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Communications, Media, and
Entertainment Industry
Viewpoint paper




                             overcome
                             the hurdles to business transformation.

                            Communications service providers worldwide are
                           looking for ways to reduce costs and total cost of
                          ownership, stimulate revenues, improve the customer
                         experience, and increase customer loyalty. One solution
                        is a business support and operations support systems
                       transformation that yields a competitive advantage.
Table of contents

A clear consensus for transformation ..........................1
HP viewpoint .........................................................1
Why transform? ......................................................1
No consensus on how to transform.............................3
Two roads to transformation .....................................4
Map your own road to success ..................................6
Take an enterprise approach for the long term .............6
Standardize requirements capture and communications .... 7
Maintain control when mobilizing suppliers .................7
Redefine your business model ....................................7
Design with integration in mind..................................7
Explore new investment strategies ..............................8
Keep it COTS ..........................................................9
Do it now ...............................................................9
About the authors .................................................. 10
Most communications service providers
(CSPs) are talking and thinking about it,
but few know what to do first. With the right
applications, information, and technology,
CSPs can redefine their business model and
undertake a transformation strategy that will
lead to success.


            Communications service providers are facing a major       HP viewpoint
            decision—how to transform their businesses to become
            more agile, grow market share, and reduce costs—          Although there seems to be a clear consensus for
            while improving their customer experience and             transformation, HP has found that many CSPs are
            satisfying the ever-increasing demand for bandwidth-      hesitating, because transformation is a costly, lengthy,
            greedy applications, online entertainment, and            and disruptive process. At HP, we know the risks.
            yet-to-be-developed services.                             Whether you are transforming your BSS/OSS or your
                                                                      entire business paradigm, transformation demands
                                                                      experience and maturity in developing large programs.
            A clear consensus for transformation                      It also requires strategic planning expertise to align with
            CSPs are nearly unanimous in their conviction that        business goals and go-to-market strategies.
            they need to transform to grow and compete against
                                                                      This paper demonstrates how HP can bring to
            new challengers, such as Google and Apple. This
                                                                      bear its technological capabilities, expertise, and
            consensus for transformation is detailed in a Business
                                                                      decades of experience in the communications, media,
            Transformation Research Project carried out by Frost
                                                                      and entertainment (CME) industries—particularly
            & Sullivan on behalf of HP between May and August
                                                                      telephony—to help CSPs cope with the seemingly
            2010. Frost & Sullivan interviewed 32 top-level CSP
                                                                      overwhelming, time-consuming, and risky process of
            executives from Europe, Asia Pacific, India, the United
                                                                      change and transformation.
            States, Canada, Latin America, and the Middle East.
            • 96% said transformation is needed now.
                                                                      Why transform?
            • 88% said they were either currently engaged in or
              had completed a transformation project in the past      There are many reasons why CSPs are looking to
              12 months.                                              transform their BSS/OSS. The following sections
                                                                      examine how outdated, homegrown, and overly
            • 65% said they will institute a new transformation
                                                                      complex BSS/OSS are inhibiting CSP success.
              project within the next 12 months.
                                                                      Outdated BSS/OSS applications
            The CSP executives interviewed for the study were
                                                                      The successful convergence of telephony, computing/
            also in solid agreement about the business segments
                                                                      IT, entertainment, gaming, media, and advertising are
            they would target first for transformation: information
                                                                      placing unprecedented demands on currently installed
            technology (IT) operations and maintenance and
                                                                      BSS/OSS—demands that many legacy systems were
            network infrastructure. Many respondents cited their
                                                                      never intended to meet. These include converged
            Business Support Systems (BSS) and underlying
                                                                      billing, customer self-service, fraud prevention, new
            Operations Support Systems (OSS) as a key
                                                                      privacy regulations, credit risk calculation, flexible
            focus of their transformation efforts. In particular,
                                                                      pricing strategies, and individual customer usage
            operators identified customer care, billing, customer
                                                                      allowances that can be adjusted in real time.
            management, and business intelligence/analytics as
            first-priority projects.




                                                                                                                              1
Siloed architecture—Another challenge is the siloed         Monolithic or nonstructured architecture
architecture of many legacy systems. Typically, CSPs        BSS/OSS that are running on outdated IT infrastructures
installed separate BSS for each new major product line.     typically have a higher total cost of ownership (TCO)
This resulted in a plethora of highly complex application   when compared to more modern and nimble
silos, which contain redundant functionality and            architectures. Most legacy IT does not incorporate a
require duplicate operational and network resources.        service-oriented architecture (SOA), which enables
These silos cannot interact with each other for lack of     easy integration within the BSS/OSS stack, with the
built-in integration layers or an application programming   network, and with external or third-party resources.
interface. Plus, they cannot be integrated with other       Without built-in integration layers and multidirectional
systems for customer relationship management (CRM)          interfaces, CSPs cannot leverage the standardized
or billing, for instance.                                   and streamlined processes and services that generate
                                                            efficiencies across the enterprise and reduce overall TCO.
Home-grown solutions—Worse yet, sometimes
legacy systems are built on outdated, home-grown            Older systems are frequently dependent on
applications that are fraught with complicated              nonvirtualized servers or nonoptimized data
solutions. Layer after layer of customization has been      centers that require expensive human resources to
built on top of applications that were written in-house     operate and support, uneconomical storage, and
more than a decade ago. Out-of-control customization        nonecological cooling systems. Outdated IT is usually
has not only made these systems complex and                 inefficient, nonredundant, duplicate, and inflexible.
unwieldy but in some cases, has effectively buried the      This is because it was rarely built specifically to
original source code.                                       optimize BSS/OSS operations but was extended ad
                                                            hoc over the years to accommodate additional BSS
Some legacy in-house systems no longer comply with
                                                            applications and updates.
the CSP’s internal standards or government regulations.
In situations where the BSS were built on commercial        Data and bandwidth explosion
packages, pieced together from various vendors,             Five years ago, no one in the telecommunications
licenses have expired, many of the vendors have gone        industry could have predicted the explosion of data that
out of business, and support is no longer available.        is transported across every operator’s network today.
                                                            Data proliferation has become such a concern that
Inflexible and slow to market—As a result,
                                                            Frost & Sullivan calls it a “major new business driver.”
legacy systems are highly inflexible. Minor pricing
or regulatory changes require expensive, time-              Frost & Sullivan cites a study1 published in June 2009
consuming, and manual coding efforts, because the           showing that data traffic increased four-fold in less
business logic and workflows are hard-coded into            than a year, from 5 to 6 gigabytes per second (GBps)
each application. Moreover, data must be maintained         at the end of 2008 to 24 GBps in October 2009. The
across multiple systems and checked for consistency         study also noted that mobile data traffic is projected to
across the portfolio. Thus, legacy systems are              double every year through 2013, which amounts to a
expensive to run, operate, and support.                     compound annual growth rate (CAGR) of 131%.

Lack of business intelligence—Most legacy systems           Network operators are struggling to keep up this
were designed for batch processing, not real-time           data explosion. They are worried about how they will
billing, charging, and business intelligence solutions.     pay to build the networking infrastructure needed to
Consequently, they lock CSPs into a flat-rate pricing       handle the world’s increasingly voracious appetite for
structure. They do not support CSP needs to obtain          bandwidth. And they are doing so amid a downward
and analyze critical customer data that is required for     pricing trend that is evident around the globe.
today’s pre- and post-paid charging models, pricing
                                                            Some operators are looking at BSS/OSS
flexibility, and product bundling. Legacy BSS also
                                                            transformation as a way of bringing in new revenue
eliminate the cost-saving potential of online customer
                                                            to help pay for the next generation of networks.
self-service options and the benefits of improved
                                                            Implementing new BSS/OSS will enable the new
customer intimacy and loyalty. Most importantly,
                                                            services, revenue streams, and pricing structures that
legacy systems impede the launch of new products
and services.
                                                            1 Published in the Frost & Sullivan Stratecast report of January 2010, entitled
                                                              “OSS/BSS Global Competitive Strategies (OSSCS), Volume 11, Number
                                                              1. The study Stratecast cited is a Cisco report, “Cisco Visual Networking
                                                              Index: Forecast and Methodology, 2008-2013”, June 2009. http://www.
                                                              cisco.com/en/US/solutions/collateral/ns341/ns525/ns537/ns705/
                                                              ns827/white_paper_c11-481360_ns827_Networking_Solutions_White_
                                                              Paper.html




                                                                                                                                       2
could offset the costs of keeping up with network            No consensus on how to transform
bandwidth demands. Transformation will also help
decrease telecom operators’ IT footprint, maximize           Although there are innumerable reasons to transform
efficiencies across the enterprise, and wring out IT         legacy BSS/OSS—and the Frost & Sullivan study shows
costs wherever possible. Smart operators will refunnel       that the desire to transform is nearly unanimous—there is
the savings derived from lower cost operations to            no consensus on how to make transformation happen.
network expansion.                                           The following sections highlight some of the more
                                                             typical approaches deployed in the market today.
Equally important, transformed BSS will enable
operators to make sense of the massive amount of             The “greenfield” approach for new-market entrants
data crossing their networks. Business intelligence          In many ways, deciding how to proceed is easiest for
applications will enable CSPs to track customer usage        new entrants into the field, particularly in Asia Pacific
patterns and institute new, multitiered charging plans       or the Middle East, where the average revenue per
based on those patterns. Customers who want faster           user (ARPU) rates are among the lowest. Greenfield
downloads will pay a premium, and heavy users will           operators must build from the ground up and can
be charged more than those increasingly rare                 take advantage of the most recent technological
individuals who use their mobile telephones solely           developments to build highly integrated, converged,
to make calls.                                               and agile infrastructures that will deliver the lowest-
                                                             cost services for years to come.
Complacency and the fear of change
Two of the biggest inhibitors to transformation are the      A range of approaches for well-established CSPs
human frailties of complacency and fear of change.           Although well-established CSPs don’t have such an
There is widespread reluctance to re-evaluate business       obvious choice as newcomers, they do have a wider
processes. All too often, CSPs use the complexity            range of options. Here are the three most common:
of their BSS/OSS as an excuse to delay or forego             • Band-aid fixes, the most inexpensive approach—
transformation.                                                Quick fixes may mitigate issues resulting from
                                                               structural complexity but will result in an increase in
Introducing a new system often can be seen as too
                                                               complexity and costs in the long term.
risky and expensive to contemplate. Customers may
opt to stay with a stable—but less flexible—system           • Application modernization, an important first step on
that will only grow more complex and expensive to              the road to business transformation—If undertaken
operate in the coming decade. HP would suggest                 as individual projects, however, modernization
“leapfrogging” the legacy system, bit by bit, to a             can result in isolated efforts that don’t resolve the
future-state platform that would remove much of the            structural issues of legacy systems.
risk from the situation.                                     • BSS/OSS transformation, a comprehensive
                                                               approach—Transformation yields the most effective
If employees are accustomed to complex and
                                                               long-term benefits and enables the new business
unwieldy systems, they assume they will always
                                                               models that are necessary for future competitiveness.
be that way. So change seems unnecessary, and
procrastination comes easy. End users want their             Some HP Tier 1 CSP customers in Europe currently are
systems to look and work like their legacy systems.          funding studies to weigh the efficacy of completely
Product managers fear they will lose customers if            abandoning their complex, inflexible, and expensive-
they drop one or two services—although they will be          to-operate legacy systems and replacing them with
replaced by services that have the potential to grow         new BSS/OSS. The data migration this approach
revenue and market share.                                    requires can be done in a controlled way. So CSPs
                                                             are justified in their belief that this greenfield approach
Thus, emotions can prevent both change and business
                                                             is worth the risk and expense, because it will enable
growth. A highly controlled and well-organized
                                                             them to launch new products and services quickly,
transformation process is the best antidote for gut
                                                             generate new revenue streams, and stay ahead of
feelings and fear. Such a transformation process starts
                                                             the competition.
with an enterprise architecture, which provides an
outline of the strategic direction, takes into account the
challenges that will be encountered, and puts specific
steps in place to mitigate potential risks.




                                                                                                                     3
Clients around the globe are undertaking projects that      In this example, The Challenger hires only a handful of
require the migration of massive amounts of data. Two       executives by the time it schedules its first meeting with
such projects involving HP include a human resources        HP. The client has no offices and no infrastructure—
migration for a large telecom operator in Western           just know-how and a clear vision of how it wanted to
Europe entailing 150,000 entries; and a new billing         proceed.
system for a North American telecommunications
                                                            From the start, The Challenger and HP determine that
company involving 450,000 accounts.
                                                            the only viable strategy for meeting the project’s
The total transformation approach differs considerably      extremely tight deadline and budget is to achieve the
from the choice popular with many North American            lowest possible TCO by using the following components:
operators whose budgets are constrained by fallout          • A fully outsourced model
from the global recession. Many North American
                                                            • Commercial off-the-shelf (COTS) applications
CSPs applied all the quick, inexpensive band-aid fixes
that were financially feasible over the past two years,     • A service-oriented integration architecture
but yielded limited results.                                Naturally, the infrastructure has to be carrier grade,
Now the forward-looking ones are seeking a                  use the TM Forum’s frameworks, and comply with all
comprehensive, step-by-step approach that will              government-mandated regulatory standards.
enable them to:                                             The Challenger supports HP’s approach to a BSS/
• Offer converged, IP-based services                        OSS stack that is as generic as possible to keep costs
• Achieve customer intimacy                                 down and speed implementation. Customization
                                                            is kept to an absolute minimum. HP estimates a
• Leverage regional and consumer offerings
                                                            substantial amount (conservatively estimated between
• Deliver more comprehensive network- and platform-         5% and 10%) of the COTS code is rewritten, primarily
  based services to their enterprise accounts               to create interfaces for security, banking, and other
They are also using BSS/OSS transformation as a way         unavoidable system personalization.
to amortize the capital expenditures (CAPEX) required       Serving as the system integrator for the project,
to institute these new offerings over a period of time,     HP works to assess requirements; draw up the
and to lower their TCO to lower their pricing structures    implementation road map; set and manage the
into the future.                                            budget; and configure, test, deploy, and run the
                                                            system on a multiyear maintenance agreement.
Two roads to transformation                                 HP also recommends to develop target enterprise
The following examples show two companies’                  architecture that will help ensure the CSP can meet
distinctly different routes to transformation success. We   future requirements.
refer to the profiled companies as “The Challenger”         Because The Challenger has not yet established a
and “The Incumbent” in the examples.                        physical location, HP has to work on many aspects
The Challenger example focuses on a hypothetical            of the projects remotely. Data centers in one country
partnership between HP and a new company, formed            were used to temporarily support development and
by a large mobile telecommunication provider.               testing until a new center was established in the
Working together at amazing speed, HP and The               company’s home country. Hardware is configured and
Challenger can build an entire telecommunications           tested in a third country and transferred to the new
infrastructure and deliver dependable voice and             data center, while it is still being built—only two weeks
multimedia mobile services in about six months—a            before user acceptance tests begin. HP also runs
remarkable feat.                                            testing phases in parallel with other implementation
                                                            processes, because time limitations preclude HP’s
From greenfield to challenger in six months                 standard testing cycles.
When The Challenger’s global parent company wins
the license to start a new mobile telephone company         In all, the HP and The Challenger project achieves
in an emerging market, it knows it has its work cut out     remarkable results. Not only does the project meet the
for it. Not only will it be challenging the market’s only   six-month activation deadline, but it also meets all cost
mobile provider, but it will have to guarantee service      objectives. At the end of the first year of operation,
delivery within six months. And when HP signs on to         HP has already reduced CAPEX of the BSS/OSS
develop, deploy, and run the entire operation, HP           environment to near 2% of revenue, well ahead of
agrees to cap CAPEX for the BSS/OSS environment at          schedule. That’s a considerable savings, because
a very ambitious percentage of the company’s revenue        comparable BSS/OSS environments run an estimated
after the second year of operation.                         4% to 6% of revenue.




                                                                                                                   4
Additionally, HP estimates that start-up costs are only     The Incumbent’s commercial mobile division sought
about 60% of the typical greenfield venture. And            a new billing solution to facilitate the launch of new
when The Challenger launches new start-ups, the             high-speed wireless offerings as part of a market
CAPEX costs for each new venture are expected to            expansion strategy. They were convinced that a new
drop by about another 40%, because the company              billing solution would help them compete against
can leverage the existing infrastructure and human          low-cost competitors that recently entered the market.
resources that HP already has in place.                     It could also provide the business intelligence and
                                                            analytical capabilities needed to target specific
The Challenger is on target to capture significant
                                                            customer groups with new services, product bundles,
market share from the incumbent provider. Customers
                                                            flexible payment plans, and less expensive customer
can set up prepaid, postpaid, and flexible charging
                                                            self-care options.
plans and pay their bills online. Some plans even
replenish used minutes automatically to guarantee           Although exact figures are not available at this time,
service continuity. Additionally, customers can             the HP-managed billing system is expected to save The
purchase from a range of mobile phones and                  Incumbent many millions over the projected 10-year
accessories from an online store and a growing              life cycle. For starters, HP reduced operating services
number of retail operations.                                run rates to one-fourth of The Incumbent’s previous
                                                            annual outlay for similar outsourced services.
The real rewards come when The Challenger launches
more start-ups, leveraging HP’s industry best practices.    Other savings resulted from the new platform, which
In fact, HP standardized these best practices in a new      replaced more expensive mid-range server and
offering, Telco Express. The offering will provide a        mainframe components with a Linux/Open Systems
repeatable and cost-effective IT infrastructure model for   architecture that uses less expensive hardware and
deploying new telecommunications companies in               embedded third-party products. Storage costs were
markets across the globe.                                   reduced by adding a locally attached SAN solution
                                                            and eliminating third-party services that were previously
This approach is not limited to greenfield launches; it
                                                            engaged to maintain tape and system back-ups.
also makes sense for incumbent Tier I operators willing
to build a single, new, strategic platform. The platform    More importantly, the converged SOA has enabled
then would be shared and exploited by multiple              The Incumbent to rethink its outsourcing strategy and
subsidiary operating companies, reducing global             squeeze out costs in the process. Instead of trying to
operational costs substantially.                            reduce outsourcing costs by consolidating services,
                                                            it now focuses on consolidating the platform. With
Billing transformation through step-by-step
                                                            converged IP, the commercial mobile group is able
modernization
                                                            to bill for multiple services such as VoIP, IPTV, Internet
The next example is an HP case study that focuses
                                                            access, and wireless, using a common billing platform,
on a long-established telecommunications provider in
                                                            a single mediation and rating solution, and a common
North America—The Incumbent. This case represents
                                                            order-entry application. They are also able to
an approach that takes a middle ground between BSS
                                                            seamlessly interface with the CRM solution to produce
transformation and applications modernization. The
                                                            a consolidated bill by customer.
Incumbent partnered with HP to develop an enterprise-
wide approach that would govern numerous but                The new billing system, running on a converged
separate modernization projects. This would eventually      HP platform, will enable The Incumbent to replace
result in a total transformation of the company’s billing   call centers with less expensive, self-service options,
capabilities over a number of years.                        institute usage caps, offer different rate structures
                                                            based on consumption patterns, and offer pre- and
The Incumbent started the process by hiring HP to
                                                            post-paid billing plans—none of which were possible
implement a new billing system for its commercial
                                                            with The Incumbent’s previous BSS/OSS.
mobile segment, which would deliver packaged-based
billing services and identify an enterprise-wide BSS/       Equally important, The Incumbent’s new outsourcing
OSS applications architecture. Next, the client plans to    policies have also helped it formulate investment
leverage lessons learned from the first implementation      strategies for funding future projects. By outsourcing
to deploy integrated billing systems in the wireline,       billing systems management, our client was able to
broadband, TV, IPTV, IP Centrex, Voice over IP, and         shift a significant portion of the project’s CAPEX to
enterprise segments. The ultimate goal is an integrated     OPEX, making the cost structure more manageable for
billing solution that delivers a single view of each        the company’s year-end balance sheet.
customer across all offerings and business units.




                                                                                                                   5
Map your own road to success                              Our Global Program Management Architecture
                                                                                            (GPMA) uses state-of-the-art tools and techniques to
Key concepts                  Because many CSPs will undertake a BSS/OSS                    assess, prioritize, design, and implement processes.
for a successful              transformation project in the coming year, the time has       This gives clients high-level visibility into program and
transformation                come to decide how to proceed. To be successful, you          project essentials such as value, quality, and risk.
                              must have a clear vision of the desired end result. Any
• Take an enterprise approach
                              transformation project must be explicitly aligned with        GPMA provides a consistent methodology across all
  for the long term.
                              the company’s business objectives and IT goals.               programs by using common definitions, processes,
• Redefine your business model.
                                                                                            tools, templates, and best practices. This ensures the
• Standardize requirements        To gain consensus, all stakeholders must be consulted     smooth interaction of interdependent projects and
  capture and communications.     and convinced that the change will benefit them.          the realization of prioritized business goals. Most
• Maintain control when           Funding must be found, risk must be minimized, and a      importantly, HP is adept at modifying our tried and
  mobilizing suppliers.           solid plan with phased deliverables must be carefully     true approaches to ensure that clients transform their
• Design with integration         defined and articulated.                                  business paradigm, as well as their BSS/OSS and IT.
  in mind.
                                  It doesn’t have to be that hard
• Keep it COTS.
                                  The prospect of undertaking a transformative initiative   Take an enterprise approach for the
• Do it now.                      seems overwhelmingly complex to some. In fact,            long term
                                  54% of the executives interviewed by Frost & Sullivan
                                                                                            Band-aids, quick fixes, and siloed projects do not
                                  indicated that executing such programs was one of
                                                                                            work in today’s climate of converged technologies,
                                  their organization’s weakest talents. Even those CSP
                                                                                            merged companies, and consolidated resources. CSPs
                                  executives who felt confident that program execution
                                                                                            are accustomed to taking the long view. No carrier
                                  was one of their strong points (43%) said they would
                                                                                            would build a network if it wasn’t convinced it would
                                  rely on external consulting and outsourcing services to
                                                                                            produce revenue for years to come.
                                  help them define and implement the project plan. In
                                  fact, 36% of all CSPs interviewed said that outsourced    It’s time to transform the way you think about your
                                  implementation and delivery consultation services         BSS/OSS stack. It’s no longer a bunch of applications
                                  were “critical” to their success.                         but a long-term investment that is as necessary as the
                                                                                            network. And like the network, it’s how you use your
                                  What does it take to find a partner with proven
                                                                                            BSS that keeps the revenue flowing.
                                  resources to achieve transformation? Look for
                                  a vendor with applications development and                Before implementing another tool or updating another
                                  maintenance expertise, as well as experience              application, take the opportunity to review your
                                  transforming portfolios specifically for the              company’s BSS requirements from a global, enterprise
                                  communications industry. You need a provider that         perspective. One-off projects, although less expensive
                                  has developed program implementation, mobilization,       in the short run, will not deliver the interconnectivity or
                                  and execution methodologies that has proved to be         system-wide capabilities needed to deliver business
                                  successful for Tier I and Tier II CSPs in major and       intelligence—the true source of tomorrow’s competitive
                                  emerging markets. That vendor’s methodology should        edge. Even if you can’t afford a large-scale
                                  establish an effective governance process that delivers   transformation project right now, spend your resources
                                  the best IT, enables multisupplier management,            on a road map that will help you prioritize projects and
                                  manages change, and controls costs.                       ensure that they work together to deliver efficiencies
                                                                                            and capabilities across the entire enterprise.
                                  Whether you decide to go it alone or rely on external
                                  resources to help transform your BSS/OSS, HP offers       HP RightStep
                                  some carefully considered suggestions for developing      Our proven methodology, HP RightStep, takes an
                                  a successful transformation strategy.                     enterprise approach to transformation planning. This
                                                                                            helps clients identify and prioritize initiatives and
                                  Global program management
                                                                                            optimize IT investments in a manner that best supports
                                  HP uses a proven approach to transformation. Our
                                                                                            the enterprise’s business goals.
                                  methodology provides the structure and governance
                                  needed to successfully develop and run a client’s
                                  enterprise programs portfolio and individual programs
                                  for a maximum return on investment.




                                                                                                                                                    6
HP RightStep uses a patented method and process            Now, getting cash amounts to a quick stop at the
set for enterprise architecture definition and strategic   corner ATM whenever it’s convenient. Foot traffic was
technology transformation planning. It enables             so reduced that banks were able to pare down the
HP to work with clients to define a strategic IT           teller staff, leaving a lot of empty real estate in the
direction, future-state enterprise architecture, and       lobby. In the United States, some enterprising bankers
a transformation plan so they know where they’re           subleased the space to become coffee shops, insurance
heading and where they should be at every step of          agencies, flower stalls, and even art galleries. Others
the process.                                               closed branches and created tiny ones in supermarkets
                                                           and malls. Recently, some European bankers have
Standardize requirements capture                           transformed their lobbies to look more like living rooms,
and communications                                         furnished with comfortable chairs and computer
                                                           terminals that are configured solely for online banking.
An HP transformation plan standardizes requirements        If you want to talk to a teller, you need to make an
capture and communications. This type of standardization   appointment and pay for the privilege.
ensures traceability and inclusive communication to all
stakeholders during the transformation process. After      It’s time to transform your identity. You’re obviously
deployment, it will ensure sustainable maintenance of      not a telephone company anymore. Most CSPs have
the business and IT services.                              moved beyond wireline and are offering a variety
                                                           of services that range from wireless to cable TV to
One of the major challenges while seeking to               VoIP. But many are still focused on transmission and
modernize the application landscape is understanding       reception. The CSPs that can bundle entertainment,
the business value of the IT services. HP’s enterprise     gaming, and information assets in ways that offer
architecture approach—based on open standards              exciting new services and capabilities to their
architecture, industry standards, and best practices—      customers will dominate their markets.
provides a controlled language and method to convey
and maintain requirements.                                 Similarly, CSPs that attempt transformation with
                                                           yesterday’s thinking and tools will wind up with
                                                           yesterday’s results. Have you thought about cafés or
Maintain control when mobilizing
                                                           art galleries lately? Or instead of the same old long-
suppliers                                                  distance plans, have you considered transforming
Some CSPs do not possess the insight required for a        cell phones into credit cards? Dramatic changes in
successful integration of OSS and BSS applications;        your strategic direction require a comprehensive
others lack the resources to cope with enterprise          understanding of the properties of the new operations
architecture complexity. In both cases, CSP will often     and a think-through of its implications.
rely on the solutioning and costing of suppliers—a
situation that can be exploited by commercial vendors.     Design with integration in mind
When working with a supplier, you should have a clear
                                                           With the convergence of communications, media,
understanding of an explicit integration framework, so
                                                           and entertainment driving innovation and customer
you can maintain control over every phase—particularly
                                                           demands, CSPs need to ensure their IT is built for
the project definition and vendor selection. You should
                                                           convergence. This means a lean, agile, and highly
also have access to all the major BSS/OSS vendors to
                                                           integrated enterprise. As demonstrated in The
help you select the solution providers and applications
                                                           Challenger case study, a BSS/OSS transformation
that work best within your framework.
                                                           can simultaneously take advantage of three cost-
                                                           containment elements:
Redefine your business model
                                                           1.   A fully outsourced model, using IT outsourcing
Smart phones, the iPhone, iPad, DROID, and other                services
new products are transforming the communications,
                                                           2.   Commercial off-the-shelf applications
media, and entertainment industries today—much
like the ATM up-ended the banking industry decades         3.   A well-designed, -deployed, and -executed
ago. Before the ATM, wage earners rushed to the                 service-oriented integration architecture
bank before it closed at 3 p.m. on Friday to cash their
paychecks and make sure they had enough money
for the weekend. The result? Long lines of impatient
patrons waiting for their turn with the teller.




                                                                                                                 7
A converged infrastructure requires enterprise-wide           payback typically needs to be short.” Unfortunately,
integration planning and building interfaces at every step:   most BSS/OSS projects will not deliver a decent ROI
1.   Choose a system integrator that takes an                 in a year or even two.
     enterprise-wide, SOA approach and has the                In this case, savvy managers are trying to steer their
     flexibility and capability to integrate all the          internal customers away from using rapid ROI as
     products you select for your BSS/OSS stack.              the only measure of success. Growing market share,
2.   Select BSS/OSS applications that offer prebuilt          improving competitiveness, and launching new
     integration. The applications should not only be         revenue streams are more accurate metrics. CSPs that
     architected as preintegrated product stacks; they        forego transformation projects because of delayed
     should also have predefined business processes           payback are in danger of losing market share to new,
     and preintegrated information out of the box.            more agile entrants.
3.   Make sure your OSS architecture has multiple             For certain, these new competitors will offer cheaper
     integration layers. Your OSS/BSS stack should            rates or better services to churn through your
     be able to interface with your company’s other           customers. Do you or your internal customers really
     BSS systems, plus the CRM and ERP solutions,             want to take that chance?
     e-business portals, and more.
                                                              Transformation is necessary
By building integration capabilities into a converged         Although the recession may have slowed progress, it
enterprise, you will be able to consolidate siloed BSS,       has not mitigated the need for transformation. In fact,
reduce your IT footprint, and lower overall TCO.              43% of the executives surveyed by Frost & Sullivan
Convergence begins with an enterprise architecture            say that the recession did not alter their view that
that’s designed with integration in mind. The basis           transformation is necessary. Another 43% say the
of this is a modern data center with an automated,            recession accelerated the need to transform.
virtualized architecture. This architecture will reduce       According to one respondent, “Our network platforms
server and storage hardware requirements, make                and business process systems are getting outdated and
management easier, and reduce risk.                           are no longer capable of catering to the increasing
The data center should incorporate a comprehensive            demand for wireless technology and mobility. This has
and cohesive monitoring and management framework              caused the urgency for us to transform.”
that is automated to respond quickly to requests and          Consequently, CFOs and IT managers must work even
incidents. This not only speeds up critical decision-         harder to get the funding they need for transformation.
making but reduces operating and maintenance costs.           Many are turning to clever schemes to convert CAPEX
The data center should be hardened with lights-out            into OPEX. As shown in the previous case studies,
operations, plus efficient, standardized tools and            converting capital outlays into operating expenses
processes to deliver high availability and accommodate        generally involves turning over the day-to-day operations
new business growth. Finally, convergence requires a          of your BSS/OSS or IT infrastructure to outsourced
multilayer network architecture that accommodates             services—whether onshore, nearshore, or offshore.
different types of traffic (applications, data, and core
operations) and enables each network to be sized              HP has found that the greatest opportunity for
appropriately to avoid congestion, provide security,          converting CAPEX into OPEX is through a multiyear
and facilitate management.                                    vendor contract in which the total project cost is
                                                              divided by the number of years in the contract. This
                                                              converts CAPEX into OPEX and also provides a
Explore new investment strategies
                                                              predictable, flattened monthly payment. HP frequently
Although some regions bounced back from the global            brings its leasing and financial services subsidiary,
economic recession of 2008/2009, the 2010 credit              HP Financial Services, into the opportunity to further
crisis in Europe and the tepid overall global recovery        reduce the initial CAPEX.
continue to keep capital constrained through 2011.
Generally, IT budgets remain tight and often are blamed       Outsourcing can deliver further cost reductions.
for delaying or resizing transformation projects.             Allowing a third party to host your operations
                                                              eliminates the need to build and maintain expensive
Another reason why many transformation projects               infrastructures. HP Enterprise Services estimates
have not moved forward is the growing demand                  that outsourcing the management of your BSS/OSS
for faster payback. According to one CSP executive            can lower the TCO up to 30% over the life of your
interviewed by Frost & Sullivan, “Increasingly, we            applications by maximizing application performance
need to show that an investment has a ROI, and                and operating efficiency. Using Best Shore® not only




                                                                                                                    8
lowers labor costs but frees you from the time and           Do it now
                                    expense of staffing and training technical staff. A fully
HP: Proven expertise,               outsourced model was a key success component for             The 30 CSP executives interviewed for the Frost &
solutions, and quality              The Incumbent and The Challenger and holds the               Sullivan Transformation Study identified a wide range
                                    potential of similar success for you.                        of business imperatives for the coming year. Below
HP has 35-plus years
of telecommunications                                                                            is a synopsis of the internal and external drivers
                                                                                                 they cited for wanting to transform their IT and BSS/
experience serving over             Keep it COTS                                                 OSS environments.
130 clients in more than 40
countries. Our experience           CSPs are old hands at innovation. The industry is            • Reduce costs/TCO: Consolidate IT resources,
serving more than 100               responsible for developing more than its share of              optimize assets, and lower both unit costs and
million subscribers with BSS/       remarkable new technology over the past 20 years.
OSS is based on our ability                                                                        overall TCO to compete on price.
                                    So the urge to develop home-grown solutions and
to maximize the telecom                                                                          • Stimulate revenues: Improve time to market of new
                                    tinker with generic applications is irresistible to many
operating environment. HP                                                                          products and services and generate new revenue
offers integrated business
                                    technologists. This is especially the case when end
                                                                                                   streams; offer more favorable and flexible pricing
solutions backed by the             users balk at learning new systems and beg the
                                                                                                   structures to improve profitability; identify and create
expertise of thousands of           technicians to customize them so they work “like they
                                                                                                   premium pricing plans for poor credit risks and
CME professionals.                  used to.”
                                                                                                   bandwidth hogs.
HP is unique in the depth and
                                    Technology, however, has become highly specialized.          • Improve the customer experience: Implement new
breadth of its hardware,
software, and services portfolio.
                                    Generally, the major BSS/OSS/CRM producers are                 business intelligence capabilities and analytics to
We deliver quality solutions        capable of delivering a superior product at a lower            create new product bundles and pricing structures
designed to lower total cost        cost than any developed in-house. BSS/OSS are                  based on customer usage patterns; create special
of ownership and reduce             becoming more akin to table stakes in a game of                offers for high-churn candidates.
risk by incorporating agile         cards. It’s the investment you have to make to play the
architectures, governance,                                                                       • Increase customer loyalty: Offer lower-cost,
                                    game, and the smart player will keep that investment
consistent quality, and security                                                                   multichannel and self-service options to enhance
                                    as low as possible. COTS packages typically cost less,
standards—from strategy                                                                            customer access to support, boost customer
                                    are cheaper to run, and require fewer maintenance
definition through                                                                                 convenience; increase customer loyalty and
implementation and                  and support resources than in-house systems.
                                                                                                   reduce churn.
management.                         Customization is a sure-fire trigger for increasing costs,
We use a proven, global                                                                          Transforming BSS/OSS is the only way to achieve
                                    slowing implementation, and impeding time to market
delivery methodology and                                                                         these goals. What are you waiting for? If 96% of the
                                    for new products and services. By keeping customization
tools based on industry                                                                          CSPs interviewed by Frost & Sullivan are planning
                                    to a minimum, rollouts, routine upgrades, and
standards and best practices.                                                                    to start their own transformation initiatives this year,
These include The Open
                                    maintenance all take less time and, consequently, cost
                                                                                                 there’s a strong probability that your competition is
Group and TM Forum                  less money. Some COTS packages have integration
                                                                                                 planning a transformation project, too.
management standards and            prebuilt into the entire solution stack. This further
the experience of our 3,700         reduces the complexity and expenditures associated           Meanwhile, consumers aren’t waiting for you to
CME Best Shore resources.           with the platform’s integration layers by between 20%        transform. They’ll switch to the company that offers
These include certifications        and 55% during the application life cycle.                   them the best price and the coolest apps. And your
(CMMI Level 5 Certifications,                                                                    enterprise customers will defect to the CSPs that will
ISO 9000, Oracle certifications)    COTS packages also simplify and speed up the
                                                                                                 help them generate new business and cut costs. The
and HP professionals                process of making pricing or regulatory changes and
                                                                                                 time to transform is now.
(including solution architects,     launching new products. Changes no longer require
project managers, and               developing and writing code. The newer packages
Microsoft technologists).           provide a GUI that allows users to input changes or
HP has long-term partnerships       requests into a preformed table or template. Many
with the best BSS/OSS, CRM,         don’t require a systems developer and allow less
and providers.
                                    expensive, nontechnical resources to make changes.
                                    New products can be launched in days instead of
                                    months, because today’s generic COTS only require
                                    users to model the new product in a test environment
                                    and then roll it out.




                                                                                                                                                          9
About the authors
                                       Harry Hendrickx                                                           Paul R. Voelker
                                       Harry Hendrickx is chief technology officer and                           Paul R. Voelker is director of communications solutions
                                       enterprise architect in the Communications, Media,                        at HP. His role in the Communications, Media, and
                                       and Entertainment (CME) industry unit at HP. In this                      Entertainment (CME) industry segment is to develop
                                       role, he is responsible for architecture management                       strategic solutions and facilitate relationships with the
                                       and support of large transformation programs.                             communications service providers and industry partners.
                                       Since joining EDS (now HP) in August 2007, Hendrickx                      Voelker joined HP in 1983 and has held various
                                       had several assignments as member of the Chief                            business development, sales, and marketing management
                                       Technology Office CME industry team. His approach                         positions. His systems and solution sales have been in
                                       is based on enterprise architecture with emphasis on                      the oil, defense, and telecommunications industries.
                                       business IT alignment.
                                                                                                                 Voelker was the Americas marketing manager for the
                                       Hendrickx’s focus currently is on enhancing the                           CME industry, responsible for business development and
                                       architecture capability in outsourcing relationships,                     managing the CME solution center. He was director of
                                       as well as within organizational boundaries. One of                       business development for service providers in the
                                       his specialties is exploiting open standards such as                      southwest United States, responsible for developing
                                       The Open Group Architecture Framework and the                             go-to-market strategies and qualifying companies for
                                       TeleManagement Forum framework.                                           strategic alliances and investment. He also was the HP
                                                                                                                 global client business manager for MCI and has
                                       Hendrickx has more than 20 years’ experience in
                                                                                                                 managed teams responsible for the entire range of
                                       business IT alignment and has held roles as business
                                                                                                                 HP’s computer products, services, and solutions.
                                       consultant, business architect, and enterprise architect.
                                       Before joining HP, he obtained the highest certification                  Voelker has been a presenter at GLOBALCOMM and
                                       degree for enterprise architects at Capgemini. He also                    TM Forum’s Management World and has served on
                                       has published numerous articles and two books on                          the Texas Governor’s IT Cluster Committee.
                                       architecture and governance.
                                                                                                                 Paul Voelker earned a bachelor’s degree in business
                                       Harry Hendrickx earned his master’s degree in                             administration from William Penn College.
                                       economics and a philosopher’s degree on governance
                                       from the University of Tilburg in The Netherlands.




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© Copyright 2010-2011 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice. The only
warranties for HP products and services are set forth in the express warranty statements accompanying such products and services. Nothing herein
should be construed as constituting an additional warranty. HP shall not be liable for technical or editorial errors or omissions contained herein.

4AA0-9713ENW, Created December 2010; Updated June 2011, Rev. 1

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Viewpoint paper

  • 1. Communications, Media, and Entertainment Industry Viewpoint paper overcome the hurdles to business transformation. Communications service providers worldwide are looking for ways to reduce costs and total cost of ownership, stimulate revenues, improve the customer experience, and increase customer loyalty. One solution is a business support and operations support systems transformation that yields a competitive advantage.
  • 2. Table of contents A clear consensus for transformation ..........................1 HP viewpoint .........................................................1 Why transform? ......................................................1 No consensus on how to transform.............................3 Two roads to transformation .....................................4 Map your own road to success ..................................6 Take an enterprise approach for the long term .............6 Standardize requirements capture and communications .... 7 Maintain control when mobilizing suppliers .................7 Redefine your business model ....................................7 Design with integration in mind..................................7 Explore new investment strategies ..............................8 Keep it COTS ..........................................................9 Do it now ...............................................................9 About the authors .................................................. 10
  • 3. Most communications service providers (CSPs) are talking and thinking about it, but few know what to do first. With the right applications, information, and technology, CSPs can redefine their business model and undertake a transformation strategy that will lead to success. Communications service providers are facing a major HP viewpoint decision—how to transform their businesses to become more agile, grow market share, and reduce costs— Although there seems to be a clear consensus for while improving their customer experience and transformation, HP has found that many CSPs are satisfying the ever-increasing demand for bandwidth- hesitating, because transformation is a costly, lengthy, greedy applications, online entertainment, and and disruptive process. At HP, we know the risks. yet-to-be-developed services. Whether you are transforming your BSS/OSS or your entire business paradigm, transformation demands experience and maturity in developing large programs. A clear consensus for transformation It also requires strategic planning expertise to align with CSPs are nearly unanimous in their conviction that business goals and go-to-market strategies. they need to transform to grow and compete against This paper demonstrates how HP can bring to new challengers, such as Google and Apple. This bear its technological capabilities, expertise, and consensus for transformation is detailed in a Business decades of experience in the communications, media, Transformation Research Project carried out by Frost and entertainment (CME) industries—particularly & Sullivan on behalf of HP between May and August telephony—to help CSPs cope with the seemingly 2010. Frost & Sullivan interviewed 32 top-level CSP overwhelming, time-consuming, and risky process of executives from Europe, Asia Pacific, India, the United change and transformation. States, Canada, Latin America, and the Middle East. • 96% said transformation is needed now. Why transform? • 88% said they were either currently engaged in or had completed a transformation project in the past There are many reasons why CSPs are looking to 12 months. transform their BSS/OSS. The following sections examine how outdated, homegrown, and overly • 65% said they will institute a new transformation complex BSS/OSS are inhibiting CSP success. project within the next 12 months. Outdated BSS/OSS applications The CSP executives interviewed for the study were The successful convergence of telephony, computing/ also in solid agreement about the business segments IT, entertainment, gaming, media, and advertising are they would target first for transformation: information placing unprecedented demands on currently installed technology (IT) operations and maintenance and BSS/OSS—demands that many legacy systems were network infrastructure. Many respondents cited their never intended to meet. These include converged Business Support Systems (BSS) and underlying billing, customer self-service, fraud prevention, new Operations Support Systems (OSS) as a key privacy regulations, credit risk calculation, flexible focus of their transformation efforts. In particular, pricing strategies, and individual customer usage operators identified customer care, billing, customer allowances that can be adjusted in real time. management, and business intelligence/analytics as first-priority projects. 1
  • 4. Siloed architecture—Another challenge is the siloed Monolithic or nonstructured architecture architecture of many legacy systems. Typically, CSPs BSS/OSS that are running on outdated IT infrastructures installed separate BSS for each new major product line. typically have a higher total cost of ownership (TCO) This resulted in a plethora of highly complex application when compared to more modern and nimble silos, which contain redundant functionality and architectures. Most legacy IT does not incorporate a require duplicate operational and network resources. service-oriented architecture (SOA), which enables These silos cannot interact with each other for lack of easy integration within the BSS/OSS stack, with the built-in integration layers or an application programming network, and with external or third-party resources. interface. Plus, they cannot be integrated with other Without built-in integration layers and multidirectional systems for customer relationship management (CRM) interfaces, CSPs cannot leverage the standardized or billing, for instance. and streamlined processes and services that generate efficiencies across the enterprise and reduce overall TCO. Home-grown solutions—Worse yet, sometimes legacy systems are built on outdated, home-grown Older systems are frequently dependent on applications that are fraught with complicated nonvirtualized servers or nonoptimized data solutions. Layer after layer of customization has been centers that require expensive human resources to built on top of applications that were written in-house operate and support, uneconomical storage, and more than a decade ago. Out-of-control customization nonecological cooling systems. Outdated IT is usually has not only made these systems complex and inefficient, nonredundant, duplicate, and inflexible. unwieldy but in some cases, has effectively buried the This is because it was rarely built specifically to original source code. optimize BSS/OSS operations but was extended ad hoc over the years to accommodate additional BSS Some legacy in-house systems no longer comply with applications and updates. the CSP’s internal standards or government regulations. In situations where the BSS were built on commercial Data and bandwidth explosion packages, pieced together from various vendors, Five years ago, no one in the telecommunications licenses have expired, many of the vendors have gone industry could have predicted the explosion of data that out of business, and support is no longer available. is transported across every operator’s network today. Data proliferation has become such a concern that Inflexible and slow to market—As a result, Frost & Sullivan calls it a “major new business driver.” legacy systems are highly inflexible. Minor pricing or regulatory changes require expensive, time- Frost & Sullivan cites a study1 published in June 2009 consuming, and manual coding efforts, because the showing that data traffic increased four-fold in less business logic and workflows are hard-coded into than a year, from 5 to 6 gigabytes per second (GBps) each application. Moreover, data must be maintained at the end of 2008 to 24 GBps in October 2009. The across multiple systems and checked for consistency study also noted that mobile data traffic is projected to across the portfolio. Thus, legacy systems are double every year through 2013, which amounts to a expensive to run, operate, and support. compound annual growth rate (CAGR) of 131%. Lack of business intelligence—Most legacy systems Network operators are struggling to keep up this were designed for batch processing, not real-time data explosion. They are worried about how they will billing, charging, and business intelligence solutions. pay to build the networking infrastructure needed to Consequently, they lock CSPs into a flat-rate pricing handle the world’s increasingly voracious appetite for structure. They do not support CSP needs to obtain bandwidth. And they are doing so amid a downward and analyze critical customer data that is required for pricing trend that is evident around the globe. today’s pre- and post-paid charging models, pricing Some operators are looking at BSS/OSS flexibility, and product bundling. Legacy BSS also transformation as a way of bringing in new revenue eliminate the cost-saving potential of online customer to help pay for the next generation of networks. self-service options and the benefits of improved Implementing new BSS/OSS will enable the new customer intimacy and loyalty. Most importantly, services, revenue streams, and pricing structures that legacy systems impede the launch of new products and services. 1 Published in the Frost & Sullivan Stratecast report of January 2010, entitled “OSS/BSS Global Competitive Strategies (OSSCS), Volume 11, Number 1. The study Stratecast cited is a Cisco report, “Cisco Visual Networking Index: Forecast and Methodology, 2008-2013”, June 2009. http://www. cisco.com/en/US/solutions/collateral/ns341/ns525/ns537/ns705/ ns827/white_paper_c11-481360_ns827_Networking_Solutions_White_ Paper.html 2
  • 5. could offset the costs of keeping up with network No consensus on how to transform bandwidth demands. Transformation will also help decrease telecom operators’ IT footprint, maximize Although there are innumerable reasons to transform efficiencies across the enterprise, and wring out IT legacy BSS/OSS—and the Frost & Sullivan study shows costs wherever possible. Smart operators will refunnel that the desire to transform is nearly unanimous—there is the savings derived from lower cost operations to no consensus on how to make transformation happen. network expansion. The following sections highlight some of the more typical approaches deployed in the market today. Equally important, transformed BSS will enable operators to make sense of the massive amount of The “greenfield” approach for new-market entrants data crossing their networks. Business intelligence In many ways, deciding how to proceed is easiest for applications will enable CSPs to track customer usage new entrants into the field, particularly in Asia Pacific patterns and institute new, multitiered charging plans or the Middle East, where the average revenue per based on those patterns. Customers who want faster user (ARPU) rates are among the lowest. Greenfield downloads will pay a premium, and heavy users will operators must build from the ground up and can be charged more than those increasingly rare take advantage of the most recent technological individuals who use their mobile telephones solely developments to build highly integrated, converged, to make calls. and agile infrastructures that will deliver the lowest- cost services for years to come. Complacency and the fear of change Two of the biggest inhibitors to transformation are the A range of approaches for well-established CSPs human frailties of complacency and fear of change. Although well-established CSPs don’t have such an There is widespread reluctance to re-evaluate business obvious choice as newcomers, they do have a wider processes. All too often, CSPs use the complexity range of options. Here are the three most common: of their BSS/OSS as an excuse to delay or forego • Band-aid fixes, the most inexpensive approach— transformation. Quick fixes may mitigate issues resulting from structural complexity but will result in an increase in Introducing a new system often can be seen as too complexity and costs in the long term. risky and expensive to contemplate. Customers may opt to stay with a stable—but less flexible—system • Application modernization, an important first step on that will only grow more complex and expensive to the road to business transformation—If undertaken operate in the coming decade. HP would suggest as individual projects, however, modernization “leapfrogging” the legacy system, bit by bit, to a can result in isolated efforts that don’t resolve the future-state platform that would remove much of the structural issues of legacy systems. risk from the situation. • BSS/OSS transformation, a comprehensive approach—Transformation yields the most effective If employees are accustomed to complex and long-term benefits and enables the new business unwieldy systems, they assume they will always models that are necessary for future competitiveness. be that way. So change seems unnecessary, and procrastination comes easy. End users want their Some HP Tier 1 CSP customers in Europe currently are systems to look and work like their legacy systems. funding studies to weigh the efficacy of completely Product managers fear they will lose customers if abandoning their complex, inflexible, and expensive- they drop one or two services—although they will be to-operate legacy systems and replacing them with replaced by services that have the potential to grow new BSS/OSS. The data migration this approach revenue and market share. requires can be done in a controlled way. So CSPs are justified in their belief that this greenfield approach Thus, emotions can prevent both change and business is worth the risk and expense, because it will enable growth. A highly controlled and well-organized them to launch new products and services quickly, transformation process is the best antidote for gut generate new revenue streams, and stay ahead of feelings and fear. Such a transformation process starts the competition. with an enterprise architecture, which provides an outline of the strategic direction, takes into account the challenges that will be encountered, and puts specific steps in place to mitigate potential risks. 3
  • 6. Clients around the globe are undertaking projects that In this example, The Challenger hires only a handful of require the migration of massive amounts of data. Two executives by the time it schedules its first meeting with such projects involving HP include a human resources HP. The client has no offices and no infrastructure— migration for a large telecom operator in Western just know-how and a clear vision of how it wanted to Europe entailing 150,000 entries; and a new billing proceed. system for a North American telecommunications From the start, The Challenger and HP determine that company involving 450,000 accounts. the only viable strategy for meeting the project’s The total transformation approach differs considerably extremely tight deadline and budget is to achieve the from the choice popular with many North American lowest possible TCO by using the following components: operators whose budgets are constrained by fallout • A fully outsourced model from the global recession. Many North American • Commercial off-the-shelf (COTS) applications CSPs applied all the quick, inexpensive band-aid fixes that were financially feasible over the past two years, • A service-oriented integration architecture but yielded limited results. Naturally, the infrastructure has to be carrier grade, Now the forward-looking ones are seeking a use the TM Forum’s frameworks, and comply with all comprehensive, step-by-step approach that will government-mandated regulatory standards. enable them to: The Challenger supports HP’s approach to a BSS/ • Offer converged, IP-based services OSS stack that is as generic as possible to keep costs • Achieve customer intimacy down and speed implementation. Customization is kept to an absolute minimum. HP estimates a • Leverage regional and consumer offerings substantial amount (conservatively estimated between • Deliver more comprehensive network- and platform- 5% and 10%) of the COTS code is rewritten, primarily based services to their enterprise accounts to create interfaces for security, banking, and other They are also using BSS/OSS transformation as a way unavoidable system personalization. to amortize the capital expenditures (CAPEX) required Serving as the system integrator for the project, to institute these new offerings over a period of time, HP works to assess requirements; draw up the and to lower their TCO to lower their pricing structures implementation road map; set and manage the into the future. budget; and configure, test, deploy, and run the system on a multiyear maintenance agreement. Two roads to transformation HP also recommends to develop target enterprise The following examples show two companies’ architecture that will help ensure the CSP can meet distinctly different routes to transformation success. We future requirements. refer to the profiled companies as “The Challenger” Because The Challenger has not yet established a and “The Incumbent” in the examples. physical location, HP has to work on many aspects The Challenger example focuses on a hypothetical of the projects remotely. Data centers in one country partnership between HP and a new company, formed were used to temporarily support development and by a large mobile telecommunication provider. testing until a new center was established in the Working together at amazing speed, HP and The company’s home country. Hardware is configured and Challenger can build an entire telecommunications tested in a third country and transferred to the new infrastructure and deliver dependable voice and data center, while it is still being built—only two weeks multimedia mobile services in about six months—a before user acceptance tests begin. HP also runs remarkable feat. testing phases in parallel with other implementation processes, because time limitations preclude HP’s From greenfield to challenger in six months standard testing cycles. When The Challenger’s global parent company wins the license to start a new mobile telephone company In all, the HP and The Challenger project achieves in an emerging market, it knows it has its work cut out remarkable results. Not only does the project meet the for it. Not only will it be challenging the market’s only six-month activation deadline, but it also meets all cost mobile provider, but it will have to guarantee service objectives. At the end of the first year of operation, delivery within six months. And when HP signs on to HP has already reduced CAPEX of the BSS/OSS develop, deploy, and run the entire operation, HP environment to near 2% of revenue, well ahead of agrees to cap CAPEX for the BSS/OSS environment at schedule. That’s a considerable savings, because a very ambitious percentage of the company’s revenue comparable BSS/OSS environments run an estimated after the second year of operation. 4% to 6% of revenue. 4
  • 7. Additionally, HP estimates that start-up costs are only The Incumbent’s commercial mobile division sought about 60% of the typical greenfield venture. And a new billing solution to facilitate the launch of new when The Challenger launches new start-ups, the high-speed wireless offerings as part of a market CAPEX costs for each new venture are expected to expansion strategy. They were convinced that a new drop by about another 40%, because the company billing solution would help them compete against can leverage the existing infrastructure and human low-cost competitors that recently entered the market. resources that HP already has in place. It could also provide the business intelligence and analytical capabilities needed to target specific The Challenger is on target to capture significant customer groups with new services, product bundles, market share from the incumbent provider. Customers flexible payment plans, and less expensive customer can set up prepaid, postpaid, and flexible charging self-care options. plans and pay their bills online. Some plans even replenish used minutes automatically to guarantee Although exact figures are not available at this time, service continuity. Additionally, customers can the HP-managed billing system is expected to save The purchase from a range of mobile phones and Incumbent many millions over the projected 10-year accessories from an online store and a growing life cycle. For starters, HP reduced operating services number of retail operations. run rates to one-fourth of The Incumbent’s previous annual outlay for similar outsourced services. The real rewards come when The Challenger launches more start-ups, leveraging HP’s industry best practices. Other savings resulted from the new platform, which In fact, HP standardized these best practices in a new replaced more expensive mid-range server and offering, Telco Express. The offering will provide a mainframe components with a Linux/Open Systems repeatable and cost-effective IT infrastructure model for architecture that uses less expensive hardware and deploying new telecommunications companies in embedded third-party products. Storage costs were markets across the globe. reduced by adding a locally attached SAN solution and eliminating third-party services that were previously This approach is not limited to greenfield launches; it engaged to maintain tape and system back-ups. also makes sense for incumbent Tier I operators willing to build a single, new, strategic platform. The platform More importantly, the converged SOA has enabled then would be shared and exploited by multiple The Incumbent to rethink its outsourcing strategy and subsidiary operating companies, reducing global squeeze out costs in the process. Instead of trying to operational costs substantially. reduce outsourcing costs by consolidating services, it now focuses on consolidating the platform. With Billing transformation through step-by-step converged IP, the commercial mobile group is able modernization to bill for multiple services such as VoIP, IPTV, Internet The next example is an HP case study that focuses access, and wireless, using a common billing platform, on a long-established telecommunications provider in a single mediation and rating solution, and a common North America—The Incumbent. This case represents order-entry application. They are also able to an approach that takes a middle ground between BSS seamlessly interface with the CRM solution to produce transformation and applications modernization. The a consolidated bill by customer. Incumbent partnered with HP to develop an enterprise- wide approach that would govern numerous but The new billing system, running on a converged separate modernization projects. This would eventually HP platform, will enable The Incumbent to replace result in a total transformation of the company’s billing call centers with less expensive, self-service options, capabilities over a number of years. institute usage caps, offer different rate structures based on consumption patterns, and offer pre- and The Incumbent started the process by hiring HP to post-paid billing plans—none of which were possible implement a new billing system for its commercial with The Incumbent’s previous BSS/OSS. mobile segment, which would deliver packaged-based billing services and identify an enterprise-wide BSS/ Equally important, The Incumbent’s new outsourcing OSS applications architecture. Next, the client plans to policies have also helped it formulate investment leverage lessons learned from the first implementation strategies for funding future projects. By outsourcing to deploy integrated billing systems in the wireline, billing systems management, our client was able to broadband, TV, IPTV, IP Centrex, Voice over IP, and shift a significant portion of the project’s CAPEX to enterprise segments. The ultimate goal is an integrated OPEX, making the cost structure more manageable for billing solution that delivers a single view of each the company’s year-end balance sheet. customer across all offerings and business units. 5
  • 8. Map your own road to success Our Global Program Management Architecture (GPMA) uses state-of-the-art tools and techniques to Key concepts Because many CSPs will undertake a BSS/OSS assess, prioritize, design, and implement processes. for a successful transformation project in the coming year, the time has This gives clients high-level visibility into program and transformation come to decide how to proceed. To be successful, you project essentials such as value, quality, and risk. must have a clear vision of the desired end result. Any • Take an enterprise approach transformation project must be explicitly aligned with GPMA provides a consistent methodology across all for the long term. the company’s business objectives and IT goals. programs by using common definitions, processes, • Redefine your business model. tools, templates, and best practices. This ensures the • Standardize requirements To gain consensus, all stakeholders must be consulted smooth interaction of interdependent projects and capture and communications. and convinced that the change will benefit them. the realization of prioritized business goals. Most • Maintain control when Funding must be found, risk must be minimized, and a importantly, HP is adept at modifying our tried and mobilizing suppliers. solid plan with phased deliverables must be carefully true approaches to ensure that clients transform their • Design with integration defined and articulated. business paradigm, as well as their BSS/OSS and IT. in mind. It doesn’t have to be that hard • Keep it COTS. The prospect of undertaking a transformative initiative Take an enterprise approach for the • Do it now. seems overwhelmingly complex to some. In fact, long term 54% of the executives interviewed by Frost & Sullivan Band-aids, quick fixes, and siloed projects do not indicated that executing such programs was one of work in today’s climate of converged technologies, their organization’s weakest talents. Even those CSP merged companies, and consolidated resources. CSPs executives who felt confident that program execution are accustomed to taking the long view. No carrier was one of their strong points (43%) said they would would build a network if it wasn’t convinced it would rely on external consulting and outsourcing services to produce revenue for years to come. help them define and implement the project plan. In fact, 36% of all CSPs interviewed said that outsourced It’s time to transform the way you think about your implementation and delivery consultation services BSS/OSS stack. It’s no longer a bunch of applications were “critical” to their success. but a long-term investment that is as necessary as the network. And like the network, it’s how you use your What does it take to find a partner with proven BSS that keeps the revenue flowing. resources to achieve transformation? Look for a vendor with applications development and Before implementing another tool or updating another maintenance expertise, as well as experience application, take the opportunity to review your transforming portfolios specifically for the company’s BSS requirements from a global, enterprise communications industry. You need a provider that perspective. One-off projects, although less expensive has developed program implementation, mobilization, in the short run, will not deliver the interconnectivity or and execution methodologies that has proved to be system-wide capabilities needed to deliver business successful for Tier I and Tier II CSPs in major and intelligence—the true source of tomorrow’s competitive emerging markets. That vendor’s methodology should edge. Even if you can’t afford a large-scale establish an effective governance process that delivers transformation project right now, spend your resources the best IT, enables multisupplier management, on a road map that will help you prioritize projects and manages change, and controls costs. ensure that they work together to deliver efficiencies and capabilities across the entire enterprise. Whether you decide to go it alone or rely on external resources to help transform your BSS/OSS, HP offers HP RightStep some carefully considered suggestions for developing Our proven methodology, HP RightStep, takes an a successful transformation strategy. enterprise approach to transformation planning. This helps clients identify and prioritize initiatives and Global program management optimize IT investments in a manner that best supports HP uses a proven approach to transformation. Our the enterprise’s business goals. methodology provides the structure and governance needed to successfully develop and run a client’s enterprise programs portfolio and individual programs for a maximum return on investment. 6
  • 9. HP RightStep uses a patented method and process Now, getting cash amounts to a quick stop at the set for enterprise architecture definition and strategic corner ATM whenever it’s convenient. Foot traffic was technology transformation planning. It enables so reduced that banks were able to pare down the HP to work with clients to define a strategic IT teller staff, leaving a lot of empty real estate in the direction, future-state enterprise architecture, and lobby. In the United States, some enterprising bankers a transformation plan so they know where they’re subleased the space to become coffee shops, insurance heading and where they should be at every step of agencies, flower stalls, and even art galleries. Others the process. closed branches and created tiny ones in supermarkets and malls. Recently, some European bankers have Standardize requirements capture transformed their lobbies to look more like living rooms, and communications furnished with comfortable chairs and computer terminals that are configured solely for online banking. An HP transformation plan standardizes requirements If you want to talk to a teller, you need to make an capture and communications. This type of standardization appointment and pay for the privilege. ensures traceability and inclusive communication to all stakeholders during the transformation process. After It’s time to transform your identity. You’re obviously deployment, it will ensure sustainable maintenance of not a telephone company anymore. Most CSPs have the business and IT services. moved beyond wireline and are offering a variety of services that range from wireless to cable TV to One of the major challenges while seeking to VoIP. But many are still focused on transmission and modernize the application landscape is understanding reception. The CSPs that can bundle entertainment, the business value of the IT services. HP’s enterprise gaming, and information assets in ways that offer architecture approach—based on open standards exciting new services and capabilities to their architecture, industry standards, and best practices— customers will dominate their markets. provides a controlled language and method to convey and maintain requirements. Similarly, CSPs that attempt transformation with yesterday’s thinking and tools will wind up with yesterday’s results. Have you thought about cafés or Maintain control when mobilizing art galleries lately? Or instead of the same old long- suppliers distance plans, have you considered transforming Some CSPs do not possess the insight required for a cell phones into credit cards? Dramatic changes in successful integration of OSS and BSS applications; your strategic direction require a comprehensive others lack the resources to cope with enterprise understanding of the properties of the new operations architecture complexity. In both cases, CSP will often and a think-through of its implications. rely on the solutioning and costing of suppliers—a situation that can be exploited by commercial vendors. Design with integration in mind When working with a supplier, you should have a clear With the convergence of communications, media, understanding of an explicit integration framework, so and entertainment driving innovation and customer you can maintain control over every phase—particularly demands, CSPs need to ensure their IT is built for the project definition and vendor selection. You should convergence. This means a lean, agile, and highly also have access to all the major BSS/OSS vendors to integrated enterprise. As demonstrated in The help you select the solution providers and applications Challenger case study, a BSS/OSS transformation that work best within your framework. can simultaneously take advantage of three cost- containment elements: Redefine your business model 1. A fully outsourced model, using IT outsourcing Smart phones, the iPhone, iPad, DROID, and other services new products are transforming the communications, 2. Commercial off-the-shelf applications media, and entertainment industries today—much like the ATM up-ended the banking industry decades 3. A well-designed, -deployed, and -executed ago. Before the ATM, wage earners rushed to the service-oriented integration architecture bank before it closed at 3 p.m. on Friday to cash their paychecks and make sure they had enough money for the weekend. The result? Long lines of impatient patrons waiting for their turn with the teller. 7
  • 10. A converged infrastructure requires enterprise-wide payback typically needs to be short.” Unfortunately, integration planning and building interfaces at every step: most BSS/OSS projects will not deliver a decent ROI 1. Choose a system integrator that takes an in a year or even two. enterprise-wide, SOA approach and has the In this case, savvy managers are trying to steer their flexibility and capability to integrate all the internal customers away from using rapid ROI as products you select for your BSS/OSS stack. the only measure of success. Growing market share, 2. Select BSS/OSS applications that offer prebuilt improving competitiveness, and launching new integration. The applications should not only be revenue streams are more accurate metrics. CSPs that architected as preintegrated product stacks; they forego transformation projects because of delayed should also have predefined business processes payback are in danger of losing market share to new, and preintegrated information out of the box. more agile entrants. 3. Make sure your OSS architecture has multiple For certain, these new competitors will offer cheaper integration layers. Your OSS/BSS stack should rates or better services to churn through your be able to interface with your company’s other customers. Do you or your internal customers really BSS systems, plus the CRM and ERP solutions, want to take that chance? e-business portals, and more. Transformation is necessary By building integration capabilities into a converged Although the recession may have slowed progress, it enterprise, you will be able to consolidate siloed BSS, has not mitigated the need for transformation. In fact, reduce your IT footprint, and lower overall TCO. 43% of the executives surveyed by Frost & Sullivan Convergence begins with an enterprise architecture say that the recession did not alter their view that that’s designed with integration in mind. The basis transformation is necessary. Another 43% say the of this is a modern data center with an automated, recession accelerated the need to transform. virtualized architecture. This architecture will reduce According to one respondent, “Our network platforms server and storage hardware requirements, make and business process systems are getting outdated and management easier, and reduce risk. are no longer capable of catering to the increasing The data center should incorporate a comprehensive demand for wireless technology and mobility. This has and cohesive monitoring and management framework caused the urgency for us to transform.” that is automated to respond quickly to requests and Consequently, CFOs and IT managers must work even incidents. This not only speeds up critical decision- harder to get the funding they need for transformation. making but reduces operating and maintenance costs. Many are turning to clever schemes to convert CAPEX The data center should be hardened with lights-out into OPEX. As shown in the previous case studies, operations, plus efficient, standardized tools and converting capital outlays into operating expenses processes to deliver high availability and accommodate generally involves turning over the day-to-day operations new business growth. Finally, convergence requires a of your BSS/OSS or IT infrastructure to outsourced multilayer network architecture that accommodates services—whether onshore, nearshore, or offshore. different types of traffic (applications, data, and core operations) and enables each network to be sized HP has found that the greatest opportunity for appropriately to avoid congestion, provide security, converting CAPEX into OPEX is through a multiyear and facilitate management. vendor contract in which the total project cost is divided by the number of years in the contract. This converts CAPEX into OPEX and also provides a Explore new investment strategies predictable, flattened monthly payment. HP frequently Although some regions bounced back from the global brings its leasing and financial services subsidiary, economic recession of 2008/2009, the 2010 credit HP Financial Services, into the opportunity to further crisis in Europe and the tepid overall global recovery reduce the initial CAPEX. continue to keep capital constrained through 2011. Generally, IT budgets remain tight and often are blamed Outsourcing can deliver further cost reductions. for delaying or resizing transformation projects. Allowing a third party to host your operations eliminates the need to build and maintain expensive Another reason why many transformation projects infrastructures. HP Enterprise Services estimates have not moved forward is the growing demand that outsourcing the management of your BSS/OSS for faster payback. According to one CSP executive can lower the TCO up to 30% over the life of your interviewed by Frost & Sullivan, “Increasingly, we applications by maximizing application performance need to show that an investment has a ROI, and and operating efficiency. Using Best Shore® not only 8
  • 11. lowers labor costs but frees you from the time and Do it now expense of staffing and training technical staff. A fully HP: Proven expertise, outsourced model was a key success component for The 30 CSP executives interviewed for the Frost & solutions, and quality The Incumbent and The Challenger and holds the Sullivan Transformation Study identified a wide range potential of similar success for you. of business imperatives for the coming year. Below HP has 35-plus years of telecommunications is a synopsis of the internal and external drivers they cited for wanting to transform their IT and BSS/ experience serving over Keep it COTS OSS environments. 130 clients in more than 40 countries. Our experience CSPs are old hands at innovation. The industry is • Reduce costs/TCO: Consolidate IT resources, serving more than 100 responsible for developing more than its share of optimize assets, and lower both unit costs and million subscribers with BSS/ remarkable new technology over the past 20 years. OSS is based on our ability overall TCO to compete on price. So the urge to develop home-grown solutions and to maximize the telecom • Stimulate revenues: Improve time to market of new tinker with generic applications is irresistible to many operating environment. HP products and services and generate new revenue offers integrated business technologists. This is especially the case when end streams; offer more favorable and flexible pricing solutions backed by the users balk at learning new systems and beg the structures to improve profitability; identify and create expertise of thousands of technicians to customize them so they work “like they premium pricing plans for poor credit risks and CME professionals. used to.” bandwidth hogs. HP is unique in the depth and Technology, however, has become highly specialized. • Improve the customer experience: Implement new breadth of its hardware, software, and services portfolio. Generally, the major BSS/OSS/CRM producers are business intelligence capabilities and analytics to We deliver quality solutions capable of delivering a superior product at a lower create new product bundles and pricing structures designed to lower total cost cost than any developed in-house. BSS/OSS are based on customer usage patterns; create special of ownership and reduce becoming more akin to table stakes in a game of offers for high-churn candidates. risk by incorporating agile cards. It’s the investment you have to make to play the architectures, governance, • Increase customer loyalty: Offer lower-cost, game, and the smart player will keep that investment consistent quality, and security multichannel and self-service options to enhance as low as possible. COTS packages typically cost less, standards—from strategy customer access to support, boost customer are cheaper to run, and require fewer maintenance definition through convenience; increase customer loyalty and implementation and and support resources than in-house systems. reduce churn. management. Customization is a sure-fire trigger for increasing costs, We use a proven, global Transforming BSS/OSS is the only way to achieve slowing implementation, and impeding time to market delivery methodology and these goals. What are you waiting for? If 96% of the for new products and services. By keeping customization tools based on industry CSPs interviewed by Frost & Sullivan are planning to a minimum, rollouts, routine upgrades, and standards and best practices. to start their own transformation initiatives this year, These include The Open maintenance all take less time and, consequently, cost there’s a strong probability that your competition is Group and TM Forum less money. Some COTS packages have integration planning a transformation project, too. management standards and prebuilt into the entire solution stack. This further the experience of our 3,700 reduces the complexity and expenditures associated Meanwhile, consumers aren’t waiting for you to CME Best Shore resources. with the platform’s integration layers by between 20% transform. They’ll switch to the company that offers These include certifications and 55% during the application life cycle. them the best price and the coolest apps. And your (CMMI Level 5 Certifications, enterprise customers will defect to the CSPs that will ISO 9000, Oracle certifications) COTS packages also simplify and speed up the help them generate new business and cut costs. The and HP professionals process of making pricing or regulatory changes and time to transform is now. (including solution architects, launching new products. Changes no longer require project managers, and developing and writing code. The newer packages Microsoft technologists). provide a GUI that allows users to input changes or HP has long-term partnerships requests into a preformed table or template. Many with the best BSS/OSS, CRM, don’t require a systems developer and allow less and providers. expensive, nontechnical resources to make changes. New products can be launched in days instead of months, because today’s generic COTS only require users to model the new product in a test environment and then roll it out. 9
  • 12. About the authors Harry Hendrickx Paul R. Voelker Harry Hendrickx is chief technology officer and Paul R. Voelker is director of communications solutions enterprise architect in the Communications, Media, at HP. His role in the Communications, Media, and and Entertainment (CME) industry unit at HP. In this Entertainment (CME) industry segment is to develop role, he is responsible for architecture management strategic solutions and facilitate relationships with the and support of large transformation programs. communications service providers and industry partners. Since joining EDS (now HP) in August 2007, Hendrickx Voelker joined HP in 1983 and has held various had several assignments as member of the Chief business development, sales, and marketing management Technology Office CME industry team. His approach positions. His systems and solution sales have been in is based on enterprise architecture with emphasis on the oil, defense, and telecommunications industries. business IT alignment. Voelker was the Americas marketing manager for the Hendrickx’s focus currently is on enhancing the CME industry, responsible for business development and architecture capability in outsourcing relationships, managing the CME solution center. He was director of as well as within organizational boundaries. One of business development for service providers in the his specialties is exploiting open standards such as southwest United States, responsible for developing The Open Group Architecture Framework and the go-to-market strategies and qualifying companies for TeleManagement Forum framework. strategic alliances and investment. He also was the HP global client business manager for MCI and has Hendrickx has more than 20 years’ experience in managed teams responsible for the entire range of business IT alignment and has held roles as business HP’s computer products, services, and solutions. consultant, business architect, and enterprise architect. Before joining HP, he obtained the highest certification Voelker has been a presenter at GLOBALCOMM and degree for enterprise architects at Capgemini. He also TM Forum’s Management World and has served on has published numerous articles and two books on the Texas Governor’s IT Cluster Committee. architecture and governance. Paul Voelker earned a bachelor’s degree in business Harry Hendrickx earned his master’s degree in administration from William Penn College. economics and a philosopher’s degree on governance from the University of Tilburg in The Netherlands. Share with colleagues Get connected www.hp.com/go/getconnected Get the insider view on tech trends, alerts, and HP solutions for better business outcomes © Copyright 2010-2011 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice. The only warranties for HP products and services are set forth in the express warranty statements accompanying such products and services. Nothing herein should be construed as constituting an additional warranty. HP shall not be liable for technical or editorial errors or omissions contained herein. 4AA0-9713ENW, Created December 2010; Updated June 2011, Rev. 1