Managed services get down to business

Ovum
The recent 2013 Managed Services World Congress in London highlighted the evolving nature of managed services, as the focus moves away from cost and towards assuring business value. Improved service delivery and customer experience have become key requirements for telcos looking to remain competitive. However, telcos need to clearly specify their business objectives, communicate these to vendors, and create an environment that enables vendors to achieve these business objectives.
 
Vendors meanwhile are also looking to move away from the “your mess for less” managed services scenario to providing value add and delivering a complete offer that supports telcos’ overall business objectives and improves customer experience. However, they must assure telcos that they are capable of delivering on these objectives by ensuring that their managed services portfolio caters for the full range of services desired by telcos.
 
The value proposition for managed services is evolving with an increased focus on customer centricity and improved service delivery. With fierce competition in both developed and developing markets, improved service quality and customer experience management have become the key differentiators for telcos.
 
High-quality service delivery to both consumers and enterprises demands an end-to-end approach to management of the whole ecosystem. This includes the network infrastructure, IT platforms, and support systems such as billing, marketing and customer management, and increasingly device management. As a result, telcos need to re-evaluate the basis on which they engage vendor services and move beyond network management to include all or parts of these roles.
 
Telcos need to clearly define their business objectives
Telcos must clearly specify their business objectives if they wish to derive value from their managed services deals beyond cost and operational efficiencies. The contract should specify the telco’s desired business outcomes. In addition, when selecting a vendor partner, the managed service portfolio should not be the only item for consideration; the full (professional) service portfolio is important, as is the financial stability of the supplier and the capabilities of the staff assigned to the contract.
 
 
Once engaged, vendor performance should be measured against its ability to deliver results that indicate progress towards business goals. Performance also needs to be verified through constant monitoring of the end-user experience. For example, a telco focused on driving growth through services delivered to enterprise customers in specific locations will need to ensure that the expected service conditions in these locations are clearly defined and satisfied. The prompt resolution of faults in these areas is a good way to judge the vendor’s performance, provided the requirement is not based on a simple number of faults resolved. The business impact for the end customer experience has to be the driving metric.
 
Vendors must be seen as partners and not just suppliers
The existing relationship between telcos and vendors needs to change, so that telcos see vendors as business partners and not just a supplier that delivers based on service-level agreements. Telcos should never outsource accountability; they must ensure effective management of their relationship and have clearly defined processes for fault escalation.
 
For example, Videocon, an Indian telco, worked with Comverse (which provided BSS managed services) and created a proactive problem-solving mechanism based on mutual understanding between both parties. This partnership yielded results such as improved time to market, cost savings, and increased system availability and utilization.
 
IT capabilities are required for end-to-end delivery
 
This end-to-end approach to managed services delivery requires not only network capabilities but also IT capabilities. Segments such as billing and customer relationship management are highly dependent on IT capabilities such as analytics and security and must be addressed by vendors. Vendors from the IT domain looking to move into the telecoms space need to evolve their capabilities to support telcos’ needs.
 
Recent activities by some of the major network equipment providers, such as Ericsson and NSN, show that they are pushing hard on this new approach to managed services. Ericsson has devised an experience-centric managed services model which aligns supporting customer expectations with service delivery. Similarly, NSN is driving its managed services and other service offerings in line with optimizing the customer’s experience of the service and not just the network. In order to deliver on the digital lifestyles that telcos aspire to, partners will need to ensure robust managed IT services across business processes, for example the lead-to-cash and time-to-resolve business processes.
 
Adaora Okeleke is an analyst in Ovum’s Telco Operations Practice

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