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Managed services:
Approaches to a changing landscape
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Page 4 Executive summary
Page 5 Section 1
The arguments for rethinking what we mean
by managed services, again, and their role in
our industrys transformation
Page 8 Section 2
Should operators resist seeing managed
services strategically?
Page 10 Section 3
Lessons learned about using managed services
words from the wise
Page 16 Section 4
In conclusion and TM Forums contribution to
managed services
MANAGED SERVICES:
That major shifts are taking place in our
industry is well known and discussed
constantly. The implications for managed
services are less well understood and receive
much less publicity, but they are fundamental
to the future of the communications and
associated industries. What we mean by
managed services is changing too.
In Section 1 we reect that in the
foreseeable future, even the most basic
products and services, such as connectivity,
will be delivered by mixing and matching
assets owned by third parties and network
providers themselves. Already in many
countries, the provision of broadband is
restricted to a single or few suppliers, such
as in Australia, while many established
communications service providers are looking
to third parties to provide them with 4G
coverage perhaps Yota Group in Russia is the
most striking example of this.
Network sharing is nothing new, but it will
become more prevalent as the economies
of scale become ever more important
and established players face increasingly
tough competition the likes of hospitals
and insurance companies are now offering
communications services.
All of which means that network operators
need to nd new sources of revenue. This
has been talked about for years, but we look
at many examples that seem to indicate
progress is nally being made. However, the
only possible way of delivering them is through
partnerships or put another way, through
partners delivering managed services. All of
the players will need managed services for
a variety of reasons, including to gain reach,
scalability, skills, products, exibility, economies,
operational efciencies, faster times to market,
reduced risk, strategic positioning and to deliver
better value to customers.
Yet there is little coordination of managed
services within a single territory, never mind
across several or many geographies. Mary
Whatman, Founding Partner, Parhelion Global
Communications Advisors, argues this is
storing up big trouble for later.
Section 2 examines arguments put
forward by service providers for not seeing
managed services as strategically important,
and suggestions about why they should,
while Section 3 offers lessons learned, from
consumers and suppliers, or both, of managed
services. There is considerable disagreement,
but the results are both insightful and very
much to the point.
Almost everyone agreed on the fundamental
importance of a good relationship between
partners, as well as intelligent contracts,
although the denition of a truly useful contract
is a work in progress.
Section 4 looks at where we are now, and
where we need to move to, and what TM
Forum and its various standards and other
activities brings to the table to help our industry
move forward, making the very most out of
managed services for all parties. After all,
for you to succeed, your partner has to be
successful.
This Quick Insights report is based on the
lively debate at the executive roundtable
entitled Managed services and outsourcing:
Building strategic partnerships for long-term
success. TM Forum would like to thank all the
senior executives who so willingly shared their
wit and wisdom.
In particular, we would like to thank Mary
Whatman for acting as moderator, and Kathy
Romano, Director, Payment Processing, Verizon
Services Operations for acting as provocateur.
We hope you enjoy the report.
Executive summary
MANAGED SERVICES:
Economies of scale dictate that there
is no point building duplicate networks
A widely accepted denition of managed
services is outlined below:
Managed services is the practice of transferring
day-to-day related management responsibility
as a strategic method for improved effective
and efcient operations. The person or
organization who owns or has direct oversight
of the organization or system being managed
is referred to as the offer-er, client or customer.
The person or organization that accepts and
provides the managed service is regarded as
the service provider. Typically, the offer-er
remains accountable for the functionality
and performance of the managed service and
does not relinquish the overall management
responsibility of the organization or system.
Source: Wikipedia
Some in the industry are arguing that we
should have already moved beyond this, due
to major shifts that are taking place in how the
industry is structured, new economic models
and the changing roles of network operators.
Certainly it is increasingly common for one or
a small number of providers to be responsible
for offering broadband access, for example
the National Broadband Network is under
construction in Australia, there is a single
xed infrastructure provider in Ghana. More
consolidation regarding the provision of xed
broadband seems inevitable.
In many countries, operators will rely on third
parties to provide their customers with access
to 4G, either entirely or to some degree. In
Russia, Yota will provide the four biggest
The arguments for rethinking what we mean
by managed services, again, and their role in
our industrys transformation
Section 1
network operators with broadband access via
4G (see panel), while in the U.S., LightSquared
is offering 4G nationwide, complemented by
satellite coverage, on a wholesale-only basis.
On June 14, as this report went to press, the
Financial Times reported that PCCWs UK
subsidiary, UK Broadband, could start offering
wholesale 4G services as soon as 2012 to
mobile virtual network operators.
Network sharing is nothing new: in Canada,
Bell Canada, Aliant and Telus decided way back
in 2001 to share a single mobile infrastructure
so they could better use their resources to
compete against Rogers Communications.
All these trends will continue, dictated by
economies of scale and the fact that it makes
no business sense to build duplicate networks.
The era of if we build it they will come is over.
It is received wisdom in the industry that
network operators will have to decide in
which layer(s) they want to play: offering
infrastructure, including broadband access
on a large scale, being an aggregator of
services and/or an enabler of digital life (see
Figure 1-1 on page 7). This theme is explored
in considerable detail in TM Forums Quick
Insights report Future Shock II: The age
of the user, which is free to members to
download from http://www.tmforum.org/
QuickInsights/8201/home.html
The changing structure and economics of
providing communications services along
with ever-increasing competition between
established players and the rise of new
entrants (the likes of hospitals and insurance
companies are now providing communications)
MANAGED SERVICES:
means operators have an urgent need to
identify, develop and offer new, revenue-
generating services. This has been talked
about for years, but progress has been slow.
Now it nally looks like things are beginning to
change. Consider these examples:
Q Over the last 18 months, PCCW in Hong
Kong has been developing an eHealth service
that will monitor people who are sick or
disabled at home, reminding them to take
their medicine on time and triggering alerts if
they arent moving around, for example.
Q In parts of Canada, Telus Health has
connected all the doctors and hospitals, and
all the health records in the nations capital. If
you are in hospital, depending on your cable
supplier, you can get a device next to your bed
that hooks you up to your home package so you
can watch your favorite cable shows as usual.
Q Sprint is talking about connecting to cars.
Q Telstra is to deliver machine-to-machine
communications.
Q The Connected Home is being developed in
many places.
Q A service provider in the Caribbean is
working on enabling customers to render their
PC screen exactly on every other device they
use, so they can interrupt it on one device and
restart it on another. The company has already
carried out a proof of concept.
Q Almost every communications service provider
has said it will offer some sort of specialized,
value added service to all its customers, such
as nancial services, with services tailored
for small and medium-sized businesses
(SMBs) for instance, with security provided
as part of a bundle.
Q In the next two years we are likely to see an
added value service provider emerge that
will allow its customers to choose which
backbone service provider they want to use
from their devices, rather than oblige them to
take service from one as part of the bundle.
Sometimes price will be more important than
quality of service, and other times not.
In almost all cases, real and futuristic, the
operators will not be providing such services
on their own, but through partnerships.
Put another way, through partners offering
managed services. The services might be
offered across infrastructure owned entirely by
the network operators, or via networks owned
by different parties as discussed above.
The network operators could choose to offer
white label services from a third party under
their own brand. Alternatively, the network
provider might deliver services for a third
party, branded by that party, depending on
how you want to interface with the consumer
of the services and your agreement with the
managed services provider.
In the rst instance, you will be users of
managed services, and in the second, providers
of managed services. Either way, the key is
that it gives operators huge opportunities in
the service aggregation layer (especially as
cloud computing becomes more prevalent),
again as shown in Figure 1-1 opposite, and at
the digital life enablement level, illustrated in
the same gure. Eden Zoller, Principal Analyst
with research house Ovum, has observed
*
that
while the digital enablement layer is typically
where operators would like to see themselves,
it is arguably less native to them.
The theory endorsed by many industry
commentators, based on the shifts that have
taken place already and look set to continue, is
that it is unlikely that most of todays operators
will continue to play at all three levels. Of course,
this will vary from country to country, depending
on many things, including market maturity.
In all three layers, services providers will
need managed services for a variety of
reasons in different situations, including to gain
reach, scalability, skills, products, exibility,
economies, operational efciencies, faster
times to market, risk management, strategic
positioning and better value to customers.
Providers of managed services, and their op-
erator clients, need to do some rethinking in a big
hurry if they are to exploit the coming era of huge
*
See Quick Insights report, Future
Shock II: The age of the user on
our website
MANAGED SERVICES:
There is little coordination of managed services
within a single country or across geographies
opportunity successfully and to its full potential.
All of which explains why Mary Whatman,
Founding Partner, Parhelion Global
Communications Advisors, came up with a
new denition of managed services as follows:
Managed services is the foundation for
monetization of the information-enabled
society by delivering services and operational
capabilities using real or virtual capabilities
sourced from companies, people or locations
that offer a business differentiating advantage
(managed services partner providers). The
consumer (enterprise, prosumer or community)
engages with their managed services provider
for a range of static or transient services.
Collectively managed services provider partners
fulll the expectations of the consumer through
each having a dened, measured and monitored
set of boundaries and key performance
indicators against which they deliver. Dened
accountability and collaborative value are key!
Source: Parhelion-GCA
This has lots of implications. Previously
operators owned their own infrastructure from
end-to-end, now they are choosing to mix
and match assets. In the coming era, much
tighter governance will be needed, as these
agreements are more integral to the business.
The problem of a lack of coordination of
managed services starts at home. Outsourcing
tends to be done on a piecemeal basis, depart-
ment by department, rather than undertaken
as part of an orchestrated effort even within a
companys operations in a single territory.
This is even worse for operators that are
active in many countries or territories (a quick
Internet search revealed that at least 47 have
properties in eight or more countries as part of
an operating group Cable & Wireless leads in
terms of geographical spread with operations in
70 different markets). There is little to suggest
any coordination of managed services across
geographies.
This is a cause for concern for a number of
reasons. As time goes by (and standardized
infrastructure become increasingly common,
driven by economics and the need for greater
operational exibility and business agility), one
of the big opportunities for services providers
will be to package services they provide
in their home market overseas, including in
countries they dont operate in at all. Also,
it seems that fewer and fewer stand-alone
operators will survive; to prosper, you will need
to be connected to a group.
From a managed services perspective, it
changes the whole dynamic of how a managed
service provider sells to a services provider and
how those managed services are used. How
you govern and are governed changes radically.
It should be a source of concern that the
solutions we are buying today, with contracts
up to seven or more years long, may not
be suitable a year from now. There is little
evidence to suggest that these considerations
are seen as part of operators strategies for the
next one, three or ve years.
We look at the varying attitudes towards the
situation in the next section.
Home
community
Business
community
Social network
community
Healthcare Finance
Home
security
Mobile
commerce
Social
networking
M2M Utilities Education
DIGITAL LIFE ENABLEMENT
(CUSTOMER/PARTNER)
Lifestyle product provider Lifestyle management Personalization
SERVICES AGGREGATION ENABLEMENT
Services enablement Content enablement
BROADBAND ACCESS ENABLEMENT
Fixed Wireless Utlility CATV
Digital life
services
provider
Aggregated
services
provider
Network
services
provider
Figure 1-1: A high-level perspective on todays business model
Source: Parhelion-GCA
MANAGED SERVICES:
Should operators resist seeing
managed services strategically?
Section 2
As Mary Whatman, Founding Partner, Parhelion
GCA, says, The central organization needs
to take tighter control over its investments in
different geographies because if a solution or a
service is maturing in one geography and you
want to apply it to another, the greater control
will make it far more effective and efcient.
Central control will also make supporting the
solution much less complex.
She argues that large organizations need a
center of excellence for central governance
and control of managed services, and that
operators should be looking to establish long-
term partnerships with the managed services
suppliers, rather than a subservient vendor
relationship with them.
Not everyone agrees. Here are some of
the opposing points of view to managed
services being strategically vital, put during
the roundtable discussion, and the answers
provided by members of the group. It also
demonstrates a real fear understandably of
giving away control.
Q: Whos going to be the point of contact for
the end-to-end delivered service and how is
assurance going to be engineered in this new
services provider model?
A: The worry is that until weve gured
out where were going, we wont ask that
question, and that we wont ask that question
until weve got 15 different contracts all set
up with different service level agreements
(SLAs) and different terms. It will be an
operational and business nightmare. We need
to think about delivering aggregated services
at the customer interface, which will make us
think of ourselves differently now, so that we
start asking those questions before we nd
ourselves in a blizzard of incompatible contracts
that are expensive and difcult to exit.
Q: Customers will blame us for problems,
even if they are in the outsourced part of the
network, so we have to share information with
our networking sharing partner. This is not the
case today, we do not share information about
network management, so this will change our
game dramatically, from systems, to interfaces
to the old business model: who is responsible
then for the overall, end-to-end performance
and customer experience?
A: Its nothing new and [the trend is] going
to increase. It is causing unease because
this is an industry that, from its inception,
had everything under its control, but when
its product was very simple dial tone. With
a car, would you go to anybody but the car
manufacturer for a warranty? It says BMW or
Lexus or whatever, and they are responsible for
everything, even if they didnt manufacture any
part of it.
We have to learn how to do these things in
this industry, to look at those guys who do it
all the time for a living. In the car industry its
been going on for 25 years or more because
they couldnt afford to do it all themselves
and theyve learned how to manage it. At one
time Mercedes thought they were the only
people who could make a screw good enough
to go into a Mercedes, and they nearly went
bankrupt. Now they buy engines from BMW.
We need to learn from them.
MANAGED SERVICES:
We need to avoid each department
having to learn lessons the hard way
Q: Does it make sense to have a common,
centralized function to manage all those
different outsourced functions, including
low-level functions such as performance
management, that only applies to operations?
I work in a big group and in my area of OSS,
outsourced performance management is a
small piece, not comparable to eld services
being outsourced, or wholly outsourced data
services. They are different, they belong on a
different level.
A: What is happening with one contract could
cause another to be weak: they need to be
managed together closely to ensure common
terms and conditions, SLAs and operational
level agreements (OLAs). Also you end up with
each department or business unit having to
learn hard lessons themselves (see Section 3),
instead of drawing on the experience of
others in the group who have already been
through the process and learned a lot from
it. For example, the value of building in
bonuses versus penalties, or incorporating the
wrong metrics instead of looking at business
outcomes.
Q: We are introducing LTE and at the same
time discussing the introduction of many new
tariffs. We want to encourage people to buy
at the higher tariff to get better quality and
bandwidth. This could be a nightmare in terms
of performance management, but we view this
as a technology piece, and not directly involved
with what we think of as being managed
services.
A: In a years time, in order to differentiate
ourselves in the market, we might be able
to choose the quality of service we have for
particular services, paying more for faster
access, rather than simply buying a higher
speed bundle. How are you going to offer that
without taking it into consideration in your
planning and your OSS services now?
In a years time, in order to differentiate ourselves in the market, we might be able
to choose the quality of service we have for particular services. How are we going to
offer that without taking it into consideration now?
MANAGED SERVICES:
Lessons learned about using managed
services words from the wise
Section 3
Here is some of the advice that came out
of the roundtable from the senior attendees
whove had extensive experience in the
processes of buying, working with and
providing managed services.
Not everyone agreed about everything,
depending on their experience and which side
of the fence they were on supplier or client
but their insights are fascinating.
Please note: Quotations are anonymous, except
where directly attributed. A line space between
paragraphs or the start of quotation under a new
heading indicates a different speaker.
Consolidate your suppliers as much as
possible
Harlan Vold, CIO, Yota Group, Is Yota going to
go and build a core network in 198 cities? No
its not my core business. I dont even want to
own and ship equipment across a country with
11 time zones its like shipping stuff halfway
round the world.
We plan, as a service, a main supplier for our
data centers and the racks, servers, network
equipment and everything will be provided by
one company that can cover, lets say, 150
cities. I have to gure out the 40+ others. You
have to consolidate on partners who can do this
for you wherever you can or youll die through
the number of partners you have to manage.
Relationships are critical
The importance of relationships between the
managed services provider and their clients
came up over and over again, and in particular
the fact that both sides need to succeed or
both will fail.
Its very benecial for both parties to
understand each other. I cant understand
the structure of most of the companies I am
working with and who reports to whom. You
get things like, The unit that is responsible
for xing you software cant do it because.....
Once you understand their problems, you
become a real partner. The next thing is that
you have to gure out who is willing to sign the
deal and what their expectations are.
From the vendors point of view, after they
have signed the deal, it seems that the clients
are changing their opinion every second week
and you cannot put everything in the contract,
no matter how good you are. So if you
understand the customers needs, for example,
if you see they produce new price plans every
couple of days, even if it is not mentioned in
the contract, you need to say to them, I am
not able to deliver that, it will kill me.
Otherwise the vendor knows the customer
is going to squeeze them and reduce the
price signicantly. Then the vendor will take
the deal and sign it, but look for back doors
in the contract, and use them next time they
get a change request. So understanding the
logic behind the contract, its structure and the
expectations behind it is a critical part of the
process if you want to achieve a win:win.
Only saving money is a waste of time
Kathleen Romano,Director, Payment
Processing, Verizon Services Operations, has
perhaps a surprising point of view, saying,
My preoccupation is delivery of service to the
customer and I have two personal approaches
that might seem counter-intuitive.
MANAGED SERVICES:
If your supplier isnt a partner, you need to think
hard about what you are asking them to run
First, I dont ever want anyone to come
to me with a deal that only saves me money
because if I dont add value to the business,
and you dont bring me something I cant do
myself, Im not interested.
I can only manage a certain number of
things and as our business is moving so fast, I
need to add value, not simply stand still.
Dont build contracts on the assumption
of success
Romano continues, So the other side of
you need to bring me added value is I have
a responsibility to understand what you [as a
managed service provider] are doing and to be
able to manage that, because if I cant manage
it, I cant get the best out of it. Im going to
look pretty stupid if the contract fails. The rst
thing I need to negotiate on any deal is whats
going to happen when theres a failure? If I can
get through that and know how well deal with
failures, then we can build a deal that works.
Partnership versus a vendor relationship
Reliability, if its a partnership, its not just
about having someone to blame. We know that
if there is a problem, our customers will call our
call centers, reliability is key.
You need partners, not an arms length
relationship. You need your partners to live up to
what they promised by keeping them close.
We tried partnership with our clients. It was
too difcult, too much was asked of us, so we
are happy to be vendors and provide what is
agreed in the contract.
All parties understand there will be change.
If I have to go back and look at the contract,
then the relationship is gone and youd better
have a good termination clause in place.
Managed services will be increasingly
strategic, and while we have to accept that
some managed service providers dont want
to be partners, you must think very carefully
about the level of involvement you want from
them and the importance of what you are
asking them to run.
Change management is crucial
You have to have a proper change
management clause in there, including
termination for convenience, termination for
cause. If you think through this stuff, then you
end up with the right thing. If you omit this
stuff, you are bound for chaos. If you only keep
10 to 15 percent of your previous staff, then
youre bound for chaos.
One of the biggest sources of failure is
when the partner that is really experienced at
outsourcing doesnt help the person who is
buying the service become accustomed to the
relationship. It will always fail. The provider
needs to help with the transition, which isnt
an emotional decision like it is for the company
that has decided to outsource. It should be a
function of change management.
Bonus versus penalties
One of our outsourcing partners have not only
taken responsibility for one or two services in a
country we operate in, but total responsibility for
network planning and its all managed by SLA
network quality that you manage in terms of calls
drops. The payment is something like a bonus
model, so we pay a set fee and they are better
paid if they do well. If not, they are paid less.
Mary Whatman, Parhelion GCA, agrees,
saying, These are some of the things that
we keep learning, and why I recommend a
center of excellence. I have seen in the same
company a contract for OSS works like that
benets for success instead of penalties, but
the outsourcing of IT or Finance have none of
that, and they wonder why one contract went
well and the others didnt.
MANAGED SERVICES:
If strategies suddenly diverge you say, Thanks very much, it was a
nice marriage, but I found a better partner and you have the pre-nuptial
drawn up already.
Id rather pay a partner or vendor 80
percent of their fee and be prepared to pay up
to 110 percent of that fee if everything goes
well rather than build in penalties whereby I
charge them when things go wrong. Its a huge
incentive and encourages innovation.
Planning for change
Whatman asks, Do you build innovation
clauses into your contract? I need you to be
able to offer new services for me three times
a year, say. How do you measure that and
whats involved? What weve started to do
is identify the value element in the contract,
and try to measure it. This has not yet been
perfected.
If you change your business model in two
years time and your partner isnt able to match
that change, you should have a Plan B. You
discuss it and either they improve to support
you as a partner, or you do something else.
Talking strategy with your partner(s)
Romano explains, In my last job [also at
Verizon] I worked very closely with Subex. We
had strategic planning sessions at least once
a year. They would present the kinds of things
they were working on, we would present our
business problems and together we would look
at what was the best approach to help us meet
those problems.
A lot of times I came up with ideas on
things we wanted to do based on things they
were doing for other people. Sometimes it
worked better than others.
You cant predict the future, which is why
you have to cut it into shorter increments so
that you can adapt it. You have to have the
right causes to adapt in good faith between the
two parties, whether its going up or down. If
strategies suddenly diverge, you say, Thank
you very much, it was a nice marriage, but I
found a better partner and you have your pre-
nuptial drawn up already.
The limitations of contracts
Morgan Chung, VP of Global Managed Services,
Carrier Software Business Unit, Huawei,
says,The contract is very important and we
review it many times, but still there are a lot of
grey areas you cannot dene completely.
You can dene SLAs, but SLAs do not
guarantee the satisfaction of every part of the
service. Things shift, not just concerning SLAs &
KPIs, such as key quality indicators. Beyond the
contractual agreement, the vendor needs to be
able to contribute even more, to work together
as a strategy partner to see what the customer
really needs.
Contracts are just a framework and the
environment is too dynamic and agile to rely
on them. The important thing is the level of
conversation you have with your partner.
Business outcome metrics
Whatman says, Weve been working with a
number of partners to frame business outcome
metrics, so in IT for example, the important
metrics are not, Is the server up 99.99 percent
of the time? Thats irrelevant. The important
MANAGED SERVICES:
You develop a decision tree to see what to
measure and what is irrelevant in business terms
question is Can a customer put an order
through?. For the order to go through in one
large North American operator meant 2,963
servers had to be up and running to get it right,
across four different vendors.
We started out measuring every server up
99.99 percent of the time, but the one that
wasnt available was critical. It stopped orders
going through. When you did the math, on
average the SLA had been adhered to and
there were no penalties against the supplier for
losing its customer business.
I was doing this stuff on my rst outsourcing
contract 15 years ago and not just on the low-
level stuff. The low-level stuff is important,
you have to have four nines reliability on a
server as a basic ingredient, because if that
doesnt work, the whole thing isnt going work
on the top. We had simple denition of critical
outages, dened by, in a call center say, if 20
agents are out of work for 15 minutes, thats
business critical.
You apply business sense to what that is and
you go step, by step, by step. From there, you
develop a decision tree from which you see
you need to measure some things and that
measuring other things is completely irrelevant.
Thats a relatively simple methodology to get
through these things.
Subjective judgements are hard
Romano says, The further you are from
the customer, your business objectives are
different. I dont care that [my managed service
providers] payment feeds came in late last
night because it didnt impact a customer, but
if it had come in two hours later, so customers
didnt get their payments posted, that would
have been an issue.
Whatman adds, How to measure how
unhappy your customer is and the impact on
them is more subjective than many of the other
measures we use. Subjective metrics make it
difcult to maintain a good relationship. More
pragmatic solutions should be explored.
The cheapest deal is unlikely to be the best
Honesty on both parts about why you are doing
the deal is far more important than the length
of the deal. Too often its more like banking I
need to put the costs on somebody else, you can
load the costs at the end of this thing because
well all have new jobs by then anyway and
goodbye. This we do your mess for less type
of approach means things go sour very quickly.
Sometime vendors are prepared to lose
money to secure your brand as a customer
reference and I think as the customer, you
want to watch out for that, because thats
often a very short-lived contract relationship,
especially when things go sour. On the other
hand, it can work well if the outsourcer needs
to keep your business. They will make the
money from elsewhere to fund it.
Track records are important
If you can look at a vendor and their track
record and see that theyve been doing this for
a long, long time, its a very good start.
Ask for bad as well as good references from
customers where things have gone wrong and
then been xed.
If you cant nd what you want, create it
There wasnt anybody who could help us,
so we had to create a partner, sending our
people out to nd other people in companies
wed worked with as part of our build and
create a partner, create the company, and
help them to be successful. So we have to do
that for probably 60 percent of the things Im
interested in outsourcing because it doesnt
exist at the maturity level where I could just
automatically expect a certain level like in
Western Europe or the U.S., say.
MANAGED SERVICES:
A year ago I would never have thought about outsourcing quality assurance or
architecture or governance, but this is changing. Ive met an operator that uses
someone else to do due diligence that the information they are getting back is
accurate.
Maintaining business knowledge
This is one of the biggest issues. In one of the
longest contracts I was ever involved in, within
two years the knowledge about what the
systems were and the infrastructure all the
decisions about them was totally gone from
the client. I took over the contract and there
was fear on both sides. I put in place a reverse
knowledge transfer whereby any time they
hired someone, I trained them because then
they could make me be successful. This needs
to be addressed in the rst six months.
Verizons Romano agrees: You have to
maintain in-house expertise or you are dead
because you need to understand what the
vendor is doing, what the process is and how it
works, or how can you manage it?
Reciprocity works
We nd that a two-way partnership works
better than a one-way vendor contract
relationship. In my experience, the best
contracts have inter-reliance and reciprocity,
Richard Ang, CTO, Worldwide Communications
Sector, Microsoft.
Room for maneuver
A vendor told me, If your contract is only worth
$250k, cant do much for you. Bundle stuff
together, make it one or two million, then I can
negotiate and maneuver within my company.
Thats a good vendor. They were honest. They
told me what value they could bring.
Morgan Chung of Huawei adds, The wider
the scope of the contract, the more options a
vendor can offer to help a customer achieve
their goals. If the scope is very limited, so are
the options. Pay as you used is an option, so
you are only paying for what you are using.
Revenue sharing is an option
Lots of people with a more traditional
approach to outsourcing dont like the revenue
sharing model, they see it as too risky, while
new and emerging markets are happier to
take this direction. I believe those in the more
mature markets will opt for this approach too
in time.
The contract is just the start
Its important not to underestimate the
ongoing effort required.
Communication is all
We have weekly meetings its a billion dollar
business.
People who manage your contract change,
and this can be very difcult. You need to
understand each others problems. You need
to communicate constantly, particularly about
changes.
Think the unthinkable
A year ago I would never have thought about
outsourcing quality assurance or architecture or
governance, but this is changing. Now Ive met
an operator that is happy for someone else to
do due diligence that the information they are
getting back is accurate.
MANAGED SERVICES:
MANAGED SERVICES:
In conclusion and TM Forums
contribution to managed services
Section 4
There is no question that the communications
landscape is changing dramatically, and that
increasingly network operators and other
communications service providers (CSPs) will
have to depend on third parties to deliver even
the most basic products and services, such as
connectivity.
While this is a step-change, and ceding
control is always a tough process for
individuals and organizations, arguably this
is a negative way of looking at the situation
and a strange view for those of us within
the communications industry to take. There
is always a great deal of talk about how
operators have previously had end-to-end
control and visibility of their networks.
In fact this has not been the case from the
industrys earliest days, when typically phone
calls were handed from one local network to
another, or onto a long-distance trunk route run
by someone else for termination, and certainly
almost all international calls rely on a third party
bearer some of the way and pretty much always
have done. Nor have they always had end-to-end
visibility, which is a huge topic in its own right.
Obviously it was much easier in the days
when the main product they delivered was dial
tone and phone calls, but the industrys roots
in standardization (to ensure interoperability
between all the worlds networks and the
compatibility of the equipment deployed on
that global super-structure) and reliability (ve
nines) should stand it in excellent stead to
make the next round of necessary changes.
The big challenge now is that far more
products and services are involved, and while the
standards and reliability that allowed telecoms
to become a globe-covering network developed
over decades, we need to move much, much
faster now in a more complex environment.
The business of running a successful CSP is,
as football commentators like to say, a game of
two halves.
On the one hand we need to speed up and
move away from the idea that everything we
launch is perfect and entirely reliable, instead
being prepared to get new services out there
fast to grab market share and our customers
imagination. Once we know weve got a success
on our hands, we can add functions later.
This is not to say that launching poorly
thought out and executed services is the way
to go, but that our mentality needs to change:
we need to be able to launch new services,
typically with partners, without betting the farm
on them, and either be ready to expand them if
they succeed or withdraw them if they dont.
We are not Google and never will be, but its
philisophy of failing is ne, but fail fast, learn
and move on is the mantra for the Internet
age. As a number of C-level executives from
service providers acknowledged at an exclusive
Business benchmarking is a powerful tool for large organizations where the
relationship between cost and advantage is not always apparent.
MANAGED SERVICES:
meeting in Dublin, too many times, we have
spent months and millions ironing out every
wrinkle of a product over a long period of time
only to nd the market isnt interested.
(These themes and issues are explored in
detail in our Quick Insights report, How to
become an innovative service provider, which
will be published shortly after this report, and
will also be free to members to download from
our website.)
The second half of running a successful
communcations service business comes down
to having an adaptable, stable, smart back
ofce that operates across multiple domains
and partners.
Deploying standardized interfaces,
documentation and processes, and best
practices have never been more important
(rather than everyone keep reinventing the
wheel) in the interests of compatibility, speed,
efciency, agility and keeping costs down.
As mentioned by a number of people in
Section 3, guring out what to measure is
a challenge, hence the Forums Business
Benchmarking Program is looking at extending
its key performance indicators and key quality
indicators initiatives to gain a better grasp of
business outcomes, for example, for managed
services. (Also see TM Forums Business
Intelligence Quarterly, published in February
2011, Managed services: Gearing up for
moves from CapEx to OpEx, which is free for
members to download from our website.)
Business benchmarking is a powerful tool,
especially for large organizations where the
relationship between cost and advantage is not
always apparent. It works like this, businesses
agree to pool critical data on their business
performance in a particular area, which we
process as a trusted third party. The resulting
reports provide participants with a view of
the industry performance and where they
stand, while preserving the anonymity of all
participants.
Any member interested in pursuing this
for managed services should contact Tonia
Graham, Business Benchmarking Program
Manager at the Forum via tgraham@tmforum.org
In addition, the Forum has a service level
agreement (SLA) Management Program,
to help get you started when drawing up
contracts with managed service providers
please see http://www.tmforum.org/
SLAManagement/1690/home.html for more
information, handbooks, our charter and
templates.
Commonality of language, standards, best
practice and understanding of each parties
needs and abilities is something the Forum will
be working on in 2011. For more information,
please contact George Greenlee, SVP, Product
Management ggreenlee@tmforum.org
Our benchmarking reports provide participants with a view of overall industry
performance and where they stand, while preserving the anonymity of all participants.
We will rely on third parties to deliver even the most
basic products and services, such as connectivity
Expanding cable revenues: Strategies for the commercial market
The past decade has seen more advances in technology than the previous
century. The cable industry is right at the very heart of this with the
deployment of new fast technologies. But technology isnt the only thing
that is changing the market is too. With Internet-based content rivals and
Internet Protocol Television offers, multi-system operators (MSOs) recognize
future revenues are threatened, and the need to broaden the income base.
This Quick Insights report discusses how these cable companies can expand
revenue in the commercial sector.
Transformation update: The impact of standards and standardization
Driven by increasing competition, maturity of traditional service markets, rapid
technological change and shrinking prot margins, service providers are seeking
to transform themselves into leaner, more agile customer-centric players.
This research report explores the progress that some have made, attempts to
quantify some of the benets achieved, and discusses plans for the future.
It includes:
Q Actual results achieved in transformation programs by select service providers
Q Future approaches and plans based on our extensive service provider
interviews
Q Conclusions and recommendations for your organization.
Converging BSS & OSS: Obstacles and answers
What does the future hold for Business Support Systems (BSS) and Operational
Support Systems (OSS) in need of change? According to Stratecast, service
providers current approach cannot be sustained. This report explores:
Q How the situation is hampering good customer service
Q The nature of and the differences between BSS and OSS
Q Difculties inherent in data migration
Q Why aligning IT with business goals is so important
Q Progress being made: TM Forums Information Framework and Business
Process Framework
Q The importance of change management.
Visit www.tmforum.org/researchandpublications to nd out more
Have you seen TM Forums latest publications
and research? They are free and exclusive.
COMMERCIAL MARKET
STRATEGIES FOR THE
QUICK INSIGHTS
EXPANDING CABLE
REVENUES
Sponsored by:
May 2011 | www.tmforum.org
INSIGHTS
RESEARCH
Sponsored by:
Transformation update:
The impact of standards
and standardization
AND ANSWERS
OBSTACLES
QUICK INSIGHTS
CONVERGING
BSS & OSS
Sponsored by:
view online
view online
view online
Visit www.tmforum.org/researchandpublications to nd out more
www.tmforum.org

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