Operators originally viewed managed services as a way to reduce opex by outsourcing network operations and BSS. Now, Shai Levy, division president of Global Strategic Sourcing at Amdocs, tells Global Telecoms Business, they are looking for a trusted partner for the long-term and no aspects of their business are off limits from the managed services discussion. Co-sponsored feature: Amdocs 
                            

                                
Shai Levy, division president of Global Strategic Sourcing at
Amdocs: The fact of a system being mission critical is not a 
barrier for managed services any more
                         
                  
Operators now face the challenge of addressing LTE deployments and users’ increased consumption of bandwidth. Both will require sustained capital expenditure and managed services can provide a means to alleviate this burden and free up internal resources for marketing and customer experience management. “Operators face the challenges of new demand for data and the need to invest more and more in the network to support that,” says Shai Levy. “They also face increased competition partly due to regulation and partly because over-the-top providers are entering the market and stealing some business. Our customers are in urgent need to be competitive and run faster. The bottom line is they need to transform, although that transformation needs to happen in different ways at different operators.”
Levy points out that even operators which are profitable still need to transform. “Even profitable operators need to transform and we have been engaged by very large and profitable groups in transformation projects,” he adds. “It can be a business transformation or a system transformation but usually it’s both which is the best way to do this. Amdocs is a provider of managed services with the ability to transform through our products and services.”
That transformational imperative is leading operators to view managed services in a different light and one that goes far beyond straightforward opex reduction. “Managed services, if done right, can bring immediate value,” says Levy. “The number one value is the ability to free up management focus, time and resources to be able to grow the business and the top line. An experienced vendor is also best enabled to secure the success of the transformation project and will do better operationally than operators can do in-house. Finally, managed services save money by introducing operational efficiencies through innovation. Those savings can then channel money to fund the transformation.”
“I’ve purposely mentioned cost savings last,” adds Levy. “There’s no doubt cost pressure is still here, it’s not over, but today to win a customer’s trust cost saving is not enough. The environment is competitive and it’s not enough to beat the competition to say you could save 5% or 10% for the operator. Our model focuses on supporting business needs by introducing technology-driven efficiencies, IT and business KPIs, and methodological ways to measure them.”
The concept of a managed services provider sharing the risks is relatively new and, in the context of traditional, long managed services engagements, provides operators with the confidence that they won’t find themselves committed to something that isn’t working. “In many cases there have been contracts of five or seven years but in this industry you can’t predict what the business model will be in five years,” explains Levy. “Operators need the flexibility we can offer to support them for the long term. One critical way to do that is to introduce innovation as an ongoing process throughout our managed services. You have to innovate the whole time.”
However, telecoms isn’t a clear field in which to roll out innovative new systems and business models. Operators are encumbered by legacy both in terms of their systems but also in terms of their strategies. That creates a series of complexities that managed services providers have to address. “We see two trends in the market when a customer goes to a new set of systems,” says Levy. “The first trend is to dump the OSS and BSS systems and give it to a managed services provider. The second is where a customer says take the old and the new together. Help us retain the old systems and go through the transformation with us.”
“In Europe we have a project where we’ll be the future system as well as the partner to operate the legacy until it is decommissioned,” adds Levy. “The operator needs to free up IT time and resources so they can go through the transformation. It takes huge energy and time so handing over to a trusted partner enables them. The other aspect is where systems are to stay in place for the long term, we can offer a competency where customers can share resources that support common parts of their operations with others and drive economies of scale. In a lot of cases legacy systems are not that different and there is commonality between them that we are able to exploit.”
This is another area in which entrenched operator attitudes are changing. The potential for future flexibility and agility is becoming more important than simply cutting cost. “Cost is a must, you can’t avoid it,” confirms Levy. “They all expect to save costs but the flexibility and the future functionality we offer is now also a must. I met the CEO of an Indian operator recently and, at most operators in India, we are not as cheap as they are at doing their own operations, his top need was to enable his business with capabilities that it doesn’t have today.”
To deliver those capabilities, along with cost savings, managed services providers need a wide range of attributes. “One of the basic elements of managed services is the responsibility that a managed services partner is taking,” adds Levy. “In general, the responsibilities need to be wide enough in their scope. There’s not a big point for managed services in a group of 25 people. It won’t have the impact of introducing managed services to an operator supported by 500 employees, for example.”
The market for managed services also starts to segment based on the size of the operator involved and the scope of the functions being passed to a managed services provider. “The largest operators in the world won’t go with a single vendor, I don’t think there are many that could take on that scale of engagement,” explains Levy. “Instead a good option of the tier one operators would be to hand out a domain responsibility end-to-end and work smartly with a few vendors, one of which is prime. It is the tier two and three and perhaps four operators who would go with a single player across their operations. I think the single vendor approach fits better with tier two to four operators. It is easier for them to handle one vendor and pick that smartly and in a way that enables them to stay in control. A small operator that takes a best of breed approach and need to manage five vendors usually finds that their organisation is too small to manage the number of vendors. In some cases the vendor is bigger than the operator involved.”
Managed services could be used more and more to run telecoms businesses efficiently. Operators have been willing to outsource network operations and the BSS for many years and now are considering going further into mission critical IT. Managed services providers have created the level of trust needed for operators to allow this and, at the same time, the competitive environment has made it a necessity. “I don’t think it is still a problem,” says Levy. “It hasn’t been for many years in North America. In Europe, I see more willingness to go this way and in countries like India and regions like Indonesia, operators have been outsourcing since day one.”
“The fact of a system being mission critical is not a barrier for managed services anymore,” he adds. “What is important for customers to secure a successful managed services engagement are well-defined business objectives. Once an operator has defined what they want to achieve the business and IT objectives become clear and a derivative of those will be the operational and technical solutions and the KPIs. The second aspect is to establish a governance process to control and manage your managed services partner. It is important you understand what your business will look like after the engagement and provides like us take new customers to talk to our existing customers.
An experienced managed services vendor should be able to provide that support and help operators identify clearly the scope of the services and define who exactly is doing which element. “Define well the things that should remain within the operator and those that will be outsourced,” Levy advises. “Pay good attention to key employees and the preservation of knowledge within your business and, finally, fix up the commercials.”
With those elements taken care of, operators and their managed services partners can turn their attention to the new models entering the market. “There are new risk sharing models that are evolving in the market and revenue sharing is one,” says Levy. “That could be based on real share of revenues or on business KPIs such as new subscriber numbers. We definitely see more and more engagements where the fixed fee is gone and the managed services provider shares the risk and the reward of the engagement.”
“We are our customers’ trusted partner to their journey to grow and innovate their business in the long-term,” emphasises Levy. “We’re not there to just lower their operational costs., we’re there to provide flexibility and stay for the long term. It is very important that we provide the track record, the financial strength, the delivery experience and the delivery excellence to our partners.” GTB