For the first time in
Compare the automotive industry: a global giant like Toyota sets up a production factory in one country to serve many others. But the products and services of the telecoms industry can be only be used in the country of origin – until now.
Virtualisation enables telcos to produce products and services once for all subsidiaries across countries. This directly translates
The subsidiaries of a telecoms group will obtain the services and products they provide to their customers just as consumers download apps, photos or music from the cloud. This production structure is the common thread of many success stories such as Google, Facebook, WhatsApp, Instagram, Twitter or Netflix.
Thanks to network
• New services can be introduced at low cost. If the service fails commercially, licences are cancelled and the hardware can be used for other services.
• Thanks to common hardware basis, use of resources can be optimised across all services. At midnight on New Year’s Eve, resources that were used a few hours before for TV can now be used for messages.
• Using the same resources, data centres can be over-dimensioned. In
• Standardised hardware means computation power can be purchased at significantly lower cost.
• Building service as software lowers the market entry barriers for new vendors. This reduces production costs, enables new licensing models as well as innovative services.
This could solve many problems telcos are facing today, especially in the competition with OTTs. Time to market and cost for new products would be reduced significantly. Easier integration of services makes automation of multiple processes possible. The cost for failure is smaller, making innovation easier.
Centralised production will cut production costs in half – thanks to a reduction of many production facilities to one and the technological advantages of unified production.
It is estimated that the transformation will take at least a decade to be executed. The new central production facility has to be built, and the services and customers migrated from the legacy platforms. Different points in the production platform’s lifetime cycle make this challenge a particularly delicate one.
Secondly, the cost development of the transformation phase affects the profitability of the entire project.
Be a brave leader. Telcos are typically steered with plans, often reflecting timespans of four or five years. It is important to set a top-down ambition level instead of arguing on a platform basis with single group subsidiaries about possible cost savings. Subsidiaries must cut planned re-investments that are no longer necessary in the light of the imminent
To keep legacy costs low and to reduce them steadily, it is important to shut down old platforms quickly. This will generate savings that can be used to absorb the additional spending for new infrastructure and transformation to some degree.
The most challenging part is getting the commitment of all stakeholders. For the
It’s a chance finally to escape the gridlock of falling revenues, increasing costs of complexity and rising substitutes. A chance to unleash synergies and to live up to one’s true potential. A chance to finally meet OTTs at eye level – or even above. And it is a way out of the threatening scenario of turning into a dumb bit-pipe.