© 2005, monash university, australia cse5806 telecommunications management lecturer: dr carlo kopp,...

© 2005, Monash University, Australia

CSE5806 Telecommunications Management

Lecturer: Dr Carlo Kopp, PEng

Lecture 7-8

Corporate Strategy

and Telecommunications


Reference Sources

NOTE: These sources are indicative - there are many other good texts

available in libraries. They are referenced here as this presentation draws on them extensively

Hofer and Schendel (Referred to as H&S in these slides)

Hofer, Charles W. and Schendel, Dan Strategy formulation : analytical concepts St. Paul : West Pub. Co., c1978 234 pages

Monash Matheson Library 658.401 H697S

Gurugé and Lindgren, Communications Systems Management Handbook,

Auerbach, 2000 Especially chapters by Beck and James

Monash Hargrave Library 658.4038 G981C 2000


Telecommunications Manager Roles

The Telecommunications Manager has two roles: Staff Role - Provide Advice and Guidance to Corporate Mgt

eg Technology: Opportunities, Threats; Regulatory Situation, Policies; etc

Line Role - Plans, Organises, Leads and Controls (POLC) all aspects of Corporate Telecommunications Facilities, including:

Telecommunications Strategic Plan Contingency Planning/Business Continuity Planning Disaster/Disruption Recovery Planning Specification & Selection of facilities, equipment, software Installation and Implementation of equipment, systems, networks Operations and day to day support of users Maintenance and Modification

Other areas may be included - eg Security


Questions for Later Consideration:

Think about these questions as the lecture progresses: Does planning the strategic directions for telecommunications in an

organisation differ from "normal" strategic planning? If so, how?

What is the relationship in a (typically) large organisation between the planning and management of:

Telecommunications; and Information systems.

Is telecommunications just part of the infrastructure of a company, or something more? Does it vary between business sectors? and if so how?

What are the processes in developing a telecommunications strategic plan?


Philosophical

Expending energy without goals or objectives in mind is wasting effort

Even with goals and objectives, a strategy is needed to provide focus and coherence of the effort


Survival of the Fittest

From Hofer and Schendel (H&S) Biological analogy:

“Over the long run, only those organisations survive that serve the

needs of their societies effectively and efficiently, that is, that provide

the benefits demanded by societies at prices sufficient to cover the

costs incurred in producing them” This concept applies to governments, businesses, organisations, and to

sub-organisations within these.

Effectiveness or Efficiency? (H&S attribute this to P Drucker) ‘Both are needed, but

if a choice must be made it is more important to do the right things (effectiveness) than to do things right (efficiency)’


Failures with ‘High Efficiency’

(from H&S) Consider also IBM and mainframes IBM through 1970s-1990s

concentrated on mainframe oriented networks and systems - using PCs as

user interface while others developed towards ‘empowering the end user’

and moving away from centralised networks

FORD vs GM 1920s - 1930s Ford was very efficient by retaining ‘the old way’ of doing business with very

limited range of models & proven engineering - but GM saw that customers

wanted more than Henry Ford’s famous comment of “any colour you like as

long as it is black”

Baldwin Locomotive 1950s very efficient USA steam locomotive builder of 1930s and 1940s but did not

change to diesel and diesel-electric technology early enough, and hence lost

the race


Strategic Planning

Determining the ‘right things’ to do (ie effectiveness) requires Strategic Planning

Strategy as a way of thinking was originally used only in military contexts -

term “strategy” comes from Greek “Strategos” = General eg Napoleon’s strategy at Waterloo

Now used more broadly in sports - eg game strategy, race strategy etc in entertainment - eg TV strategies to attract viewers in normal business etc


Strategy in Business

Was not studied in business context until recently (after 1940s)

Before 1940, businesses had unwritten (and ill considered) ‘strategies’

eg to ‘expand’, ‘grow’, ‘make a profit’ were seen as self-evidently good ideas - but are essentially open-ended aims, not strategies

Few considered drawing up a strategic plan to achieve these aims within specified time-frames, or within specified constraints

Initially strategy had a narrow focus in business: founder or ‘driving entrepreneur’ philosophy - eg Henry Ford,

and product orientated rather than infrastructure oriented

Now ‘strategy’ is a normal part of all aspects of business planning Not all organisations are effective in planning strategies since the

skills set is demanding in both technique and insights


What Is Corporate Strategy?

Wide spread of definitions, with focus ranging from narrow to broad. Various authors have discussed it as:

Drucker (1954) ‘what is’ is our business? what should it be?

Chandler (1962) the determination of the long-term goals & objectives of an organization the adoption of courses of action the allocation of resources necessary to meet goals

Andrews the pattern of objectives ... purposes ... goals ... to define the business

the company is in … Ansoff -

the common thread of the business


Goals and Objectives (H&S P20-21)

H&S Definitions: Goals - long run, open ended attributes or ends desired ie

unbounded and untimed statements of aim Objectives - intermediate term targets towards achieving goals

Objectives should be stated to cover: the goal or attribute being sought an index measuring progress toward that goal a target or hurdle to be achieved; and a timeframe in which to achieve the target or hurdle

Strategy is the planned approach to achieve objectives Good understanding of objectives leads to better strategy Poor understanding OR poor objectives

always lead to bad strategy


Components of Strategy (P21 to P25 H&S)

H&S page 25 “Strategy is the fundamental pattern of present and planned

resource deployments and environmental interactions that indicates how the organisation will achieve its objectives.”

Components of Strategy: scope or domain of the activity in its environment skills and resources available to undertake the activity

(‘distinctive competencies’) competitive advantages resulting from the activity synergy - the degree to which activities above reinforce or

negate one another

The first three points are ‘effectiveness’ issues, while fourth point is ‘efficiency’ related


Hierarchies of Strategies H&S pages 27 to 29

1. Corporate level - “what business should we be in” broad and multi-divisional considerations ‘scope’ or ‘domain’ components are main concerns

2. Business level - “how to compete in this marketplace” business oriented - both production and marketing sides distinctive competencies (skills and resources) and competitive

advantages are the main emphasis in these

3. Functional Area Synergy (working together) and development of competencies

are the main concerns at this level e.g. a Telecommunications Unit functions


Matrix for Comparing Businesses H&S P31 Boston Consulting Group (BCG)

developed this matrix in 1970s Example shows comparison of 12

products or business. Axes show business growth rate vs

relative market share. Diameter of circles indicate relative

size of or business “Stars” (upper left quadrant)

high growth and good market share “Cash Cows” (lower left)

well entrenched in market with reasonable growth

“Dogs” (lower right)poor growth and poor market share


Comments on BCG Matrix

Note logarithmic scale on horizontal axis this better reflects reality than a linear scale - ie increase in sales

by $1M pa is minor to a large organisation, but major to a smaller one

As shown, this example is at a Business level however similar examples can be drawn at ‘functional levels’

Model is too simplistic H&S Page 32 to 34 discuss conceptually similar models with

more parameters

A similar approach is useful to assist in determining strategic directions for telecommunications networks


Product or Infrastructure? Is ‘Telecommunications’ a product for your

organisation? Currently - it is for Telstra, Optus, Vodaphone, Orange etc Future - and many more

BUT - even Telcos need infrastructure networks to support operations,

marketing, financial activities (bills etc) and management

Is your organisation’s network only an infrastructure service? Can today's infrastructure be tomorrow's products?

Consider UE (an electricity distributor) - UE Telecomms Consider AAP (news wire service) - AAPT

Telecommunications in both started as infrastructure networks supporting their primary products/services


Communications Issues (1)

Visibility - The communications infrastructure can be: ‘backroom’, keeping the company's processes running

eg corporate voice or data networks, process control networks

‘just another resource’ - visible to customer, but of low impact eg routine telephones, faxes, data services, or

the company’s ‘front desk’ (highly visible to customer) Used to be the Telephonist and ‘easy to remember’ phone numbers Now - Domain names, Web pages, customer support call centre etc

Facilitator, It can be used for enabling activities that could not be done before, or could only be done imperfectly eg EDI, EFT, B2B, Customer self-service (request brochures,

orders, bills, etc.)


Communications Issues (2) Network physical, logical and management structure can be

centralized (all power rests in the centre) “Centrally oriented” distributed (power is shared around the sites) (can have severe

coordination problems) localized (each site does its own thing) (can lead to anarchy)

Limited planning/operational horizon (max. 5 years)

Technological changes and telecommunications needs are changing too rapidly to permit longer view

Enables corporate productivity gains:

fewer people fewer levels in the hierarchy - flatter management structures


Strategic Communications Planning Changing approach of management focus:

was primarily load-based - eg how much load or traffic to be carried? how many lines? what bandwidth is required?

ie was focussed on technology and cost now focussed more on:

telecommunications products and services available (existing, future)

users and their needs (in-house, customers) services and products that can be offered user support, customer self-serve etc What telecommunications deals are being offered, and where ie now focuses on functionality, possibilities for its use,

and on seeking best deal for purchased services

The key aspect is the future requirements or needs


Telecommunications Strategic Issues

The Telecommunications strategic planning function needs to understand: Mission of the organisation External influences Technology Internal influences


Mission of the Organisation

The Telecommunications network(s) must be subordinate to the overall corporate mission

But do we know what these are?

Issues:

Is there a corporate mission statement? Are there corporate objectives and strategies? What can be done if there are no corporate level goals,

objectives and strategies? What if the corporate goals/objectives/strategies make

unrealistic demands on telecommunications? Is a Telecommunications Unit mission statement (separate from

the organisation mission statement) required?


External Influences

An understanding the external influences is necessary, including:

Business cycle (recession, expansion, inflation, ...) Which stage are we in now, and when is going to change

Competitors if a service or content provider, need to consider competitors work If telecommunications is only an infrastructure for your organisation, you

need to consider how your competitors are positioning themselves for the future in terms of telecommunications

Regulatory environment & trends Technology available in marketplace Support levels available Financial modeling and sources

Availability of external finance (if needed)


Broad Financial Models

EG Funded centrally (off-the-top) vs paid by usage

Out-sourced vs in-house operation

Minimal private network (VPNs, etc.) vs full private network

Issues: establishment and operational costs management complexity exposure to risk potential new products synergy


Technology Issues

What technology issues are important? Existing Networks

Architectures existing networks and existing equipments -

eg can these be upgraded? Design issues

link and equipment load utilisations - ie above / below 50% loaded? bottlenecks in the networks - where, how severe, can be alleviated? design parameters - lifetime, reliability, repair / replace philosophy

Marketplace What is available How stable and mature Cost and performance Maintenance and support


Internal influences

Understanding the internal influences, including What is required of the network Strategy for change Knowing the finances available

dollar value when and how

(eg initial buy, or rent now and buy later, or lease and return) cash flow issues

Operational interface Production resources available

staff - numbers, skill levels, trainable or not installed base - buildings, cabling, equipment, contracts technologies in use (or technologies known and understood)


Developing the Technical Network Strategy

A technical strategy study is required to guide

the technical design implementation and support of the organisation’s network(s)


Outcomes

The outcomes are (at a broad level): directions policies techniques budgets implementation timetables

which guide the Telecommunications Manager in the ‘line management’ aspects of the job - ie the management of the Telecommunication Unit


Network Technical Strategy The key point is to recognise and obtain acceptance

that it is providing infrastructure for the whole organisation, but is not the Infrastructure Plan for the organisation

WHY?

Because the network should support the organisation, not direct and control it.

Having the infrastructure network technical strategy as the Infrastructure Plan for an organisation is like putting the cart before the horse.

If the network is a “Product”, then things are different


Infrastructure Strategy Studies Scope Include all forms of communications in study

Voice, data, Internet, fax, telemetry, video, fire & security alarms Don’t forget needs of ‘roaming’ or mobile users for data ‘Scope’ may also cover non-electronic communications -

eg ‘hard-copy’ communications, including couriers, mail, etc advertising brochures

(consider having them on web pages, or requested via (IVR)

In order to: gain understanding of trends and intentions look for possible rationalisation avoid simply automating yesterday’s approach and technology, ensure that future changes are allowed for, and to ensure that current (and future) technology is used to best

advantage


Strategy Study in Six Stages

Stage 1: Analysis of EXISTING Networks

Stage 2: Identify FUTURE Requirements and Constraints

Stage 3: Definition and Evaluation of Options

Stage 4: Strategy Consolidation

Stage 5: Report to Management

Stage 6: Recording the Concept for Later Detailed Design


Stage 1 Analyse EXISTING Networks Traffic Loads and Capacity Reliability and functionality Residual working life of

current systems, facilities (buildings and power supplies etc), communications and support equipment

Consider existing contracts for systems, equipment, facilities, provision of services such as telecommunications services, facilities management, etc


Stage 2 FUTURE Req’ts & Constraints

Identify Future Network and Facility Requirements

Architectural Broad Brush Estimates Don’t worry about How, concentrate on WHAT is required

Traffic Loads and Characteristics

Functions and capabilities needed (not only ‘wanted’)

Available buildings and environmental supporteg is the company vacating suitable buildings somewhere?


Stage 3 Consider Options Define and Evaluate Options and alternative solutions

This is where you consider the questions: ‘HOW to do it’ and ‘HOW MUCH would it cost if done this way’

A major creative effort Can use brainstorming, think tanks, seminars, etc. Essentially draws from:

existing installed base information about current & emerging technology and techniques bright ideas future requirements

to produce a short list of options (combination of evolution and revolution)


Stage 3a Evaluation of Options tests to be applied:

flexibility under change, particularly increased load new traffic types

cost effectiveness (use DCF techniques) resilience (failure of components, industrial action) future safe (ISDN, satellites, mobiles, etc. integration of voice, data, video security management ease

expansion monitoring record keeping diagnosis of problems (maintainability)


Stage 3b Trade Studies

Capture evaluation of alternatives in ‘Trade Studies’ A ‘Trade Study’ compares costs, benefits, risks, timescales and

other factors of several alternatives eg Is it better to use a cheap, slow network, or

a faster but more expensive one?

Often a simple spreadsheet is used Eg comparison of coffee mugs

Which is best?

Option 1-Thin Plastic Option 2 - Ceramic mugs Option 3 Metal beakersRequirement Weighting % meets Score % meets Score % meets Score

holds hot coffee 5 100 500 100 500 100 500Insulated 2 10 20 50 100 0 0Has handle 2 0 0 100 200 0 0

Totals: 520 800 500


Stage 3c Special Issues In many organisations there are some special issues which must be

addressed in a planning study:

special manufacturers and / or vendors eg If your organisation has a subsidiary that manufactures communications

equipment, then you will probably have to use their products

a pre-existing problem that is assuming high importance often a carry over from earlier era –

eg demands for redundant equipment and power supplies (backup generators)

management and owner prejudices must or must not use certain equipment / services etc

technologies eg wireless LANs and mobile phones are not permitted in many areas

near explosives in highly secure environments in hospitals


Stage 4a Strategy Consolidation Consolidate the viable options identified in Trade Studies into two or three

alternate architectural designs

We can usually present options as follows: Option 0 – Do Nothing

What will happen if nothing is done

Option 1 – Do minimal changes Minimum changes to continue operations as indicated No real preparation for future evolution

Option 2 etc– Progressively more changes with each option Option 2 is basically an evolution from the present Options beyond 2 are progressively more advanced (and risky)

Option n – Revolutionary extensive changes Probably too ‘state of the art’ for safety and comfort


Stage 4b Prepare Study Report

Describe project background and rationale

Briefly describe each major architectural option Include Costs & Resources (dollars), people, buildings Schedule (Time Table)

Milestones and Proposed payment schedule if applicable Risks, and their mitigation Benefits of that option - absolute benefits, and in comparison to

alternate architectures

Issues which are independent of the architecture (eg colour of paint on boxes, constraints on locations or vendors)

Identify these issues separately for resolution


Stage 5 Report to Management

Present the highlights of the written report to higher management and answer their questions

Why do we do this? Remember the Golden Rule

Follow up and respond to their directions and guidance

“The one who has the gold makes the rules”


Stage 6 Recording Concept for Later Document the concept or architecture for posterity

If a particular style or option has been selected then write a System Specification

This is a formalised description of the system

Use precise and quantitative language eg

"The coffee cup shall hold 250cc of liquid when the liquid level is 1cm below the top the rim." is precise and testable, while

"The coffee cup is to be of normal size" is vague and imprecise, and can not be tested. Whether the product meets the specification is a matter of personal opinion - thus leading to arguments.


Written Requirements A project without stated requirements can never be considered to be

wrong - but it will be a failure

Unwritten (and un-agreed) requirements inevitably lead to mis-matched expectations between stakeholders. Verbal statements and assumptions lead to mis-understandings

Interpretations/understandings of statements of requirements are renown for variations - even in co-operative environments.

Common sense is very rare, and is dependent on each person’s own personal history

DO NOT RELY ON ‘COMMON SENSE’


What’s next?

An Action Plan is needed.

This should contain (or cover development of) the following for the Telecommunications Unit

mission statement goals, objectives & strategies,

aligned with corporate strategies and expenditurenote that this requires statements of future needs

implementation plans - who is to do what, when, and under what budget

The action plan needs to be agreed with peers and higher management


Points for Discussion These questions were raised in the first few slides:

Does planning the strategic directions for telecommunications in an organisation differ from "normal" strategic planning? If so, how?

What is the relationship in a (typically) large organisation between the planning and management of:

Telecommunications; and Information systems.

Is telecommunications just part of the infrastructure of a company, or something more? Does it vary between business sectors? and if so how?

What are the processes in developing a telecommunications strategic plan?

© 2005, monash university, australia cse5806 telecommunications management lecturer: dr carlo kopp,...

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