With fierce competition at all levels, increasing consumer demand for a seamless user experience and Internet technology providing a constant stream of disruption, service providers face a business situation that's forcing them to transform their operations. This transformation means shifting the service mix toward innovative, sticky services and end-to-end service control to lower costs and lock in network value.
Service providers realize that their business will be completely different in five years and that their networks must be transformed to drive new business directions. Service transformation will change the relationship they have with their residential customers, from service transaction-based (phone, Internet and TV) to a relationship where the service provider manages the communications and entertainment experience residential users have at home and away.
Until recently, service providers have met the service challenge by overlaying individual stovepipe services onto their IP infrastructure. It's now time to change the game. Today's service providers are looking at creating new services and the vast and growing opportunities with fixed and mobile broadband services for a combinational service perspective - to push the end-user experience even further.
In doing so, service providers face the challenge of deploying, using and valorizing these new services within an optimized and cost-effective architecture and, at the same time, making the services able to communicate and interact seamlessly with one another and with other services, including third parties.
More agile approach
Service providers need a strategy for competitive transformation to evolve their services gradually toward convergence and become more agile competitors. This strategy will enable them to deliver a better user experience with converged services, locking more end-user value to their assets that can't be easily copied by competitors.
Competitive transformation is achieved by leveraging three key components: service transformation, network transformation and business transformation.
Service transformation leverages service creation: creating new service categories and revenue, as well as, innovating to defend these new and traditional revenues.
Network transformation leverages service control: using operator resources to differentiate services based on QoS, security, bandwidth and other provisioning features while delivering more valuable service innovations than competitors.
Business transformation leverages service integration: to manage risk linked to operator needs for growth by outsourcing network and service integration tasks. This includes E2E integration, turn-key capabilities as well as whole-network transformations.
Delivering such new and composite services requires a strong services strategy and sharing of common information (e.g. user profiles, IP infrastructure resources, and so on) and management capabilities across services, increasing beyond IMS, the concept of a shared service delivery environment (SDE).
It's good enough to say service providers need to focus on agile service creation. But, how do they mitigate risk in new service introductions‾ How do they create new service categories without losing focus on customer retention‾
The answer is a three-pronged approach (each prong increasingly risky):
- Enhance the existing service portfolio by extending the features current services. For example, a presence enabled address book where a user can see if a contact is already on the phone before they call.
- Add trusted services to the portfolio by tapping into existing user behaviors and launching services that are popular on other mediums. Users can comfortably decide whether the extension will be useful or not. For example, people understand what watching TV is all about, so mobile TV, by extension, is easy to introduce and easy for users to understand, and thus helps reduce subscriber churn and increase ARPU. These services are also likely to be easier for service providers to assess for uptake with focused market research. A typical example of enhancement to today's service portfolios, by extending features or taping into existing behavior, includes leveraging mobility and broadband to deliver more convenience and more features to subscribers.
- A third approach to new service introduction is to rely on third parties to focus on new, yet unknown services that tap into needs end-users don't know they have (disruptive new services are not easy to predict or understand, but their big potential makes them a likely area for strategic service development). Although these services have the potential to be quite lucrative, it is difficult to forecast what the best ones will be (i.e., like SMS). This is an ideal area for integration of third-party developers because they can roll over application development quickly, and many developers can focus on many niches that a traditional service provider cannot - sometimes known as a shotgun approach.
Once the service strategy or mix is determined, the challenge is managing the complexity of the different service delivery paradigms to provide a seamless combinational service offering.
Phased approach
Service provider transformation is inevitable, and taking the right steps requires strategic direction. The power of an SDE comes from the flexibility it provides through common applications that service providers can mix and match to meet their business objectives. Using an appropriate selection of common SDE management applications, service enablers, service applications, as well as telecom and IT standards-based interfaces and integration technologies, service providers can introduce new revenue-generating applications while existing services are migrated from legacy systems, in a de-risked approach, minimizing disruptions to end customers.
The SDE offers service providers, moving to carrier-class all IP service delivery environments, key common capabilities that enable the optimal co-existence of service platforms using different service delivery paradigms, while at the same time maximizing the common management of their services and their required network resources.
By also following a service creation strategy that mitigates their risk, service providers can ensure their successful transformation to the new market place, and win with convergence.
Nicolas Mercouroff is with Alcatel-Lucent's convergence business group