Transformation revisited

Few words are as loaded as “transformation.” Webster's calls it an act, process or instance of change — not to mention a conversion, a makeover and a revolution. For service providers, all those definitions fit, yet transformation means even more, encompassing network transformation, from static legacy TDM networks to more dynamic, service-centric IP; back-office transformation, from siloed, hard-coded systems to newer, more flexible IT architectures; and business transformation, including altogether new ways of delivering services, working with partners and serving customers.

Perhaps because it is such a loaded term, many global service providers in recent years have opted to load their entire futures into so-called transformation projects, complete with slick-sounding code-names — Big Pond, Single Stack, 21CN — and far-reaching, shoot-for-the-stars ambition.

As many of these projects today near key milestones or even, in some cases, completion, Telephony decided to take a look at the “state of transformation.” We spoke with service providers, analysts and vendors to get a sense of where these projects have succeeded and where they've come up short — with a special focus on determining where such efforts go from here as we enter a year of great economic challenges.

“I suspect that nearly all of these companies are disappointed to some extent with these transformation projects,” said Martin Creaner, who as president and chief technology officer of the TM Forum talks to industry CTOs and CIOs often about the progress of their transformation projects. “I also do think they regret the folly of making such a large splash in announcing many of them. You get to bathe in the warm glow of expectation for a period of time, but then you realize, ‘Oh my god, I have to deliver on this.’”

Few, if any, service providers — or even their vendors — will talk about their efforts in such blunt fashion — especially on the record. Not only are their peers watching, but the financial community is as well. There's simply too much money and market valuation tied up in the delivery of these projects to speak about warts too freely.

Service providers and their partners were, however, willing to share many best practices and lessons learned, along with keen insight into how transformation strategies have changed and will likely continue to evolve. In the end, service providers are absolutely traveling down the road toward transformation — network, system and business transformation — but in ways unexpected and with end games still largely up in the air.

Why transformation matters

Has it really been nearly five years since BT's 21CN project was first announced? Or more than three years since Sol Trujillo, CEO of Telstra, set his company down the path of massive network and IT transformation? A handful of other global telcos — from NTT to Telecom Italia to France Telecom and more — set off on their own high-profile transformation projects in much the same fashion. Here in the U.S., consolidation has obviously put the focus on two main competitors in AT&T and Verizon, each of which has taken up the task of transforming itself across the board — sometimes with bold gestures, as in the case of Verizon's FiOS, and other times with projects and efforts less public but no less ambitious.

With so much effort and money invested in such projects, there's no doubt progress has occurred — in many cases significant progress. Analysts such as Yankee Group's Philip Marshall, who evaluated carrier transformation efforts, gave props to BT and Telstra for their state-of-the-art core (IP and MPLS) networks; to NTT and Verizon for pushing fiber deep into their networks; to DT and Telstra for massive IT investments; and to AT&T, Orange/FT and Telecom Italia for creating innovative new service delivery and partnership plays. (See “Transformation Report Card” on page 37.)