Insights Managed Services

Report prepared for Jean Rodrigues of Maksen Consulting, S.A.. No unauthorised sharing. April 2013 | www.tmforum.
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Managed services:
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Report prepared for Jean Rodrigues of Maksen Consulting, S.A.. No unauthorised sharing.
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FAR FROM CONVERGENCE ORDER MANAGEMENT PROBLEMS
LONG SERVICE LAUNCH PERIODS MANUAL PROCESSES
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ARE YOU STILL STRUGGLING WITH OLD FASHIONED PROBLEMS ALREADY SOLVED BY ETIYA?
FAR FROM CONVERGENCE ORDER MANAGEMENT PROBLEMS
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Managed services:
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Page 4 Executive summary
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Section 1 Managed services evolution

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Page 11 Section 2 Results from interviews with service providers: The customers speak Page 21 Section 3 Conclusions and recommendations Page 34 Sponsored features
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THE NEW MANAGED SERVICES:
IMPROVING CUSTOMER EXPERIENCE, ENABLING NEW BUSINESS OPPORTUNITIES
Executive summary
Readers with a traditional view of managed services may be surprised by the title of this report. But managed services are in the midst of real change, which promises significant business benefit to communications service providers. The purpose of this report is to describe the change that is occurring, as well as to look at how communications service providers can take advantage of it, improving their planning, supplier selection and governance capabilities and ultimately improving their chance of success. Central to the report are the results of a survey of 58 service providers from around the world, covering 100 managed services engagements, as well as 14 interviews from executives at 12 service providers on their experiences. This is the largest sample of primary research we have conducted on managed services, and the results are encouraging. Particularly interesting is the geographic spread of the survey roughly 60 percent of the respondents are from Asia, Middle East/Africa and Latin America, giving a strong feel for opportunities and experiences in emerging economies. As long-time managed services observers know, what we might describe as modern managed services (post service bureau) have existed for about a quarter of a century, starting perhaps with the landmark deal between Eastman Kodak and IBM ISSC (now Global Services) in the late 1980s. Modern managed services have shown steady if unspectacular growth, albeit in the face of mixed reviews by some customers and the controversy created by people displaced by their introduction. This resilience is grounded in one simple fact: Overall, managed services have delivered significant business benefit to
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their customers. Historically, that benefit has centered on cost reduction, and more recently on operational excellence, but a third wave of managedservice engagements is emerging with the intent of providing much higher, more relevant value, as services are tied directly to business outcomes and measured in business terms. In fact, readers will see that in Section 2 of our survey, improving customer experience and enabling new business opportunities were the third- and fourth highest-ranked goals of our survey respondents engagements, trailing only improving operational excellence (a secondwave hallmark) and reducing operational expenditure (a first-wave hallmark). While these goals for engagements are relatively new, they are already in play, and we document some impressive results from a handful of engagements. These new managed services are also demanding a new style of planning and governance, and a new set of supplier selection factors. Accordingly, in Section 1, we lay out a more detailed description of the evolution of managed services, characterizing the three waves, explaining the drivers of change, and differentiating the approaches of each era in terms of the goals they address and the need for evolution of the customer-supplier relationship. We also briefly discuss the impact of cloud computing on managed services, and reflect on some of the findings from our executive interviews regarding the role of cloud for managed services and the remaining barriers to adoption. In Section 2, we discuss the results of our service provider survey, including convergent, wireless and cable providers from around the world. As we mentioned above, this is the most balanced global survey we have
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Most respondents to the survey are planning to increase their use of managed services
conducted on managed services to date, with 60 percent of the respondents serving emerging economies. We discuss the results of the survey, focusing on the tendency to increase or decrease use of managed services, broad drivers, critical success factors, and functional areas of growth. We then delve into a summation of individual engagements, looking at functional areas addressed by the engagements and levels of satisfaction. In general, the results were cause for relative optimism, with better satisfaction scores than last years research, especially for engagements that are 50 percent or more complete. Finally, in Section 3, we are prescriptive, taking lessons learned from our executive interviews and sharing those viewpoints, especially as they impact the planning, supplier selection and governance components of managed services engagements. As in our last research effort on managed services, it became clear that there was not a single aspect of outsourcing that challenged our respondents, but a number of aspects that contributed to the problems they experienced.
Accordingly, we felt it important to not only revisit the steps that communications service providers might take to improve their experience and gain more benefit, but to put those steps into a broader context, a managed services lifecycle. Needless to say, managed services is a highly complex topic that requires a great deal of attention, but it is also a direction that can result in big business benefits. We should point out that majority of the communications service providers surveyed were planning to increase their use of managed services. We believe that formulating a managed-services strategy is an important step for virtually all communications service providers, and proper management of the lifecycle can lead to important benefits for them and a win-win partnership with their suppliers. As always, the devil is in the details, and those who can master the planning, supplier selection and governance components of managed services engagements will be the greatest beneficiaries. We hope you enjoy the report, and are able to glean value from it.
As in our last research effort on managed services, it became clear that there was not a single aspect of outsourcing that challenged our respondents, but a number of aspects that contributed to the problems they experienced.
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Section 1
Managed services evolution

Managed services have been offered for decades, and what we might describe as modern managed services (post servicebureau) have been around for about a quarter of a century. Modern managed services have also shown steady if unspectacular growth, albeit in the face of mixed reviews by some customers and the many people displaced by their introduction. This resilience is grounded in one simple fact: Overall, managed services have delivered significant business benefit to their customers. Historically, that benefit has centered on cost reduction, and more recently on operational excellence, but a third wave of managed service engagements is emerging with the intent of providing much higher, more relevant value, with engagements tied directly to business outcomes and measured in business terms. In fact, as we spell out in Section 2, after improving operational excellence (a second-wave hallmark) and reducing operating expenditure (a first-wave hallmark), improving customer experience and enabling new business opportunities were the third- and fourth-highest ranked goals of our survey respondents engagements. While these engagements are relatively new, they are indeed already happening, and we have seen impressive results from a handful of them. These new engagements are also demanding a new style of planning and governance, and a new set of supplier selection factors. The goal of this section is to discuss the evolution of managed services from a business perspective over the last 25 years. As alluded to above, we will break these intro three waves, managed services 1.0, 2.0 and 3.0. In the beginning There are many interpretations of when managed services started. Some would say the service bureaus of the late 1960s and 70s, or timesharing around the same period started it, but for our purposes, the first wave of IT outsourcing really began in earnest in the late 1980s with the landmark Eastman Kodak deal outsourcing a huge swath of its IT to IBMs ISSC (services) division. This successful engagement proved the concept of outsourcing at scale, and paved the way for a variety of similar deals with other large corporations across a wide variety of industries including financial services, transportation, manufacturing, automotive, aerospace, defense contracting, and later telecom. This phase, which we will designate as managed services 1.0 was largely about a transfer of assets (that is, capital and people) from one company to another with the goal of saving money. Many management teams, feeling pressure from the financial community, saw outsourcing as a short-term way to reduce costs and capital expenditures. As stated above the goals of the deals were not particularly aggressive, with the exception of reducing costs. In fact, these types of engagements were later characterized by the somewhat cynical phrase your mess for less. While there was generally some talk of evolving the technology and developing best practices, the industry was relatively new, and because many of the human resources came
Many management teams, feeling pressure from the financial community, saw outsourcing as a short-term way to reduce costs and capital expenditures.
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Customers liked the lower costs, but not the mediocre performance
primarily from the customer, and the systems and infrastructure to be managed was generally highly proprietary and often customized, the managed services provider often faced serious challenges to any modernization attempts. Moreover, the contracting process was more of an art than a science, given the immaturity of the industry, with customers and suppliers alike learning as they went along. The second phase of managed services 1.0 took place in the late 1990s through the early 2000s with the advent of offshoring. Countries such as India, the Philippines, Ireland and others offered relatively inexpensive labor and in many cases skilled labor forces. In addition, some of the leading managed services providers in these countries developed strong initiatives to align their processes with standards, for example, the compatibility maturity model (CMM) for software development, increasing customer confidence and productivity. While the industry grew rapidly and achieved a number of successes, a variety of complex factors caused mixed results for many engagements. This was exacerbated by the bandwagon effect of many companies pushing for offshoring, making trained resources scarcer, and therefore expensive, and lowering quality. In addition, this rapid growth caused the emergence of a number of opportunistic, less-skilled companies who nonetheless won business and were not able to meet their customers expectations. In addition, the rise of these new players resulted in multisourcing, or the use of a number of supplier companies for outsourcing by a single customer, in place of the monolithic agreements struck in the early days, such as the IBM-Eastman Kodak deal. This added complexity and risk for customers. Still, the
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lure of lower costs continued to drive the market, and expand the industry to many other countries. The second wave Frustrated by mediocre performance but pleased with the lower costs, customers began demanding operational excellence and the second wave of managed services, managed services 2.0, emerged in the mid-2000s. This wave was characterized by a growing supplier base that had become more skilled, experienced and to some degree sophisticated, and had a better sense of the art and science of contracting for managed services. Service-level specifications became much better defined and more detailed, sometimes to the extent of constraining the players if they were not thoughtfully defined. In addition, the concept of expertise-based sourcing emerged, usually based on technical acumen. This meant customers often carved up their contracts horizontally, perhaps giving the compute infrastructure or data center to one vendor, the desktop to another, the network to yet another and applications to one or more additional players. While this approach drove operational excellence in the management of the pieces of the IT infrastructure, it created a set of new problems. In addition to creating contractual complexity and increasing management overhead, this often resulted in difficulty getting a single view of the IT infrastructure and end-to-end performance. Worse yet, when problems arose, since there was no holistic view of the infrastructure, it could lead to supplier finger pointing, slowing the resolution of problems. This, in turn, led to customers asking their best performing suppliers to manage their weaker ones, but this of course led to additional cost
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for the customer, more complexity for the managing supplier and less goodwill from the demoted supplier. No link to business outcomes Perhaps the largest problem of managed services 2.0 was that, despite the fact that managed services had become increasingly critical to business performance over its first two decades, customers still had difficulty linking their contracts to business performance. Since managed services were becoming a bigger part of customers delivery capability, it seemed clear to forward thinkers that this shift should be occurring, but long contract periods and inexperience on both sides with these types of deals slowed progress here. In fairness, some of the later engagements labeled transformational have come close to this, so they could perhaps be considered next generation. However most of those we have seen are still more focused on process optimization and associated metrics rather than directly tied to business goals. The clearest driving force for the third wave of managed services, managed services 3.0, is the need to focus on business outcomes. Business process outsourcing (BPO), which really began during the managed services 2.0 era, attempts to do this, but much of early BPO was focused more on body shop oriented processes, and morphed into more process optimization and operational excellence focus engagements. Sophisticated, IT-enabled outsourcing, on the other hand, based upon appropriate technology, can take a lot of the body-shop
element out of this through high degrees of automation. Advanced tools such as process analytics can help with process optimization, freeing managed services suppliers to formulate solutions which address business outcomes while effectively managing costs. Technology-based suppliers may not want to go overboard with supplying all the people for a BPO engagement though. Its one thing to provide a few experts in areas such as network planning and design, operations management, policy creation or product catalog and pricing. Its quite another to fill a call center with agents. Determining where to draw the line can have a big impact on profitability and value. Business outcomes top the agenda This does not mean that the process focus of the managed services 2.0 era will become obsolete. This is still important, but it will be driven more by the pragmatism and priorities of business outcomes, and not just process excellence. For example, a business outcome for a faster (better) experience in customerorder fulfillment might spawn a set of business metrics around elapsed time per transaction in a call center, a retail shop or a website. This in turn might spawn operational key performance indicators (KPIs) around customer service agents, sales representatives and web response times, and order fallout resolution times. The clear top-line goal though is faster fulfillment from the customer point of view. Another natural evolution here is the replacement of the historical horizontal outsourcing with vertically-focused outsourcing. Here, the supplier responsible for
Some of the later engagements labeled transformational have come close to this, so they could perhaps be considered next generation.
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The supplier responsible for the business goal should be also responsible for providing the right resources
achieving the business goal is also responsible for the resources required to deliver the business goal, or at least has authority over them. This is intended to take most of the friction and finger-pointing out of the problem resolution process, and more importantly, assure better overall performance through properly prioritized alignment of resources. Of course, there will be new factors critical to selecting and working with managed services providers as we move to the managed services 3.0 phase. Since the dialog will move from a primarily technical and operational discussion to include business strategy and outcome discussions, among the most important aspects will be strategic fit of the engagement partners, and the way that they approach business innovation. If the outcomes are going to match up in the future, then certainly the vision of the partners should also, as well as at least some of the major investment strategies. This is essentially what we mean by strategic fit, although there are other aspects we will discuss in the following chapters that will fall into this concept. We are really at the beginning of the third wave of managed services. Figure 1-1 shows the evolution of managed services. As managed services 3.0 engagements are relatively new, we did not include those types of questions in the survey. We were able to conduct interviews with some service providers involved in them, and found a handful of good results. One service provider had achieved a 25 percent decrease in its order fulfillment interval through its engagement, including a steep reduction in the time it took to resolve fallouts. Another had experienced a 28 percent improvement in time-to-market for complex services, and a third had reduced by one-third
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Figure 1-1: Managed services a simplified look at market evolution

A simplified look at market direction
We are here Managed Services 3.0
Managed Services 1.0
Managed Services 2.0
1997-2005
2005-2012
2012-
Key Focus Areas
n Cost
n Offshore
reduction / low cost sourcing
n Operational n Expertise
excellence based sourcing
n Strategic
Business enhancement fit-based sourcing
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the volume of call center calls related to bill accuracy. We also found a few vendors that touted somewhat higher numbers, but we were not able to confirm them. These are impressive improvements, nonetheless, and demonstrate the promise of engagements which are business-outcome based. What about cloud computing? No discussion of managed services complete without at least a brief assessment of the impact of cloud. Many observers feel that cloud computing will have a major impact on managed services. We did not survey specifically on cloud, but we gave respondents ample opportunity to write in other factors, and the topic never came up. Executive interviews indicated concerns about cloud, especially for mission-critical areas. Concerns typically expressed had to do with security, privacy, multi-cloud integration and the ability to take on somewhat customized (especially legacy) workloads. Having said that, most felt the move to cloud to be inevitable over time and took a sort of show-me attitude for the near-term. Its important to remember that many CIOs still have a somewhat operational bent, and it is likely to take a convincing demonstration of viability for mission-critical operations before theyll move their bread and butter apps over to the cloud. Who can blame them, given the job market? Our top-line conclusions given our discussions with communications service providers and suppliers:
computing will have a significant impact on managed services, especially in the areas of low-end (non-mission critical) and short-term contracts. The viability of a managed analytics service will also be important this is already happening to some extent. n Cloud services will put pressure on managed services providers to change their pricing model. The idea of paying based on consumption is attractive for service providers, and they will be pushing for the same type of business model from their suppliers. n In many ways, operators will measure cloud-based managed services the same way they will measure non-cloud engagements. After all, contracts based on business outcomes dont reach down to the computing architecture level. Having said that, a mature cloud implementation (whenever that happens), should provide suppliers with lower costs, greater scalability and more flexibility. n In our view, it is incumbent on the suppliers to demonstrate that cloud can do it perhaps they should be eating their own dog food to show it can work. We hope we have provided you with a good sense of the evolution in this section. Our next section will provide service providers perspective on managed services, based on our recent survey and executive interviews.
n Cloud
Many CIOs still have a somewhat operational bent, and it is likely to take a convincing demonstration of viability for mission-critical operations before theyll move their bread and butter apps over to the cloud.
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The response to this years survey was from a broad base in every sense
Section 2
Results from interviews with service providers: The customers speak

This section summarizes our findings from interviews with service providers about their current and planned use of managed services, their motivations, and what they see as their greatest challenges. We surveyed 58 service providers about their current use of managed services for Business Support Systems (BSS)/ Operating Support Systems (OSS), their business drivers, perceived critical success factors for engagements, and their outlook for the future. We also asked them to report on their satisfaction with current engagements, and received about 100 responses related to specific engagements. Finally, we also conducted in-depth interviews with 14 service providers in 12 different countries to seek greater detail. This section provides the results of this research, including demographics, drivers, critical success factors, future plans and satisfaction levels with current engagements. Any survey results in communications are highly contingent on the responding companies. This years managed services research respondent base was comprised of a decidedly broad range of countries, with slightly more than 60 percent of respondents coming from regions whose economies are traditionally thought of as developing. While Europe had the most respondents with 30 percent, Asia, Latin America and Middle East Africa each contributed about 20 percent of respondents. Interestingly, North America, the region where managed services got its start in the late 1980s, contributed less than 10 percent of the response. In addition to geographic diversity, respondents were diverse in the types of
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Figure 2-1: Geographic spread of respondents

Middle East / Africa Asia Europe North America
Figure 2-2 Service provider type

Convergent Mobile Cable
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services that they provided. A full 60 percent of our respondents were convergent services providers, offering a combination of voice, video and data services over both fixed and wireless network infrastructure. These respondents were primarily the incumbents in their geographies, though some had started as wireless carriers initially and added competitive fixed infrastructure at a later date, either in their initial service area, or, in one case, in a country outside their origin. Wireless service providers accounted for 25 percent of our respondents. These were split between multi-country and sometimes multiregional service providers, and companies operating in a single geography. With few exceptions, these wireless providers were among the top three providers in their primary service areas. Cable companies comprised the remaining 15 percent of respondents. All of the cable companies responding were multi-service companies, and a few were multi-country players. Virtually all respondents offered services in addition to video, with all offering some kind of data/Internet services, and most offering voice. A handful had partnerships with mobile providers, and one was owned by a mobile provider, though reporting separately. Managed services drivers We asked our respondents to choose the top three overall drivers for engaging in managed services relationships going forward; that is, what they are trying to accomplish with current and future engagements. This question was a general/strategic one, and not tied to any particular engagement, but rather gave an indication of the companys overall view of the motivation for managed services engagements. The most popular driver, similar to last years
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Figure 2-3: Overall drivers for managed services engagements

Improving operational excellence Reducing OpEx Improving customer experience Enabling new business opportunities Improving network / service performance Reducing CapEx 0% 20% 40% 60% 80% 100%
research was improvement in operational excellence. This, of course, has been a primary driver for some time now, with the expectation of a number of ancillary benefits, such as lower cost and greater execution speed. It is also a primary goal for transformational outsourcing and business-process outsourcing. Second, by what might seem a surprisingly wide margin, was reduction of operational expenses. In previous research, we have seen operating expenditure (OpEx) reduction as equivalent or even higher scoring than operational excellence, but, as we have pointed out, it is now being approached in importance by other factors. Many service providers feel they have already significantly lowered cost, and dont expect huge reductions, so simply lowering cost is no longer enough. Still, OpEx reduction remains the second most important factor, if only by a few points. Customer experience improvement
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The rise of customer experience as a driver of managed services engagements was inevitable
closely follows cost reduction, trailing by only 2 percent. This phenomenon has been developing for some time, as we have formally followed it for nearly five years at TM Forum. While there has been no epiphany moment among service providers, interest has gradually increased, especially as markets have matured and customer retention has approached acquisition in importance. With more and more service providers using managed services in customer-facing functions, the rise of customer experience as a driver of managed services engagements was inevitable. Coming in fourth is enabling new business opportunities. With established services reaching saturation levels, service providers are looking for ways to enable new services, or to provide them themselves. These might be new connectivity services such a 4G services, or cloud services or perhaps some flavor of machine-to-machine (M2M) services. Several service providers we spoke with are working with managed services providers to deliver these capabilities, typically branded with the service providers name. The most common example of this among the operators we interviewed was for cloud or business services, or for service management engagements, but several of them expected this aspect of managed services to blossom in future, as service providers became more experienced at delivering digital services. Improving network/service performance also made a strong showing, especially among wireless services providers. Increasingly,
new networks are delivered as part of managed services engagements, sometimes with the supplier taking a five-to-seven year management contract for the network, or alternatively under a build/operate/transfer arrangement. Under this arrangement, the vendor builds the network, operates it for some pre-determined period of time (usually a year or more) and then turns it over to the service providers staff. Interestingly, those vendors who offer build/operate/transfer told us that the vast majority of their build/operate/transfer networks are not transferred at the end of the initial period. Instead, the vendor is able to negotiate a longer-term management contract by demonstrating excellence and delivering a good experience to the service provider during the initial period. Perhaps the most striking conclusion of this years survey is the balance between customer experience, new business enablement, and network/service improvement. We believe this is due at least partly to the number of younger companies responding to the survey. These are companies whose service territories have seen rapid growth the last few years, who have to quickly ingest new technology, and who have had little time to build staff and skills in these new areas. Looking to established managed services providers for these capabilities gives these companies the chance to work with suppliers who may have already demonstrated these capabilities elsewhere. Of course the challenge is to assess their motivation and ability to bring these capabilities
Vendors who offer build/operate/transfer told us that the vast majority of those networks are not transferred at the end of the initial period.
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to new geographies, and to ramp up at the speed required by the service provider. In any case, it is clear that managed services are no longer just about saving money, or just providing better operational processes. They must deliver new business and technical outcomes to be effective. Managed services critical success factors We asked our respondents to choose the top three critical success factors for managed services engagements going forward. Again, this question was a general/strategic one, and not tied to any particular engagement, but rather intended to give an indication of the service providers overall view of important aspects of managed services engagements. As with last year, a well-defined contract scope led the responses in importance. This should not surprise those experienced in managed services engagements. A welldefined scope help the service providers and the managed service provider understand the problem and develop an appropriate solution. In addition, it educates and sets expectations among stakeholders, enables a realistic and practical budgeting process and result, and provides a basis for meaningful dialogue for the managed service provider and other vendors and partners of the service provider who may be impacted. Finally, the contract scope serves as a basis for discussion and negotiation if needs are not being met, or if the contract needs to be modified in some way, and who should bear the financial burden of the modifications. Finally, the contract should include not just the initial scope but language indicating how disputes will be resolved, and procedures for modification of the contract. The second most popular critical success
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Figure 2-4: Critical success factors for managed services engagements

Well-defined contract scope Continuous improvement strategy by the vendor Shared goals between the partners Joint innovation focus Knowledge transfer/ transition planning Clear joint governance process Strict SLAs and penalties Lowest cost delivery mechanisms Vendor track record Contractual incentives for the vendor 0% 10% 20% 30% 40% 50%
factor was a continuous improvement strategy by the vendor. One of the most common concerns we have heard over time from communications service providers is the lack of motivation of vendors who have met the contractual terms to push to exceed them. Many service providers we spoke with believe that some vendors, having invested heavily early in the contract period, are content to recover their investment and reticent to invest in improvement in the middle and late stages, or to further optimize aspects of the engagement as market needs and technologies evolve, and new lessons are learned. These communications service providers (and some suppliers) believe that a better approach is to come up with a continuous improvement strategy, allowing the service provider and the vendor to gain from
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The parties need a specific strategy and process for how they will work together
incremental improvement. This improvement may or may not result in additional revenues to the vendor, but can certainly improve their chance of renewing or increasing the scope of the contract over time. The third most widely chosen critical success factor was shared goals between the communications service provider and the vendor. This is particularly important for engagements involving transformation or business process outsourcing, and especially for engagements longer than three years. These goals should be reflected in the language of the contract, but the shared vision implied here goes well beyond the detail and metrics laid out in that document. Service providers are looking to partner with vendors who share their vision of the future not only in the details of the agreement, but in terms of the macro trends that are likely to play out over the life of the contract and beyond. This is particularly important in terms of the investments that the vendor is likely to make in the future, and how well they will fit with those made and required by the service provider. This aspect will require detailed strategic discussions between the senior management team of the vendor and that of the service provider. Its important to recognize that these may change somewhat over the life of the longer contracts, and goals and strategies should be reviewed at least annually to check the strategic fit. Similar to the previous two critical success factors, but perhaps more tangible in terms of execution, the fourth most popular factor
chosen was a joint-innovation focus. The idea is that the service provider and the vendor should work together collaboratively to find new ways to solve problems, new services or business strategies that might be deployed, or new technologies that might be exploited to provide mutual benefit to the engaged parties. A specific strategy and process for how the parties will work together should be included in the contract scope, including a joint planning process, and some specification of roles and responsibilities. In addition, the agreement should be monitored over the life of the engagement for performance and effectiveness, though it may be difficult to measure as explicitly as the operational processes in the engagement. The next most popular critical success factor selected was knowledge transfer and transitional planning. Critical to getting off to a good start and fostering a good relationship, knowledge transfer especially from the service provider to the vendor must take place as the operational responsibility transitions, and there must be mechanisms to measure progress both in terms of speed and effectiveness. Moreover, detailed planning and preparation must be done prior to handoff to assure no negative impact to customers, operations or revenues as a result of the handoff. Few things can undermine goodwill between the engaged parties during the initial stages than problems with the transition, and loss of goodwill and/ or trust at this stage can hinder the ongoing relationship for some time.
Service providers are looking to partner with vendors who share their vision of the future, including in terms of future macro trends.
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One of the most underestimated areas in our managed services report of last year was the scope and complexity of the governance process and the need to appropriately involve the myriad stakeholders of larger managed services engagements. Developing an effective and clear joint-governance process is essential to service provider oversight of the engagement, including monitoring effectiveness, planning and approving changes, administering penalties and incentives, and many other aspects of the engagement. Central to good governance and relationship management in general is the free and timely flow of information and transparency. If the governance process is to engender trust among the engagement partners, transparency of information and processes is very important, and frequently cited in our interviews. Strict service level agreements (SLAs see panel) and penalties came next in the critical success factors list, cited by almost a quarter of our respondents. Strict measurement and management of SLAs and resultant penalties can be effective for managing vendors, but the process in which this occurs must be managed carefully to avoid both the alienation of the vendor and the potential for less-than-optimal
relationships. These are particularly problematic in contracts that were selected based on the lowest cost, as the vendor may have less leeway to remedy the problem due to lack of investment resources. One service provider we interviewed spoke of their vendor lowering their efforts in other areas to try to make up for the cost of the penalties, and another spoke of a vendor trying to void their contract. From their standpoint, a few vendors mentioned unhealthy and ultimately unprofitable contracts in which they had unknowingly engaged. The lesson here is that while penalties can be effective deterrents, they should not become the root cause of distrust or non-compliance among the engagement partners. A lowest-cost delivery mechanism was next, with about 20 percent of respondents selecting this. The relatively low position of this historically important factor reinforces the view that while low cost is important, service providers are looking for much more from their suppliers than just low-cost delivery. Still it is an important consideration. Vendor track record and positive contractual incentives for the vendor score relatively low, garnering 10 percent each. This does
Help with drawing up service level agreements

The TM Forum Service Level Agreement Management Handbook (3.0) is available for members to download free of charge from our website www.tmforum.org/ GB917SLAManagement. You will nd best practice and guidance to help you draw up your contracts successfully. There is also an SLA Management Group within the Forums online Collaboration Community working on new developments. If you would like more information about our activities or would like to join the Group, please contact Tina OSullivan, Senior Program Manager, TM Forum Collaboration Program via tosullivan@tmforum.org
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Nearly two-thirds of respondents are planning to increase their investment
not imply that these are not important, but relatively less important compared with other things in the view of our respondents. We were a bit surprised to see vendor track record rated so low, however, and had we surveyed specifically on supplier-selection criteria, we would expect it to be higher. Expectations for future usage of managed services We asked our respondents to comment on their expected usage of managed services over the next three years. As can be seen from Figure 2-5, demand for more managed services seems to healthy, with nearly two-thirds of respondents saying they will increase investment, and only 16 percent saying they plan to decrease usage. Topping the list, 48 percent said they plan to moderately increase their use of managed services, while 15 percent of respondents expect to aggressively expand their use of managed services. Commensurately, only 4 percent of respondents said they would decrease their use radically, and 12 percent said they planned to moderately decrease use. Nine percent of respondents said they expected their investment to stay the same, and 13 percent werent sure. While these are general observations and absolute spending was not estimated, we expect service provider spending on managed services to grow moderately over the next three years. This is in line with most industry forecasts we have seen. Areas of growth for future managed services We asked our respondents about the domains in which they expected to invest in managed services over the next three years. While the leader in investment among our respondents
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Figure 2-5: Expected use of managed services engagements

Aggressively decrease use 4% Usage will stay the same 9% Moderately decrease use 12% Dont know 13% Aggressively expand use 15% Moderately increase use 48%
Figure 2-6: Expected areas of growth for managed services engagements in the next three years
CRM/CEM Billing Network/service management Device management Order management Analytics/data management Revenue assurance Partner management Self-service Fraud management 0% 10% 20% 30% 40% 50%
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had been in network and service management, billing and customer experience management tied for the top spots looking out three years from now, with nearly half expecting to use managed services for these. Network and service management, which led the sample, was still close behind, with almost 40 percent of respondents expecting engagements here. The next most popular spots were held by order management and device management with each garnering 33 percent. Close behind that were analytics/data management (29 percent) and revenue assurance, (27 percent) respectively. Partner management as mentioned by 20 percent and self-service and fraud management were each chosen by 14 percent of respondents. Service providers report on current managed services We asked our respondents to list some details of up to three managed services engagements. We received about 100 responses. Figure 2-7 shows the functional areas of the engagements included in their responses. The largest reported functional area by far was in network and service management. This was very common among the wireless/ mobile service providers, and there was considerable penetration in the converged carriers, but few of the cable companies gave this response. Most of these engagements were listed as transformational, but a few were described as simple transfers of assets. About 50 percent of our respondents reported some level of satisfaction with their network/service management engagements. Customer support came next, with 22 respondents listing this functional area, split almost equally between transformational/ modernization efforts and business process
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Figure 2-7: Current functional areas using managed services

Other 5% Order management 8% Facilities management 8% Billing 17% Customer support 22% Network / service management 40%
Figure 2-8: Satisfaction with reported current managed services

Very satisfied 18% Somewhat satisfied 25% Neutral 47% Somewhat dissatisfied 10% Very dissatisfied 0%
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Service providers who use a transformational or business approach are more satisfied
outsourcing. The majority objective of these responses was to improve customer experience, but a handful of engagements were started to support new business ventures. Most of the respondents in this category were converged carriers, joined by some wireless service providers and a handful of cable companies. Service providers that used a transformational or business process outsourcing approach tended to be more satisfied than those who chose a simple transfer of assets. In general, however, service provider satisfaction levels trailed here, with only 36 percent indicating they were somewhat satisfied or very satisfied. Seventeen of our respondents reported billing engagements. These engagements largely involved transformation/modernization, with several business process outsourcing engagements included. In addition, about a quarter of our respondents used these engagements to support new business initiatives. Billing respondents were the happiest of our group, with two thirds indicating they were somewhat satisfied or very satisfied. Order management and facilities management came next, each with eight engagements cited. The order management engagements largely involved transformation/ modernization, with a few business process outsourcing engagements included. A quarter of respondents reported being somewhat satisfied in this group, and the rest were
neutral. Facilities management engagements largely involved business process outsourcing, and here we saw the biggest shifts, with 25 percent being satisfied, 50 percent neutral, and 25 percent dissatisfied, but it is important to note that these are small samples. The other engagements were split among finance, data analysis, revenue assurance, project management, and system testing. Evaluations here differed greatly with data analysis listed as very satisfied and a few of the others as moderately dissatisfied, but again keep in mind that these are samples of one, and therefore not indicative of the broader market. Overall satisfaction with current managed services Figure 2-8 shows the overall level of satisfaction with the 100 engagements reported by respondents. As can be seen from the chart, about 43 percent of respondents had some level of satisfaction, 47 percent were neutral, and 10 percent were somewhat dissatisfied. Overall this does not indicate a particularly high satisfaction rate. In fact, our satisfaction numbers are somewhat lower this year than last year, though we have a far broader respondent base this year, as well as a shift to more developing economies, and last years results included a much higher dissatisfaction rate. We believe the low scores in managed services are due to a variety of challenges in the space including the complexity of the
The order management engagements largely involved transformation/ modernization, with a few business process outsourcing engagements included. A quarter of respondents reported being somewhat satisfied in this group.
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engagements, lack of understanding of how to maximize the effectiveness of engagements, emotional issues normally involved in outsourcing, and financial pressure, among others. Another reason for the high proportion of neutrals has to do with the percentage of completion of the engagements. The majority of the engagements that were reported were fewer than 50 percent complete. If we look at engagements that were greater than 50 percent complete, 70 percent of respondents indicated some level of satisfaction, 23 percent were neutral and only 7 percent were dissatisfied. This is closer to the proportions we saw last year, when our survey was dominated by service providers engaged in their second- or third-round of managed services projects. In general, service providers from the
developing economies were the most satisfied, and mature economies had the lowest satisfaction. While a detailed set of interviews of the sample set and analysis of satisfaction is beyond the scope of this report, this is likely due to a variety of factors, particularly the complexity of the problems and perceived entitlements in the developed economy service providers, as well as their level of operational sophistication and expectation, and the higher levels of personnel displacement in mature economies. It is also because many service providers in the less-developed economies are attempting to benefit from the lessons of the past, and are good students of managed services. Asian and Middle East/Africa service providers tended to be the most satisfied with their reported engagements, and Western European operators tended to be the least satisfied.
Many service providers in the less-developed economies are attempting to benefit from the lessons of the past, and are good students of managed services. Asian and Middle East/Africa service providers tended to be the most satisfied with their reported engagements, and Western European operators tended to be the least satisfied.
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This is a time of real change in the structure and goals of managed services engagements
Section 3
Conclusions and recommendations

As can be seen from Sections 1 and 2, this is a time of real change in the structure and goals of managed services engagements. If the early examples of success we discovered can be replicated, this will also be a time of greatly increased business impact. Having said that, we saw inklings of the traditional resistance to managed services and cloud computing in a number of our interviews. While only time will tell, the potential is clearly there for better customer relationships and more rapid and smoother business enablement. While the focus on business outcomes is a relatively new phenomenon, as in our last research effort on managed services, what became clear was that there was not a single aspect of outsourcing that challenged our respondents, but a number of aspects that contributed to the problems they experienced. Accordingly, we felt it important to not only revisit the steps that communications service providers might take to improve their experience and gain more benefit, but to put those steps into a broader context, a managed services lifecycle, if you will. We have not attempted to describe every aspect of the lifecycle, but rather focus on three key areas to which we believe most of the problems our respondents identified are related. Those areas are planning and strategy development, sourcing evaluation criteria, and various governance issues. Finally, we have tried to evolve our recommendations to reflect the change in nature of the engagements, and recognize the importance of working toward business outcomes in each of these aspects. Our thoughts and recommendations are detailed within the context of each of the areas, as listed below. Developing a managed services strategy and plan In approaching outsourcing opportunities, communications service providers should move beyond the historical opportunistic approach, focused solely on saving money, and develop an outsourcing plan and strategy. The goal here is to build a sourcing strategy that will fit their market, business strategy, aspirations and skills. Key to this strategy is the thread we have emphasized in this report: the move to specify and manage to business outcomes, and the development of business-specific key performance indicators (KPIs) that drive the process and operational KPIs. Only then can they understand where the best opportunities lay, the benefits they should enjoy, and the inherent risks of their approach. There are many proprietary approaches offered through various sources, but in the end the strategy and planning phase boils down to half-a-dozen steps. Although the approach is straightforwardly complex, proper execution requires the identification of, and a high degree of collaboration among, the various stakeholders in the corporation, up to and including the board of directors in some cases. Addressing a broader set of stakeholders is particularly important in approaching business
There are many proprietary approaches offered through various sources, but in the end the strategy and planning phase boils down to half-a-dozen steps.
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outcomes, as the business organization is the driver of these. This is important if the corporate needs are to be met and retained staff is to understand, support and execute their part of the implementation and management of the engagement. Finally, the strategy and plan requires a reasonably clear view of the future, as most contracts are five-to-seven years in length. The steps boil down to: 1. Work definition 2. Cost estimation 3. Skill/resource analysis 4. Core versus non-core determination 5. Risk assessment 6. Analysis and strategy formulation 1: Work definition The work of the company should be defined in terms of business process, but only in relation to the achievement of the business
outcomes that will drive the engagement. This will help the organization understand the business value of the process and uncover the stakeholders for each of the processes. It also allows the communications service provider to assess whether this need is best fulfilled by traditional outsourcing or business process outsourcing. Technology is also important here, but it is clearly secondary to business process at this point. Importantly, processes should be defined not only by their strategic and operational characteristics, but also by the desired outcomes related to the processes. 2: Work cost and benefit estimation Following this definition of business processes, communications service providers need to create rough cost estimates for each process, as well as to understand the relative benefit from a business outcome perspective. Stakeholders need to be careful to understand the true and complete cost of the processes,
Leveraging industry-standard metrics

One of the toughest aspects of using managed services is ensuring you are getting a good deal and TM Forums Business Benchmarking programs leverage the standardized Business Metrics that have been developed and agreed by TM Forum members. The benchmarking database contains more than 26,000 data points contributed by more than 170 communication service providers in over 65 countries around the world. Examples include metrics for the mean time for order-to-activation, order-to-activation by major process, percentage of orders requiring rework by cause-type and percentage of service activation. Participation in TM Forum benchmarking studies is free to all communication service provider members in good standing. Please contact benchmarking@tmforum.org for more information. In addition, TM Forums Business Metrics Automation Certification Program enables software providers to test and certify their adherence to TM Forum Business Metrics syntax and use of the Business Metrics Automation interface. Automating the process provides service providers with consistent, accurate, and apples-to-apples comparisons for both benchmarking studies and internal dashboards by procuring products with TM Forum Business Metrics built in. Business Metrics Automation Certification enables suppliers to differentiate products and solutions by implementing TM Forum standard metrics and automated, secure data collection and dashboard connections. It is only issued against individual products, not companies or individuals.
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Sustained, competitive advantage is particularly important in fast-changing industries
if possible, down to individual components as well as the relationship to the business outcome. This, along with other criteria, creates the basis for selection and prioritization of potential outsourcing target areas, as cost and more recently benefit are the primary drivers. 3: Skills and resource analysis (relative to the work) Here, communications service providers should attempt to understand their capabilities with respect to particular processes, the resources required to attain/maintain acceptable performance and whether they can sustain acceptable performance levels for the foreseeable future, from both a skill and resource perspective. 4: Determine core versus context work processes Here, the communications service provider determines which processes provide or contribute to sustained competitive advantage relative to the current and target customer base. Those that do are considered core processes, those that dont need to be considered context (i.e. non-core). Core processes might include things like product strategy and design, customer experience strategy, branding and so on. Some communications service providers might include the core network, though many have concluded this can now be outsourced. In fact, in our survey, netowrk sand service management was the most common managed services engagement category. There is also a notion of what is mission critical here; determining if interruption or discontinuation of the process would cause severe negative business impact.
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Generally, this is not a make-or-break factor for outsourcing, but companies may want to exercise tighter controls over these processes. The idea of sustained competitive advantage is particularly important in fast-changing industries such as those that comprise the digital value chain. To facilitate this, the organization must have a clear view of the future and where it wants to be next. 5: Risk estimation Communications service providers need to assess and estimate the risks associated with outsourcing the work processes. There are a variety of risks, including issues with process integrity/efficiency, legal and regulatory risks, the affordability and availability of skill sets, the alignment between communications service providers and their suppliers, philosophical alignment, ability to manage the outsourcing vendor, rate of industry change and so on. Understanding risks can help communications service providers see better which processes can be outsourced and under what circumstances, as well the steps they must take prior to and during the sourcing phase. It is important here that the level of tolerable risk is aligned with the risk appetite of organization, and certainly with the benefits of the business outcomes. Different communications service providers have different views on this, and risk levels must be aligned with management thinking to be sustainable. 6: Analysis and strategy formulation In the final step, communications service providers management and stakeholders must weigh the factors described above both from a business benefit, business process and a technical perspective. Then they need to
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determine what action, if any, should be taken. This could range from business as usual to full or partial outsourcing of a process, or even to transformation or elimination of a particular process. It is important to understand the strategic business goals of the organization and the intended outcomes of the defined processes and how treatment of each of the processes aligns. What is the organization trying to accomplish? Simple cost reduction? Freedom to focus on strategic issues and future needs? Greater business and organizational flexibility? Greater customer loyalty? The organizational goals ultimately must be a strong driver of action. In the final analysis, it is very important that this step result in a realistic assessment of the state of the communications service providers processes and a clear strategy that will be embraced by the staff they retain at both a process and an enterprise level. It must also capture a compelling business scenario for the retained staff as well as the other stakeholders. Communication of the plan and the reasons for the choices are also very important steps to facilitate buy-in. Navigating the sourcing phase The sourcing phase is a very important part of the managed services lifecycle, especially given the average length of five or more years for many of the contracts. It becomes even more important as the domain to be managed increases in size, complexity and/or mission criticality. Accordingly, many advisors compare sourcing activities to those of choosing a lifelong mate. Below we list some of the critical criteria for evaluating suppliers, gleaned from our conversations with advisors, suppliers and communications service providers.
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Key criteria 1. strategic fit a. linkage to business outcomes and process/ technical operations b. shared vision and goals 2. industry knowledge, best practices, continuous improvement, risk management 3. suppliers track record 4. commitment of key personnel 5. supplier resources a. skills b. infrastructure c. financial position 6. commitment to standards (ITIL, COBIT, Frameworx etc.) and standardization 7. visibility and transparency of performance 8. transition plan/ knowledge transfer. Strategic fit/shared goals Strategic fit is a commonly used term among business consultants, and generally describes the alignment of a firms objectives, resources and strategies to a specific set of goals or outcomes. Here we are suggesting that communications service providers evaluate the vision of the managed service providers for alignment to their own vision, as this will indicate where the supplier is likely to place its strategic emphasis going forward. Another aspect of this is how well the supplier can demonstrate the linkage between the business outcomes that communications service providers have defined in their planning phase and the plans and performance of the proposed business outcomes and processes as well as the technical operations. Finally, while we are emphasizing business vision, technology acumen remains important, and communications service providers should be evaluating their suppliers views and actions relative to topics such as cloud computing,
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Business outcomes are a thread that increasingly passes through all phases
network evolution, standardization and multivendor integration. Agreeing on business outcomes Business outcomes are a thread that increasingly passes through all phases, but the real test and interpretation of them come during deployment, and definitions and agreements are often fine-tuned as both the customer and the supplier learn. Outcomes may change somewhat as new environmental or strategic changes occur. Communications service providers and their suppliers must recognize this and address it, allowing for future flexibility as markets change. This is yet another instance of where relationship management is fundamental. Industry knowledge and best practices Communications service providers should evaluate their suppliers based upon their understanding of the industry and the key issues facing the industry and its customers. This will help the supplier to maintain an edge in strategic fit, as discussed above. In addition, industry and best practices knowledge can be applied to each account to improve performance.
Moreover, suppliers should be focused on continuous improvement, evolving the practices, processes and infrastructure to improve performance and address evolving business requirements. Of course, these practices should not only improve base business performance, but also be deployed to improve risk mitigation. Managing relationships A key component of governance, the need for managing relationships is often seen as one of the key learnings from first generation outsourcing experiences. As can be seen from our survey, many believe that the key to success is to develop an air tight set of metrics and simply manage to the numbers. But getting that level of performance in the real world requires the dedication of people and expertise and in the real world. Increasingly, business priorities, customers needs, laws, regulations, technological trends and business processes change more frequently than every five to seven years. Moreover, alignments and definitions that initially seemed clear in principle and on paper often diverge in interpretation and practice,
Managing partnerships introductory guide

TM Forums Managing partnerships introductory guide provides a framework to help service providers build sustainable relationships and partnerships with other providers an increasingly important aspect of delivering and consuming services as the digital ecosystem expands and becomes more fragmented. Increasingly, services comprise different components from many types of providers who collaborate to provide an end-to-end service, meaning that each is dependent on all the others. Unfortunately, many of these relationships do not run smoothly, in part because companies lack the skills needed to manage them. This guide is designed to share best practices so that problems can be minimized. Managing partnerships introductory guide version 1.2 is available free to all employees of member organizations who register on the Forums website from: www.tmforum.org/Introguide/Managingpartnerships
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especially when contracts cross cultures and market boundaries. In these circumstances, effective problem resolution demands close communication and collaboration between communications service providers and their suppliers, which is best executed in an environment of mutual respect and trust. As one interviewee remarked, specs are great for boxes, but in complex service-based engagements, its the people who make the difference and not the technology. Suppliers track record A suppliers track record is an extremely important indicator for communications service providers. While as vendors record relative to business outcomes will likely be small, the companys process excellence and cost reduction should be demonstrated and strong. Managed services suppliers should willingly provide reference accounts within the communications industry that have contracted similar services and performance levels. This will give the communications service provider an opportunity not only to observe operations in a business-as-usual mode, but also the reference accounts should be able to comment on how suppliers have performed in times of stress or significant change. Key personnel Communications service providers should carefully address the issue of personnel. One cannot assume that just because a particular individual or group is available during the planning and negotiation phases of an engagement that they will also be part of the ongoing supplier delivery team. When in doubt, key personnel should be specified, and contracted to remain for some time period,
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recognizing that they may not be available full-time for the full duration of a multi-year engagement. Its also important to assess and interview personnel responsible for the day-to-day management and operation of the communications service providers activities, judging their skills, commitment, and understanding of key objectives and measurement, and of the governance process. Communications service providers should ask themselves whether they would hire these individuals as their own employees if they were insourcing. This is particularly important when communications service providers are sourcing business process services, as the skill set required may be more diverse and difficult to find, and expertise may vary significantly between the suppliers locations or teams. Another less common but important aspect of this might be the specification of an executive sponsor or contact within the supplier, who might work with senior management of the communications service provider to keep them abreast of strategic initiatives and developments within the industry and the supplier that might be of interest or benefit. Supplier resources and financial position Evaluation of the suppliers resources is another important activity. With growing demand for managed services and margins for service businesses often slim, some suppliers are constrained by the resources on which they can call. Communications service providers should be sure suppliers have the technical infrastructure capable of supporting their requirements, as well as the demonstrated ability to scale as necessary, support compliance and security requirements
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Look to suppliers who are adopting standards-based processes and practices
The business impact of standards-based conformance

TM Forums Frameworx suite of standard-based tools and best practices is already widely recognized as the standard for business processes, information and applications, and rapid integration. Frameworx Conformance Certification Assessments enable service providers and suppliers to verify an implementations, products, or solutions conformance to Frameworx Business Process and Information Frameworks models and improve the overall efficiency of an organizations procurement processes. Frameworx Implementation Conformance The Frameworx Implementation Conformance Assessment provides verification of a service providers internal business processes and enterprise data model, enabling you to validate and improve the efficiency of your organization, comparing adherence to the proven Frameworx Business Process and Information standards, on a sliding scale. Implementations which meet the rigorous certification standards are awarded the TM Forum Frameworx Implementation Conformance Mark. Combined with TM Forum Benchmarking (see pages 6 and 29), Implementation Conformance Assessments provide a clear assessment of how your enterprise-wide operations compare to industry leaders, and where to direct transformation investment for maximum effect. Frameworx Product and Solution Conformance By demanding Frameworx-conformant products and solutions you can reduce implementation cost, time and risk. Product Conformance Assessments provide an independent verification of a suppliers product conformance to Frameworx. Each assessment verifies adherence to the Frameworx Business Process and Information models, providing an easy way to assess a products conformance. Since service providers can procure discrete products and/ or pre-integrated off-the-shelf solutions, the TM Forum also offers Solution Conformance Assessments that assess a solution suites conformance to Frameworx. Procurement (RFx) Training and Support To help simplify the process of procuring Frameworxconformant products and solutions, TM Forum provides RFx templates and training for your procurement staff, helping you request and check Frameworx conformance quickly and simply. In addition, TM Forum offers a broad range of support and expert advice for service providers striving for Frameworx conformance.
and mitigate operational risks. They should also insure that the skills and human resources are available to properly manage the infrastructure. Finally, communications service providers should evaluate the suppliers financial position. Suppliers who have easy access to capital and are well-capitalized will generally have better facilities and are more capable of scaling quickly to address evolving business requirements. They will also likely be more attractive to skilled personnel, and they will have the wherewithal to pursue investments in line with their goals and vision.
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Commitment to standards and standardization Communications service providers should look to suppliers who are successfully adopting and deploying standards-based processes and practices (for example, TM Forums Frameworx suite - see page 32), as well as standardizing their operations with these in mind. Not only does this support the introduction of best practices, it allows customers and suppliers to take advantage of economies of scale and joint learnings, potentially reducing cost, risk and time to change. It also supports
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communications service providers compliance strategies and positions them to change in a more nimble fashion when these practices and processes change, as they inevitably will. Performance visibility and transparency Communications service providers should look for suppliers with well-structured processes and tools for monitoring ongoing service delivery, specifically focused on monitoring operation of process and reporting results in the context related to business outcomes. Where possible, management processes based on industry standards, such as Information Technology Infrastructure Library (ITIL) or Control Objectives for Information and related Technology (COBIT) should be deployed. Real-time reporting, exception reporting and predictive analytics can be useful in providing appropriate visibility and supporting management decision processes. Performance transparency is critical to effective governance and can help to support a stronger partnership through effective information sharing and resultant trust. Transition planning and knowledge transfer One of the first tangible things communications service providers will experience after the contract period begins is execution of the transition plan. They should evaluate the approach and track record of the supplier in this regard, not only considering transition of business processes and technology infrastructure, but also considering the treatment of any transferred employees. This is critical if the supplier is to retain key support skills, not to mention complying with legal and regulatory requirements. It is important also to remember that not all of the resources will be from the communications service provider,
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and new resources will need to be quickly and accurately brought up to speed. In the past, communications service providers have been relatively good at evaluating resources, personnel, track records, and in some cases, transition plans, at least for targeted current operations. They have been more challenged or chosen not to closely evaluate broader issues such as strategic fit. In several cases, we saw the results of this in the concerns of our interviewees. If communications service providers are to improve their chances of having an effective outsourcing experience, they must take a more holistic view of planning and sourcing, actively involving their more senior management. Governance issues Once the planning and sourcing phases are completed, communications service providers embark on various outsourcing engagements. To gain the value and realize the business outcomes they identified and sought in the planning and sourcing phases, they need to become adept at managing these engagements. Historically, some firms have apparently believed that once the contract is signed, much of the operational detail will take care of itself, as they have either underestimated or ignored the effort to manage the outsourced operations on a day-today basis. In fact several of our interviewees indicated they had underestimated or perhaps misunderstood aspects of this phase. In the end, it is still the management of the communications service provider that shares responsibility for the outcomes of the engagement, and not just the supplier. This is the longest phase by far of the lifecycle, and the most important, as this is where all the strategizing, planning and
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Part of an effective planning exercise is the concept of building in motivation
evaluating is to pay off. It too must be approached as methodically and holistically as the planning and sourcing efforts if it is to be successful. Some of the key factors for success in this phase include: n managing relationships (see panel on page 25) n agreeing on/adapting business outcomes n building a monitoring plan and budget n evolving incentive and penalty structures n maintaining the knowledge base n clarifying accountability n day-to-day monitoring and reporting n managing expectations/ balancing stakeholder needs n managing change n end-game planning. Perhaps the newest wrinkle here is recognizing that increasingly, governance is based upon meeting business outcomes, and adapting governance strategies and processes accordingly. This may require new roles and skills in the execution of the governance strategy. Building a monitoring plan, clarifying accountability Obviously a monitoring and reporting plan is important, yet communications service providers have often underestimated both effort and budget required here. They need to learn from their prior experience and that of others that they must create a clear plan and allocate an appropriate budget to operationalize and maintain that plan. Ideally, this should be anticipated as part of the cost estimation during the planning phase, and included in the souring and contracting activities, but finetuned at this phase. Importantly, not only the outcomes, goals
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and process must be defined here, but roles of both the supplier and the communications service provider must be detailed and clarified. The plan needs to take into account day-to-day operation, but also should include processes such as lower-level conflict resolution and escalation procedures when problems occur, as they will. Incentives and penalties: carrots and sticks Part of an effective planning exercise is the concept of building in motivation for those implementing and executing the plan. Historically this largely took the form of penalties for missing performance parameters, and penalties, as evidenced in our survey, remain the motivator of choice. Occasionally though, service providers consider offering financial incentives for performance exceeding expectations. This can be a very effective strategy, as long as the result of the performance provides an offsetting financial benefit to the communications service provider, such as impacting top-line growth. Generally these incentives are negotiated during the contracting phase, but sometimes the processes for measuring them must be fine-tuned or re-interpreted during operational planning or mid-course corrections. Day-to-day monitoring and reporting This, of course, involves execution of the plan as well as acquisition and deployment of the resources necessary to effectively monitor and report. As detailed in the sourcing phase, one of the more important first steps here is the establishment of well-structured processes and tools for monitoring ongoing service delivery. Those processes should be specifically focused on monitoring operation of key processes and reporting results to the
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appropriate stakeholders in the context related to business outcomes. Just as the operational plan is subject to change, so are the monitoring plan and specification of toolsets. Managing expectations/balancing stakeholder needs An important thread running through sourcing and planning is the identification and balancing of stakeholder needs. This is particularly important in legacy environments where historical entitlements have prevented companies from achieving potential efficiencies, but it applies even to greenfield operations where differing views and power struggles manifest themselves. Managing expectations is important not only between the supplier and buyer, but also within the buyers organization, in particular between
operational staff and business management. Operational staff must seek to do whats best for the company overall and not necessarily for one specific interest group. While most of this should be addressed in the planning phase and enforced in the operations processes, there will undoubtedly be some fine tuning required on an ongoing basis, and conflict resolution procedures should be defined. The communications service provider itself should also have correspondent conflict resolution processes that support this area. Managing change The topic of change management in managed services is a large and complex one with many domains, but these should be addressed as part of governance.
ITIL and the Business Process Framework

The Business Process Framework is part of TM Forums Frameworx suite of standards-based tools and best practices (see www.tmforum.org/Release125/14324/home.html for more about the latest release). The Framework simplifies and assures consistent, enterprise-wide implementation of ITIL by providing an out-of-the-box set of business processes and flows. ITIL is defined in terms of a set of suggested generic process steps (without detailed definitions of the processes themselves), plus a means to provide evidence that an organization is following them. These steps are general-purpose and could potentially impact a number of other activities, particularly as different departments within the same organization are likely to interpret and define the processes differently, creating problems at the boundaries, where the differently defined processes dont match. In contrast, the Business Process Framework defines specific processes within the steps that must be followed for an organization to be considered Frameworx-conformant. This greater specificity is to reduce the so-called integration tax and procurement costs. Without this level of detail, integration becomes prohibitively time-consuming and expensive. So an IT organization implementing the Business Process Framework inserts process steps and flows into ITIL steps and evidence points. To facilitate this process, the Forum has used ITIL terminology where appropriate in new process definitions, mostly at Level 4 of the Business Process Framework. In addition, it is adding ITIL notes to processes to indicate how they map to ITIL. TM Forums members can tune into one of our most popular webinars ever, ITIL and the Business Process Framework Working Together, from January 2012, by going to: www.tmforum.org/ITILandBPF
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Formulating a managed-services strategy is an important step for communications service providers
Some of these can be addressed through adoption disciplines detailed in standards specifications such as ITIL and International Standards Organization (ISO 20000), but these may need to be extended to cover aspects of business processes. Processes for larger strategic changes, such as the accommodation of new business initiatives or significant implementation of new technologies, should be addressed, at least in principle, in the planning phase and in a more detailed fashion here. Again, involvement of key stakeholders is critical here, as they will be most impacted, and should participate closely in the processes. End-game planning While the overwhelming majority of effort in planning and execution is invested in the target domain of the managed services contract, savvy companies recognize that even longer contracts are finite in their length, and should make plans to determine what to do as the end of the contract approaches. In fact, many vendors begin preparing for this a year or more before the end of the contract, often with the goal of signing a new/follow-on contract well before the previous one ends. Communications service providers should develop a strategy for assessment, decisionmaking and change management in a similar timeframe. In some instances, this will be to allow sufficient time to end the relationship in an orderly, efficient fashion, but mostly it will
be about revisiting the disciplines discussed in the planning and sourcing phases above. If the processes used in those phases are well defined, they can be used here. Reviewing the various aspects detailed here of the planning, sourcing and governance activities should give the reader a healthy respect for the broad scope and complexity involved in developing and executing a managed services engagement strategy. The addition of business outcomes makes the relevance and potential impact of the engagement greater, but it too can add a level of complexity. Readers should also recognize that our discussion has been limited to the areas where we believe there are the greatest opportunities for improvement, and do not include areas like contract development or negotiation. Needless to say this is a highly complex topic that requires a great deal of attention, but it is also a direction that can result in significant business benefits, and we should point out that majority of the communications service providers surveyed were planning to increase their use of managed services. We believe that formulating a managed services strategy is an important step for virtually all communications service providers, and proper management of the lifecycle can lead to significant benefits for them and a win-win partnership with their suppliers. As always, the devil is in the details. We hope you have enjoyed the report, and been able to glean value from it.
Proper management of the lifecycle can lead to significant benefits for [operators] and a win-win partnership with their suppliers. As always, the devil is in the details.
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FRAMEWORX
What is TM Forum Frameworx and how can it help you?
Adopted by 90 percent of the worlds largest service providers, TM Forums Frameworx suite of best practices and standards provides the blueprint for effective, efficient business operations. Frameworx enables you to assess and optimize performance using a proven, service-oriented approach to operations and integration. Frameworx provides a set of practical tools to improve endto-end management of services across complex environments, including the digital ecosystem. Developed and implemented by the Forums extensive membership, Frameworx is proven to improve agility in IT and operations, resulting in increased margins and enhanced customer experience. Frameworx helps you: n Innovate and reduce time-to-market with streamlined end-to-end service management; n Create, deliver and manage enterprise-grade services across multi-partner value-chains; n Improve customer experience and retention using proven processes, metrics and maturity models; n Optimize business processes to deliver highly efficient operations; n Reduce IT systems integration costs and risk through standardized interfaces and a common information model; n Reduce transformation risk by defining a proven blueprint for agile, efficient business operations; n Gain independence and confidence in your procurement choices through conformance certification and procurement guides; and n Gain clarity by providing a common, industry-standard language for processes, information and applications. Frameworx is developed in the Forums unique Collaboration Community and continues to evolve through the efforts of the Community to meet changing market needs. It is driven by service providers and available exclusively to members, whose companies represent more than 90 percent of the worlds communications subscribers. Frameworx is made up of core frameworks, business metrics and best practices: Business Process Framework (eTOM) The Business Process Framework defines a comprehensive set of efficient, clear and effective business processes that are critical to running a service providers business, at the least possible cost. The framework provides a multi-layered view that starts with primary organizational functions and drills down to thousands of process details, and is strongly aligned with ITIL. It is supported by off-the-shelf tools to provide an implementable catalog of the business processes and includes users guides and sample process flows to ensure your processes are streamlined across the enterprise and across partners in a value-chain. Information Framework (SID) The management of services, customer experience, networks and enterprise management functions demands consistency of data across an enterprise. The Information Framework provides a comprehensive, industry-agreed, structured set of definitions for the information that flows through an enterprise and between service providers and their business partners. It is a widely adopted model that is supported by off-the-shelf tools for implementation into software solutions, reducing time and effort for creating standardized integration points. Application Framework (TAM) Understanding how your business processes are implemented in your software systems environment is essential. This Framework provides a model for grouping processes and their associated information into recognizable applications that span the service providers operations, business, and enterprise management functions. It provides a common language and identification scheme between buyer and supplier for all application areas. It helps in the design of enterprise architecture through a better understanding of your systems. Integration Framework This Framework provides direction on how operational processes can be automated by utilizing standardized information definitions from the Information Framework to define standardized Service Oriented Architecture (SOA)-based management systems. It also provides an automated means to create standardized interfaces and use these interfaces to integrate applications within the enterprise and with partners. Business Metrics Understanding the performance of your business is a critical aspect of managing transformation. Knowing how you compare to the industry in key operational areas will guide your transformation investment. TM Forums Business Metrics, mapped to the Business Process Framework, provide a way for you to measure success based on a balanced scorecard that covers:
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and margin a view of fiscal performance; experience measures that impact the end- customers reaction to the service offering; and n Operational efficiency a view of cost and expense drivers.
n Customer
n Revenue
Best practices TM Forum and its members have developed and documented best practices in a variety of topics to help both service providers and suppliers develop competencies in areas like business process optimization, cloud and infrastructure management, customer experience management, data analytics and policy, innovation, partner development, revenue management and security and privacy. It is TM Forums view that competency in all these areas will be required by organizations who want to succeed in a digital world. Whats in the latest release? Lucky Frameworx 13 Individuals from member companies all around the world collaborated in close to 40 projects to develop the features available in the latest release of Frameworx. The standards, best practices and tools found in Frameworx 13 help both service providers and their suppliers address the challenges of succeeding in a complex and dynamic environment that requires them to simultaneously ensure their traditional businesses remain profitable and take advantage of market opportunities in order to emerge as leaders in the new digital economy. Highlights of some of the new and enhanced features of the release include the following: A new Digital Services Reference Architecture which provides a standardized framework enabling the digital services ecosystem to deliver open and interoperable, enterprise- grade, virtualized services by maximizing re-use, agility of operations and scalability. n A Partnering Guide designed to provide practical advice to companies operating in the new digital ecosystem on how to create and manage partnerships. n A new Big Data Reference Model which defines the major components needed for implementation of big data solutions and outlines 23 real-life use cases where big data analytics can be leveraged to provide business value to service providers. n The Customer Experience Management Index (CEMI) which provides an independent measure for C-level executives to understand if their business is performing at, above or below the expected industry average in terms of managing customer experience successfully.
n
n New CyberOps Metrics Guides on server management/ hardening and distributed denial of service attacks that will help to make security measurable. n Technical updates to the ground-breaking Simple Management API, upgrading the code to REST Level 2, meeting the needs of the market for standardization and ease of use. n A Charging and Billing for M2M Technical Report that takes a broad look at M2M from the perspective of charging and billing and examines the business models across industries to arrive at examples and pricing models that will help identify gaps in the billing and charging areas of the Business Process Framework that need to be filled to ensure the framework supports M2M. n An insightful Smart Grid Report that provides a roadmap for how Smart Grid operations can leverage the operational standards found in Frameworx. n An eHealth Report that defines the players in the eHealth value chain and their interactions, then defines the roadmap for the management challenges that will need to be addressed in the upcoming 18 months.
Support for adopting, implementing and using Frameworx There are many ways that TM Forum works with its members to facilitate the successful adoption and implementation of the standards and best practices found In Frameworx. TM Forum offers regular benchmarking studies, a Frameworx Conformance Certification Program that allows suppliers to certify their commercial products and solutions, RFX templates for service providers who are procuring solutions and a robust series of training and career certification programs. Please visit www.tmforum.org/frameworx for more detail and to download the core frameworks and new features found In Frameworx 13. Please contact us via frameworx@tmforum.org if you have any questions.
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Report prepared for Jean Rodrigues of Maksen Consulting, S.A.. No unauthorised sharing. Sponsored feature
A New Age of Outcome-Based Managed Services:

Using Transformation-as-a-Service in Managed Services to improve Customer Management
Emmanuel Amamoo-Otchere BSS & OSS Professional Services Market Development
The traditional telecom service provider (TSP) is losing control. Customers are becoming more belligerent and competition is more intense, both in products and price, which is almost or at parity through competition with class competitors and OTT players. Telecom operators are increasingly challenged by their ability to treat different customers appropriately. The immediate mitigating actions needed to manage customer problems are increasingly mired in a short-term focus, which must change. The challenge scenery is consistent in all markets we have engaged in globally, with the exception of a few markets with no competition. But this scenery will get complex and even volatile, given the transformation from telecom services to communication services, the latter being a true enabler of ubiquity, agility and flexibility. Managed Services (MS) has long focused, or indeed emerged, from cost-optimization concerns. Managed Services Providers (MSPs), in their quest to deliver cost savings, seek optimized business models, including off-shoring and body shopping, to become enablers of organization optimization. The missing piece, however, has been aligning technology outsourcing initiatives to harness the value in a holistic Customer Relationship Management (CRM) program. Operators have in the past managed specific factors of CRM such as Customer Experience (CE) from some specific or key dimensions, including:
n Ease of ability to contact the service provider n Delivery of services on time
E2E SDM, Tech. Convergence
E2E SDM, Tech. Convergence
Service Delivery Management, ITIL
Off shoring, Consolidation, Virtualization
HUAWEI TECHNOLOGIES CO., LTD.
Fig. 1: Managed Service growth and changing imperatives

n Correctness n Fault
and accuracy of billing and Incident management n Problem management effectiveness (Same incident never happens within a specified time frame, 30 to 45 days etc). This approach has been acceptable, at least until the rise of the age of mobile and data, where CE quality is influencing the re-dynamics of CRM. As operators adopt Managed Services and seek to re-vitalize their engagement with true partners, they seek new MSP competencies that deliver not only bottom line, but customer-enabling objectives, such as Customer Interface Management (CIM), enabling the Customer Experience Enhancement paradigm and proactive Customer Problem Management. Based on our experience in the market place, telecom operators adopting
or ending their existing outsourcing engagements seek new competencies from MSPs to transform their capabilities to deliver or better manage business outcomes (for example, improved Customer Experience and revenue and margin management). Transformationasaservice (TaaS), a.k.a managed transformation (MT), is a Managed Change Delivery Program (MCDP) of Huawei that serves as a game-shifter, rising a level above the operational efficiency we are enabling in many of our engagements. TaaS/MT afford operators the value they seek through existing or planned Managed Services engagement that seek to leverage the Total Value of Partnership (TVP). The Managed Journey Huawei understanding of market trends The journey through the years with Managed Services has seen steady shifts
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almost every five to ten years, and a new focus on higher goals that foster new synergies between provider and operator to form value-centered partnerships. We are now in an era where Customer Management must enable new service engagement paradigms, i.e. Customer Experience and more outcome-based delivery. Using TaaS, Huawei approaches operators key focus from two key dimensions: business and technology. As unique value propositions rise with growing influence on challenges of telecom operators, CM-focused outsourcing engagements emerge as fundamental reasons to tap on Managed Services using TaaS or Managed Transformation programs. Huawei recently was engaged by Three UK, taking over the larger scale Managed Services from another vendor, then incumbent. Through TaaS/MT, Huawei brings to the outsourcing engagement a new capability that maximizes Customer Experience focus through an End-2-End Customer Management support program, which will enrich Threes services innovation capability, not only from a business point of view, but through an enabling technology platform (people, processes and products). This trend, a new niche focus for existing Managed Services and ongoing outsourcing engagements, taps on TaaS/ MT as an essential add-on capability to deliver, where prevoiusly non-existent, optimized business imperatives using our Huaweis TVP basis. Our unique value framework, delivers, through TaaS/MT, a rich functionality of Customer Relationship Management that
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New CEM Design Analysis Template development Measurement & Management Matrix assembly
Experience Modeling
Customer Interaction & Process optimization Experience Enhancement transformation projects.
Application & Product Enhancement
Monitoring
Managed Services & CustomerRelationship Management
E2E Service Delivery Management Capturing Experience Index Providing Experience insights for decision support
Fig. 2 CRM subject optimization through Managed Services

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builds into MS operations the value of effective process management. The unique expertise Huawei brings in facilitating CRM operations and enablement from IT can be best fashioned on our TVP Offer. The TVP model showcases a rich base of products and platforms, people and processes matched with flexibility to deliver well -knitted measurable and manageable service indicators cost and quality. In reference to the model, the three key levels of delivery are fashioned into: a. Monitoring A foundational operational platform Establish the foundation to acquire an understanding of the operational environment, through establishing an E2E Service Delivery Management framework using industry recognized practice-based Service Delivery and Quality Management frameworks and Standards (ITIL v3 & TL9000), so as to build or optimize the service operation process.
b. Experience Modeling Design the new levels of Customer Management focus This is a periodic activity that becomes a part of the CRM program. Review of existing, and design of new performance measures are aggressively pursued through the value partnerships program, which will comprise of using comprehensive workshops with key business parties marketing, sales, customer care and technology function -- in a process that identifies key areas that must be realized to feed into CRM process. The holistic approach to CRM enhancement will consider service and product lifecycle from inception through to Billing and after-care to completely model Experience Management. c. Application & Product Enhancement To automate the customer management campaign, IT products and services need to be continually enhanced or optimized
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A New Age of Outcome-Based Managed Services:

Using Transformation-as-a-Service in Managed Services to improve Customer Management
Table 1 Sample case benefits for Application & Enhancements towards Customer Management
decomposition that provides a rich basis to facilitate actualizing the execution and to tie in Business Process fundamentals management of Customer Relationship Page 1 technology functionalities. Management (CRM) CO., functions. Huawei proprietary. Nowith spread without permission. HUAWEI TECHNOLOGIES LTD. The basic fact with technology products Such efforts by IT must be focused on automating reactive and proactive customer or services is that problems and issues will always emerge. How such problems interaction processes, integrating business and issues (incidents or problems) are processes and bringing non-intrusive managed with respect to the customer, network events into the CRM play (e.g. or how practical and self-healing process capacity utilization of sites matched with mechanisms can be actuated to deliver post-dial delays or RTT for Internet packets a proactive customer support, is what to better CIM or ready CIM services for differentiates service providers. Customer Problem Management). CRM is a concept larger than Customer Business processes must become dynamic, highly integrated and smart for interactions within the organization and with/to customers, and partners. Managing Customer Experience through TaaS The life cycle of CE highlights a plethora of touch points. Referencing the TMForum CRM Level 1 decompositions, we have a clear mapping of what should become the CI candidates that must be key to addressing the CRM process. The TMForum eTOM CRM decomposition gives a holistic
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Care, Customer Experience or Customer Interface Management; it is the integration of customer acquisition, enhancement and retention through management lifecycle of inter-related relationships. In the table below, we identify key organizational business groups and their key functions and performance measuring metrics and show how Huawei through its IT offerings can matchtoserve and align technology management with Customer Relationship Management functionalities to improve the overall Customer Management program. Developing a holistic CE focus from CRM using Huawei BSS Managed Services as a enabler of CM Transformation. Managing customers is and will be a continuously evolving and re-optimizing service-based process. Through practice and experience, this service-process presents eight broadly identified but not explicitly finite zones, and using MS, we are able to maximize operators business process, and deliver improved Customer
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Customer Experience Management program as a journey through Managed Services.

Plan & Design
CEM Index Management
Build
Operationalize
Continuous Re-alignment Monitored
t1
t2
t3
t4
t5
tn
Enablement & Operations Services Introduction
- Managed Services
Application & Infrastructure Enhancement & Implementations

- Systems Integration framework
Performance Monitoring & Decision Support

- Managed Services
Insight driven operation assessment.

- A Consulting framework
Future Operating Model and Implementation plan

Metrics and Management framework definition.

Business & Technology Alignment Implementations

- Consulting & SI framework
Continuous Business & Technology Improvement

- Managed Services
HUAWEI TECHNOLOGIES CO., LTD.
Fig. 3 A Managed journey for Customer Relationship Enhancement

Reference to the 8 key blocks showcased, in Fig. 3 CM can be effected through Hauweis IT engagement program by:
Management through the interfacing services and through operational-izing of the application/product portfolio. The journey to achieving a full or complimentary CRM program is a staged process. Huawei brings to telecom operators this staged TaaS program,
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following best-of-service delivery and process management approaches that use key process boards such as eTOM, ITIL and Quality Management. In figure 3, we identify the stages and how we align them in a general milestones CE transformation journey.
In Conclusion The current age of digital services heightens focus on Customer Management. CM will now require a measure of proactive-ness within a CRM framework that requires an online induction of service experience, and positions how the organization will prepare itself dynamically to manage any potential impact that service-based issues or problems will feature. Indeed, steering the customer to a perceived smarter engagement and therefore delivering a positive experience is an essential core component of Customer Relationship Management. How do you know your CRM program embodies the richness of Customer Management? How can you transform CRM to enable monetizing Customer Experience and improve the returns on CRM program investment? These questions will form the driving strategy to optimize Customer Management. Customer Management in the grand scheme of approach will require an organization to have an adequate enterprise-wide strategy that must cut across market management, product and services planning, Billing Management and services operations and management. What Huawei brings to the table for operators is Customer Management with a build of technology products and services that are aligned to business processes to deliver optimal Customer Management engagement, and eventually, driving improvement in all the measurable indicators (qualitative and quantitative).
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The Spirit of Managed Services: Inspired by the Customer Experience

Customer Experience is the key player in todays highly competitive telecom marketplace the key to winning customer loyalty and achieving overall business success. Delivery of an excellent Customer Experience is becoming fundamental to the strategy of many Communication Service Providers (CSPs), especially in a world of hyper-competition. However, in such a hyper-competitive world, CSPs are also being pushed to do more, faster, with less, which could have the potential to have a negative effect on the Customer Experience. In this environment, many look to Managed Services experts to help ensure that efficiency translated to excellent experience. Much attention is paid to the network in terms of customer experience. In reality, delivery of an excellent experience involves all aspects of a CSPs business: marketing, IT, the call center and beyond. In todays reality, a users experience also extends into the social world and can also still be as fundamental as interoperability of a service between different devices or networks. As a leading provider of products and solutions for Business and Support Systems (TMF Business Process Framework-certified),policy, digital services and traditional value-added services, Comverse understands that the Customer Experience is influenced by a great number of variables spanning all aspects of the relationship between the CSP and its customer, which includes multiple touchpoints and service experiences. And so we have backed our solutions with a strong services offering, including Managed Services. Customer Experience Mindset The Customer Experience mindset is the inspiration driving all Comverse Managed Services activities and interactions.
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Drawing from our extensive experience with more than 450 CSPs worldwide, Comverse Managed Services team understands the strategic importance of an excellent customer experience, and has built our Managed Services offering with a focus on monitoring, managing and improving the various facets that can impact the customers experience. Heres how we do it: Comverse Managed Services Methodology: Helping You Define and Achieve Your Strategy Comverse Managed Services helps you
achieve your business goals. We define clear operational Key Performance Indicators (KPIs) and plan the operational activities, based on your strategy and business goals, as depicted in the diagram below. Again, an overarching goal of delivering an excellent Customer Experience enables the setting of KPIs and associated activities to achieve those KPIs that will impact the Customer Experience in a direct and positive way. Comverse Managed Services approach utilizes ITIL Best Practices, as well as TMFs Business Process Framework. In
Figure 1: Comverse Services Serving Your Strategy

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the engagements we have done, we have seen that the activities of our Managed Services teams create momentum within the CSP instilling a constant dynamic for measurable improvement, plus a system of precise metrics to verify progress. Ongoing improvement and ultimately attainment of operational KPIs trigger achievement of the target business KPIs, contributing to attainment of business goals. Comverse Service Offering Comverse Services span Operations and Management of BSS and Digital Services and VAS environments and applications. This can start simply through handling of specific activities to be out-tasked, move to providing experts for team augmentation, and then assist you in planning and optimizing your system performance. We are experts at operating our solutions, so you can focus on other aspects of your business. Comverse is also consulting and working closely with you to realize the benefits of a business transformation process a process which often has the focus of improving your customers experience. Following are three examples of different Comverse Service offers and how they boost customer experience: 1) Boosting Customer Satisfaction through Streamlined Billing Processes The race to reduce customer churn especially that related to customer satisfaction remains one of the most desired managerial targets. Billing issues can be a major reason for customer frustration, in turn potentially leading to churn. Errors also cause significant pressure on the call center and other support channels. Improvement in these areas dramatically reduces the number of
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call- center cases related to bills, and no less important, enhances your trusted relationship with your customer. And while Comverse BSS solutions are well-known to be robust and productionproven at carrier-class levels, Comverse Managed Services are able to help operators fine-tune their operations to get the most out of their Comverse deployment. Comverse Managed Services can significantly improve bill accuracy by improving methodological aspects of existing CSP processes. One case study documents a 40-percent reduction in the number of bill-related-calls to the call center. This reduction was brought about by the results of various corrective actions implemented by the Comverse Managed Services team, including:
n Product Lifecycle Management (PLM): Reviewing and organizing the PLM process resulting in price plans that meet the original goals and definitions and a portfolio that is more easily understood by the CSP and its customers. n Re-engineering bill Quality Asurance processes for better efficiency and accuracy.
Such activities, performed by Comverse experts, reduced issues that might have required customer support interaction, and at the same time increased operational efficiency a double win for the operator. 2) Peak Traffic Management: Getting the Most from Special Events Customer behavior and habits are changing. While ten years ago it might have been considered an insult to get a holiday greeting text message instead of a call, youngsters have grown up and
turned SMS/MMS holiday greetings into the norm. As a result, CSPs experience an immense load on their messaging systems exactly on the days when they are least able to cope working with reduced staffing, both in the engineering department and the call center. This sets up a potentially explosive situation that, in a case of SMSC failure, could foster significant customer anger, increased churn, bad publicity and damage to the CSPs image and brand. As a leading global provider of messaging solutions, Comverse knows that Christmas and New Years Eve pose major challenges. Many CSP CFOs look forward to the increased revenue from these high peak-traffic days while many CTIOs and Customer Relation Managers experience fear. The Comverse Special Event Care service helps maximize the revenue potential and reduce the risk of high peaktraffic events like Christmas, national holidays and other high-usage occasions such as major international sports events that attract tens of thousands of roamers. In addition, it offers a level of service assurance that should meet or exceed customer expectations. Dozens of Comverse customers have used the service and gained peace of mind, knowing that their messaging systems are well-prepared and fine-tuned for an exceptional traffic load. Systems are well monitored, and if anything unexpected occurs, it is immediately handled by the best possible experts allowing you to preserve an excellent customer experience. 3) Social Media: Influence the Influencers and Meet Your Customers Where They Are In todays world, social media plays
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The Spirit of Managed Services: Inspired by the Customer Experience

a huge role in the overall customer experience. Of course, many CSPs have pages on leading social media sites, but these pages are generally static and informative. No real interactivity certainly not meaningful interactivity is enabled by these static pages. This is because there is no real connection between the CSPs existing ecosystems and the social application. CSPs are missing an opportunity. Comverse Managed Service experts can help CSPs make their social presence more relevant through Comverses new Social Media Enabler - Comverse Share which enables linkage of social data with existing business processes and systems. With this linkage, CSPs can build social applications that move beyond static pages and instead: 1. Interact in a meaningful way with customers where they already are 2. Expand the CSPs BSS profile of opt- in subscribers with subscribers social profile to enable new actionable insights and meaningful interactions 3. Create a new Support channel Comverse Share, a Software-as-aService (SaaS) solution, connects an operators systems (e.g. CRM, BSS, Messaging) and business processes with social media, enabling the CSP, through social applications, to interact, sense and manage the experience and satisfaction of subscribers, via the favorite interaction channel of many. With social applications that leverage Comverse Share, a CSP can know its customers better, through new information about each including a social score/profile. With this expanded view, a CSP can benefit from better customer segmentation and relevant offer presentment. For example, customers who have liked a new device
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might be interested in a promotion for that device. Comverse Managed Services consultants also assist you to proactively approach Social VIP customers with offerings that will help you transform them to advocating customers, with the highest possible Net Promoter Score (NPS). Moreover, the Comverse Managed Services team, using other advanced tools, can assist you in transforming network and user data into concrete actions. We enable the marketing, support and customer care functions to define a wide range of compelling event rules that trigger personalized businesssupporting activities. Energizing Your Business Comverse provides a range of resultoriented Managed Services around BSS as well as digital and value-added services. Planned in accordance with a CSPs business and operational needs, and aligned with TMF Business Process Framework, these services augment core competencies and energize the business. Comverse Managed Services, tuned to meet CSP business goals, can positively impact your customers experience and satisfaction through a focus on operational activities and KPIs that have direct impact on the experience an endcustomer receives from the CSP.
Comverse Managed Services are attuned to improve the customer experience, a momentumgenerating kind of perpetual improvement machine.
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IP Addressing and Network Visibility

a New Business Opportunity for MSPs
Managed service providers and their enterprise customers have traditionally relied on Microsoft DHCP and Excel spreadsheets in their IP addressing activities. As cloud computing, desktop virtualization and related Bring Your Own Device (BYOD) technologies make IP addressing and naming processes increasingly complex, many managed service providers are finding that the associated manual processes and the lack of transparency starts holding back the scalability and therefore the return of these new breeds of service provisioning offerings. Along with automation comes selfservice which is yet another area where the existing IP addressing and naming solutions do not fare very well. As managed service providers create Virtual Private Cloud (VPC) offerings and other services whereby the customers business users gain access to a selfservice portal, tenants IT departments easily lose visibility into the segments of their private networks that are being run in the cloud as a part of the VPC service. The traditional solution to the business issues outlined above is based on a CAPEX intensive model, which assumes that the managed service provider makes a significant investment into the provisioning and management technology used to solve the issue. At Nixu, however, we view this discontinuity as an excellent opportunity for managed service providers to transform IP addressing and cloud-provisioning technologies from infrastructure expenses into profit drivers with a pay-as-you-go business model. The following case study on Tieto
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describes how we automated and slashed the cloud provisioning leadtime of Tietos VPC service, Tieto Cloud Server, from three weeks to three minutes. Better yet, by granting tenants IT departments restricted access to the Nixu IPAM, Tieto gave its customers real-time visibility into the parts of their private networks running in the cloud, plus a new IPAM SaaS service offering that allows tenants to have full visibility into their legacy networks. Case Study: Powering the Worlds Fastest Cloud Services Customer Profile Tieto is a leading IT service company in northern Europe providing IT and product engineering services. With an employee base of 18,000 experts and worldwide coverage, Tieto provides service integration solutions with unmatched quality experience in IT. Tietos customer-driven global delivery model helps boost growth and drives efficiency by turning complex concepts into solutions. Its standardized and scalable approach in creating unmatched service integration solutions increases efficiency, agility and innovation. The Cloud Revolution and Changes in the Industry Landscape Infrastructure and software as services run on the cloud are creating a paradigm shift in how organizations large and small consume applications and infrastructure. By taking advantage of pay-as-you-go business models, organizations can significantly decrease IT infrastructure acquisition and maintenance costs. This allows companies to dramatically reduce
their operating expenses by utilizing ondemand cloud services for networking, computing and storage. Consumptionbased business models introduced by cloud services have revolutionized the competitive landscape in the industry, providing everyone with an access to the same tools and services that until now only bigger organizations with large IT budgets could afford. The cloud revolution has created a blue ocean of opportunity for IT service providers to offer simple and secure ondemand services to entirely new market segments. This allows all entities to become leaner by better aligning their IT infrastructure with their business needs. The Challenge Tieto, a thought-leader in solution integration, had long anticipated a growing demand for cloud services without time or place restrictions. Following its strategic intention to become the leading IaaS cloud service provider in the Nordics, Tieto has made considerable investment in building world-class data centers, orchestration systems and cloud infrastructure to meet the anticipated growth. With a state-of-the-art network architecture and cloud infrastructure in place, their manual release parameter provisioning process ended up being the only remaining bottle-neck in an otherwise automated cloud application deployment process. Release parameter provisioning is the last phase of the application deployment workflow. It involves assigning properties such as IP address, name and other network settings to the workloads deployed in the cloud and is repeated
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Nixu Cloud IP Suite A Perfect Fit to Tietos Requirements Eager to automate the last mile of the cloud application deployment workflow, Tieto started off with an IP Address Management (IPAM) solution offered by a prominent DDI vendor competing with Nixu. After several months and multiple failed attempts, the shortcomings of the competing solution became evident and Tieto decided to contact Nixu for assistance.
every time a virtual machine is deployed. Doing this manually meant delaying the application deployment lead-time by up to two weeks. Thus, it soon became clear to Tieto that if they wanted to offer truly ondemand cloud services, this part of the process would also have to be automated.
Within three months, Nixu had leveraged the robust API of Nixu Cloud IP Suite to seamlessly integrate with Tietos infrastructure and fully automate the release parameter provisioning process. An excellent match for Tietos requirements, Nixu Cloud IP Suite reduced the end-toend provisioning time of workloads from two weeks to three minutes, making Tieto Cloud Server the fastest IaaS Cloud offering around. Publicly launched in November 2012, Tieto Cloud Server has set industry benchmarks for truly on-demand and automated cloud application deployment workflow. Pasi Sutinen, the Technical Director at Tieto, said: We are grateful to Nixu for helping us reduce the application deployment lead-time from two weeks to three minutes. Nixus robust API was the key to success, beautifully aligning the release parameter provisioning with our workflow.
INSIGHTS RESEARCH
43
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Comverse is the worlds leading provider of telecom business enablement solutions that support service innovation and smart monetization through a rich portfolio of BSS, Data Management and Monetization, Digital & Value Added Services, IP Communications and Professional Services. Comverses extensive customer base spans more than 125 countries and covers over 450 communication service providers serving more than two billion subscribers. The companys innovative product portfolio enables communication service providers to unleash the value of the network for their customers by making their networks smarter. Comverses solutions are available in a variety of delivery models, including on-site, cloud, hosted and managed services. Comverse is ranked number 55 in PwCs Global 100 Software Leaders list. www.comverse.com Founded in 2004, Etiya has been designing, developing and realizing Business & Operation Support Systems and conducting Systems Integration. Since its foundation Etiya has become the leading supplier of CRM and Order Management systems in Turkey that currently has reached a volume of thousands of users and millions of customers. Etiya has been investing on M2M and Big Data solutions. Our purpose is to have fully integrated CRM Solution with M2M & Big Data and to provide turnkey solutions to our customers. Our mission is to understand and meet the needs of our clients by delivering high quality value-added solutions. Our qualified consultant team helps our clients to align their business processes with eTOM Business Process Framework. We have extensive experience in Telecommunication Business Processes working with the biggest telecom operators in Turkey to help them define, develop and bring to market their new products and services. www.etiya.com Huawei is a leading global information and communications technology (ICT) solutions provider. Through our dedication to customer-centric innovation and strong partnerships, we have established end-to-end advantages in telecom networks, devices and cloud computing. We are committed to creating maximum value for telecom operators, enterprises and consumers by providing competitive solutions and services. Our products and solutions have been deployed in over 140 countries, serving more than one third of the worlds population. Huaweis vision is to enrich life through communication. By leveraging our experience and expertise in the ICT sector, we help bridge the digital divide by providing opportunities to enjoy broadband services, regardless of geographic location. Contributing to the sustainable development of the society, economy and the environment, Huawei creates green solutions that enable customers to reduce power consumption, carbon emissions and resource costs. www.huawei.com Nixu Software simplifies cloud application deployment for enterprises and managed service providers who need to automate the IP commissioning process. The companys patented technology easily integrates with existing infrastructure allowing IT departments to manage IP resources in real-time. Nine out of 10 of the worlds largest service providers and half of the Fortune 500 rely on Nixu to improve the manageability of their network. www.nixusoftware.com
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Multi-cloud migration: How operators can still seize the day
The cloud services market has seen robust growth over the last three years, benefiting from improvements in technology, service innovation, competitive pricing and increased overall market acceptance. When implemented correctly, enterprise cloud services offer tremendous benefits in terms of reducing costs and improving business agility. Making the most of these benefits means changes throughout the service providers enterprise. In this report we investigate the cloud services market with an emphasis on the opportunities for cloud service providers. It includes analysis of TM Forums prima facie research, gleaned from a combination of e-surveys and in-depth interviews with 24 operators across the globe. The research found that although some service providers believe they can go head-to-head with market heavyweights like Amazon, in fact they need to complement their offers, recognizing that operators can excel by providing hybrid cloud solutions for enterprises as they migrate on-premises workloads into public and private cloud environments. This contrasts with the hybrid solutions promoted by over the top (OTT) companies, which are focused on dynamically allocating work-flows between disparate public and private cloud environments.
28/03/2013 14:50
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INSIGHTS
RESEARCH
Multi-cloud migration
How operators can still seize the day
Sponsored by:
Cloud IR.indd 1
PRIVACY
MANAGING
QUICK INSIGHTS
2013 | www.tmforum.org
$495 USD / free to TM Forum members
Managing privacy: The pitfalls and promise of personal data

The move to an online networked world is creating massive amounts of personal data. Proper personal data management can enable a one-to-one marketing and product personalization experience that is highly beneficial for consumers, as well as suppliers. For the experience to be of real mutual benefit, however, consumers must be assured that their privacy isnt being violated and that personal data is protected and only shared with those they trust. Despite industry assurances that data wont be misused, there is substantial evidence that consumers privacy concerns arent going away and that regulators and governments are taking the issue very seriously indeed. This Quick Insights report spells out strategies that address underlying complexities in achieving the delicate balance between respecting consumers privacy and exploiting commercial opportunities. Key topics include the roles of subscriber data management, identity management and service brokering along with some of the prospects and pitfalls of trying to make the most of the data goldmine.
THE PITFALLS AND PROMISE OF PERSONAL DATA

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2013 | www.tmforum.org
$495 USD / free to TM Forum members
Profiting from Wi-Fi: Customer experience wins over new revenue

With smartphones and tablets rapidly increasing in popularity, users are consuming far more data. The massive growth predicted in mobile data traffic and machine-to-machine applications over the coming years will put enormous strain on cellular network capacity, as operators seek to meet users performance expectations. However, planning and financial constraints prevent them from increasing their cellular network capacity sufficiently. Seamless incorporation of Wi-Fi and small-cells, is the only way to meet this exploding demand. Already 18 of the worlds top 20 communications service providers have publicly committed to deploying their own networks of Wi-Fi hotspots. We look at the changing role and functionality of Wi-Fi, such as the development of next generation hotspots to bring the mobile-like ease of use to Wi-Fi, such as automatic handover.
PROFITING FROM
WI-FI
QUICK INSIGHTS
CUSTOMER EXPERIENCE WINS OVER NEW REVENUE

Sponsored by:
The report concludes that investing in Wi-Fi is essential for operators, if they want to keep their customers through offering an acceptable level of experience. It looks like one of the few opportunities to monetize it is through attractive data roaming packages which is an untapped and substantial market.
Visit www.tmforum.org/researchpublications to find out more
Everything that can be digital will be.

Weve seen the future. And its digital. In just ten years, the way we communicate, consume information and entertainment has been changed forever. And thats just the start. The Digital Revolution is transforming our personal and professional lives. We demand simplicity, but the complexity behind our interconnected digital lives is only growing. TM Forums Digital Services Initiative focuses on overcoming the end-end management challenges of complex digital services, enabling an open, vibrant digital economy. For more information on the TM Forum Digital Initiative visit www.tmforum.org/digital There are ve core principles of the Initiative:

Insights Managed Services

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Report prepared for Jean Rodrigues of Maksen Consulting, S.A.. No unauthorised sharing. April 2013 | www.tmforum.

FAR FROM CONVERGENCE ORDER MANAGEMENT PROBLEMS

LONG SERVICE LAUNCH PERIODS MANUAL PROCESSES

HIGH OPERATIONAL COSTS DE-CENTRALIZED PRODUCT CATALOG

HIGH CHURN RATE

The NeW MaNaGeD serVIces:

imPROVing CUstOmER EXPERiEnCE, EnaBLing nEW BUsinEss OPPORtUnitiEs

FAR FROM CONVERGENCE ORDER MANAGEMENT PROBLEMS

LONG SERVICE LAUNCH PERIODS MANUAL PROCESSES

Assuring customer Page experience from end-to-end 6

Vice President, Events, Publications and Content: Rebecca Henderson rhenderson@tmforum.org

DE-CENTRALIZED PRODUCT CATALOG

Page 4 Executive summary

Section 1 Managed services evolution

THE NEW MANAGED SERVICES:

IMPROVING CUSTOMER EXPERIENCE, ENABLING NEW BUSINESS OPPORTUNITIES

THE NEW MANAGED SERVICES:

IMPROVING CUSTOMER EXPERIENCE, ENABLING NEW BUSINESS OPPORTUNITIES

Managed services evolution

THE NEW MANAGED SERVICES:

IMPROVING CUSTOMER EXPERIENCE, ENABLING NEW BUSINESS OPPORTUNITIES

Figure 1-1: Managed services a simplified look at market evolution

Managed Services 1.0

Managed Services 2.0

Key Focus Areas

reduction / low cost sourcing

excellence based sourcing

Business enhancement fit-based sourcing

THE NEW MANAGED SERVICES:

IMPROVING CUSTOMER EXPERIENCE, ENABLING NEW BUSINESS OPPORTUNITIES

Results from interviews with service providers: The customers speak

Figure 2-1: Geographic spread of respondents

Figure 2-2 Service provider type

THE NEW MANAGED SERVICES:

IMPROVING CUSTOMER EXPERIENCE, ENABLING NEW BUSINESS OPPORTUNITIES

Figure 2-3: Overall drivers for managed services engagements

THE NEW MANAGED SERVICES:

IMPROVING CUSTOMER EXPERIENCE, ENABLING NEW BUSINESS OPPORTUNITIES

Figure 2-4: Critical success factors for managed services engagements

THE NEW MANAGED SERVICES:

IMPROVING CUSTOMER EXPERIENCE, ENABLING NEW BUSINESS OPPORTUNITIES

Help with drawing up service level agreements

Nearly two-thirds of respondents are planning to increase their investment

Figure 2-5: Expected use of managed services engagements

THE NEW MANAGED SERVICES:

IMPROVING CUSTOMER EXPERIENCE, ENABLING NEW BUSINESS OPPORTUNITIES

Figure 2-7: Current functional areas using managed services

Figure 2-8: Satisfaction with reported current managed services

THE NEW MANAGED SERVICES:

IMPROVING CUSTOMER EXPERIENCE, ENABLING NEW BUSINESS OPPORTUNITIES

Conclusions and recommendations

THE NEW MANAGED SERVICES:

IMPROVING CUSTOMER EXPERIENCE, ENABLING NEW BUSINESS OPPORTUNITIES

Leveraging industry-standard metrics

Sustained, competitive advantage is particularly important in fast-changing industries

THE NEW MANAGED SERVICES:

IMPROVING CUSTOMER EXPERIENCE, ENABLING NEW BUSINESS OPPORTUNITIES

Managing partnerships introductory guide

THE NEW MANAGED SERVICES:

IMPROVING CUSTOMER EXPERIENCE, ENABLING NEW BUSINESS OPPORTUNITIES

Look to suppliers who are adopting standards-based processes and practices

The business impact of standards-based conformance

THE NEW MANAGED SERVICES: