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Failed Transformation and the Future of Billing

  • It seems that every time I am in Singapore, I run across a lot of people interested in one common theme. This time it has been “transformation projects”. And the caricature I would use would be “Sure we need one, but not on your life”.

    Let’s cover the “Sure we need one…”. On the one hand, there is a purely tactical need: current IT architectures in telecommunications are at “end of life”: “It costs too much to do anything new and it is getting too expensive to support what we do today.” The fear is that the next big business imperative - consolidation, convergence, competition, regulation – will break the back of the system leaving the company exposed to failure. Everything possible is being done to extend system life including outsourcing, but costs are accelerating and IT is noticeably under delivering.
    This phenomenon is not unique to telecommunications. Businesses in general are not keeping up with the pace of change in their respective industries.  Strategies to turn change from a threat to an opportunity are not lacking. The ability to execute on these strategies is the problem. 
    I would describe it as a business process gridlock. These new strategies call for new business models – new business models call for new business processes – and new business processes must be driven a company’s major stakeholders / actors.  And this chain is breaking down.
    To address change these actors must change how they “do things” – how they interact, deliver services, consume services. Unfortunately and naturally, no one (whether Employee, Management, IT Systems, Customers, Suppliers and Government) likes change. And if just one party digs in it heels, we have gridlock. 
    In the world of transformation – IT systems are typically asked to act as the keystone of business change – the foundation from which the non-IT parts of business processes can be built.  Now of course, a bad foundation will mean a rickety enterprise so IT is seen as a critical first step. But this linear “let’s build an IT Petronas tower within which we will run the business” is fundamentally flawed. Businesses are more like cities than buildings – IT can be seen as the bridges and traffic lights; if neither works you have gridlock. But if the transport workers strike you have the same. IT is critical but it is far from sufficient – and even as it becomes more intelligent and grows up from being a tool set to being an autonomous business actor – it will still be a player not a foundation to addressing change.
    Transformation couched in terms of building a new foundation – typically built on a business case of the next big thing (Fixed Mobile Convergence, Pre-paid Post paid convergence, etc.) – misses the point. Transformation cannot be about building a new foundation every time the world predicts a new imperative. It has to be about helping all the actors – especially customers, suppliers and managers – be ready and willing to address change – predicted and not.
    IT investment to build the adaptive enterprise (IBM’s term) is really much more than replacing the old outdated enterprise applications with the new. It is more than taking ad hoc architectures and making them Service Oriented.   It is really about helping the non-IT actors be change ­agents - make it easy for customers, managers, suppliers and employees to evolve how they work and in doing so evolve the business. 
    To be honest, we should judge all big IT initiatives (Transformation, Cloud/SaaS, BI, SOA, virtualization) on not just cost effectiveness or IT responsiveness or delivering new business functionality.   They must be judged on making change easy for enterprise as a whole.
    Now back to billing and telecommunications.  In communications the one domain that immediately gets impacted by strategic change is revenue management.  Herein lays large scale “Billing transformation” projects.   And judging by their results in terms of cost and effectiveness in taking the enterprise to the next level – they are poster children to discourage anyone else from ever undertaking anything that even gives a hint of “transformation”.
    I would say “real transformation” is all about making business “strategy ready”. I look at billing RFP and don’t see this as the driver. There is a lot of “new foundation-ism” when in these RFPs. But the truth of the matter is these RFP are increasingly rare and the very few RFP out there rarely come to fruition as actual projects. This is strange given how old and precarious billing and CRM architectures are.
    If we continue as we are now, consumer billing systems in telecommunications will die of old age and with them the billing process as we know it today. Telecommunications billing systems that made fortunes for software entrepreneurs and system integrators in te 1990s will disappear.  Unless transformation projects begin to show value soon, I am afraid that telecommunications service providers may begin to ask – why bill at all if it is not economic? And this is not just a death knell for post-paid system; it bodes poorly for pre-paid as well. With the convergence agenda telling providers to replace both “post” and “pre” or neither – I am afraid “replace neither” will become the answer.
    Accessing the network can never be completely free - somebody will have to pay. But I would caution that funding the network in the future may come from something that does not look at all like billing.  And as I am a billing guy down deep… I am sure it will miss some of the key things billing does provide well, such as demand management.  
    Networks may become a natural utility like roads and, if they do, probably rely on supply management (dreaded centralized planning) to avoid crowding out and over utilization. The “free market” we have now that rests on pricing and charging will take a back seat. You can be sure Apple and Google will not complain. 
    What is ironic is that just when telecommunications – the leader in billing as a business process – enters into this “billing crisis”, other industries such as energy, water and even transport will begin to take billing seriously. Their advantage will be to introduce change enabling billing for the first time and not have to contemplate the risks and enormous costs of a huge transformation swap out.
    What would I suggest to “save billing” (yes, I know I am exaggerating) in telecommunications? Simply define IT transformation’s key goal as enabling change – not replacing the old with the new. I would be curious to see what a billing RFP would look like…. 
    And which management consultants and system integrators will act as change enablers? Hopefully all of them – supporting legacy systems is no way to make money.  As for “the ecosystems”… between IBM (whom I see as architects and engineers), Microsoft (whom I see as a inexhaustible tool makers) and Oracle (whom I see as a unpleasant pre-fab home salesman), I hold the greatest hope for IBM. 
    Douglas Zone
    About Douglas Zone Douglas Zone works as Special Projects at Cable & Wireless
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    MIGUEL A. SERRANO GORDON I´m afraid but I don't get the point about IBM...What has this company to offer in regards to billing?
    27 September 2010
  • Douglas Zone
    Douglas Zone I must be sad to comment on my own Blog! But here is a link on "enterprise architecture" - the idea that business process is business process regardless of being run by software, employees or partners....  more
    23 September 2010
  • Sri Jagadish Baddukonda
    Sri Jagadish Baddukonda Couldn't agree more about the failure of the transformtion projects. What is crucial is that the Telcos should fine tune thier business process and make them flexible instead of looking towards IT as the answer - IT does give an answer when the base busin...  more
    28 September 2010
  • Craig
    Craig Well in regards to IBM, and the comment below. It is true there are still those out there that don't see IBM in the Telecommunications space however history of course is typically not debatable, some points;

    >22,000+ people directly delivering serv...  more
    26 October 2010