Recent advances in telecoms technology have shown how a successful managed services relationship should be based on innovation.
Outsourcing, as Peter Pan might have said, can be an awfully big adventure: not a blind leap into crocodile infested seas (unless you’re particularly careless in your choice of service provider), but an ever-evolving journey that can take you to places you might never have dared to reach unaided.
Nowhere is this more true than in telecommunications, says Bradley Mead, vice president for services, north west Europe, at Ericsson, the world’s largest telecom services provider.
Technology and service provision are changing rapidly, with voice and data networks converging thanks to the ubiquity of IP (Internet Protocol), so that time-honoured distinctions between IT and telecoms no longer apply. Add the pressures created by increasingly demanding customers and intense competition between brands, and telcos are being driven to ask themselves some tough questions about how they operate, and to seek managed service providers that cannot just run their operations more cheaply and effectively, but become true partners in developing and evolving their business.
Innovation has become a key deliverable. “It’s not necessarily because the activities we take over weren’t done well by the client organisation,” says Mead. “But a managed service is fundamentally different. The operations we take on become a core business for us, and for that business to be successful we have to be able to demonstrate ongoing value and deliver ongoing benefit for both parties.”
The service provider can draw on its wider experience, gained through working for a variety of clients on a global scale, and combine this with a fresh approach, unencumbered by the ‘This is how we’ve always done it here’ mentality that so often restricts the ability of organisations to innovate from within.
The effect can be significant. Mead cites a leading mobile phone operator for which Ericsson reduced the time to market for a new product or service from three or four months to as little as a fortnight, through better understanding of the business requirements and improvements to the processes involved.
The key is often co-ordination: of billing systems, marketing collateral, customer service etc. “Over the last two years we’ve taken 50 per cent of the cost and 50 per cent of the cycle time out of launching a new mobile device,” says Mead.
Outside in
Innovation should be at the heart of a service provider’s culture, Mead argues, whether that means improving efficiency in the client’s current processes by reducing errors and wastage, or inventing entirely new service offerings. “Innovation drives more value for us as a business and also for our customers. It’s becoming a critical success factor in managed services.”
Sometimes the idea comes from the client, and the service provider is then able to turn it into reality: “Tell us the outcome you want and we’ll work out the process,” as Mead puts it. This enables the service provider to be output-driven, focusing on the end solution, whereas an internally led development is more likely to be process-driven, starting from the status quo and often getting bogged down in technological minutiae. (It’s rather like one of those puzzles where you have to navigate to the centre of a maze: they always seem easier if you start from the middle and work back).
This approach has enabled Ericsson to develop for one of its clients a unique and fully-integrated self-service and self-care system for mobile phone subscribers, accessible from the phone itself, via the internet, and by agents in the mobile operator’s contact centre. The unified approach has increased customer satisfaction, reduced the complexity of the systems, reduced the volume of calls to the contact centre, and above all given a significant boost to the client’s brand.
Other innovations may originate with the service provider itself, and Ericsson holds regular joint innovation forums with its clients. One of these resulted in a tool that allows a mobile operator to see in real-time the usage patterns of content that customers are viewing on their phones. This helps the operator not only to understand customer behaviour, but also to ‘push’ information and marketing messages to the precise point where it knows a customer is most likely to see them. The tool – which Mead believes is unique – is also being used to sell realtime advertising space.
Another example of the service provider’s proactivity is a usercustomisable portal that will allow mobile users to have more control over the way information and services appear on their phones. “The client said to us: ‘We’ve been thinking about doing this, but you’ve actually done it’,” says Mead.
Mutual benefit
However, it is an important principle that innovation is not the sole responsibility of the service provider but a partnership between it and the client, Mead believes. Although perhaps 80 per cent of innovations may originate with the service provider, the customer’s 20 per cent are significant, and can often give rise to the highest-value solutions for both parties. “We don’t want our clients to keep their good ideas to themselves!”says Mead. And outsourcing the day-to-day running of its services enables the client organisation to give more attention to its core business strategy, including innovation: a ‘classic’ benefit of outsourcing that really delivers, says Mead, although it may be six to 12 months before the client fully appreciates its effect.
Co-operative innovation is part of the growing trend to treat outsourcing as an evolving partnership rather than a rigid supplier-contractor relationship that must be locked down by a tight contract; Ericsson itself has moved away from the rigid, boilerplate outsourcing contracts of its early years in favour of more flexibility.
“It’s not just about meeting service level requirements any more, but being in partnership and listening,” says Mead. “There needs to be some skin in the game for both sides. When things change and evolve and extra benefit can be delivered by doing things differently, we both gain. This approach drives everybody to focus on doing things the best way and for mutual benefit. I can’t overstate how important that is. A relationship based on innovation and mutual benefit is the key to success. It’s the difference between old-style outsourcing and present-day managed services.”
Shared future
In future, Mead believes, many of the issues currently faced by the telecoms industry will increasingly affect adjacent sectors such as media, utilities, public safety and other government sectors, as computing and communications technologies converge and commercial pressures increase. Market consolidation and falling growth rates will encourage organisations to consider sharing infrastructure, whether that means telecoms bandwidth or back-office functions such as billing. This is especially likely in more mature markets such as the UK. In all such sectors there will be increasing scope for managed service providers to add value as well as driving out costs.
“Managed services relationships are an ongoing journey, continuously evolving,” says Mead. “and if you get it right then there will be a genuine element of adventure.”
by Paul Bray
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