 Mahatma Gandhi Road Nungambakkam Chennai 600 034 Tel: +91 44 3914 5000 Fax: +91 44 3914 5999 Hyderabad 8-2-618/2 Reliance Humsafar, 4th Floor Road No.11, Banjara Hills Hyderabad –500 034. Tel: +91 40 66305000 Fax: +91 40 66305299 Kolkata Infinity Infotech Park Limited 10th Floor, Infinity Benchmark, Plot G-1, Block EP & GP Sector- 5, , Salt Lake Electronics Complex, Kolkata 700 091 Tel: +91 33 3982 3210 Fax: +91 33 3982 3222

KPMG Contacts
Akhilesh Tuteja Executive Director IT Advisory Tel: +91 124 307 4800 Fax: +91 124 254 9101 E-Mail: atuteja@kpmg.com Sudhanshu Fadnis Associate Director IT Advisory Tel: +91 124 307 4000 Fax: +91 124 254 9101 E-Mail: sfadnis@kpmg.com

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

© 2008 KPMG Advisory Services Private Limited, an Indian private limited company and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.

You're Reading a Free Preview

/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->