Managed ICT Transformations are a New Approach to Outsourcing
Legacy telecom operators face disruptive changes due to the emergence of ICT technologies such as virtualization, software-defined ‘X,’ cloud computing, and Big Data. IT-minded service vendors are taking customers from traditional telecom operators by extracting increasing amounts of value from upper-layer-level applications. Telecom operators face great pressure from surging traffic on their networks but are not seeing the expected growth in revenue.
Telecom operators are having to adapt to increasingly complex operating environments that combine network and IT platforms. Equally important is the use of new technology to evaluate customer needs and create new business opportunities through quick innovation.
The large telecom carriers that are actively transforming their businesses to the cloud include AT&T whose employees have been told: ‘Adapt or Else.’ A China Mobile branch has reformed its Network Management Service (NMS) by adding staff and training to adapt to the challenges of digital services. Similarly, the Telefónica IT department is fully engaged in support of that company’s transformation.
New Requirements for Operators
Operators have their own roadmap that includes support from trustworthy partners who share the same strategic vision and provide key technologies.
For instance, Network Functions Virtualization (NFV) involves services on both telecom networks and IT-derived data center platforms. Huawei helps new NFV users outsource the necessary technical competence quickly through Build-Operate-Transfer (BOT) programs.
NFV, however, is not an all-in-one solution. After the completion of an NFV integration project, telecom operators remain concerned about operating and maintaining the new system and reconstructing existing processes and organizations.
One cautionary tale of an NFV deployment has an operator at odds with the NFV service provider about the division of operating responsibilities. A second operator, having struggled an entire year to manage the company public cloud, came to Huawei for support to establish a suitable cloud-service operating model.
Under pressure to focus on customers, markets, and service development, telecom operators are collaborating with strategic outsourcing partners in new ways for multiple-vendor management and the implementation of their transformation plans. Experienced telecom operators accustomed to outsourcing are being overwhelmed by the management challenge of multiple-vendor outsourcing and coordination programs at the levels necessary to assure that the interests of each stakeholder are met.
Small- and medium-sized operators are also taking advantage of the same best practice methods provided by large external service organizations to reduce the cost of transformation and minimize risk. Overall, the number of examples in which telecom operators are outsourcing the operation of their telecom networks and IT systems continues to increase.
A Middle East operator revealed the logic behind this trend: “We are a telecommunications service provider, not a software company. This is why we made the decision to outsource the operation of our IT systems and network infrastructure.” As software-defined infrastructures continue to proliferate, informed telecom operators focused on the business innovations that best serve their end users are choosing to outsource the operation of their public and private data centers to professional service providers.
Although a key motive for outsourcing, the reduction of operating costs accounts for a relatively small percentage of revenue. A Gartner research report entitled IT Spending: How Do You Stack Up? found that telecom operators are more concerned about IT innovation than reducing costs. Facing pressure to transform the ICT infrastructure of her company, the IT director of a Latin America operator said, “For me, business innovation is the biggest consideration when selecting an outsourcing service provider.”
Where previous outsourcing programs emphasized cost reduction, increasingly the requirements for engagement are reform driven. The companies who are brave enough to change are not only updating their ICT infrastructure, but must also transform their processes for more organizational efficiency. The result is that managed transformations are emerging as the primary outsourcing requirement for speeding service innovation in ways that minimize cost and risk.
Solutions and Value Proposition
Huawei’s Managed IT Transformation solution helps telecom operators adopt new ICT technologies by providing best practices in skills development, organization optimization, and process reconstruction.
First, the Managed IT Transformation solution uses three approaches to help telecom operators manage the complexity of ICT transformations:
- Optimize Existing IT Environments: Establish standardized service delivery processes that reduce operating costs and ensure service quality of platforms and people; consolidate data centers, improve hardware utilization, and rationalize software licenses.
- Technology Transformation: Improve infrastructure use and reduce deployment time for new services using a dynamic architecture.
- Application Transformation: Improve business agility by enabling a Platform-as-a-Service (PaaS) environment and facilitate business application transformation using Software-as-a-Service (SaaS); build a bimodal (one mode focused on stability, the other on agility) DevOps-enabled infrastructure.
Second, the Managed NFV/Cloud Operation BOT solution helps telecom operators deploy new services by integrating technology and business processes.
Third, the Managed ICT Operation solution helps telecom operators optimize their organizations and processes, build unified service platforms, and improve digital service efficiency by implementing multiple-vendor management protocols for ICT utilization.
Over the past two years, Huawei’s managed solution has helped several European telecom operators — TDC, KPN, Orange Spain, and Virgin Media — accelerate their ICT transformations. In the Middle East, Zain and VIVA have tried Huawei’s unified ICT operation solution ahead of others and reaped benefits. In Africa, Huawei’s outsourcing service has helped Etisalat and MTN meet the challenges they faced to adopt new services.
A recent example of Huawei’s managed transformation service is its cooperation with Qatar-based Ooredoo. In addition to commercializing a unified NFV and cloud ecosystem to deliver public services through an agile ICT platform, the Ooredoo UNIFY strategy intends to integrate internal processes and streamline the organization.
The development of Huawei’s managed transformation solutions is based on supporting 150 telecom networks worldwide, including the construction of 400 data centers. Regarding delivery resources, Huawei has four global service centers and three remote service delivery centers. For technology innovation, Huawei uses the Operation Web Service (OWS) platform — a cloud-based delivery platform that supports quick, policy-driven service deployments, elastic expansion, and API-based customization — to gradually realize the potential of software-defined operations.
According to a senior executive in charge of the company’s managed services, “When Huawei says that future operations will be software-defined, our claim is backed by large investments and deep experience in building this brighter future.”