The Business Value of the Network Integrator

25/06/2009 by David Slade.

THE COMPLEXITY CHALLENGE

Within the last few years, service providers have engaged in a wide array of initiatives to transform their networks and business models to monetize growing user demand for new interactive multimedia communications and entertainment experiences. While the drive to grow revenue is, and will remain, a core factor for operators, the requirement to save on operating and capital costs has more recently risen to equal prominence, as new data revenues have not yet made up for declining voice services and slowing subscriber growth for most operators.

Many paths to more cost effective service provider operations are being examined. The most prominent of these is to migrate to an all-IP-based network. Whether fixed or mobile operator, this migration requires a transformation from time-tested legacy infrastructure with built-in reliability to a relatively new set of platforms that require careful engineering and integration to ensure a premium quality of experience. The transformation also requires changes in OSS/BSS and opens up the possibility of new service delivery and customer management business tools and models.

As a result, service providers are engaged in a more complex integration environment than ever before. While the overall concept of transforming to an IP-based network is conceptually feasible, the multitude of migration and optimization requirements that are visible in today’s network environment threaten to overwhelm service provider staff capabilities at a time when cost management is becoming the key priority.

Case Study: Cost Reduction At BT

Project examples include British Telecom’s investment in a converged IP core network, an intelligent service enabling infrastructure based on IMS, an operations support systems (OSS) architecture based on commercial off-the-shelf systems, and the development of an open application layer that allows faster time-to-market for traditional and Web 2.0 services. These initiatives, dubbed the “21st Century Network” by BT, are based on a business case that emphasizes platform consolidation as a way to first reduce operating, development and maintenance costs; and eventually generate new services and new sources of revenue. The clock is ticking on achieving this transformation, as BT intends to close down its last PSTN switch in 2011.

However, such cost reducing initiatives can be hampered by complexity; multiple projects are required to not only transform the various domains of the network, but integrate them into a seamless end-to-end working solution. The process of translating the vision of a transformed network into a positive business case and process road map can be very time consuming. After the road map is complete, then the work really begins with a multitude of sub-projects to drive the transformation of each network domain and the overall end-to-end network solution.

Needed Expertise

In many cases, service providers lack the expertise to effectively carry out both the pre-transformation planning and the post-execution training and ongoing support of numerous projects. Manpower shortages and a lack of specific knowledge/expertise may be an issue for a small-to-medium operator, while even a large operator may lack the technology expertise in IP or Web services to effectively carry out the plan with only in-house resources. Alternatively, service providers may have internal expertise but wish to prioritize the utilization of these resources to address their core competence – developing and delivering end user services.

Frequently, a number of outside “experts” are brought into the service provider to carry out major transformation projects, or certain subprojects within a major project. These vendors can include:

• Telecom equipment suppliers working with the network-facing elements;

• IT systems integrators working with operational support and billing systems; and,

• Software and Internet services specialists focused on applications.

Without careful management the cost and time requirements of the sub-projects may quickly wipe out a large portion of the cost savings in the original business case.

However, one strategy being adopted by a growing number of service providers to minimize the cost of transformation is to select a single integrator that brings together a combination of its own skills and a roster of “best-of-breed” partners to achieve desired transformation goals in the most efficient manner.

THE DOMAIN CHALLENGE

According to TBR’s Telecom Infrastructure Services Model (TIS), service providers worldwide will spend more than $15 billion on integration services in 2008, as shown in Figure 1 below. TBR’s TIS Model tracks telecommunications infrastructure services spending by service providers worldwide. Published semiannually, the model is based on analysis and forecasts of product-attached or capex-driven services such as deployment and maintenance, and non-product-attached or external opex-driven services such as professional and managed services.

As indicated in the preceding figure, service provider investments are expected across four major domains to achieve effective end-to-end network transformation. The domains address the key areas of the service provider infrastructure, and each domain requires a set of specialty skills to support the required optimization, consolidation and integration goals of each subproject. The four key domains are defined as follows:

Subscriber Domain

Transformation in the Subscriber Domain enables a shift from mass market services built to provide a common experience to all end users, to easily accessible services tailored to the individual on demand. Service providers are well-positioned to deliver these services because they can leverage assets such as subscriber presence and location information, subscriber preference information, single sign-on capability, real-time rating and charging, and content administration. Service providers gain differentiation by an ability to account for individual preferences and desires, which builds customer loyalty and reduces churn. In addition, this new capability allows service providers to field alternative business models such as advertising.

In addition, the transformed Subscriber Domain makes it easier for service providers to deliver third-party applications that support value-added services tailored to the individual subscriber. Critical to this capability is the ability to provide third-party services access to federated subscriber data. To transform the Subscriber Domain, operators must integrate multiple subscriber systems into an optimized management system that allows subscriber data to be quickly and easily accessed by service provisioning and delivery and billing systems. However, the transformation process goes beyond simply replacing aging silos of subscriber data with a distributed intelligent database: transforming the subscriber domain means enabling personalization and delivery of targeted content for end users, in addition to consolidating platforms, while maintaining the quality of experience, regardless of the targeted end user network or device.

Applications Domain

The Application Domain of the network is perhaps the most critical of the four domains. As service providers rapidly convert to software-oriented architectures that support concepts such as “write once, deploy everywhere” applications, the ability to provide a common development platform is crucial. For example service providers such asAT&T base their implementation of new service layer-enabling technology on the number of services they can rapidly bring to market. With AT&T in the midst of deploying U-verseIPTV  service for the home and high-speed HSPA wireless broadband networks, the goal for a growing number of these services is that they be accessible via “three screens” — the PC, the television and the mobile device.

In addition to the “three screens” target, service providers are leveraging SOA and Web 2.0 environments to reduce the time to market for application deployment. The goal is to make available IP-compatible services as quickly as possible. This requirement increases the need for a well-integrated application delivery environment that can seamlessly leverage the underlying IP network.

Added to these requirements is the ability to present and quickly deploy applications from third-party developers without reengineering network interfaces. The new Applications Domain must not only be capable of delivering to any access point, but must also be capable of seamlessly integrating with non-native applications. The transformed service delivery environment therefore requires seamless migration and mediation services for third-party applications.

Billing And OSS Domain

Integrating billing and operations support systems (OSS) are crucial to managing customer revenue acquisition and retention, and ensuring network and applications reliability and consistent quality of service. Transformations in this area typically focus on consolidating diverse OSS and BSS systems that today address separate silos or applications, to create a single, consolidated support management system that tracks and manages the customer based on all his or her relationships with the service provider. In concert with the subscriber and application domain evolutions, future billing systems must evolve to support new customer relationships and new application revenue recognition models such as advertising and third-party revenue sharing.

OSS consolidation on commercial off-the-shelf platforms is gradually replacing the highly customized platforms of the past. These operational support systems must also accommodate new network elements, particularly the ability to monitor and manage IP traffic and cross-domain applications.

Network Infrastructure Domain

The integration of high capacity access networks with common core network elements supporting reliable delivery of IP multimedia services requires unique expertise. Service providers are increasingly relying on partnerships with equipment suppliers to guarantee quality of service in these implementations. Many are turning to out-tasking or outsourcing models to reduce costs for in-house training.

Ultimately, however, integrating the layers of network infrastructure from the device to access, aggregation, edge, core and transport to deliver services in an optimized seamless manner requires a range of network integration skills. Further, these evolutions must be accomplished in concert with transformation in the other domains to achieve effective end-to-end implementation.

Network Integrator Role

As Figure 2 indicates, the Network Integrator delivers best-in-class integration capabilities within each of these four domains and, most importantly, delivers the design, project management and integration services expertise to integrate the entire set of domains to deliver the desired services to end customers.

Without sufficient attention to integration requirements across domains, service providers run the risk of lack of project coordination, imbalanced investments among the various domains and not meeting end-to-end service objectives. A Network Integrator is often needed to resolve such issues because many service providers still operate in silos of control, in which each domain is owned and managed by different stakeholders in the company.

Case Study: Verizon’s Silos

Verizon Communications provides a good example of a network operator in the early stages of transformation. The company’s core businesses, as characterized by Verizon’s Director of Multimedia Services Architecture Bill Goodman, include:

• A local telecommunications business that is focused on transforming from traditional voice service to fiber to the premise (FTTP), delivering a bundle of intelligent, interactive services;

• A business services arm, Verizon Business, that is evolving to an IMS-driven, SIP-based services model; and,

• Verizon Wireless, a mobile business joint venture with Vodafone Communications, which is upgrading capacity to support VoIP and fixed mobile convergence by means of dualWiFi /CDMA devices.

NETWORK INTEGRATOR BUSINESS VALUE

While there are many integrators operating within today’s service providers, consolidating the transformation projects under the supervision of a primary Network Integrator offers the following areas of business value:

Cost Savings

There are a number cost savings benefits to working with a Network Integrator, including 1) consolidating supplier management, 2) maintaining overall project vision and 3) ensuring project goals are achieved in a timely fashion.

Consolidating Supplier Management

By establishing the transformation process as a project under the guidance of a single Network Integrator, the service provider consolidates the cost of supplier management. Rather than manage a host of subprojects with different suppliers, the service provider, according to the business plans, maps out a vision and sets performance expectations according the business plan with a single partner. The Network Integrator is responsible for managing the subprojects within the context of multivendor agreements with the appropriate third parties and the service provider. With the right Network Integrator, the service provider will also be able to turn over supplier sourcing, resulting in additional savings in time and staff resources. Alternatively, the Network Integrator may be required to work with other suppliers identified by the service provider. The integrator must be skilled at both identifying appropriate suppliers and working with installed base suppliers or service provider preferences.

Maintaining Project Vision

Because of the multiple domains involved, service providers can easily become focused on a portion of the transformation within a single domain rather than maintain the complete roadmap. Operating independently, suppliers can move at varying speeds within subprojects and lose track of the big picture. These issues can cloud the once-clear evolution/transformation path across domains, causing imbalanced investments and outcomes for key milestones. For example, an IT supplier may implement an integration project involving the deployment of new consolidated BSS/OSS platforms without sufficient understanding of the changes in the underlying network, or parallel subscriber and applications domain. This may require costly additional integration expenses to create the appropriate interfaces or even change major aspects of platform functionality to accommodate the misunderstandings.

Achieving Goals on Time

Acting as the chief project manager, the Network Integrator ensures that cost savings through platform consolidation and other transformations are achieved according to deadline. Often these savings can be delayed due to interdependencies of the various sub-projects. The Network Integrator’s role is to help the service provider identify interdependencies and effectively manage them to meet the project timeline. The Network Integrator may bring its own design and analysis tools to bear on the full-scale transformation, allowing better risk mitigation and contingency planning across all subprojects and suppliers involved.

Faster Time To Revenue

As in the case of BT, while many of today’s transformation projects are based on business cases that focus on cost reduction, operators understandably expect to attain new sources of revenue at the end of any transformation project. Decreasing time-to-market and reducing investments required to launch new products and services will continue to be requirements in transformation projects.

While many service providers engage in IP transformation as a hedge against future challenges to their business models, most foresee the impact of new sources of revenue from services that blend personalized content with multimedia and multi-device access capabilities. They also expect new revenue sharing and advertising models to create incremental revenue. These future value/benefit expectations are driving today’s transformation projects.

The Network Integrator must possess sufficient expertise with new revenue sources to achieve the revenue-generation milestone, and not just settle for delivering cost savings. This commitment is a change from the traditional position of equipment suppliers, who have historically operated with a philosophy of “if we build it (the network), they (subscribers and revenue) will come.” In short, the delivery of the subscribers through investments in customer acquisition was up to the service provider.

The age of the Network Integrator does not mean a fundamental shift in roles. Service providers must still invest in customer acquisition and focus on new services development. But the Network Integrator, operating in partnership with the service provider to achieve the transformation vision, shares the requirement to secure subscribers. To this end, the Integrator must possess end-customer knowledge through research and experience so that the transformations within each domain cater to real revenue value for the service provider.

Figure 3 maps the Network Integrator skill requirements to the key domains to achieve the transformation sought by the majority of service providers today. The data indicates that the Network Integrator role requires both domain and project management expertise at a multivendor level, as well as experience achieving transformation milestones.

Case Study: Telstra — One Click

Telstra represents a major network transformation project in which the skills of the Network Integrator have been crucial to meeting project milestones and delivering benefits to the service provider, according to Michael Lawrey, Telstra’s Executive Director for Network and Technology. Telstra’s journey began in November 2005 with the challenge of creating an end-to-end IP infrastructure that could enable “one-click services,” whereby the end user could access a consistent experience no matter which network access method was used. To enable the IP infrastructure to meet this, Telstra executed three infrastructure transformations:

• Transformation of the mobile network infrastructure to a next-generation network

• Installation of a high-capacity IP core network

• Transformation of a next-generation access network

• Cross-domain network operations and service delivery

The Network Integrator, in this case Alcatel-Lucent, provided complete end-to-end cross-domain project management. “Regardless of the equipment we used in the network, the integrator was responsible for it all, even including the testing and quality assurance tools,” Lawrey said.

The key for Telstra was to work in close collaboration with the Network Integrator, which provided a single point of accountability. In addition to managing the interdependencies of a multivendor, cross domain environment, the Network Integrator provided the critical functions of ensuring that subscribers would be served efficiently with the quality of experience Telstra expected. Lawrey characterized this as making sure the customer delivery system operated effectively, including services activation and network assurance.

Telstra achieved cost savings of 30% to 40% by employing a single Network Integrator, Lawrey said, including via a reduced workload on Telstra’s staff and through cost savings in equipment and services from the suppliers involved in the project. “By pushing the workload to a single integrator we achieved economy of scale,” Lawrey said.

The transformation of Telstra’s network domains is an ongoing project that includes the complete lifecycle of deployment, operation and maintenance. Lawrey expects the Network Integrator to come along for the entire journey. “We have built a relationship not only with the country team, but also the global assets of the supplier. We have a deeper relationship with coordination of global road maps and strategy. This is a partnership for the lifecycle of the network,” Lawrey said.

SUPPLIER SELECTION

While not all firms can fit the bill across the range of skills required for the Network Integrator role among suppliers, service providers have a short list of consolidated firms that are vying for the opportunity. These include the largest suppliers of telecom infrastructure services as shown in Figure 4.

SUMMARY

The importance of the Network Integrator role will continue to grow as service providers move more aggressively toward transformation. Maintaining the skill sets and delivering on the project milestones will be key differentiators for suppliers in both IT and telecom going forward. Alcatel-Lucent has an early lead with positions in a number of major service provider projects. With the role of Network Integrator open to a single supplier at each account, the company’s position is the strongest of the top suppliers. However the position will not go unchallenged; each supplier will work from its installed base and technology position to gain the role.

Posted in Applications Domain, Billing And OSS Domain, Network Infrastructure Domain, CDMA devices, Subscriber Domain, Network Integrator, Wi-Fi, Web 2.0, operations support systems (OSS), converged IP core network, System intergration | No Comments »