Building the IMS business case

Much has been written about IP multimedia subsystem architecture and the benefits of removing network silos. However, the significant economic benefits of IMS depend on the execution plan for the operator's strategic framework, which spans competitive, operational, technology and financial aspects. A wireless operator viewing IMS as a necessary standards evolution will likely adopt a revenue-driven approach. A consolidated wireless/wireline operator will seek to develop a cross-business unit service delivery and infrastructure plan to reduce long-term unit cost.

What are the true short-term and long-term drivers of an IMS business case? This depends on how operators allocate strategic value to various IMS architectural elements. Moreover, the approved IMS business case also must be closely monitored as services are deployed to refine assumptions.

• Evaluate IMS as a strategic business initiative: Strong market forces relating to IMS/convergence, such as industry consolidation, new joint ventures and vendor/operator reorganizations, can affect the entire service provider value system. Restructurings that eliminate the traditional line between wireline and wireless products will allow creation of company-wide IMS initiatives that leverage internal assets and respond more effectively to competitors. Governance models and allocation of responsibilities will be significantly easier as consolidation occurs. Carriers must pay attention to organizational models that can exploit the potential of IMS and convergence by focusing on content partnerships, partner strategies and marketing organizations.

• Evaluate current infrastructure: What is the current state of IP infrastructure? Are there existing softswitch or voice-over-IP capabilities in place? How can these be leveraged? Existing IP infrastructure could lower implementation risk and cost. Also, what are current IT business processes for “order-to-cash” functions? Often, these systems don't work smoothly, and before carriers add IMS to the mix, they might need to redesign some existing systems to reap the most benefit. Meanwhile, what is the current service creation and delivery process? What are customer-care models today, and how will they change in an IMS framework with multiple services? It will be a key variable cost that must be actively managed.

• Review specific business case elements: Regarding capital expenditures, IP networks typically carry lower equipment costs, but most have higher capitalized software and systems integration services costs than traditional network infrastructure.

Regarding operations expenses, power maintenance and management expenses, IP carries lower network interconnection costs than TDM, and potentially lower IT costs come with unified provisioning and service delivery. However, there could be higher IT costs related to implementing the network management tools necessary to provide strong service level agreements and higher personnel costs related to re-training the work force. In large enterprise conversions to all-IP architectures, these costs represent the largest underestimated category of cost and drag on the overall business case.

In terms of revenue, IMS promises new revenue streams from new services and new partners such as content providers and other third parties. Yet, the user value proposition and adoption of fixed/mobile convergence services remain unproven.

Realistically, integration expenses could be higher during early stages because of the challenges of mixing and matching different vendors. In addition, operators have a tremendous task ahead of them in retooling and training their operations people in IP. Furthermore, service quality management and performance management of a mixed set of IMS services also must be developed to appropriately manage shared network assets. Finally, operators must develop overt strategies to educate consumers about new device capabilities to increase adoption and usage.

If all the pieces of the business case come together, IMS will lead to a lower cash cost per user and higher service revenue from new customer segments in the long term.

PK Prasanna is IMS/convergence lead for inCode, a global wireless business and technology consulting firm. He is a panelist in the “IMS, the Core of Convergence” panel during the IP Summit at Globalcomm. For more information, e-mail pprasanna@incodewireless.com.