Telecom Managed Services

1. Session 1. Introduction :
NW Oursourcing by Vendor and Wholesaler
Part 1 : NW Outsourcing : Introduction
Part 2 : NW Outsourcing : BTWholesale View
Part 3 : NW Outsourcing Survey Results : by Booz Allen
Part 4 : NW Outsourcing by Vendors : Vendors as Network Owners
Dr.Ir.Joko Suryana
Joko Suryana ITB 2011 1

2. Part 1 :
Network Outsourcing :
Introduction
Dr.Ir.Joko Suryana
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3. Network Outsourcing : Background
• Many operators are seeking to streamline their cost structure in
response to declining average revenue per user (ARPU).
– As a consequence, operators have been scrutinizing their network
operating expenses (OpEx), which typically constitute between 17%
and 20% of total operating costs.
• Operators have also begun looking to vendors to :
– operate and maintain all or part of their network
– move the network to next-generation technologies
– help drive down network operating expenses
• Partnering takes a variety of forms, ranging from outsourcing
specific tasks to management of all operations and maintenance
activities.
– Even network sharing and managed capacity options, in which the
operator pays the vendor on a per-use basis, are being considered.
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4. Network Outsourcing : Background
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5. Network Outsourcing : Background
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6. Network Outsourcing : Background
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7. NW Outsourcing Benefit
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8. NW Outsourcing Benefit
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9. NW Outsourcing Landscape
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10. Network Outsourcing Types
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11. NW Outsourcing by Operator Interest
• The interest in outsourcing is growing, but
operators are confronted with different
challenges :
– emerging market operators are dealing with strong
growth
– mature market operators face sinking ARPUs and
network convergence.
• Consequently, individual operators will each have
their specific reasons and rationale for pursuing
different network outsourcing arrangements.
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12. NW Outsourcing by Operator Interest
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13. Outsourcing Market Size
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14. Example 1 : Out-tasking Business of
Detecon Al Saudia
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15. Example 1 : Out-tasking Business of
Detecon Al Saudia
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16. Example 1 : Out-tasking Business of
Detecon Al Saudia
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17. Example 2: Outsourcing Deal of Alcatel
with One in Austria
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18. Example 2: Outsourcing Deal of Alcatel
with One in Austria
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19. Example 2: Outsourcing Deal of Alcatel
with One in Austria
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20. Part 2 :
Managed Network Services
BTWholesale View
Dr.Ir.Joko Suryana
Joko Suryana ITB 2011

21. UK Wholesale Market
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22. BT Wholesale : Products
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23. BT Wholesale : Customers
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24. Wholesale Market Trend
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25. BT Wholesale Revenue Evolution
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26. BT Wholesale an Established Managed
Services Business
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27. MNS in Action : KCON
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28. MNS in Action : Virgin Media
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29. MNS in Action : MBNL
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30. Part 3 :
NW Outsourcing Survey Results
by Booz Allen
Dr.Ir.Joko Suryana
Joko Suryana ITB 2011

31. Outline
• Why Outsource?
• What Gets Outsourced ?
• Who Outsource ?
• Which Vendor ?
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32. Why Outsource ?
• More than 90 percent of respondents said their primary goal was to reduce operating
expenses (OPEX).
• Only in North Africa were operators not driven by OPEX reduction; instead, they were
motivated by the desire to “remove the headache” of managing large workforces over vast
geographies.
• Indeed, many respondents cited better cost control—the ability to manage those large
workforces more flexibly as demand changes—as a significant benefit of outsourcing.
• Meanwhile, reducing capital expenses was rarely cited.
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33. OPEX Saving by Outsourcing
• Overall, operators are quite happy with the results of their outsourcing efforts.
• Two-thirds of respondents said they had realized their OPEX savings goals for the
most part—no matter what their initial goals were.
• Indeed, all of those who reported a savings goal of more than 30 percent reported
meeting that goal, at least in part.
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34. What Gets Outsourced ?
• Telecom operators have been outsourcing a variety of network functions, including
the designing and building of new network technologies.
• Yet as operators complete much of the work needed to upgrade to faster xDSL and
3G technologies, and business cases for FTTx remain unclear, operator attention
has turned again to outsourcing the ongoing “run” operations of their traditional
businesses
• For the same reason, outsourcing providers are also concentrating more of their
efforts on developing operations and maintenance services beyond core
equipment provision.
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35. Willingness to Outsource
• Every telecom operator either has considered outsourcing the
three primary areas of field services operations : site operations,
maintenance and administration or already outsourced.
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36. Who Outsources?
• Multinational mobile operators and cable companies were the most willing to outsource.
• European fixed-line operators were less likely to outsource than mobile carriers, thanks primarily to
concerns that the complexity of fixed-line operations increased the risk of transferring control to
outsourcers, and might actually increase costs in the short-term as vendors struggle to manage that
complexity .
• Mobile operators in Europe were typically more likely to outsource than those in other regions,
where the cost benefits were harder to realize.
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37. Which Vendors ?
• The technical proficiency of candidates is critical to the selection process, but not whether a
prospective outsourcer also made the equipment that runs the operator’s network .
• Equally important is whether the candidates maintain a strong local presence, given just how
resource-intensive many of these network and field operations can be.
• Indeed, most operators did not view a vendor’s strong presence in neighboring countries as
adequate to their needs; operators said they would rather share in-country resources—and
savings—with their competitors than risk cross-border resources being stretched too thin.
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38. Part 4 :
NW Outsourcing by Vendor Challenges
for Wholesale Operator :
Vendors as Network Owners
Dr.Ir.Joko Suryana
Joko Suryana ITB 2011

39. Evolution of Telecom Value Chains
• Innovation in the telecom value chain has created a number of
now-familiar supply options; could ‘vendor as network owner’ be
the next evolutionary step?
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40. Competitive Landscape
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41. Vendor as Network Owner Rationale
• Vendors and Operators have strategic and economic incentives to moving
towards a Vendor Network Owner model, which can also promote
consumer benefits
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42. Vendors are already financing and
operating networks
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43. Vendor Options
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44. Telecom NW Layer :
Managed Service View
• The layers of a telecoms network are not all equally suited to
the vendor ownership model
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45. Charging Models
• Vendor Network Owners can mix and match different
charging models to monetise network
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46. The Risks :Vendors as Network Owners
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47. Key Success : Vendors as Network Owners
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48. Example : 1#
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49. Example : 2#
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50. Session 2. Financial Analysis ( Indonesian)
Analisis Finansial
Layanan Managed Service
Dr.Ir.Joko Suryana

51. Outline
• Pendahuluan
– Tantangan Persaingan
• Driver Finansial kebutuhan Outsource Jaringan
– Pengurangan OPEX
– Optimasi CAPEX
– Benefit Finansial dengan Outsource
• Komponen Cost Operator Telco
– Berdasarkan jenis : Direct cost, Indirect cost, Hidden cost
– Berdasarkan proses bisnis : OSS, BSS
– Lebih Detil Komponen Cost Jaringan
• Analisis Finansial sebagai Pertimbangan dalam Keputusan Outsource
Jaringan
– Komponen Analisis Finansial
– Cash Flow Sebelum vs Sesudah Outsource
• Scope Managed Services / Outsourcing berbasis pengelolaan cost

52. PENDAHULUAN

53. Tantangan Operator
• Market and business related
– Persaingan yang makin ketat
– Declining pendapatan voice
– Profitability dari layanan mobile
broadband yang masih kecil
– Perubahan business landscape
– Investasi untuk penggelaran
teknologi baru
• Technology and network related
– Pemilihan teknologi
– Struktur cost sistem seluler
– Scalability dan spectrum
– Offered bit rate versus coverage
dan load

54. Tantangan Bisnis Operator pada
Lingkungan Kompetitif
Tantangan Requirement
High Debt Ratio
Balance Sheet Re-engineering
• High finance fee
High OPEX
Lower OPEX solution
• High Operation cost
High Churn rate
• Intense competition Faster go-to-market
• Inefficient loyalty program
High CAPEX
Risk sharing
• High investment on new services

55. Alternatif Solusi
Balance Sheet Lower OPEX Faster go-to- Risk sharing
Reengineering Solution market
Financing
1
Solution √
Hosting
2
Solution √ √ √
Revenue
3
Sharing √ √
4 Outsourcing √ √ √

56. DRIVER FINANSIAL TERHADAP
KEBUTUHAN OUTSOURCING

57. Benefit Finansial Outsourcing

58. Benefit Finansial Outsourcing : Reduksi OPEX
• Menurunnya ARPU dan tekanan persaingan membuat operator
mencari usaha untuk menjaga margin dengan cara menurunkan
OPEX yang terkait dengan jaringan.
• Meskipun penghematan biaya bisa diperoleh secara in house
dengan perbaikan proses, pelepasan aset dan pengurangan
karyawan
– Namun hal ini hanya akan berdampak sedikit terhadap prosentase
penghematan sehingga tidak cukup untuk menaikkan EBITDA.
Menurut para konsultan strategi telekomunikasi, seharusnya
penghematan OPEX bisa dilakukan sampai dengan 15-30% atau
setara dengan perbaikan EBITDA sebesar 8 %.

59. Financial Benefit dari Outsourcing:
Dari sisi OPEX
Visibilitas dan Prediktabilitas OPEX
• Dengan outsourcing, service provider akan mempu
melihat kedepan dan dengan lebih pasti
memperkirakan besarnya biaya OPEX
– Hal ini akan meningkatkan kemampuan service provider
dalam melakukan perencanaan bisnis, serta OPEX
budgeting sehingga bisa mengurangi resiko bisnis.
• Sebagai tambahan, service provider dapat
mengoptimalkan keseimbangan antara service level
dengan cost.

60. Benefit Outsourcing: Reduksi OPEX, Fokus pada
Core Business dan Peningkatan Layanan

61. Benefit Finansial Outsourcing : Reduksi CAPEX
• Selain reduksi OPEX, operator juga dituntut untuk
melakukan minimisasi CAPEX atau paling tidak optimalisasi
CAPEX untuk mendapatkan perlindungan margin serta arus
cash.
– Investasi CAPEX cenderung ditujukan untuk infrastruktur baru
• Infrastruktur eksisting harus tetap menghasilkan arus kas
untuk mendapatkan pengembalian modal ( ROI )
– Namun demikian, infrastruktur mengalami depresiasi seiring
waktu sehinggan berdampak pada EBIT
Reduksi CAPEX dengan Outsourcing bisa mencapai 5-6 %

62. Financial Benefit dari Outsourcing:
Dari sisi CAPEX
Perbaikan Utilisasi CAPEX untuk Peningkatan
Arus Kas
• Perbaikan utilisasi CAPEX merupakan salahsatu
kunci utama untuk menaikkan arus kas suatu
operator
• Managed service dapat mencakup desain
jaringan, aktivitas operasi dan optimasi jaringan
yang pada gilirannya berdampak pada perbaikan
utilisasi CAPEX

63. Benefit Finansial Outsourcing :
Reduksi OPEX dan CAPEX
• Pyramid Research telah melakukan survey bahwa penghematan biaya
dengan melakukan outsourcing mencapai 22 % baik untuk OPEX maupun
CAPEX.
• Semakin banyak porsi yang di outsourcing-kan, semakin besar dampak
penghematannya.

64. Benefit Finansial Outsourcing :
Contoh Penghematan Konversi CAPEX ke OPEX

65. KOMPONEN COST

66. Komponen Cost Operator Telco :
Berdasar Jenis
• Biaya penyelenggaraan suatu layanan terdiri dari
beberapa komponen direct cost :
– Direct labour cost
– Direct cost dari subkontraktor
– Direct cost dari material
• Selain itu terdapat juga biaya-biaya lain, berupa
indirect cost :
– Indirect labour cost : departemen SDM, sisfo kepegawaian
– Indirect cost dari subkontraktor : transportasi, bea cukai
– Cost yang terkait dengan pegawai : sewa ruang, peralatan
IT, kendaraan, SPJ
– Bunga bank, pergudangan dan training

67. Komponen Cost Operator Telco :
Berdasar Jenis
• Selain direct cost dan indirect cost ada biaya lainnya yang disebut
sebagai : hidden cost oleh ketidakefisienan operasional
• Bila proses internal tidak tanggap dan tidak dioptimasi terhadap
dinamika pasar seperti :
– Makin ketatnya persaingan
– Pengurangan margin profit
– Munculnya pelanggan tipe baru
– Kebutuhan baru dari pelanggan eksisting
– Kemunculan teknologi baru
– Layanan baru
– Pertumbuhan resource internal
• Maka akan mengakibatkan organisasi menjadi tidak efektif dan
efisien 100 %, sehingga menimbulkan biaya tambahan yang bersifat
hidden.

68. Komponen Cost Operator Telco :
Berdasar Jenis
• Hidden cost lainnya juga bisa ditimbulkan oleh
kurang optimalnya kinerja alat produksi, buruknya
level layanan serta indikator kinerja :
– Buruknya kapasitas
– Tidak meratanya coverage
– Lambatnya troubleshooting
– Kurangnya SDM di lapangan
Akan membawa pada ketidakpuasan pelanggan,
berpindahnya pelanggan ke kompetitor sehingga
berdampak pada penurunan pendapatan

69. Komponen Cost Operator Telco :
Berdasar Proses Bisnis
• Pada bisnis jaringan mobile, proses bisnis terdiri dari dua
kelompok besar :
– Front office : sales and marketing
– Back end office : coverage, capacity and functionality

70. Komponen Cost Operator Telco :
Berdasar Proses Bisnis

71. Komponen Cost Operator Telco :
CAPEX dan OPEX Jaringan

72. Komponen Cost Operator Telco :
OPEX Jaringan
• OPEX Jaringan terdiri dari • Dalam contoh berikut,
biaya-biaya : reduksi OPEX
– Planning dan optimisasi – Planning dan optimisasi
jaringan : 23% jaringan : -6%
– Managemen dan operasi – Managemen dan operasi
jaringan : 17 % jaringan : -4 %
– Pemeliharaan jaringan: 16 % – Pemeliharaan jaringan : -4 %
– License fee : 12 % – License fee : -3 %
– Sewa site, sewa bandwidth: – Biaya Transisi : +1 %
23 % • Dengan outsourcing, total
– Biaya lain-lain : 9 % biaya OPEX jaringan akan
• Dengan outsourcing, total berkurang sebesar 15-17%
biaya OPEX jaringan akan
berkurang sebesar 15-30%

73. Komponen Cost Operator Telco :
OPEX Jaringan

74. Reduksi Biaya Planning
dan Operasi Jaringan
• Direct cost :
– Perencanaan , operasi dan pemeliharaan jaringan merupakan
fungsi-fungsi yang menghabiskan banyak anggaran.
• Belanja pegawai untuk operasi jaringan membutuhkan 20-30% dari
anggaran jaringan
• Biaya ini bisa ditekan, bila dilakukan outsourcing karena MS provider
menggunakan strategi shared service melayani beberapa operator
sekaligus.
• Indirect cost :
– Operator juga dapat melakukan penghematan OPEX, karena
managemen pergudangan dilakukan oleh shared service yang
mendapat pekerjaan outsource dari beberapa operator.
• Hidden cost :
– Dengan terpenuhinya KPI dan SLA, maka penghematan hidden
cost juga bisa ditekan

75. Reduksi Biaya Equipment Maintenance
dan Vendor Management
Direct cost :
• Reduksi Equipment Maintenance
– Pengurangan biaya juga bisa dilakukan pada reduksi License fee dan
aktivitas vendor-service support.
– Operator dapat menghemat OPEX hingga 4% melalui outsourcing.
Indirect cost dan Hidden cost :
• Reduksi Biaya Vendor Management
– Dengan penunjukkan outsourcing satu pintu, maka interface
administratif akan dikelola oleh service provider yang mendapatkan
pekerjaan outsourcing.
– Sebagai contoh, Telecom New Zealand telah melakukan penghematan
lebih dari 74M Euro dengan menyerahkan managemen 20 vendor ke
fihak yg menerima outsourcing

76. PENGEMBANGAN MODEL
FINANSIAL

77. Analisis Finansial sebagai Pertimbangan
dalam Keputusan Outsource Jaringan
• Analisis finansial menyediakan dua sudut pandang penting :
– Analisis spending berdasarkan kategorinya : perangkat hardware,
personnel, fasilitas dan lain-lain
– Analisis spending berdasar aktivitas : perawatan, operasi,
perencanaan, optimasi dan lain –lain
• Hasil analisis ini membawa pada identifikasi item apa atau tahap
mana yang bisa dilakukan penghematan
– Item atau tahapan yang dihemat biasanya terkait dengan indirect cost
dan hidden cost
• Analisis finansial juga diperlukan untuk perhitungan trend spending
beberapa tahun mendatang
• Hasil analisis juga harus menyediakan suatu cost baseline dari OPEX
dan CAPEX perusahaan untuk menjalankan bisnis dalam beberapa
tahun ke depan.
– Cost baseline ini nantinya akan dipakai untuk mengevaluasi proposal
yang diajukan oleh vendor atau service provider.

78. Pengembangan Model Finansial
• Setiap pelanggan prospective seharusnya melakukan analisis
finansial untuk memberikan perbandingan teknikal dan bisnis yang
dilakukan secara in-house dibandingkan dengan outsourcing.
– Analisis ini hendaknya menguji elemen biaya internal seperti :
pegawai, training, transportasi dll
• Suatu service provider penyedia outsourcing hendaknya
mengajukan usulan cakupan pekerjaan yang memenuhi persyaratan
dengan analisi ROI serta penjelasan tentang cost benefit
terhadap bisnis baik dalam nilai nominal penghematan serta
parameter indikator kunci ( SLA dan KPI )
• Pada skema outsourcing tradisional biasanya kerjasama dilakukan
dalam multi-year, namun demikian pada skema outsourcing saat
ini, dapat dibuat suatu masa payback period dalam satu tahun atau
kurang sehingga mendorong level kerjasama dalam jangka yang
lebih panjang dengan scope pekerjaan yang makin lebar.

79. Pengembangan Model Finansial

80. Contoh Cash Flow Operator yg
menjalankan Outsourcing

81. Benefit : Sebelum Outsource
• Gambar disamping
mengilustrasikan business
case dari suatu implementasi
program efsiensi yang
dilakukan oleh suatu
operator.
• Pada tahun awal, terjadi
peningkatan upfront.
• Pada bulan ke 18 terjadi
breakeven, sedangkan untuk
mencapai tingkat
penghematan yang
diinginkan diperlukan waktu
selama 23 bulan.
• Walaupun penghematan
dapat diperoleh dalam
jangka panjang, dampak
jangka pendek tidak disukai
kebanyakn operator

82. Benefit : Setelah Outsource
• Gambar di samping berikut
kinerja operator setelah
outsourcing
• Kemampuan vendor untuk
merealisasikan skala
ekonomi dan sinergi serta
kemampuan untuk
mendistribusikan investasi
memungkinkan untuk
penghematan up front
• Meskipun dalam jangka
panjang penghematan yang
diperoleh lebih kecil,
perhitungan NPV
memperlihatkan hasil yang
baik

83. SCOPE PEKERJAAN OUTSOURCING
BERBASIS PENGELOLAAN COST

84. Scope Pekerjaan Network Outsourcing
Almost implementing on Telco’s

85. Scope dari Outsourcing berdasarkan
Parameter Finansial yang Dikelola
• Terkait dengan parameter Finansial (CAPEX dan
OPEX) yang dikelola terbagi dalam beberapa tipe :
– Tipe out tasking :
• Model 1 : outtasking
– Tipe Managed Operation :
• Model 2 : full technical operation
• Model 3 : site rental and transmission cost management
– Tipe Managed Capacity :
• Model 4 : asset optimization and supply chain management

86. Scope dari Managed Service berdasarkan
Parameter Finansial yang Dikelola

87. Model 1
• Level terendah dari Managed Service adalah Out-
tasking, yaitu bentuk awal dari Outsourcing.
• Outtasking merupakan penugasan operator kepada
Managed Services provider untuk melaksanakan tugas
operasi parsial dari fungsi atau proses yang terkait
dengan managemen jaringan atau layanan.
• Pengukuran kinerja dibuat berdasarkan task-based KPI
– Dalam hal ini Managed Services provider mendukung
operator untuk melakukan penghematan pengeluaran
OPEX yang terkait SDM

88. Model 2
• Level scope berikutnya dari outsourcing adalah Full
technical operation
• Managed Services provider mengerjakan tugas-tugas
operasi jaringan atau layanan secara penuh dengan
tanggung jawab menjaga end-to-end KPIntuk
melaksanakan optimasi, desain dan aktivitas
pembangunan.
• Model outsourcing ini merupakan model yang paling
banyak digunakan dalam industri telekomunikasi.
• Operasi jaringan yang full ini memerlukan staff transfer dari
operator ke Managed Services provider sehingga
memungkinkan reduksi OPEX secara substansial
dibandingkan dengan Outtasking

89. Model 3
• Pada scope pekerjaan level lebih tinggi selanjutnya
Managed Services provider menangani bukan hanya
operasi teknikal secara penuh, namun juga melakukan
tugas-tugas Site and transmission cost management
mewakili operator.
• MS provider bertanggung jawab dalam mengelola
infrastructure sharing seperti tower, shelter, power dan
lain sebagainya.
• Model outsourcing ini juga melibatkan staff transfer dari
operator ke Managed Services provider.
– Oleh karena itu, selain berdampak pada reduksi OPEX terkait
dengan SDM , reduksi lebih jauh juga terjadi pada OPEX
jaringan.
– Skema model outsourcing ini juga berdampak pada
pengurangan capital expenditure(CAPEX).

90. Model 4
• Scope yang paling luas dari outsourcing adalah Asset optimization
and supply chain management.
• Model ini membuat peran Managed Services provider lebih besar
dalam optimasi coverage dan capacity mewakili operator dengan
tanggung jawab penuh untuk menyediakan kapasitas jaringan pada
saat apapun dan dimanapun.
• Karena penggelaran jaringan sangat terkait dengan demand aktual,
maka disini operator bisa lebih pasti melakukan optimasi cash flow
dan modal ( OPEX dan CAPEX ).
• Terkait dg jaringan, operator hanya melakukan order dan membayar
tambahan coverage dan capacity baru yang disediakan oleh MS
provider dengan suatu pernjanjian SLA dan end-to-end KPI yang
disepakati.

91. Model 4
• Bagi operator, hal ini berarti terjadi pengurangan resiko dan
reduksi cost sekaligus atau reduksi OPEX dam CAPEX.
• Managed Services provider bertugas mengelola technical
operation, site and transmission cost management, serta
capacity and coverage management dari jaringan yang
dimiliki operator.
– Staff transfer biasanya juga termasuk dalam skema outsourcing
ini
• Dengan in-depth partnership ini , operator dapat
mengamankan efisiensi OPEX serta produktivitas CAPEX
karena vendor melakukan optimasi total cost of ownership
jaringan.

92. Session 3.
Business Landscape Change and Next
Generation Managed Service
Dr.Ir.Joko Suryana

93. Outline
• Telco Trends
– From Network-centric to Service-centric
– Network Infrastructure become a non core-business
– Network Infrastructure is a burden rather than competitive advantage
– Outsourcing is a must for Service Providers
– Telco trends will push service providers to become Telco 2.0 operators
• Future Business Model of the Service Providers
– Telecom Services and Content Sales Company
– Telecom view vs Internet view Business Models
– Non conventional Telco Actors
• Next Generation Managed Services
– Build/operate/manage
– Managed Infrastructure
– Managed end-to-end services operations
– Full Outsourcing
• Vendor Selection

94. TELCO TRENDS

95. Telco Trends

96. Telco Trends

97. From Network-centric to Service-centric
• Service providers are moving from a network-
centric to service-centric environment to meet
consumer and enterprise demand for innovative
multimedia applications and services.
• Increasing focus on the end user and meeting this
demand requires advanced network deployment.
• But in the current cash strapped environment
how can this be accomplished while at the same
time achieve reduction in total cost of
ownership?

98. From Network-centric to Service-centric

99. Network Infrastructure become a non core-business
• Increasingly telecom operators are viewing
ownership of the network infrastructure as
outside their core-business.
• Driving this trend are the increased speed of
innovation cycles, and the pressures of time-to-
market.
• In this new environment, the operators are
attempting to mitigate the risk of making upfront
investments in new technologies before the
technology has proven itself in the marketplace.

100. Network is not Competitive Advantage Anymore
• The fact is that the network is no longer a unique
selling point to their customers – rather it is the
services offered over the network that is of
primary interest.
• So the service providers must walk a tightrope of
implementing a broad set of technologies in
order to offer state-of the- art services to end-
customers, but at the same time being careful
not to overload those customers with new
offerings and technologies.

101. Network Infrastructure as a Burden
• It is apparent that the ownership of network
assets can increasingly become a burden to
today’s telecom operators rather a competitive
advantage.
• Network sharing and Outsourcing will become
more and more important in the overall telecom
business model and will include share all network
elements – core, access, transport and service
platforms, the legacy network, and new
extensions and technologies or lease the network
based on outsourcing.

102. Outsourcing is a must for Service Providers
• A clear indication of this trend is the increasing demand for
solutions that include outsourcing, or at least the sharing of
telecom network infrastructure.
• Just a few of the indicators that the network is no longer a
commodity includes the specialization of telecom carriers into a
variety of wholesale segments, such as backbone service providers.
• Other indicators include the increase in co-locating and sharing
mobile sites and a trend to leased line unbundling.
• The use of managed and hosted applications is on the rise, as is the
trend on the part of the telecoms to look to an outside firm to
manage capacity.
• In fact, the entire legacy network can be outsourced. This can occur
in a selective fashion – e.g. the transport network of a mobile
operator; or full outsourcing of the operation of a legacy network to
an independent 3rd party vendor.

103. Service Providers will transform to Telco 2.0
• Through creative partnering and innovative risk sharing
options, new managed services and outsourcing business
model options provide the framework for creating a next
generation enabled portfolio of services for consumers and
enterprises ready for Telco 2.0; without compromising
network performance, service quality and security.

104. Three Different Parts to the Future
“Telco 2.0” Operator
Telco 2.0

105. FUTURE BUSINESS MODEL OF
SERVICE PROVIDERS

106. Future Business Model for Telecom
Operators
• In the future, service providers will hardly
resemble the companies they were in the late
20th and early years of the 21st century.
• For example, they may position themselves as
your friendly “Telecom Services and Content
Sales Company.”
• They will no longer own or operate a telecom
network infrastructure, and will focus exclusively
on customer acquisition, interaction and
retention.

107. Future Business Model for Telecom
Operators
• Tomorrow’s service providers will diversify by offering
unique services and content in combination with attractive
pricing.
• They likely will offer these services and content via hosted
platforms they do not own, and will bring their products to
the end-customers via a fully converged shared network
infrastructures.
• One of the biggest shifts in the transformation of today’s
operators will be their evolution from an organization
focused on engineering and technology to becoming a
nimble marketing brand that delivers innovative and
sophisticated cutting-edge services to its customers.

108. Future Business Model for Telecom
Operators

109. Business Landscape Changes
• We can see a transition from
the “telecom view” to the
“Internet view” or a
combination of the two.
1. In the first case the main
aspect is the infrastructure
and services that are
added “on top of” the
networks.
2. Using the second view the
networks are seen as an
asset similar to roads,
railways, water supply,
Transform schools that are needed in
order to facilitate markets,
companies and the society
to function as expected.

110. Non Conventional Telco Actors
• As identified by a representative for the Gartner group at
the Mobile World Congress in Barcelona 2009 other types
of actors make large efforts in order to obtain a share of the
internet business and to connect customers more closely.
• Examples are :
– Microsoft (SW)
– Nokia (mobile phones)
– Google (internet), i.e. large, global and powerful companies.
– Skype
• Therefore, Future Service Providers should offer
competitive services to their customers for maintaining the
businesses

111. Wholesale providers need to help retail providers
Manage costs and Introduce new services
• Core revenues for traditional players are slow
growth or flat
– They are looking to manage costs
– They are looking for external help in managing costs
• Service providers need new areas so that don’t
lose out to new players
– Wholesaler needs to help traditional players introduce
new services
– Wholesaler should as soon as possible offer the
managed services and network outsourcing

112. NEXT GENERATION MANAGED
SERVICE

113. Next Generation Managed Service
• The current uniform outsourcing model is rapidly changing
as vendors and operators gain insights from existing deals.
• There are three elements will shape the next generation of
managed networks:
– First, the combination of network sharing and outsourcing,
wherein multiple operators agree to share active and passive
network elements and outsource the operations of those
elements to a vendor.
– Second, wider use of asset transfers beyond the current
software and test-bed transfers.
– Third, the growth of out-tasking beyond its traditional domain
of field maintenance to include mission-critical aspects such as
NOC operations and network optimization

114. Managed Service Scope

115. Managed Services also Have Changed
• What the preceding makes clear is that the entire
concept of “managed services” has changed.
• No longer can managed services be limited to
operationally focused and network-centric.
• The main components of the old approach — NOC
services, multivendor maintenance and network
outsourcing — were sufficient in an environment
where point solutions, cost savings and the bottom line
were primary considerations.
• But the next generation of managed services, out of
necessity, shifts the emphasis significantly to a focus on
the end-customer’s services.

116. Managed Service Transformation
P
r
e
s
e
n
t
F
u
t
u
r
e

117. Next Generation Managed Services
• Specifically, next-generation managed services are geared
toward achieving business transformation via a services-
centric approach.
• The goal is to give customers the services they want, where
they want them, when they want them across a variety of
devices.
• In striving to achieve this goal, risk mitigation is evolving
into a risk sharing approach.
• Greater attention is given to implementing both top- and
bottom-line solutions — and to the need for significant,
nonlinear reductions in CAPEX/OPEX.
• Instead of short-term tactical advantages, the focus is
firmly on long-term strategic gains.

118. NG-MS : Build/operate/manage (BOM)
• Meeting demand for telecommunication services is an
essential part of transformation.
• A qualified partner can help network operators with a
comprehensive approach to cost-effectively roll out,
operate and manage a new network deployment.
• In the build phase, this typically includes design, planning,
engineering, installation, integration, optimization test and
turn-up.
• The operate-and-manage phase typically includes
monitoring, fault management, field maintenance, repair,
and performance and configuration management.
• Eventually, operational responsibility can be transferred to
the network operator.

119. NG-MS : Managed Infrastructure
• In building on the basic BOM approach, a trusted
partner can share a portion of the risk in the early
years of deployment with the network operator.
• Instead of paying all CAPEX up front before realizing
any new revenues, the network operator can share the
risk of build-out with the partner by deferring a share
of the cost until it realizes subscriber growth.
• This isn’t just a bottom-line solution: The freed-up
dollars can be used to build subscriber growth further
and faster — and grow the top line in the process.

120. NG-MS: Managed Infrastructure

121. NG-MS:
Managed end-to-end services operations
• By focusing operations from a network-centric to a
services-centric approach, a partner expands
operations support beyond the traditional network
boundaries to include customer premises devices that
control end-user services.
• Thus the “network” now includes devices like IP set-top
boxes and IP modems, which are monitored for
performance quality and customer-relevant metrics.
• Put another way: Operations processes are extended
beyond just the traditional network to cover services-
based metrics in a fully migrated, IP-based end-to-end
network environment.

122. Managed end-to-end services operations

123. NG-MS: Full Outsourcing
• In assuming end-to-end network operation processes and related
functions, a partner can help network operators address critical
requirements in a services-centric approach to business.
• Full outsourcing can be defined as creating a “virtual” telecom
services provider by the combining network operations outsourcing
with a transfer of assets to the managed services provider.
• The role of the outsourcing partner is to operate the new “virtual
telco” and to manage the partnership of what would typically be
multiple parties, where each performs a clearly defined role.
• This results in a tailored, single-sourced solution allows for clear
accountability and helps increase the focus on quality, while helping
to ensure a smooth transition to next-generation networks and
realize long-term financial objectives.

124. Full outsourcing

125. VENDOR SELECTIONS

126. Vendor Selection Flow

127. Establish realistic expectations about
benefits and scope
• Having a clear set of objectives and a business
case that can be benchmarked are prerequisites
for convincing senior management to make the
commitment to network outsourcing.
• Common pitfalls are overestimating savings,
inadequately defining the scope of the
outsourcing project, and mixing outsourcing
initiatives with other infrastructure projects (such
as next-generation networking migration).

128. Establish realistic expectations about
benefits and scope

129. Define a detailed picture of the
desired end-state early on
• Operators that successfully execute outsourcing deals
define a detailed picture of the desired end-state early in
the process—and further validate this with the respective
vendors.
• Having a clear understanding of one’s expectations and
requirements is central to maintaining control throughout
the vendor selection and negotiation process, and then
arriving at a satisfactory outsourcing contract.
• Designing the end-state model requires answering the
following questions: scoping, operations and process
model, KPI and performance model, governance model
• What dispute arbitration mechanisms should be installed :
asset model, payment model, 3rd party contract, HR
transition model

130. Use a structured process for vendor
selection
• Vendor selection is one of the most critical decisions an operator
will make.
• Entering into an outsourcing relationship can provide real benefits
as outlined; however, revision of the decision or late vendor
changes can be painful.
• Consequently, we advise operators to follow a rigorous and
transparent deal-definition and partner-selection process.
– The process is characterized by the early development of the desired
end-state by the operator.
– A select group of vendors should be involved extensively to validate
and test the end-state, prior to the issuance of an RFP.
– These discussions should involve key personnel who will be the
leaders of the organization post-outsourcing.
– While the investment in terms of resources and time might seem
initially excessive, a clear and jointly held understanding of the details
and alternatives for a future outsourcing deal is critical to future
success.

131. Align and communicate
• Senior management support for the outsourcing initiative and
internal communication of the implications for employees are vital
to ensuring success.
• Insufficient attention to these elements has often resulted in
attrition of more than 20% of operator staff during the process, not
to mention needlessly drawn-out negotiations with potential
vendors.
• How to align and communicate?
– On the first point, we’ve already noted the importance of a sound
business case and end-state model.
– With respect to the second point, operators must supply their staff
with early and honest explanations of how the outsourcing deal will be
implemented, what these changes will mean for how people do their
work, and how job performance will be evaluated and rewarded.

132. THANK YOU