IT becoming key element in managed services deals

Experience with IT is moving to the forefront in managed services and outsourcing deals as operators seek to enhance the customer experience with more tightly integrated networks and business processes. Telecoms.com recently met with Luigi Migliaccio, global head of IT managed services at Ericsson, who explained how the back office silos that persist in large operators are killing the company.

Indeed, while efficiency and cost control are still identified as the most important concerns for operators considering managed services, recent research indicates these same organisations are on the brink of a complete change in strategic focus driven by the need to pursue new revenues. A study from Informa Telecoms & Media recently found that 85 per cent of operators see the development of new revenue streams as their key objective and by association they expect this from their managed service providers.

This chimes with Migliaccio’s view that more and more services are now enabled by network and IT together. Whereas ten years ago, when Ericsson struck its first outsourcing deals, all services were enabled by the network only, because there was only voice and messaging which required no interaction with IT. “But now everything is prepaid and everything is fully controlled so IT has to be involved to make this happen,” he said.

Despite the fact that outsourcing deals are now commonplace, the ‘divide and conquer’ approach to managed services is still often seen. Speaking at the Managed Services World Congress event in London this month, executive director of Oger Telecom, Fabrizio Mambrini, said that operators should avoid going to one provider for all their managed services needs, to avoid putting all their eggs in one basket and avoid lock in.

But this stance was countered by Migliaccio, who said that such an approach was now only understandable for efficiency and cost control considerations. Because in order to derive more value from a managed services deal, the outsourcing provider needs to have a much greater understanding not just of the technology but also of the company’s IT and business processes, which requires more broad reaching contracts.

Having several managed services partners gives you levers, where you can tell suppliers they are in competition with each other. “But if you want to be customer centric and you want to be very business performance oriented then you need a different approach that incorporates the network and IT. This is what forward looking operators are doing – looking to measure their net promoter score (NPS) and customer satisfaction index (CSI) and other performance targets that are very valuable,” Migliaccio said.

The shift to becoming a customer experience focused operator is key in a world where it is increasingly difficult to differentiate. Ericsson’s point is that in any mature market, any service a carrier chooses to launch is delivered by the same suppliers everyone else uses, so the only things that work in terms of differentiation are quality and care.

Yet this approach is difficult to take when so many carriers have back office teams and functions that still operate very much as silos. Despite making the company less agile, these groups defend their existence but they “are killing the company,” according to Migliaccio.

The CTO and CIO should be merged roles but unfortunately they are still separate, he argued, adding that there is a growing gap between the technical people (engineers) and the IT process people in operator, so that the IT people now only work on business functions because they don’t have technology as a core asset, instead focusing on service and marketing. The CIO’s role is about business and services rather than technology.

“So it’s important to have people who are accountable and responsible for the services as well as the technology. We might be managing the billing system, the charging system, or even a full datacentre as well as the network,” Migliaccio said. “We need to properly define the scope of a contract to be responsible for the most important part of the operator’s services and the bigger the scope of the deal the more easy it is to help a customer develop their business. You need IT as a managed service as well as the network so business services are properly enabled,” Migliaccio said.