At the Carriers World conference in London, Ruth Pickering, managing director of strategy & portfolio at BT Wholesale, spoke on camera to Mel Coles of Total Television. In the interview, she talked about the growth of wholesale business in turbulent times.
When Beatriz Butsana-Sita, general manager of BT Global Telecom Markets (GTM) spoke at Carriers World Middle East in October, Brian Dolby interviewed her for Total Television. In the video of the interview, she talks about the challenges that keep her awake at night and her view of some of the solutions. [Read more...]
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Andrew Dodsworth, director of operations and voice business for BT Global Telecom Markets (GTM), discusses the current market and how partnerships can help operators compete and thrive.
Business models are under constant pressure as network operators aim to consolidate legacy cost structures and take advantage of new opportunities. So operators now consider partnerships and sourcing that they would not have considered in the past. Another reason for them to take a closer look is that sourcing for integrated processes and value chains is much more attractive than it used to be. Flexible wholesale and outsourcing offerings can now connect process steps and interfaces instead of connecting chunks of infrastructure. Especially with managed services, telcos can outsource selected parts of their operations – they don’t have to take an all-or-nothing approach.
Does the pace of technology change influence the trend toward more outsourcing and managed services for operators?
Yes, because rapid technology change has made long-term investment cases for operators very difficult. In the past, operators could rely on long-term use to ensure that large investments paid off. Today payback is less likely. Compare the lifecycles of the copper phone line and a mobile 3G network. With LTE (Long Term Evolution) just around the corner, it’s a challenge to get payback from 3G. This payback challenge has changed operators’ view of network investment and influenced their approaches to outsourcing. Operators need partners to complement their portfolios. No operator can go it alone anymore. (For more about the critical importance of collaboration, see “Talking telcos with BT Telconsult: Collaboration is key“.)
Does the new sourcing impact the ownership of networks?
In the past, the party who owned the network ruled the value creation. The services were all based on one network, preferably end-to-end. This was seen to prevent competitors grabbing a share of an operator’s business. Only the international voice business was different, mostly because not everybody could maintain a global end-to-end voice network with national footprints everywhere. Fortunately for operators, IP networks changed all that: the public internet created a global-to-local over-the-top infrastructure which is not facilities-based. It allows almost everyone to compete on a level playing field. And the service provider rules the value creation. Against this background, although ownership remains a key factor in the core of an operator’s business, the accessibility of networks becomes a major consideration. This means that interoperability between networks is far more important than it used to be. The myriad services, devices and changed user-patterns arising from fixed-to-mobile convergence, global roaming, social networks and smart devices are another reason that no operator can go it alone anymore. So we see most tier-1 operators moving to create IP exchanges and look for federated partnerships. And the creation of innovative IP-based solutions which are interoperable now define the competitive edge.
How can wholesale players serve the outsourcing and managed-services needs of their telco customers?
Wholesale can be a key enabler for operators to address the changing requirements of their customers, who want to follow the trends in networked IT services toward cloud computing, smart grids and integrated ICT services. In BT we think that wholesale should support telcos end-to-end in their evolution:
- Helping operators and service providers consolidate their legacy infrastructure and maximise output from traditional services at the end of the lifecycle.This involves taking costs out, preventing unnecessary investment and innovating to defend the traditional business as long as it is viable and until migration and substitution are possible.
- Supporting operators in their transformation to next-generation networks and next-generation access.Most operators are in this stage now, but they can’t complete it alone. Wholesale can help by providing professional services and sharing expertise.
- Creating an IP-based portfolio of wholesale services to help carriers and providers in the new-wave space.These services have to be interoperable and provide a guaranteed quality of service. All parties must receive a payment for their services and payback on their investments to ensure that their businesses are sustainable.
To support telcos in cost consolidation, business transformation and IP innovation, the wholesale market will change. Already some wholesalers are concentrating on consolidating legacy, while others are focusing on the next-generation IP world.
Besides wholesale telecoms companies, who else offers outsourcing and managed services to operators? Will the competitive landscape change for them, too?
Hardware and infrastructure vendors have a strong history of equipment-based outsourcing. To expand into the new landscape, they will have to change to service-based outsourcing, based on the cloud model. With the convergence of classic IT, software and applications – and the networks to connect them – different industry segments are aiming to offer the best combination of services. Vendors, IT companies and over-the-top players may offer some of their services on a wholesale basis. Carriers will continue to predominate, and may boost their wholesale offerings by partnering with the new players to offer them network access. Interoperability and partnering will be key factors to success.
You mentioned the cloud model. How do cloud services relate to outsourcing or managed services in the carrier market?
Cloud computing will make outsourcing more flexible, scalable and quickly adaptable to business needs than it has been in the past. Outsourcing will become more like a service or utility which providers can upscale or downscale and provision in hours or days as required. Public cloud computing gets a lot of hype, mostly from public-cloud players. Over-the-top providers get a lot of exposure here. Vendors also use cloud computing to depict themselves as innovators. Carriers and operators do less self-promotion. They listen to what their customers say they need and engage with them from a position of trust. One area where carriers and operators can score is secure private cloud delivery. BT GTM’s Virtual Data Centre is an example. Wholesale plays a role in enabling carriers to offer the cloud components: Infrastructure as a Service (IaaS), Platform as a Service (PaaS), and software and applications as interoperable services (Software as a Service – SaaS). In BT we will combine our wholesale VDC offer with managed network services and IP Interoperability. This will enable operators to create viable cloud portfolios. If you want to see cloud really happen, I think you have to look at operators, carriers and service providers.
What drives an operator’s decision to outsource?
Operators usually base the decision to outsource on two factors: cost and the need to transform a function through innovation. The cost of providing a service is always a factor when operators decide whether to provide it themselves or buy it in. They consider how to focus their capital expenditure (CAPEX), how to get maximum efficiency from operational expenditure (OPEX), and whether they have the right resource working on the right things. However, operators must balance cost considerations with the need to innovate. A simple cost transformation or an isolated innovation approach will never deliver the powerful results of both together.
If they are looking for transformation, how can network operators make sure it happens?
Let’s face it – this is not easy. A lot of operators struggle with this question. They need to set goals and objectives and track performance against them. Transformation affects the entire organisation, so appropriate metrics are crucial to identify and ensure the benefits for the organisation, its business processes, systems and infrastructures. These metrics should include key process indicators such as financial performance, total cost of ownership, return on investment, working capital, speed to market, etc. Most operators say that they learned from the transformation process and that their transformations gradually gained momentum. Wholesale can help by sharing expertise. During our own transformation process at BT, we developed insight that we now share with others via professional services from BT Telconsult.
Some companies may fear that outsourcing could result in lack of control over important elements of their operations. Is this justified?
The issue of control may be a consideration in outsourcing decisions, but should not prevent the establishment of successful partnerships. Sometimes the customer wants to hand the control – and all the issues – to a third party in exchange for a delivery commitment. That is what managed services are about. In such an arrangement, service level agreements (SLAs), process steps and interfaces can replace internal controls. The main issue is trust. Do I trust the party I will source this service from? Do I believe they are competent and will deliver all I need? Am I certain they will use my information appropriately, keep it safe and ensure its integrity? Carriers and service operators traditionally have very strong relationships with their customers based on trust. Both sides can take advantage of these relationships and create an environment that inspires confidence – whether the context is outsourcing for business processes or service delivery in a private cloud.
When setting up an outsourcing arrangement, what can the supplier and customer do to make it succeed?
At the contract level, due diligence must define the scope of the arrangement. Contracts must be flexible enough to allow for amendments. The architecture of the agreement and the priorities of cost, transformation and innovation are key. On the operational side, service descriptions, SLAs, reporting and monitoring are essential. Both parties must adapt their operational models to reflect the outsourcing agreement. To address any problems that may arise, they should be able to change the parameters of the arrangement and mitigate the impact of any disruptions in a pragmatic way. A strategic change in the environment that sparked the decision to outsource can affect the success of the partnership. Market conditions change. Mergers and acquisitions alter the portfolio and infrastructures available. Not all outsourcing agreements are flexible enough to address all potential future changes. Ultimately it may be necessary for one party to unravel an outsourcing agreement. Of course, the relationship between the parties is very important. A good relationship can help prevent problems and, if issues do arise, make their resolution easier.
What is BT’s approach to wholesale outsourcing and managed services?
At BT, our strategy is to enable our wholesale customers to succeed in a constantly changing world. The major trends in the telecoms industry – cost consolidation, business transformation and IP-based innovation – keep the environment in flux. This means that our customers must constantly change in response. We need to support their change from end to end. We can help them consolidate their traditional business. We can share our experience of how to transform. We can concentrate our investments on serving them with wholesale IP solutions, including outsourcing and the managed services in our portfolio. This approach embeds us deeply in the evolving business of our customers and creates a winning proposition for both sides.
For more information about outsourcing and managed services from GTM, contact your account manager.
Director of operations and voice business
BT Global Telecom Markets (GTM)
As director of operations and voice business, Andrew Dodsworth manages the overall GTM business and voice in particular. Andrew joined BT in its graduate programme right after completing his studies and has spent the past 25 years in the company, earning experience in client relationship management, communication, commercial and financial management, risk assessment and negotiations. Coming from the Concert joint venture between BT and AT&T, Andrew’s first role in GTM was head of international wholesale voice sales. Andrew has a BA (Hons) in business and marketing from Plymouth University and Diplomas of the Market Research Society and Chartered Institute of Marketing. In his spare time, besides cooking, collecting wine and looking after his garden, Andrew enjoys supporting organisations for disabled and disadvantaged children.