According to a recent Alcatel-Lucent (News - Alert) whitepaper, Building an Outsourcing Relationship: Key Factors for Success, In a time of Rapid Change, “Powerful trends are driving the need for communications service providers (CSPs) to transform the way they do business and operate their networks.” In fact, the list is worth repeating:
· From fixed to mobile
· From voice to data and video
· From simple handsets to complex multi-functional devices
· From basic voice users to sophisticated demanding end users
· From standalone services to convergence of IT and telecom
· From focus on managing day-to-day operations to focus on managing subscriber retention
· From dedicated infrastructure to flexibility through cloud
· From closed interfaces to open Application Programming Interfaces (APIs)
As a result of these, and in the face of the “new normal” being an era where the only constants are there will be change and the speed of change will accelerate, more and more Communications Service Providers (CSPs) are considering outsourcing part or all of their network, business and IT operations.
A leading indicator of this trend was the recent announcement that one of India’s largest CSPs, Reliance Communications (News - Alert), revealed a unique agreement with long-standing partner Alcatel-Lucent (ALU) to outsource significant parts of its operations. The deal, lasting through 2020 is aimed at providing Reliance a wide range of services including:
· Operations support system (OSS) integration
· Benchmarking and radio frequency coverage testing
· Service delivery management
ALU will also be responsible for network performance and ultimately the service quality delivered by Reliance, with the goal of boosting the customer experience. In addition, ALU will work closely with Reliance to identify opportunities to introduce new services and expand existing businesses.
This streamlining will include harmonizing previously independent wireless and fixed-line teams and bringing them together into a single network organization. Standardizing the tools, processes and best practices of the organization also will be part of Alcatel-Lucent’s objectives.
“We are happy to announce our new partnership with Alcatel-Lucent, which is a transformative leap from the limited scope and vision of traditional outsourcing of services,” said Gurdeep Singh in the statement, chief executive officer of wireless business for Reliance Communications.
“This will enable Reliance Communications to take the lead in offering next generation telecom solutions that will meet and exceed the expectations of our customers, and help them to transit from voice-led usage to a seamless data experience across multiple devices and platforms,” he added.
Reliance Communications currently has 130 million customers and is part of the larger Reliance Group, a large Indian conglomerate with a net worth of more than $17.7 billion.
The contract with Alcatel-Lucent continues the partnership between the two firms, which now runs more than $1 billion.
“Having partnered with Reliance Communications over the years, we fully understand what is required to manage and transform its network,” noted Munish Seth, president and managing director of Alcatel-Lucent India. “We believe that our extensive experience with Reliance Communications has played a major part in the expansion of our existing relationship, and the awarding of what is one of the largest and most strategic contracts for us to date.”
The agreement is the first converged wireless/fixed-line contract in India, and one of only a handful in the world, according to the statement by the two companies.
Why managed services and why now
As the whitepaper explains, while managed services for network operations have been around for almost two decades, the perfect storm of technical and competitive factors are making the value proposition for an outsourcing solution compelling. Managed services are no longer just about running a network cheaper. Managed Service Providers (MSPs) like ALU, must now help CSPs be not just reactive and proactive in dealing with the new normal. This means MSPs must offer more than “like-for-like-for-less.” They must lead with the transformation of software-based Operations Support Systems (OSS), delivered as a managed service model, and support new CSP (News - Alert) business models like infrastructure sharing and netco/servco arrangements.
According to Alcatel-Lucent, the real crux of the matter is that: “MSPs and CSPs must align in a partnership arrangement, in which they share both the risks and rewards of what happens with a CSP’s business. It will be the MSP’s responsibility to help support and manage the rapid operations and business changes… This calls for a true partnership engagement model, supported through structured governance, change management and a mutual commitment to success. As its operational goal, the MSP must support the CSP’s competitive differentiation, by helping it deliver new services faster, cheaper and with a better quality of experience for end users. This needs to be accomplished in line with the CSP’s key business objectives (KBOs), such as increasing ARPU, decreasing user churn and improving margins and revenues.” In fact, the whitepaper lays out twelve steps that can be taken to assure the partnership works smoothly.
In an age where the centrality of CSPs in emerging ecosystems has become a priority challenge, outsourcing to an MSP makes good sense so that the CSP can concentrate its resources on delivering a quality customer experience that can enable it to thrive is an increasingly competitive environment.
Edited by Peter Bernstein