Navigating the communications convergence

The telecommunications and media industries are now on the cusp of a major transformation that is driven by the market need to bundle services across multiple product lines and the emergence of voice-over-IP technology. The resulting communications convergence is forcing telcos to abandon the traditional fixed-line voice business model and adopt a triple-play approach, offering fixed-line and wireless voice, broadband, and entertainment.

Telcos that successfully navigate the convergence will benefit in several key ways. New product offerings will open the door to new customers and markets, driving business growth. New up-sell and cross-sell opportunities will increase revenue and maximize revenue per customer. The one-stop-shop approach for services will increase customer loyalty, thereby reducing churn rates and customer acquisition costs. All of these will translate into higher profitability and increased shareholder value.

This article describes the trend toward convergence and explores obstacles to success in a converged world. It also examines how a common customer relationship management (CRM) layer across application silos empowers telcos to succeed in the new world of convergence.

The changing landscape

Rapid consolidation, the IP revolution, and rising demand for self-service are driving major changes in the telecommunications industry. Mergers and acquisitions are occurring rapidly as players scramble to expand their product offerings and geographic reach. Moreover, the lines are blurring between communications and entertainment.

As for VoIP, demand is skyrocketing. To capitalize on the opportunities it offers, telcos worldwide are launching major initiatives to upgrade their business support and operations support systems.

Further complicating life for the telcos is the rising demand for online business transactions. Customers want to view statements, dispute charges, pay bills, change rate plans, and add and cancel services over the Web. In many cases, business-to-business (B2B) enterprises are awarding contracts to providers based on the quality and availability of self-service capabilities.

Telcos are responding to these drivers in a variety of ways. Some are developing their own networks to compete with wireless, broadband and VoIP providers. Others are merging with or acquiring companies to expand service offerings and customer bases. Some, such as BT, are bundling partner services into their offerings and delivering them to the consumer as a single vendor. As mobile virtual network operators (MVNOs), these companies are able to introduce new services without incurring development costs. They can then offer attractively priced service bundles with the advantage of a single vendor for acquisition, support and payment. Telcos are also moving aggressively to tackle the self-service issue by simplifying Web-based interactions and making more and more services available online.

Obstacles to convergence

While these positive moves are helping telcos adapt to convergence, many obstacles hamper success. One of the biggest hindrances is the current state of the telco IT environment. The typical telco is burdened with a highly complex IT ecosystem comprising dozens of disjointed applications. This complexity and fragmentation may be the result of mergers and acquisitions or of legacy applications that were custom-built for a specific product line or function. Most carriers have stovepipes of IT stacks that are specific to individual product lines and channels, limiting their ability to bundle services and react quickly to ever-changing market needs.

In some cases, there are duplicate systems for crucial functions--for example, separate order capture systems for fixed-line, wireless, and DSL services. In the case of MVNOs, partner systems come into play. And while MVNO arrangements expand the number of services the telco can provide, they also drive up costs because order execution requires close coordination across multiple content, service, and network providers.

In this fragmented IT environment, product catalogues for individual product lines are proliferating, making it virtually impossible to obtain a consolidated view of all services offered. Disparate catalogs limit the telco’s ability to quickly put together price bundles and establish effective self-service.

Fragmentation also prevents telcos from obtaining a consolidated view of the customer. Consequently, employees cannot quickly see which services a customer has already purchased, nor can they gain a complete picture of all customer interactions. The results are slow response to inquiries, poor customer support quality, and limited cross-sell and up-sell opportunities.

The solution--a common CRM layer

To succeed in the new world of convergence, carriers need to unify siloed systems and data through a common CRM layer that spans the entire IT ecosystem. This layer (illustrated in Figure 1) serves as an intelligent information broker to the myriad back-office systems orchestrating and monitoring the transaction life cycle. Through this layer, carriers can create a consolidated product catalog and a true 360-degree view of the customer.

Implementing a true customer-facing product catalog enables telcos to replace cumbersome, costly and error-prone manual processes with automatic creation of quotes for services bundles and automatic capture and submission of order information to back-office billing and provisioning systems. The advantages include dramatically shortened service delivery cycles and a reduction in the number of orders rejected due to entry errors--whether the order is placed through a call center or over the Web.

With a complete, 360-degree customer view, call center agents and salespeople know which services a customer has and can engage in up-sell and cross-sell activities to drive additional revenues. The right solution unifies customer data across multiple service offerings, business units and functionally disparate systems, and provides a single authoritative source of customer information across the enterprise.

Conclusion

The convergence that is occurring in telecommunications today presents telcos with a new set of challenges. Telcos that are innovative in how they approach these challenges, however, will gain a strong competitive edge in the convergent world that is rapidly emerging. In particular, these companies will leverage technology to unite disparate product and customer data; transform it into business and customer insight; and deliver it to call center agents, salespeople, and others to drive operational efficiency. As a result, these companies will position themselves to deliver high-quality services and superior support, thereby increasing customer retention, driving revenues, and enhancing profitability.

Rahul Sachdev is General Manager of Siebel Communications, Media & Energy.

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