1. Counteracting complexity in the
Telecommunication industry
Motivation and outlook for a management
approach for coping with complexity
24th June
Oliver Budde

2. Changing Playing Fields result into …
Incumbents in high wage countries are facing an increasing level of complexity. Coping
with this complexity requires new management approaches.
External Complexity Drivers are changing the game
Supply Side Demand Side
Organisation Technical Device Individualization of Quality Demand
Convergence Convergence Convergence Needs
New player, Fixed-Mobile Multiple Use Communication becomes High Product Quality is a
new types of Convergence supporting new a Lifestyle-Product, must, excellent customer
cooperation on the network business consisting of intertwined facing processes
layer opportunities components become essential
Increasing product variety Increasing momentum
Rising Complexity
(=Increase of Mass and Dynamics)
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3. … consequences for incumbents.
The increase of external complexity has proven to be a major influence on the business
model of Communication Service Providers.
Implications from an increased level of external complexity
Customer Migration Number of Competitors (Global Markets)
Approx +50% Approx +150%
Quality Revenue
? Pressure ? Pressure
1990 2000 2015 1990 2000 2015
Source: Mercer Management Group Source: RegTP, 2004
Duration of the Product Lifecycle Achievable Market Prices
Approx -50% Approx -50%
Innovation Cost
Pressure Pressure
? ?
1990 2000 2015 1990 2000 2015
Source: Christensen, The Innovator’s Dilemma, 2003 Source: Federal Communications Commission, 2004
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4. The Past
Right after the monopoly, only a limited number of product variants did exist. Therefore
the complexity level was easy to cope with and good margins have been generated.
In the good old times the product variance was limited
Quantity – Price - Cost
• An increasing level
of product
individualitation,
does not go along
with a proportional
increase of the
price Price
• Complexity costs
are often hidden, Cost
which therefore
leads to cross-
subsidisation of
the standard Profit
products
Outlier Standard Outlier
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5. But the Changing Grounds lead to ..
CSPs react on the increase of external complexity with an expansion of product variants.
Complexity drivers come into play and change the game
Quantity – Price - Cost
Complexity Driver Demand Side
Cost
Price
Organisation Convergence
Technical Convergence
Device Convergence
Outlier Standard Outlier
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6. #1: Complex Product Bundles and Tariffs structures
The introduction of complex product bundles and tariffs structures increase the
coordination effort and leads to higher costs.
Complexity drivers come into play and change the game
• Higher Quantity – Price - Cost
development
cost through
less scaling
effects Complexity Driver Demand Side Cost
Loss
Price
• Increasing
costs for Organisation Convergence
ensuring
product Technical Convergence
quality
Device Convergence
Outlier Standard Outlier
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7. #2: Increasing Process Complexity
The cost for the provision of customer facing processes (FAB) increases with the
number of product offerings.
Complexity drivers come into play and change the game
• Higher Quantity – Price - Cost
training
efforts for Cost
customer
care agents Complexity Driver Demand Side
Loss
Price
• Increased
coordination Organisation Convergence
effort with
external Technical Convergence
parties
Device Convergence
Outlier Standard Outlier
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8. #3: Increasing IT-Complexity
Highly complex software infrastructure supporting the automatization of the process
execution inhibits an adaptive process management.
Complexity drivers come into play and change the game
• Configuration Quantity – Price - Cost Cost
of already
highly
customized
software Complexity Driver Demand Side
Loss
Price
• Integration
cost with
external
parties Organisation Convergence
through non
standardized Technical Convergence
interfaces
Device Convergence
Outlier Standard Outlier
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9. Summary of current challenges
The consequence of an increased level of internal complexity can be further broken
down into four dimensions to motivate the need for action.
Implications in the categories of a holistic PLM
Steering Level Execution Level Product Architecture IT-Support
Limited Product Long product No efficient release Inconsistent product
Success rate relative to development cycle times management due to a data management in
Product the high number of missing consistency of relation to the whole
product ideas the product architecture product life cycle
Complexity
Internal Complexity
Missing capabilities to High numbers of Limited exploitation of Still inadequate
manage the Products in the operating automatization potential Process-IT support for
Process interdisciplinary aspect systems, due to a missing in the execution of mass executing the PLM-
of PLM or incomplete processes in the process
Complexity
retirement management fulfillment
process
Limited availability of Limited capabilities to High product launch IT-Systems are
steering parameters on cope with challenges in costs, due to the dominated by
IT an adequate quality level the billing systems heterogeneity of IT- individualized systems,
systems and their the introduction of COTS
Complexity
individual configuration/ has started
programming
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10. Conclusion
For coping with the increased internal complexity an integrated management approach is
required, tackling the multifaceted challenges from every angle.
Integrated Management Approach
Lifecycle-Oriented Portfolio Management
Strategy
PLM-
Customer Needs Management DSS
Strategic Process Management
Multi-Project
Determines Mgmt System
PLM IT Architecture
Value Chain Integration DMS
Supports
Process
PLM-
Collaboration
Operational PLM Process Tools
Empowerment of People WFMS
Shapes PDM
Product Model
Architecture
Product-
Process Model Integration
Architecture
Resource Model
Product Data Information Framework
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