Vertical Focus

Focus On: Telecom

N Geetha looks at how CIOs in the telecom industry are addressing business challenges
by using IT.

India becomes the second largest telecom network in the world after China with more
than 300 million subscribers. Moreover, it is also the fastest growing telecom market
adding about 8.5-10 million new mobile subscribers every month and the telecom
industry is one of the largest spenders on IT in the country.  

Arpan Gupta, Assistant Manager, Industry Verticals Practice, IDC India reports that the
telecom sector grew at  over 20.9% in revenue terms during FY08 vs. FY07 emerging as
one of the key sectors responsible for India’s resurgent economic growth. The telecom
services industry in the country was worth US $28.9 billion in 2007-08 and is projected
to grow to US $57 billion by 2012, at a CAGR of 14.5%.  According to Gupta, the
subscriber base for mobile services will exceed 737 million by 2012 at a CAGR of 25.9%
up from the current 261 million. Besides this, the growth rate of teledensity across urban
and rural areas is rising and in the process, it poses significant challenges for CIOs.

Both market forces and technological innovations influence growth in the telecom sector.
Gupta points out that increased forays to attract more subscribers in rural areas and
increased domestic and foreign interest in the sector has had a role to play in this. The
introduction of 3G and WiMAX technology-based services, content enhancement and
value added services (VAS), mobile number portability also had an impact on the
growth. In spite of a global economic slowdown, the Indian telecom industry has not
fallen into this downward spiral and it remains a promising segment with investments
happening.

Focus on: Telecom

Top business challenge: Ensuring profitable
growth despite a growing subscriber base and fierce
competition by way of speed to market, while
creating new revenue streams through value added
services.

Solution: Effective use of CRM, ERP, workflow, OSS

(Operation Support Systems), business intelligence
for varied billing solutions, infrastructure platform for
value added services, GIS, document management
solutions etc., for achieving customer delight.

How IT can help: Greater transparency in varied

billing transactions, reduction in overall
communication cost, better customer relationship
management and better services.

Strategic technological planning by operators like BSNL, Tata Teleservices, MTNL, Bharti
Airtel, Reliance Communications, their offerings and effort towards making technology
affordable  have  influenced the positive growth curve of this sector.

According to IDC’s Gupta, the total IT spend of Indian telcos in CY 2007 was Rs 8,633
crores, which is expected to grow at a CAGR of 17.7% over the period 2008-2012. This
kind of investment has prompted service providers to look out for high-end technologies
to make their IT infrastructure flexible, responsive and robust to meet emerging market
needs to ensure operational efficiency.
 While other sectors are playing it low key, the CIOs of the telecom sector
face greater challenges of employing technological innovation to counter
growing competition to woo customers.

B V Joshi, VP-IT of Reliance Communications found a plethora of

B V Joshi, 
opportunities in the country, which is attracting global players to come in
VP-IT of with huge foreign investment, thereby driving margins and profits for all
Reliance the telecom companies. The primary driver for growth, he opines, is
Communication
s
healthy competition and improvement in technology that service providers
are bringing to the table to reduce tariffs and improve
service quality.

B K Badola, GM-IT of the Rs 7,000 crores MTNL finds that services such
as IPTV, VoIP and other GSM-related services have created more growth
opportunities from both aspects of operational and fulfillment. “Every
aspect of the services be it PSTN, broadband, CDMA, leased lines, B K Badola, GM-
transmission network etc. has increased the growth potential for us to IT
drive better services,” said Badola.

While agreeing that the country is in early stages of growth as far as

teledensity is concerned, Jai Menon, CIO of Bharti Airtel has a huge task
ahead. Menon opined that from an overall subscriber point of view, the
telecom providers need to offer dial tones to 1 billion people, about half a
billion on a faster track. Broadband is in its infancy and has huge
potential, in media DTH TV is emerging rapidly, besides the integrated
Jai Menon, mobile, PC and TV services are taking off.
CIO
Bharti Airtel
From Airtel’s perspective, the organization is witnessing a year-on-year
growth of 57% and 42% growth in revenue with its focus on taking the
digital lifestyle to rural markets.  “We intend to make the technology more affordable
and are tapping 300,000 census towns and with a joint collaboration with IFFCO are
penetrating into 385,000 non-census towns,” said Menon. The principal objective is to
drive profitability for the organization through technological innovations where Airtel has
witnessed a 4% profits on its margins and 22% net profits in Q2.

BSNL’s growth is reflected in the increase in the number of lines from one lakh a year
back to nine lakh lines in Bangalore alone besides increasing subscribers in the state.
“Six lakh mobile customers and 2.5 lakh broadband users, with the growth in broadband
increasing also calls for a robust IT system, particularly when we are moving towards IP
based platform,” said Shubhendu Ghosh, Principal GM-IT of BSNL. 

A G Rao, Chief Technology Officer, Tata Teleservices Limited is bullish

about growth. Mobile telephony has been growing at an annual rate of
about 90% with Tata Teleservices achieving a CAGR of 113% as of March
2008, with more potential residing in the untapped urban and rural areas.

The CIO of the Rs 11,800 crores Siemens, Nishith Sharan, is charting out
A G Rao,  plans of infrastructure development to leverage opportunity and sustain
Chief Technology
growth. “Despite deferred expansion plans in the market, Siemens will
Officer, Tata
Teleservicesexplore potential growth areas, look to leverage its domain expertise and
Limited create sustainable value propositions for its customers with its range of
innovative products, systems and solutions,” averred Sharan. Given the
growth potential and the investments proposed to boost the sector aligned
with consumer growth, the telecom sector has been quite IT savvy when compared to
the other industry verticals.
The CIOs of the telecom segment have been on their toes to meet demand, innovate and
track technologies. There are certain popular technological deployments that are unique
to this sector.

Prevalence of IT 

The telecom sector differentiates itself from the rest of the verticals by deploying state-
of-the-art technology tools influencing economic growth in a big way. Each of the areas,
be it billing and payment, call records, value added services, tariff plans, fraud checks,
credit checks, etc., calls for IT tools to enable the companies to bring in efficiency.

 Key technologies deployed by the Indian telecom services sector as per IDC’s Gupta
would be inclined towards workflow management solutions, 
integration of OSS/BSS applications with ERP, CRM, business intelligence and data
warehousing.

Infrastructure platforms to enable the deployment of value added services (VAS) and the
launch of more ‘white-labeled’ services, geographic information system, document
management services, convergence and migration services and disaster recovery
solutions etc. are key areas of IT adoption. While growth oriented sectors such as retail,
government and education are highly focused on purchasing and deploying hardware,
the telecom sector focuses on software and IT services as well as networking
technologies to support next generation networks.

Siemens’s Sharan found this sector to be cost and price sensitive. As a result, deployed
solutions must be innovative, cost-effective, and should bring about tangible and
measurable productivity improvements with regard to any kind of software applications.

BSNL’s Ghosh found that a single window approach integrating new software applications
including CRM, business intelligence and ERP for billing, 
order management, material procurement, payment etc., is critical for the sector.
According to Tata Teleservices’s Rao, the product portfolio management (PPM) solution
intended for central creation, modification and deletion of products or entities such as
tariff plans and schemes are critical. Reliance’s Joshi found the importance of IT in
telecom from the call stage when it is transmitted to the switch to call routing that
differentiates between the post paid and prepaid subscribers. “Call interpreting
application software, billing software, CRM, ERP, mediation device, fraud management
system, decision support system, dunning, credit control system etc., become the critical
components of the IT in this sector,” said Joshi.

MTNL’s Badola said that telematics, virtualization, SOA and converged MPLS networks
play a dominant role in the telecom industry, besides BSS and OSS on the operational
side.

With the dependence on IT, the CIOs are in no position to curtail IT spending as it
becomes a major catalyst for growth. 

Ringing challenges

With technology adoption racing ahead, CIOs of the telecom sector not only have to
worry about aligning IT with business. Here IT itself becomes a business which enables
the service providers to innovate with regard to their offerings. The major business
challenge for every CIO of this sector is to handle growing customer demand and
customer retention, while creating new revenue streams to drive growth and profits
through varied and innovative services.
For instance, BSNL’s Ghosh said that his major business challenge is to be to able to
integrate the day-to-day business functionalities with the IT system for both internal and
external customers, speed to market, managing with insufficient skilled manpower and
ever increasing attrition.

The greatest challenge lies in retaining and motivating people within a government setup
where there is no reward system, while ensuring the organization continues to deliver
quality service without any hiccups amidst a growing consumer base.

Ghosh maintained, “Handling new customers and customer retention amidst increasing

competition also poses a challenge, which makes it imperative to create new business
streams to make ourselves profitable.” 

Reliance’s Joshi said that communication service providers are facing unprecedented
business challenges owing to technology convergence needs given the enormous choices
for customers in the market in the form of various attractive product or service offerings
for minimal rates.

“Our major challenge is with regard to value added services which are vital as new
revenue streams and as most of these are targeted at the youth and entertainment.
Here, the size of the market cannot be accurately predicted,” said Joshi adding, “There
are issues related to piracy as far as content and frequency of updates go and to check
this scalable infrastructure capacity is required.”

The critical challenge for any CIO is the barrier of handset compatibility to access the
value added services, which is keeping users using low-cost handsets away from these
services. As the content and services taken to the end user go through a long chain of
Service Providers, the revenue sharing results in slim pickings for companies.

According to Siemen’s Sharan, the challenge is to provide a high performance,

adaptable, and cost optimal Information Technology environment to meet business
requirements and the challenges arising out of ever changing business conditions,
markets and product portfolios.

For Tata Teleservices’ Rao ensuring profitable growth in the current scenario of
increasing subscribers but decreasing average revenue per user (ARPU), fierce
competition from new entrants, increasing revenue streams other than voice like VAS
and data services pose challenges which need careful management. “Providing an
enhanced and differentiated customer experience in order to leverage regulatory moves
like number portability and control churn, delivering complex services while containing
costs is a critical challenge,” said Rao.

MTNL’s Badola faced the challenge of maintaining systems such as GSM, postpaid,
billing, data etc., which are scattered and proper integration methods were required to
manage them under one framework.

“Converged networks also pose challenges as a single service delivery platform needs to
be created and a centralized monitoring system evolved,” said Badola.

Airtel’s Menon found a great business challenge to be playing the role of a

leader addressing business problems both internally and externally. “While maintaining
the existing operation support systems and business support systems intact, the
challenge is to create more revenue streams in the form of portal services, create user
technology and support systems, experiment with ERP systems and evolve a robust
fiscal model where both OPEX and CAPEX are lowered,” maintained Menon.
IT at Work

Telecom CIOs believe in IT as a catalyst for growth and transformation towards

profitability. The interesting phenomenon is that unlike other industry verticals, telecom
grows its business on IT and automation is critical for survival. The opinions of CIOs and
their deployments reflect the fact that IT is an enabler of efficiency. For instance,
creating new revenue streams in the form of value added services by the CIOs is nothing
short of IT becoming a critical component of revenue generation.

 For MTNL’s Badola, IT has been a major enabler and he prefers homegrown applications
rather than going in for branded systems. MTNL has deployed CSMS (customer service
management system), HR related salary management system, financial management
systems and billing systems for its businesses. “We wanted coverage for these solutions
with the operation support systems and business support systems and went in for M Dox
and IBM and HP platforms. The coverage billing solution has been developed on Intel,
Systime, Intec and Elitecore modules and used PeopleSoft for the CRM deployment.

Application monitoring services have been critical for value added services from MTNL
using the mobile network as part of its service delivery platform. Having a customer
base of over 3.5 million in GSM and over 1.5 million on CDMA, the most significant
moment was to integrate all the solutions related to PSTN, broadband, GSM, CDMA into
a single framework on a converged platform incorporating its OSS and BSS systems.
According to Badola this was an Rs 500 crores project.

MTNL also evolved two new data centers and worked out a clear RoI strategy where the
organization saw benefits in terms of ease of network procurement, per user revenue
going up, inventory reduction and ease of operation with centralized billing.

Airtel’s Menon believed IT to be the backbone for its services particularly when handling
2,000 servers, 2,000 terabytes of data, 8 gigabytes of bandwidth and the entire
operations and business support system. Unlike its peers, Airtel went in for outsourcing
the entire IT deployment function to IBM much earlier. IBM developed the entire ERP
system related to HR, supply chain management, finance based on Oracle, Metasol and
SoA architecture. “We got IBM to customize best-of-breed software packages to
integrate with our BSS and OSS and creating a service delivery program (SDP). As part
of SDP, we came up with mobile TV, DTH besides effective broadband solutions based on
the utility model of unstructured services. Interactive portal services also became a
major component on SDP.

However, the most critical deployment has been the e-tize solution for employees, which
was a drive towards a paperless office. “Content management using transcode, profile
manager, digital manager tools also saw a significant response and IT as a whole helped
us in bringing out a globally replicable model,” said Dr Menon.

Tata Teleservices’ Rao opined that the CIOs are leveraging technology and solutions in
various areas like deploying hosted and shared services in order to leverage existing
infrastructure, with the hosting not limited to internal business units but also to other
partner companies and customers. “We are creating frameworks and services that are
aligned to industry standards for seamless integration, automation and promoting re-
use, while coming out with innovative solutions like Product Portfolio Management for
significant improvements in time-to-market and competitiveness”, said Rao. Developing
remotely accessible solutions supporting rural penetration is vital for Tata Teleservices,
besides having comprehensive enterprise analytics for data-driven decision-making and
better customer understanding. While Green IT initiatives become pertinent for resource
optimization, creating a product portfolio management enables central creation,
modification and deletion of products or entities such as tariff plans and schemes. This
system, Rao opined would automatically distribute all the products configured to various
downstream applications that include billing, order management, enterprise integration,
CRM and point of sale.

Rao said that IT has contributed significantly to cost reduction in this area through a
recharge solution in the form of Electronic Voucher Distribution (EVD), which is an
electronic prepaid mobile phone recharge platform that enables the service provider to
electronically distribute and sell innovative and flexible recharges to customers.

EVD system supports Flexi and Special recharges through various channels such as SMS,
WEB, WAP and Payment Gateways, with key benefits being reduced time-to-market from
one to two months to less than five days and enormous cost savings of about Rs 6
Crores per month at just 60% penetration. Siemen’s Sharan initiated deploying
enterprise-wide applications extending traditional ERP and Internet applications to
support non-critical functionality.

Siemens’ investments went into upgrading the existing network backbone, and changes
to the resilient MPLS WAN. Virtualization and blade computing have enabled Sharan and
his team to improve processing power resulting in the reduction of OPEX, power and real
estate. “Tools like Microsoft SCCM and SCOM are helping us improve enterprise-wide
service delivery through remote management, up-to-date inventory status etc.

Reliance has been effectively used IT for every aspect of its business. Joshi initiated
customized applications deployments that include fraud management systems, CRM, and
a Mediation Device application that transforms raw network events from different
network elements into meaningful business information, facilitating billing, interconnect
and fraud management systems to reduce the load on usage events validation and
processing.

“We went ahead with ERP to deliver a single database that contains all data for the
software modules related to manufacturing, supply chain management, financials,
projects, HR and the data warehouse,” said Joshi. With major IT innovations on its
agenda, BSNL has gone in for a complete IT transformation and the company is set to
revamp its IT infrastructure and application modules. According to Ghosh, the company
will be doing away with its legacy system having an Oracle database and an in-house
developed software named DotSoft for its billing systems. “The entire IT solution was
being run on legacy systems and in silos and now we intend to bring all applications on
the single window system be it commercial, billing, customer services,” said Ghosh.

As per the  the National IT policy infrastructure, under the CDR (Call data record)
project  rolled out by the central government, about Rs 1,200 crores has been
sanctioned to BSNL towards IT modernization. BSNL will consolidate all of its systems
into one and create a robust IT system, which will enable it to offer greater services.

Ghosh maintained that in the process, four new data centers would be established
spread across each zone, enveloping North, East and South. Each zone would deploy
billing applications including landline billing, leased line billing, broadband, order
management and others.

“The entire project is outsourced to HP which will evolve best-of-breed solutions at every
phase,” said Ghosh.

Software applications for converting call-related data into a monetary-equivalent value,

collection management, carrier billing and settlement system, decision support systems,
computer-based information systems including knowledge-based systems that
support decision-making activities were key deployments at Reliance.
Despite being the trendsetters with technological innovations on the cards, the CIOs do
feel that they are missing something more. They find certain technologies emerging that
could be of use to the sector.

Be Trendy

Most CIOs in this sector believe that SOA-based Web solutions would be the next phase
of deployment and virtualization with the concept of Green IT gaining momentum in the
desktop space.

Reliance’s Joshi pointed out that introduction of 3G technologies would change the way
of communication, creating room for value added services. Most CIOs in the telecom
space are evaluating 3G, which they would be deploying in about two to three quarters
from now.

MTNL is working out ways to provide a transfer of 1000 Gbps per district soon. Airtel’s
Menon is betting on cloud computing based model as the future direction, which could
save him an enormous amount of money. Green IT technology and e-waste initiatives
also falls under Airtel’s agenda. IDC’s Gupta expects the industry to witness cost savings
through automation and innovation technologies, improved connectivity over voice and
data, gathering business intelligence. “IT will be primarily used for data integration,
business integration and technology integration going forward which will drive major
growth for organizations,” said Gupta.

Tata’s Rao found growing customer demand for VoIP, 3G and wireless broadband, next
generation network promoting convergence, mobile commerce and location-based
services. “IT is geared up to meet these business frontiers by adhering to standards,
promoting service-oriented architecture, rationalization and simplification of IT estate,
and deploying Software-as-a-Service (SaaS),” he commented.

he fact that the Indian telecom industry is robust and growing is no secret. More than 20 million
basic and cellular subscribers were added in the year 2003 alone - helping the industry meet its 7
per cent teledensity target, a whole year in advance. This isn’t a chance occurence. Over the last
few years the Indian telecom industry has seen a customer acquisition war like no other —
dramatically falling prices, attractive schemes, and emotional ad campaigns — vendors have
gone all out to get the largest share of the pie, and very successfully so. Recent cuts in tariffs all
reiterate the fact that the liberalisation of the telecom industry is having the effect that introducing
competition usually does - making the customer win.

However, as experts would put it - the best is yet to come. Service providers — having proved
their mettle in the war of customer acquisition will now go on to round two — customer retention.

All of us have had experiences with our service providers that have been less than satisfying.
How many times have you received a call from a customer relationship agent enquiring about
your phone bill payment — a day after you’ve informed another of your intention to drop a
cheque off the next day? Or, how about finding that your roaming facility is inactive because
there’s some confusion at the back end about your credit limit? These are all common issues
faced by customers — issues that have and could cost a service provider a customer.

As the market matures and the customer truly becomes king, a service provider will be under
pressure to innovate and make customers stay. Effective, personalised customer relationship
management will become the mantra for Telecom Service Providers (TSPs). Simply stated,
Customer Relationship Mana-gement (CRM) is about finding, getting, and retaining customers.
CRM is at the core of a customer-focused business strategy and includes the people, processes,
and technology questions associated with marketing, sales and service.

In today’s hyper-competitive world, organisations looking to implement successful CRM

strategies need to have access to a common view of the customer using integrated information
systems and contact centre implementations. The customer should also be able to communicate
via any communication channel he chooses to use. CRM tools will enable TSPs to understand
customers against a set of parameters.

Vendors will be able to appreciate a customer’s socio-economic background, preferred services,

usage patterns, spending trends, satisfaction levels, payment history, important dates, family
information, etc.

An effective CRM solution requires good business intelligence tools. These tools are used to
eliminate guesswork and gut-feel based decisions. These enhance communication and joint
planning across functions and lines of business, and enable organisations to respond much more
quickly to changes.

These solutions are tightly integrated with all the data sources within the organisation. Disparate
data sources are converted into a data warehouse or data mart depending on the need, and data
in these warehouses and marts are logically segregated. On top of these data warehouses sit the
BI tools. It is these tools that enable organisations to view the entire customer data on a
dashboard - measuring return on investment (RoI), quality of service, cost of capital, cost of
service, profitability of different features and services being offered to customers, marketing
campaign effectiveness, etc.

Telecom vendors have so far invested in building systems for mediation, provisioning, service
and revenue assurance, network management and other essential enterprise needs.

Now they need to focus on establishing robust CRM practices - online, always connected
infrastructure that will allow them instant access and facilitate efficient decision making. The
Indian telecom industry has come a long way over the last 10 years. Of these, the last four-five
have been particularly exciting for the TSP. On one hand, consumers demand cheaper, feature-
rich and faster access, and on the other, the same consumers are spoilt for choice with multiple
carriers and service providers to choose from in each circle.

The next five years or so should see the landscape change, and TSPs mature from being
salespersons to relationship managers. Added to this, the imminent consolidation will call for the
use of technology as the process integrator, ensuring that the customer has a smooth, seamless
experience. The knowing customer will be at the centre of this change - and the biggest
beneficiary too.