Telecoms markets across the globe are in a state of upheaval. Traditional telco services are rapidly being commoditized, prompting operators to try and differentiate themselves by offering new services and new bundles, underpinned by new business and billing models.
Although rolling out new services and new bundles can help increase customer loyalty and drive growth in a fiercely competitive market, it is hard to execute on this strategy without throwing the business into turmoil. As they redefine their market proposition, telecom operators typically need to go through a series of technical and business transformations to enable the adoption of new business models and the supporting billing systems.
In fact, transformation has become a regular, on-going activity for communications service providers, large and small. Experts estimate that at any point in time about 25% of CSPs are involved in some form of system transformation or another, ranging from big-bang transformations that impact entire organizations, to a series of mini-transformations that put service providers in a constant state of flux.
A transformation might involve the introduction of a new business vertical, M&A activity, the migration of a billing system, an overhaul of price plans, the replacement of a customer relationship management (CRM) system, the rollout of a new network or an upgrade to a network management or operations support system (NMS/OSS).
Why transformation is tough
A number of factors can throw a transformation off course. Firstly, the legacy systems are likely to be complex, making it hard to map data and processes across to the new system. Secondly, a transformation will typically require cross-company resources, meaning business silos need to work together. Finally, a transformation will likely affect several systems, vendors and processes, increasing the likelihood of missteps and disruption to the existing operations.
The difficulty of pulling off a successful transformation has been highlighted by the well-publicized problems suffered by U.S. Cellular when it introduced a new billing system designed to enable it to offer shared data plans. The U.S. mobile operator had to issue about $10 million in billing credits during the third quarter of 2013, as a result of billing system issues, and it lost 71,000 subscribers in the period, according to a report by Fierce Wireless. "Regrettably, the billing system implementation impacted our ability to provide high-quality service to every customer for a period of time," CEO Kenneth Meyers said in a statement. The company "expected a conversion of this size and complexity to have its challenges, but quite frankly we underestimated them," Meyers added in a conference call with analysts, according to Fierce Wireless.
Although few transformations reach the media spotlight, many are highly disruptive, costing a CSP time and money and, in some cases, damaging relations with customers. When a company moves vital information from a legacy system to something new, the integrity of the data can easily be compromised.
Reducing the risks
To reduce the risk, a CSP needs to carry out thorough checks at many different levels. In the case of a billing system migration, for example, it is not just a question of preserving data integrity. CSPs also need to be sure that all price plans and their many attributes are copied successfully to the new system without compromising profitability. Otherwise, ARPU could fall and revenues suffer.
Moreover, a billing system transformation offers CSPs an opportunity to eliminate redundant plans with small numbers of subscribers, thereby reducing the costs associated with the maintenance of a large number of old price plans. However, this requires a deep analysis and simulation processes to determine which price plans should be eliminated and which new compatible pricing plans they should be replaced with.
Likewise, in a CRM replacement, CSPs need to ensure all subscribers and their profiles are transferred properly – and that subscribers are aligned with the right price plans, the product catalogue and services. The roll out of a new LTE network can also present major data integrity challenges.
The best way to reduce the risks associated with a transformation project is to model and monitor the impact of the changes in a systematic and comprehensive way. The transformation process should be validated and assured using multiple parallel activities. When these activities detect problems, the CSP needs to be able to quickly identify the root cause and rectify the situation.
At cVidya, we call this approach “transformation assurance”. We conduct such assurance checks for clients on a managed services basis, usually by bringing in a small team of our own experts to oversee the process and run the analysis on cVidya's own backend systems.
Although transformation is fast becoming a fact of life for telcos, it doesn’t have to throw a company into turmoil.