Telecom operators are finalizing managed service providers that are able to reduce complexity and operational costs in both IT and mobile network environments.
ABI Research says Huawei and Ericsson are the ones to watch as the network managed services market heads toward $18 billion by 2019. Their economies of scale and performance advantages reinforce and grow their dominant market positions. Future growth areas include converging mobile, wireline, IT, and networks silos and the expertise needed to succeed with SDN and NFV.
Technology trends
The demand for higher-capacity mobile broadband services is increasing and Carrier Ethernet is becoming the solution of choice given its ability to handle multiple services with different requirements and SLAs. As Carrier Ethernet enables converged architectures it is the most cost-effective means for operators in emerging telecom markets to address the growing need for backhaul.
“Ciena also sees a clear move towards networking architectures and solutions that will draw from new technologies, such as Software Defined Networking (SDN) and Network Function Virtualization (NFV). Both these technologies encourage an open ecosystem where networking functions and applications can emerge from an environment of co-creation,” said John Baughn, vice president, Network Transformation Solutions at Ciena.
Since network is becoming more and more software-driven, the telecom industry expects a growing demand for IT solutions within the network domain, including network optimization and planning, solutions for small cells etc. Smaller operators are more open to cloud-based solutions.
Abhay Kumar, regional vice president, Asia Pacific, Amdocs, says SMAC (social, mobile, cloud and analytics) and digital transformations are gaining traction. There is a strong need to find ways to tap into the new domains and move to multi-channel solutions to grow the business.
The Amdocs O2A offering allows proactive prevention of issues and more efficient management of the process, as well as clear accountability. For a North American service provider, this system and application agnostic offering has reduced stuck orders by 65 percent and increased automation to 75 percent.
How telecoms benefitted
Telecom customers using Amdocs’ managed services include AT&T, Bell Canada, Sprint, MetroPCS, Elisa, MTel, TIM Brasil, Telkom South Africa, Globe and several Vodafone entities, including Vodafone India and seven Vodafone markets in Europe supported by shared service center structure.
Mtel has recently expanded its relationship with Amdocs to include its IT operational support.
“We will be able to achieve high performance levels with a highly efficient cost structure. The managed services deal is a significant milestone in our strategy to consolidate our operations to become a true, multi-play provider, and will help us to further differentiate ourselves, while offering an exceptional customer experience,” said Horst Pertl, chief technology officer at Mtel.
TIM Brazil will now directly benefit from Amdocs’ 30 years of expertise in managing complex operations.
“The IT organization needs to evolve, following the company’s growth. We are standardizing TIM’s systems and Amdocs is a partner in this project. As a result, we expect to achieve accelerated growth, cost reduction and further improvements in our customers’ experience,” Luigi Longarini, IT Director of TIM Brazil.
For a service provider in EMEA, Amdocs O2A delivered improved KPIs including 20 percent flow-through improvement, 20 percent automation of fallout remediation, 40 percent order backlog reduction and 40 percent data alignment improvement.
Ciena is currently a supplier to five of the top seven operators in India. This includes operators such as Reliance Communications, Bharti, and Indian Global operators such as Tata, and Global Cloud Exchange (formerly Reliance Globalcom). On an international basis, Ciena currently supplies most of the world’s top operators, including, AT&T, Verizon, BT, NTT and Mobily.
Earlier this year Ciena announced the completion of a submarine network upgrade spanning from India to Singapore with i2i, a venture of Bharti Airtel. Using Ciena’s converged packet optical and network management solutions, the upgrade enables Bharti to increase capacity over the i2i cable and respond to a surging demand for high-bandwidth data services driven by both enterprise applications and an increasing use of mobile bandwidth across the region.
Ciena and Etihad Etisalat (Mobily) of Suadi Arabia are working to provide Advanced Connectivity Services (ACS) for the enterprise and public sector in the Kingdom of Saudi Arabia (KSA).
Mobily’s ACS services are enabled by its next-generation network that leverages Ciena’s Converged Packet Optical, Optical Transport Networking and Packet Networking portfolio, as well as support from Ciena’s Network Transformation Solutions practice.
“Mobily has transformed the mobile market in the KSA and is equally determined to carry this change through to the enterprise connectivity market,” said Mohammed Basafi, chief technology officer at Mobily.
Ciena and Tata Communications are providing increased capacity across the TGN-Pacific and Intra-Asia submarine fibre, enabling high-bandwidth connectivity to carrier and enterprise customers. Ciena is enabling Tata Communications to better monetize its network and provide flexibility to its customers. This also allows them to handle capacity demands driven by high-bandwidth services such as cloud computing, video and mobile communications.
“Investments such as the Ciena 100G upgrade to our TGN-Pacific submarine cable and Intra-Asia routes enable us to meet customer demand for high-bandwidth services and applications, whilst ensuring end-to-end network performance for our enterprise and carrier customers across the US and Asia,” said Genius Wong, senior vice president, Global Network Services, Tata Communications.
Demands of telecoms
Telecom operators look for managed services to help assist them through transition, as networks are starting to be architected not just for connectivity, but for consumption. In a world where apps are delivering content to our homes, offices and mobile devices, operators need to focus on architectures and managed services that will help them manage risk while providing quality connectivity.
Enterprise customers have a related set of expectations, in that they too look for time to market advantages, business assurance tools, and the ability to outsource operational environments that are not part of their core business. As their IT applications also become app and cloud centric, they will look for innovative services (either carrier managed, or managed by the app provider) to help them get the most efficiencies of their IT investments.
“We are seeing that more attention is being paid to the quality of provided services with a clear trend towards business-driven KPIs. Today, it is important to look beyond the operational KPIs and understand the impact on the business,” said Kumar of Amdocs.
Communications service providers are looking for partners who can bring to the table added business value on top of the traditional outsourcing benefit of lower costs. They need a managed services partner that can take ownership over multi-vendor environment and act as a single point of accountability, simplifying and streamlining their relationships within a multiple vendor ecosystem. There’s a need for a new role emerging – that of services integrators who can support communications service providers and embrace their challenges as they seek to enter new domains and introduce new technologies.
Tips to telecom CTOs
“In general, enterprise IT departments are facing some key challenges including: increasing responsiveness to their customers, controlling CAPEX and OPEX, and ensuring regulatory compliance, security and privacy,” said Baughn of Ciena.
As IT applications become app centric and cloud centric, enterprise CTOs and CIOs should consider:
# Solutions that connect both their users and their private data centers seamlessly to the cloud
# Connectivity and/or managed services that maximize their business assurance, allowing them to get real time and historical performance data and analytics for their mission critical connectivity and applications
# Connectivity and managed services that are vertically integrated into their IT and business applications, giving them the most business agility and responsiveness to their customers and their market
# A service provider that can guarantee secured access for their user community, protecting mission critical information
# Collaborations with service providers that ensure IT investments are aligned with business objectives
In telecom, with its high CAPEX and OPEX, converging markets and narrowing voice ARPU, innovation paves the way to improved customer experience, increased efficiency and business growth. A ‘true partnership’ mindset along with a keen focus on innovation are what CTOs need in a business partner to help them deliver what the business asks for in order to drive growth, while maintaining a low cost structure and high efficiencies that management demands.
A survey conducted by Amdocs earlier this year indicates a clear need for a services integrator to act as the communications service provider’s business partner, proactively identifying and driving the implementation of technology-based solutions, while taking ownership for the multiple vendors involved. The survey indicated that 74 percent of respondents reported an increase in the number of services vendors they engaged with, 26 percent actually doubling the number of vendors over the last 5 years.
Telecom multi-affiliate operators are under pressure to deliver a consistent customer experience across markets, each with different cultures, mindsets, regulations and languages, while increasing efficiencies. This can be effectively delivered via a shared services center. CAPEX and OPEX reduction, risk, overhead and complexity mitigation as well as adherence to predefined desired performance levels are just some of the benefits of such an operation.
With new revenue streams in their infancy and flattening of traditional revenue streams, telecom operators are under pressure more than ever to reduce costs. At the same time, they are hard-pressed to keep up with the demands of their subscribers and must invest in capital expenditure to meet them.
Telecom analysts on managed services
Technology Business Research last week said Huawei is growing its leadership presence in IT and Network Managed Services.
Since entering the market in 2005, Huawei has won more than 360 managed services contracts, with operators viewing Huawei’s customer management practices and technical expertise as particularly strong.
“Operators in the TBR survey cited Huawei among the top three managed services providers for network functions. The company’s portfolio of managed services for IT and network environments delivers IT transformation for operators looking to incorporate new technologies such as Network Functions Virtualization , Software Defined Networking and cloud into their operations,” said Michael Sullivan-Trainor, executive analyst, TBR.
“Operators everywhere face the challenge of compressed margins and growing costs and by using managed services, they can simultaneously reduce operating expense and improve customer facing performance,” said ABI Research’s Joe Hoffman, practice director, Networks.
Though Huawei and Ericsson compete in the super-heavy-weight division, they still have to keep watch on Nokia Networks and Alcatel-Lucent as they will be looking for opportunities in managed services and lapses in the leaders’ performance.
Baburajan K
editor@telecomlead.com
