Guest Post: New 'Order to Cash' outsourcing models for Telco 1.0 and Telco 2.0
In the guest article below, HCL and Infonova discuss the opportunities to outsource key business processes in a world where Telco 1.0 and Telco 2.0 coexist.
Situation - Some indisputable facts
In order to reduce costs, many telcos and cablecos have utilised business process outsourcing, usually outsourcing processes with high volumes of repetitive tasks. An example of this would be Order Provisioning or L1/L2 Customer Support. This type of outsourcing has often delivered significant labour cost arbitrage gains as well as better management and improvement of Service Levels and Performance Metrics in the initial phase of such engagements - thereby initiating an expectation of continuing year-on-year increment of benefits.
However the business benefits of outsourcing have not always been scalable, replicable, and above all, sustainable.
Complication - What has changed?
The market dynamics are consistently and continually accelerating and altering. Consequently, Telcos and Media Operators must continually modify their product offerings and market approach - and survival will require that telcos operate both Telco 1.0 and Telco 2.0 business models simultaneously.
So what does this mean for most Telcos that have outsourced processes from their front or back office?Conventional outsourcing often reduces the Telco/Media Operator's capability to be flexible and responsive to market changes:
- Upgrading front and back office systems that have been partially or fully outsourced is both complex and costly
- the outsourced process locks the operator into an operating model that tends to extend the core business cycles - i.e. Concept-2-Market; Order-2-Cash and Ticket-2-Repair
- the challenges of modifying and launching new products and services are accentuated when processes are outsourced because the performance metrics of an outsourced contract usually require very structured upgrade programs
- and lastly, the front & back office systems that support the outsourcing contracts in most cases are "hard wired" for the original business proposition and unable to easily support triple and quad play (Telco1.0) business models without significant investment in both time and money.
Enabling two sided business model functionality requires the capability to manage (and automate) new business rules across processes and systems. This is a significant additional complication for most outsourced telcos, as Telco 2.0 operators are likely to require the capability to support multiple charging and revenue sharing models simultaneously. The current front and back office systems, however, are designed to support single sided business models.
For example, new channels such as supermarkets and equipment manufacturers such as Apple are also seeking Order-2-Cash solutions which can be own-branded - but most operators do not have the front and back office systems to support this white labelling functionality since most legacy front and back office systems only support Single Brand functionality and cannot support multi white-label branding scenarios.
With the lack of appropriate front and back office systems capabilities aggravated by severe funding constraints, most Telcos are not in a position to effectively address the Threats and Opportunities of the changing market.
So, given that Heads of Strategy and Marketing are expecting to pursue radical new Telco2.0 business models just as the Heads of Operations and the CFO are struggling with the complexity of re-working outsource arrangements to get more flexibility as well as managing the mounting costs of re-structuring IT systems to support of Telco1.0 business models...just as there is a massive financial squeeze - two questions are crying out for answers:
- Is there an outsourcing organisation that understands the need to provide a flexible outsourcing service to Telcos that can deliver and support Telco 1.0 and Telco 2.0 business models?
- Is there a platform out there that can simultaneously support Telco 1.0 and Telco 2.0 business models that will also support the outsourcing requirements?
Answer - Yes
HCL and Infonova recently announced the launch of a new business process outsourcing service. This joint service focuses on helping operators outsource the end-to-end "order-to-cash" process. The offering includes outsourcing the core processes that perform the execution of the business plan, i.e. the product management, the customer management, the order management, the billing and the collections.
We believe this outsourced service is different from other offerings for a number of reasons. The prime platform based outsourcing delivers multiple processes end-to-end - the complete order to cash process. The service also provides convergent telcos and media operators with the opportunity to outsource complex "order to cash" triple and quad play services (Telco 1.0) as well as Telco 2.0 double sided business models where the operator collects revenue for its services to facilitate business to consumer transactions.
HCL's new platform-based outsourcing service tackles a major gap in the market for operators that have "hard wired" inefficient systems and processes and are weighing up choices between complex SI integration projects versus achieving the same and better functionality and flexibility as part of an outsourcing contract.
This end-to-end outsourcing approach has been designed to enable the operator to avoid the complex, risky and often highly political journey usually accompanying in-house transformation. The difficulties of building a new order-to-cash platform internally or externally and then bringing it back into the business, create a massive distraction and overhead that can be avoided by an elegant reliable outsource process with a professional outsourcer.
The overall impact through should be significant improvements in the operator's balance sheet and cash-flow, with costs directly related to performance. The outsource service includes rapid online product management and launch functionality with capabilities for Telco 1.0 and 2.0 business models - with the aim of re-establishing the operator's competitive edge and improve customer loyalty. The outsourcing framework should also improve confidence that strategy and market offerings can actually be delivered.
For example, mobile operators are partnering with and/or acquiring fixed line operators to enable them to launch triple play and quad play services - and vice versa. While the executives involved announce that the result will be a "transformation", typically, the IT engineers from both camps start to work through how they can ensure that "their" pet systems prevail and become the masters of the data.
Most IT groups tend to believe that it would not be possible to deliver the functionality without their systems and their involvement - after all there is a natural level of responsibility to maintain the processes supported by their systems that have been in place for years - as well as the uncertainty that if the other party's systems "prevail" or worse still everything is outsourced, this could result in systemic failure or even job losses!
The challenge is that most IT groups hold a conventional view (from both a business and IT perspective) of what needs to be done and logically architect the integration of their existing systems to deliver bundles of the services they already deliver (Telco 1.0). Incidentally, it is very difficult to deliver Telco2.0 business model functionality through integration of the legacy Telco 1.0 systems! There are a number of operators that have embarked on this journey often called "transformation" with their IT teams budgeting multi-millions of euros to deliver hard-wired integrated systems for Telco 1.0 business models.
Most C-level executives are reluctant to challenge conventional wisdom! But they could outsource the delivery of their new bundled services to a company like HCL with the confidence that this service would also enable them to operate Telco 2.0 business at the same time - achieving both speed to market, reduced cost to serve and significant flexibilities for its business operations - and with the outcome that their 'transformation' has been achieved much quicker.
This is particularly possible via HCL's approach because it delivers bundled product offerings using the operator's fixed and mobile wholesale interfaces at a fraction of the cost of typical integration programs. HCL's platform is also able to operate as a wholesale aggregation platform and deliver the functionality for Telco 2.0 business models that orchestrate a multi party, multi level B2B2C environment.
A key element of the secret sauce is that HCL's platform based order-to-cash outsourcing is supported by the high level of process automation delivered by Infonova's non intrusive end-to-end front and back office BSS umbrella, operated by HCL's process experts. HCL chose Infonova's BSS as the basis for their platform based outsourced service because Infonova's BSS delivers a business rule driven workflow and has sophisticated integration capabilities that enables orchestration and SLA tracking of any process associated with any legacy interface.
We believe that this approach delivers a broader impact for operators, with higher predict-ability, scale-ability, replicate-ability, forecast-ability, as well as a dramatic improvement to all their operating metrics and faster outcomes than usually delivered by conventional outsourcing techniques.
Ultimately the opportunity is to a.) ensure continuity and b.) build financial savings benefits over both the short and longer term while delivering the order-to-cash functionality required for both Telco 1.0 and Telco 2.0 business models.