Remember the days when outsourcing meant giving “non-core” systems and processes to third-party “consultants” who promised to save you money while allowing you to focus on whatever they thought was your core business? They glibly dubbed it, “your mess for less.”
Then the mess-for-less paradigm evolved from mere “outsourcing” to the more consultant-speak “managed services.” Unfortunately, the term “managed services” grew to include a lot of what was synonymous with outsourcing—cost-cutting, right-sizing, best-shoring—without necessarily providing the strategic advantages that comprise successful managed-services engagements.
Earlier inflection points in the market have largely been driven by one technology or one business change, but today’s context is driven by a confluence of disruptive new technologies that dramatically affect how, when, and where business gets done. The future success of today’s organizations lies in the ability to harness new technology to stay nimble and agile, to be able to continually redefine the way they work, compete, and win in the marketplace. That’s today’s global managed services value proposition.
Think proven, repeatable processes and methodologies; flexible and adaptable technologies; application-agnostic solutions; and cloud-based infrastructure. Think long-term ROI unfettered by maintenance agreements. Think large-scale transformation at the speed of machines. Think just-in-time innovation.
The Telecom Paradox
In 2012, global mobile industry revenue neared $1.5 trillion, essentially tripling over the last 10 years. By 2020, industry experts predict there will be 50 billion devices in the market and 40 times the volume of data transacting through service-provider networks.
And yet, while these organizations may have billions of dollars in revenue, their margins are incredibly narrow—and getting narrower still.
Globally, voice revenues are expected to fall below the 60 percent threshold this year, making your average service provider look an awful lot like your average utility—and it’s likely to get worse before it gets better. Operators can expect margins to shrink from the current 30 to 40 percent industry standard to a mere eight to 10 percent over the next five years.
Successful operators will need flexible cost structures and dynamic new revenue streams to remain competitive—and that means they’ll need to invest in innovation. The paradox of huge market opportunity combined with sharply declining margins only tells part of the story: operators also must contend with an increasingly tech-savvy, data-hungry, price-sensitive consumer.
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Mobile usage over long-term evolution (LTE) networks is fuelling an incredible demand for data, which in turn fuels demand for fast, flawless network and systems performance. Meeting such ever-increasing customer expectations requires operators to adapt at both the operational and systems levels. To manage costs aggressively, speed time to market, and improve the customer experience, many operators have stopped viewing managed services as the latest flavor of outsourcing and have begun to see it as essential to the bottom line.
The right managed-services provider can help operators strike a good balance between the ability to manage critical systems while actively investing in innovation. BSS systems are extensive, complex, and inflexible—they have many moving parts, a scarcity of skilled and trained technical resources to manage them, and rising operational costs, all of which decrease the resources an operator has available to invest in innovation. Managed services can find more efficient ways to operate—over-the-top and in the cloud, for example—to support rapid and continual innovation and new product and services offerings while keeping costs under strict control.
Get On My Cloud
Moving to cloud-based models or over-the-top offerings doesn’t mean operators have to rip and replace their existing BSS systems. Today’s managed services environment supports flexible, enabling technologies that eliminate product and process density from the start.
A skilled managed-services partner can reduce overall architecture complexity, providing an agile solution that allows operators to compete effectively, respond to market forces faster, and optimize costs. This approach is quite different from the managed-services models of the past. The new model is created and run by systems experts, and the partner’s role is a strategic asset, not just a component of a tactical operation. Done correctly, a successful managed-services engagement results in a sophisticated, comprehensive BSS engine from a secure enterprise-grade cloud platform.
The challenge is getting on that cloud. It requires a shift in how operators view their business models, and it requires support from the entire organization—not just Operations and IT. Understanding the requirements from both commercial and technical perspectives is critical.
In addition, successful managed-services engagements require proper scope. A patchwork-quilt approach to project scope can’t tackle the complexity and intricacies of managing a BSS environment in the cloud. To improve time-to-profit, realize cost efficiencies, and fuel innovation, operators must empower their partners to take on a broader scope. Partners must integrate more fully into the business with outcomes mapping to strategic business objectives. For their part, managed-services providers must possess a deep understanding of the operator’s business and be able to work effectively within it to deliver the desired results.
The Road Ahead
Operators cannot control the speed of market change or the pace at which they must adapt to keep up with it—but they can control how they respond. The dawn of both LTE and the cloud provides secure, industrial-scale BSS that not only supports hyper-innovation but also increases time-to-profit for new products and services.
Effective managed services engagements are much more than outsourced IT. The flexibility and adaptability of the technology solutions they provide empower operators to respond quickly to market demands. Equally important, the efficiency they bring frees the resources operators must have to be able to innovate, which is the key to growth.