Not too long ago, big-bang network and IT system overhauls were all the rage. But with mixed successes, notable setbacks and a tough economy, what's a telco looking to transform itself to do?
The challenge for service providers, however, is that for transformation to be truly successful, they must align change along all three of those axes — network, IT system and business model — while simultaneously dealing with long-standing cultural, historical and even regulatory baggage.
“The question to ask is this: What is the agenda associated with all of these transformation strategies?” Marshall said. “If the ultimate purpose is to completely transform the business, then we are still a ways off. Most of these efforts are too focused on just retiring old infrastructure or dealing with consolidation in cases where there have been mergers. In those cases, these initiatives are almost counterproductive; they are just more of the standard four- to seven-year technology upgrade cycles. If service providers are not aligning [system and network] transformation to the transformation they aspire to in the rest of their business, then they've got problems.”
Indeed, if you look at successful transformations in other industries — such as IBM from mainframe builder to IT services giant, Kodak from a focus on film/cameras to digital imaging, or even Apple from second-tier computer-maker to boutique device/content/service provider — the businesses these transformed companies operate today often are worlds away from where they started.
“Transformation efforts are to a good degree working, but the transformation needs to be not just about technology and software,” said Elisabeth Rainge, analyst with IDC, who closely follows carrier next-generation network (NGN) efforts.
“It's so much more about people and processes,” Marshall added. “You can't just put a Band-Aid on the problem. These transformations are very difficult, risky and painful processes, and they need to be front-loaded with cultural change as well.”
For companies that for decades — if not centuries — were singularly concerned with running their networks, that level of cultural change is enormous, said Mark Francis, vice president of AT&T enterprise architecture, in a talk at a recent TM Forum event. “This is a completely different paradigm than the one we've been doing for 100 years,” he said. “The real challenge we have is that sometimes it seems like we're moving slowly. What took 100 years to build, we're trying to replace in five or 10 years.”
The ultimate challenge, exacerbated by tough economic times, is to replace revenues from core services that are rapidly disappearing. “What's driving the transformation is that the bread and butter of the last few decades is gone,” Francis said. “What we need to come up with are new, viable services to cover that revenue.”
So if we can agree that at this point no service provider has pulled off an all-encompassing transformation, let's look at where progress has been made — as well as places where barriers have yet to be surmounted — in the three key areas of transformation: networks, systems and business models.
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© 2013 Penton Media Inc.
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