As the realisation dawns that a new network infrastructure is only as good as the new business opportunities it creates, operators need specialist help in transforming their business models, says Andreas Herzog. Co-sponsored feature: Alcatel-Lucent

Andreas Herzog: vision, new business models and new process

In a market that is probably in its strongest period of change since telecommunications began, network operators are now realising that their best hope of long-term prosperity is to undergo radical transformations of their ways of doing business.

As many have already identified, that means moving away from network-centric offerings towards value-added, customer-centric content, solutions and services.

This is a huge shift for the traditional operator, however. Reshaping their offerings in such a diverse way requires much more than a transition to a new technology - which introduces the question of where they can go for help.

New business challenges demand new kinds of support

While, once, a large, established network equipment and services vendor would have been well equipped to integrate new systems, guiding the operator through the twists, turns and pain of migrating to a new platform, with the right blend of products and integration services, most equipment providers now struggle to meet the diverse range of needs created by the new value-added, service-led paradigm.

The new world of communications services provision demands a plethora of customer offerings, including applications and content provision, as players strive to differentiate themselves and climb the value chain. So, in turn, operators seeking to broaden their horizons in this way have begun to demand much more from their network technology providers.

But are their vendors rising to meet them? Many network suppliers, themselves having recognised a need to expand their portfolios, have branched out into managed service provision, but operators now need much more than simply help in operational performance- or cost-related problem-solving.

New models, new processes

As the operators try to break into new territory, they have to get ahead and carve out new markets - from being able to ensure end-to-end service levels across a complex, extended supply chain, to understanding and implementing new business models.

After all, the main driver for an operator to undergo such a substantial change is so that it can profit from the opportunity to enter new markets and bring something new to their customers, in the way of intelligent multimedia applications, content and services. This, in turn, demands a new business model, and new support systems.

Which is why the telecom industry analysts have begun to redefine the scope of the professional services that these operators now need to draw on, as comprising something more strategic and long-term than just outsourcing.

Customer challenges

Business customers are developing very similar needs, as they attempt to transform their internal infrastructures to meet the exploding demand for bandwidth, collaborative applications, and more flexible and mobile connectivity. Never quite knowing what the business will throw at them next in its bid to conquer new markets, internal information and communications departments are frantically juggling the need to innovate and stay one step ahead of the market, with the need to maintain and improve current services.

A recent independent report by Yankee Group notes that nine out of 10 communications-intensive organisations are seeking outside help as they build mobility-enriched, IP-centric environments.

The report notes that the growing need of these companies for a transformational network overhaul, alongside the accelerating need to trouble-shoot existing networks, is overstretching existing resources. With a ten-fold growth in network end points predicted over the next five years, such challenges will only multiply.

“Connectivity, like water, is now a human necessity,” Yankee Group warns, noting that thirst for connectivity will power 3.8 billion mobile handsets in 2009 and drive the replacement of 1.2 billion for newer, feature-rich models. This excludes the interplay of wifi-enabled MP3 devices like Apple’s iPod touch, netbooks, Amazon’s Kindle and other consumer must-haves.

Worse still, communication is endlessly reinventing itself, the report adds. “We’re turning voice into text, audio conferencing into video conferencing and embedding presence and context intelligence into standard business applications. Across the world, more than 12 billion IP video streams are now viewed every month in homes, offices and, increasingly, on the move. As these numbers continue to climb, they translate into complex networking challenges: How does one manage volume and also maintain quality?”

Juggling now with tomorrow

Because there is no scope for compromise, enterprise customers, as with the network operators, need more support from their network providers, to they are able to keep all of the balls up in the air, while ensuring speed to market, at minimal risk, with their planned infrastructure transformations.

As a direct result, Yankee points to a shift in interest from ad-hoc, unplanned use of professional services, for example forced by a breakdown or other crisis, and transactional services such as the externalisation of non-core technical functions, largely to achieve cost savings, towards transformational services. Here, the primary focus is to achieve something new and different, such as that ever-desirable business agility.

It was this need to derive more from its infrastructure that recently led Asian service provider, Bharti Airtel, to form a joint venture with Alcatel-Lucent.

The resulting operation, Alcatel-Lucent Network Management Services India, manages Bharti Airtel’s pan-India wireline broadband and telephone services, while also supporting the operator’s next-generation network (NGN) transition. This allows the service provider to offer advanced services such as high-speed internet, triple-play, media-rich value-added services, MPLS and VPN [PGD1] solutions to retail and business customers.

Picking the right partner

With more than 15 years’ experience of managed services, Alcatel-Lucent today operates more than 80 networks on behalf of service providers around the world, covering more than 180 million subscribers, and enjoying a leadership position in multi-technology and multi-vendor managed services.

Earlier this year, it further bolstered that position with a strategic partnership with IT vendor and managed services specialist HP.

But, more than that, Alcatel-Lucent is now capitalising on its rich experience to extend professional, customised consultancy and best-practice-driven transformation services to its operator and enterprise customers worldwide.

Global centre of excellence, local delivery expertise

By globalising and standardising its international processes and tool platforms, Alcatel-Lucent has been able to industrialise its managed services delivery capabilities, combining the efficiencies of a network of service delivery centres with distributed centres of excellence, where experts are deployed within easy reach of customers’ premises.

By doing this, Alcatel-Lucent is able to extend customised managed services solutions to its customers, ensuring much shorter time to market, while lowering the cost and risk for these companies as they roll out new innovations.

Transformation in action

A successful pioneer in the use of a broad portfolio of network transformation and managed services is Telecom New Zealand (Telecom). The operator was one of the first service providers in the world to not only outsource the management of both its fixed and mobile networks to Alcatel-Lucent, but also to engage the company’s products and services to create a more transformational environment.

Specifically, Alcatel-Lucent has partnered with Telecom to launch a series of profitable services that enrich the end user’s experience of mobile broadband, particularly small-business customers, by extending its offerings to include complete value-added business applications.

In just one of numerous examples, the operator provided a port authority with a complete solution to allow hoist operators to manage container movements from the driver’s seat.

By extending significant value to the end customer, the operator was able to stand out against rival players, increasing loyalty while boosting margins.

Where time is of the essence in getting to market with new services and solutions, operators and businesses need to get it right first time, which means picking a partner very carefully. In an intensely competitive marketplace, there are no second chances.

Global trends

Where use of managed services is already well established, operators and enterprise customers are very open to entrusting transformational projects to an established, reliable and proven industry partner. Europe, certainly, has been a hotbed of activity for managed services, and, the more saturated the market for traditional communications offerings, the greater the chances that operators will be seeking help to get to the next level.

Strong interest in managed services exists in India, too, as the wireline broadband boom continues, creating a wealth of exciting new opportunities for operators. In other markets, including the Middle East and Africa, the Asia-Pacific region and the Americas, it will be the innovators that move first, and Alcatel-Lucent is poised to propel those pioneers to early success, as it is doing already in some countries within those regions.

After all, who better to lead them to victory than a company that has already been there for many years?

As operators and internal communications departments grow to accept that the success of a network has little to do with the bits and bytes and so much more to do with how these are exploited strategically through innovative services, applications and content, many will need help to sufficiently broaden their horizons and successfully harness the new opportunities that are open to them. Understanding the ins and outs of IP technologies is only a small part of that journey. The rest requires vision, new business models and new business processes.

This is where Alcatel-Lucent can truly add value. GTB

Andreas Herzog is president of managed services at Alcatel-Lucent