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Communications service providers worldwide are looking for ways to reduce costs and total cost of ownership, stimulate revenues, improve the customer experience, and increase customer loyalty. One solution is a business support and operations support systems transformation that yields a competitive advantage. Communications, Media, and Entertainment Industry Viewpoint paper OVERCOME the hurdles to business transformation.

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Achieving the optimal Business Support System and Operations Support System transformation

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Page 1: Viewpoint paper

Communications service providers worldwide are looking for ways to reduce costs and total cost of

ownership, stimulate revenues, improve the customer experience, and increase customer loyalty. One solution

is a business support and operations support systems transformation that yields a competitive advantage.

Communications, Media, and Entertainment Industry

Viewpoint paper

overcomethe hurdles to business transformation.

Page 2: Viewpoint paper

Table of contents

A clear consensus for transformation ..........................1HP viewpoint .........................................................1Why transform? ......................................................1No consensus on how to transform .............................3Two roads to transformation .....................................4Map your own road to success ..................................6Take an enterprise approach for the long term .............6Standardize requirements capture and communications ....7Maintain control when mobilizing suppliers .................7Redefine your business model ....................................7Design with integration in mind ..................................7Explore new investment strategies ..............................8Keep it COTS ..........................................................9Do it now ...............................................................9About the authors ..................................................10

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Most communications service providers (CSPs) are talking and thinking about it, but few know what to do first. With the right applications, information, and technology, CSPs can redefine their business model and undertake a transformation strategy that will lead to success.

Communications service providers are facing a major decision—how to transform their businesses to become more agile, grow market share, and reduce costs—while improving their customer experience and satisfying the ever-increasing demand for bandwidth-greedy applications, online entertainment, and yet-to-be-developed services.

A clear consensus for transformationCSPs are nearly unanimous in their conviction that they need to transform to grow and compete against new challengers, such as Google and Apple. This consensus for transformation is detailed in a Business Transformation Research Project carried out by Frost & Sullivan on behalf of HP between May and August 2010. Frost & Sullivan interviewed 32 top-level CSP executives from Europe, Asia Pacific, India, the United States, Canada, Latin America, and the Middle East. • 96% said transformation is needed now. • 88% said they were either currently engaged in or

had completed a transformation project in the past 12 months.

• 65% said they will institute a new transformation project within the next 12 months.

The CSP executives interviewed for the study were also in solid agreement about the business segments they would target first for transformation: information technology (IT) operations and maintenance and network infrastructure. Many respondents cited their Business Support Systems (BSS) and underlying Operations Support Systems (OSS) as a key focus of their transformation efforts. In particular, operators identified customer care, billing, customer management, and business intelligence/analytics as first-priority projects.

HP viewpoint Although there seems to be a clear consensus for transformation, HP has found that many CSPs are hesitating, because transformation is a costly, lengthy, and disruptive process. At HP, we know the risks. Whether you are transforming your BSS/OSS or your entire business paradigm, transformation demands experience and maturity in developing large programs. It also requires strategic planning expertise to align with business goals and go-to-market strategies.

This paper demonstrates how HP can bring to bear its technological capabilities, expertise, and decades of experience in the communications, media, and entertainment (CME) industries—particularly telephony—to help CSPs cope with the seemingly overwhelming, time-consuming, and risky process of change and transformation.

Why transform? There are many reasons why CSPs are looking to transform their BSS/OSS. The following sections examine how outdated, homegrown, and overly complex BSS/OSS are inhibiting CSP success.

Outdated BSS/OSS applications The successful convergence of telephony, computing/IT, entertainment, gaming, media, and advertising are placing unprecedented demands on currently installed BSS/OSS—demands that many legacy systems were never intended to meet. These include converged billing, customer self-service, fraud prevention, new privacy regulations, credit risk calculation, flexible pricing strategies, and individual customer usage allowances that can be adjusted in real time.

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Siloed architecture—Another challenge is the siloed architecture of many legacy systems. Typically, CSPs installed separate BSS for each new major product line. This resulted in a plethora of highly complex application silos, which contain redundant functionality and require duplicate operational and network resources. These silos cannot interact with each other for lack of built-in integration layers or an application programming interface. Plus, they cannot be integrated with other systems for customer relationship management (CRM) or billing, for instance.

Home-grown solutions—Worse yet, sometimes legacy systems are built on outdated, home-grown applications that are fraught with complicated solutions. Layer after layer of customization has been built on top of applications that were written in-house more than a decade ago. Out-of-control customization has not only made these systems complex and unwieldy but in some cases, has effectively buried the original source code.

Some legacy in-house systems no longer comply with the CSP’s internal standards or government regulations. In situations where the BSS were built on commercial packages, pieced together from various vendors, licenses have expired, many of the vendors have gone out of business, and support is no longer available.

Inflexible and slow to market—As a result, legacy systems are highly inflexible. Minor pricing or regulatory changes require expensive, time-consuming, and manual coding efforts, because the business logic and workflows are hard-coded into each application. Moreover, data must be maintained across multiple systems and checked for consistency across the portfolio. Thus, legacy systems are expensive to run, operate, and support.

Lack of business intelligence—Most legacy systems were designed for batch processing, not real-time billing, charging, and business intelligence solutions. Consequently, they lock CSPs into a flat-rate pricing structure. They do not support CSP needs to obtain and analyze critical customer data that is required for today’s pre- and post-paid charging models, pricing flexibility, and product bundling. Legacy BSS also eliminate the cost-saving potential of online customer self-service options and the benefits of improved customer intimacy and loyalty. Most importantly, legacy systems impede the launch of new products and services.

Monolithic or nonstructured architectureBSS/OSS that are running on outdated IT infrastructures typically have a higher total cost of ownership (TCO) when compared to more modern and nimble architectures. Most legacy IT does not incorporate a service-oriented architecture (SOA), which enables easy integration within the BSS/OSS stack, with the network, and with external or third-party resources. Without built-in integration layers and multidirectional interfaces, CSPs cannot leverage the standardized and streamlined processes and services that generate efficiencies across the enterprise and reduce overall TCO.

Older systems are frequently dependent on nonvirtualized servers or nonoptimized data centers that require expensive human resources to operate and support, uneconomical storage, and nonecological cooling systems. Outdated IT is usually inefficient, nonredundant, duplicate, and inflexible. This is because it was rarely built specifically to optimize BSS/OSS operations but was extended ad hoc over the years to accommodate additional BSS applications and updates.

Data and bandwidth explosionFive years ago, no one in the telecommunications industry could have predicted the explosion of data that is transported across every operator’s network today. Data proliferation has become such a concern that Frost & Sullivan calls it a “major new business driver.”

Frost & Sullivan cites a study1 published in June 2009 showing that data traffic increased four-fold in less than a year, from 5 to 6 gigabytes per second (GBps) at the end of 2008 to 24 GBps in October 2009. The study also noted that mobile data traffic is projected to double every year through 2013, which amounts to a compound annual growth rate (CAGR) of 131%.

Network operators are struggling to keep up this data explosion. They are worried about how they will pay to build the networking infrastructure needed to handle the world’s increasingly voracious appetite for bandwidth. And they are doing so amid a downward pricing trend that is evident around the globe.

Some operators are looking at BSS/OSS transformation as a way of bringing in new revenue to help pay for the next generation of networks. Implementing new BSS/OSS will enable the new services, revenue streams, and pricing structures that

1 Published in the Frost & Sullivan Stratecast report of January 2010, entitled “OSS/BSS Global Competitive Strategies (OSSCS), Volume 11, Number 1. The study Stratecast cited is a Cisco report, “Cisco Visual Networking Index: Forecast and Methodology, 2008-2013”, June 2009. http://www.cisco.com/en/US/solutions/collateral/ns341/ns525/ns537/ns705/ns827/white_paper_c11-481360_ns827_Networking_Solutions_White_Paper.html

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could offset the costs of keeping up with network bandwidth demands. Transformation will also help decrease telecom operators’ IT footprint, maximize efficiencies across the enterprise, and wring out IT costs wherever possible. Smart operators will refunnel the savings derived from lower cost operations to network expansion.

Equally important, transformed BSS will enable operators to make sense of the massive amount of data crossing their networks. Business intelligence applications will enable CSPs to track customer usage patterns and institute new, multitiered charging plans based on those patterns. Customers who want faster downloads will pay a premium, and heavy users will be charged more than those increasingly rare individuals who use their mobile telephones solely to make calls.

Complacency and the fear of changeTwo of the biggest inhibitors to transformation are the human frailties of complacency and fear of change. There is widespread reluctance to re-evaluate business processes. All too often, CSPs use the complexity of their BSS/OSS as an excuse to delay or forego transformation.

Introducing a new system often can be seen as too risky and expensive to contemplate. Customers may opt to stay with a stable—but less flexible—system that will only grow more complex and expensive to operate in the coming decade. HP would suggest “leapfrogging” the legacy system, bit by bit, to a future-state platform that would remove much of the risk from the situation.

If employees are accustomed to complex and unwieldy systems, they assume they will always be that way. So change seems unnecessary, and procrastination comes easy. End users want their systems to look and work like their legacy systems. Product managers fear they will lose customers if they drop one or two services—although they will be replaced by services that have the potential to grow revenue and market share.

Thus, emotions can prevent both change and business growth. A highly controlled and well-organized transformation process is the best antidote for gut feelings and fear. Such a transformation process starts with an enterprise architecture, which provides an outline of the strategic direction, takes into account the challenges that will be encountered, and puts specific steps in place to mitigate potential risks.

No consensus on how to transformAlthough there are innumerable reasons to transform legacy BSS/OSS—and the Frost & Sullivan study shows that the desire to transform is nearly unanimous—there is no consensus on how to make transformation happen. The following sections highlight some of the more typical approaches deployed in the market today.

The “greenfield” approach for new-market entrantsIn many ways, deciding how to proceed is easiest for new entrants into the field, particularly in Asia Pacific or the Middle East, where the average revenue per user (ARPU) rates are among the lowest. Greenfield operators must build from the ground up and can take advantage of the most recent technological developments to build highly integrated, converged, and agile infrastructures that will deliver the lowest-cost services for years to come.

A range of approaches for well-established CSPsAlthough well-established CSPs don’t have such an obvious choice as newcomers, they do have a wider range of options. Here are the three most common:• Band-aid fixes, the most inexpensive approach—

Quick fixes may mitigate issues resulting from structural complexity but will result in an increase in complexity and costs in the long term.

• Application modernization, an important first step on the road to business transformation—If undertaken as individual projects, however, modernization can result in isolated efforts that don’t resolve the structural issues of legacy systems.

• BSS/OSS transformation, a comprehensive approach—Transformation yields the most effective long-term benefits and enables the new business models that are necessary for future competitiveness.

Some HP Tier 1 CSP customers in Europe currently are funding studies to weigh the efficacy of completely abandoning their complex, inflexible, and expensive-to-operate legacy systems and replacing them with new BSS/OSS. The data migration this approach requires can be done in a controlled way. So CSPs are justified in their belief that this greenfield approach is worth the risk and expense, because it will enable them to launch new products and services quickly, generate new revenue streams, and stay ahead of the competition.

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Clients around the globe are undertaking projects that require the migration of massive amounts of data. Two such projects involving HP include a human resources migration for a large telecom operator in Western Europe entailing 150,000 entries; and a new billing system for a North American telecommunications company involving 450,000 accounts.

The total transformation approach differs considerably from the choice popular with many North American operators whose budgets are constrained by fallout from the global recession. Many North American CSPs applied all the quick, inexpensive band-aid fixes that were financially feasible over the past two years, but yielded limited results.

Now the forward-looking ones are seeking a comprehensive, step-by-step approach that will enable them to:• Offer converged, IP-based services• Achieve customer intimacy • Leverage regional and consumer offerings• Deliver more comprehensive network- and platform-

based services to their enterprise accounts

They are also using BSS/OSS transformation as a way to amortize the capital expenditures (CAPEX) required to institute these new offerings over a period of time, and to lower their TCO to lower their pricing structures into the future.

Two roads to transformation The following examples show two companies’ distinctly different routes to transformation success. We refer to the profiled companies as “The Challenger” and “The Incumbent” in the examples.

The Challenger example focuses on a hypothetical partnership between HP and a new company, formed by a large mobile telecommunication provider. Working together at amazing speed, HP and The Challenger can build an entire telecommunications infrastructure and deliver dependable voice and multimedia mobile services in about six months—a remarkable feat.

From greenfield to challenger in six monthsWhen The Challenger’s global parent company wins the license to start a new mobile telephone company in an emerging market, it knows it has its work cut out for it. Not only will it be challenging the market’s only mobile provider, but it will have to guarantee service delivery within six months. And when HP signs on to develop, deploy, and run the entire operation, HP agrees to cap CAPEX for the BSS/OSS environment at a very ambitious percentage of the company’s revenue after the second year of operation.

In this example, The Challenger hires only a handful of executives by the time it schedules its first meeting with HP. The client has no offices and no infrastructure—just know-how and a clear vision of how it wanted to proceed.

From the start, The Challenger and HP determine that the only viable strategy for meeting the project’s extremely tight deadline and budget is to achieve the lowest possible TCO by using the following components:• A fully outsourced model• Commercial off-the-shelf (COTS) applications • A service-oriented integration architecture

Naturally, the infrastructure has to be carrier grade, use the TM Forum’s frameworks, and comply with all government-mandated regulatory standards.

The Challenger supports HP’s approach to a BSS/OSS stack that is as generic as possible to keep costs down and speed implementation. Customization is kept to an absolute minimum. HP estimates a substantial amount (conservatively estimated between 5% and 10%) of the COTS code is rewritten, primarily to create interfaces for security, banking, and other unavoidable system personalization.

Serving as the system integrator for the project, HP works to assess requirements; draw up the implementation road map; set and manage the budget; and configure, test, deploy, and run the system on a multiyear maintenance agreement. HP also recommends to develop target enterprise architecture that will help ensure the CSP can meet future requirements.

Because The Challenger has not yet established a physical location, HP has to work on many aspects of the projects remotely. Data centers in one country were used to temporarily support development and testing until a new center was established in the company’s home country. Hardware is configured and tested in a third country and transferred to the new data center, while it is still being built—only two weeks before user acceptance tests begin. HP also runs testing phases in parallel with other implementation processes, because time limitations preclude HP’s standard testing cycles.

In all, the HP and The Challenger project achieves remarkable results. Not only does the project meet the six-month activation deadline, but it also meets all cost objectives. At the end of the first year of operation, HP has already reduced CAPEX of the BSS/OSS environment to near 2% of revenue, well ahead of schedule. That’s a considerable savings, because comparable BSS/OSS environments run an estimated 4% to 6% of revenue.

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Additionally, HP estimates that start-up costs are only about 60% of the typical greenfield venture. And when The Challenger launches new start-ups, the CAPEX costs for each new venture are expected to drop by about another 40%, because the company can leverage the existing infrastructure and human resources that HP already has in place.

The Challenger is on target to capture significant market share from the incumbent provider. Customers can set up prepaid, postpaid, and flexible charging plans and pay their bills online. Some plans even replenish used minutes automatically to guarantee service continuity. Additionally, customers can purchase from a range of mobile phones and accessories from an online store and a growing number of retail operations.

The real rewards come when The Challenger launches more start-ups, leveraging HP’s industry best practices. In fact, HP standardized these best practices in a new offering, Telco Express. The offering will provide a repeatable and cost-effective IT infrastructure model for deploying new telecommunications companies in markets across the globe.

This approach is not limited to greenfield launches; it also makes sense for incumbent Tier I operators willing to build a single, new, strategic platform. The platform then would be shared and exploited by multiple subsidiary operating companies, reducing global operational costs substantially.

Billing transformation through step-by-step modernizationThe next example is an HP case study that focuses on a long-established telecommunications provider in North America—The Incumbent. This case represents an approach that takes a middle ground between BSS transformation and applications modernization. The Incumbent partnered with HP to develop an enterprise-wide approach that would govern numerous but separate modernization projects. This would eventually result in a total transformation of the company’s billing capabilities over a number of years.

The Incumbent started the process by hiring HP to implement a new billing system for its commercial mobile segment, which would deliver packaged-based billing services and identify an enterprise-wide BSS/OSS applications architecture. Next, the client plans to leverage lessons learned from the first implementation to deploy integrated billing systems in the wireline, broadband, TV, IPTV, IP Centrex, Voice over IP, and enterprise segments. The ultimate goal is an integrated billing solution that delivers a single view of each customer across all offerings and business units.

The Incumbent’s commercial mobile division sought a new billing solution to facilitate the launch of new high-speed wireless offerings as part of a market expansion strategy. They were convinced that a new billing solution would help them compete against low-cost competitors that recently entered the market. It could also provide the business intelligence and analytical capabilities needed to target specific customer groups with new services, product bundles, flexible payment plans, and less expensive customer self-care options.

Although exact figures are not available at this time, the HP-managed billing system is expected to save The Incumbent many millions over the projected 10-year life cycle. For starters, HP reduced operating services run rates to one-fourth of The Incumbent’s previous annual outlay for similar outsourced services.

Other savings resulted from the new platform, which replaced more expensive mid-range server and mainframe components with a Linux/Open Systems architecture that uses less expensive hardware and embedded third-party products. Storage costs were reduced by adding a locally attached SAN solution and eliminating third-party services that were previously engaged to maintain tape and system back-ups.

More importantly, the converged SOA has enabled The Incumbent to rethink its outsourcing strategy and squeeze out costs in the process. Instead of trying to reduce outsourcing costs by consolidating services, it now focuses on consolidating the platform. With converged IP, the commercial mobile group is able to bill for multiple services such as VoIP, IPTV, Internet access, and wireless, using a common billing platform, a single mediation and rating solution, and a common order-entry application. They are also able to seamlessly interface with the CRM solution to produce a consolidated bill by customer.

The new billing system, running on a converged HP platform, will enable The Incumbent to replace call centers with less expensive, self-service options, institute usage caps, offer different rate structures based on consumption patterns, and offer pre- and post-paid billing plans—none of which were possible with The Incumbent’s previous BSS/OSS.

Equally important, The Incumbent’s new outsourcing policies have also helped it formulate investment strategies for funding future projects. By outsourcing billing systems management, our client was able to shift a significant portion of the project’s CAPEX to OPEX, making the cost structure more manageable for the company’s year-end balance sheet.

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Map your own road to successBecause many CSPs will undertake a BSS/OSS transformation project in the coming year, the time has come to decide how to proceed. To be successful, you must have a clear vision of the desired end result. Any transformation project must be explicitly aligned with the company’s business objectives and IT goals.

To gain consensus, all stakeholders must be consulted and convinced that the change will benefit them. Funding must be found, risk must be minimized, and a solid plan with phased deliverables must be carefully defined and articulated.

It doesn’t have to be that hard The prospect of undertaking a transformative initiative seems overwhelmingly complex to some. In fact, 54% of the executives interviewed by Frost & Sullivan indicated that executing such programs was one of their organization’s weakest talents. Even those CSP executives who felt confident that program execution was one of their strong points (43%) said they would rely on external consulting and outsourcing services to help them define and implement the project plan. In fact, 36% of all CSPs interviewed said that outsourced implementation and delivery consultation services were “critical” to their success.

What does it take to find a partner with proven resources to achieve transformation? Look for a vendor with applications development and maintenance expertise, as well as experience transforming portfolios specifically for the communications industry. You need a provider that has developed program implementation, mobilization, and execution methodologies that has proved to be successful for Tier I and Tier II CSPs in major and emerging markets. That vendor’s methodology should establish an effective governance process that delivers the best IT, enables multisupplier management, manages change, and controls costs.

Whether you decide to go it alone or rely on external resources to help transform your BSS/OSS, HP offers some carefully considered suggestions for developing a successful transformation strategy.

Global program management HP uses a proven approach to transformation. Our methodology provides the structure and governance needed to successfully develop and run a client’s enterprise programs portfolio and individual programs for a maximum return on investment.

Our Global Program Management Architecture (GPMA) uses state-of-the-art tools and techniques to assess, prioritize, design, and implement processes. This gives clients high-level visibility into program and project essentials such as value, quality, and risk.

GPMA provides a consistent methodology across all programs by using common definitions, processes, tools, templates, and best practices. This ensures the smooth interaction of interdependent projects and the realization of prioritized business goals. Most importantly, HP is adept at modifying our tried and true approaches to ensure that clients transform their business paradigm, as well as their BSS/OSS and IT.

Take an enterprise approach for the long termBand-aids, quick fixes, and siloed projects do not work in today’s climate of converged technologies, merged companies, and consolidated resources. CSPs are accustomed to taking the long view. No carrier would build a network if it wasn’t convinced it would produce revenue for years to come.

It’s time to transform the way you think about your BSS/OSS stack. It’s no longer a bunch of applications but a long-term investment that is as necessary as the network. And like the network, it’s how you use your BSS that keeps the revenue flowing.

Before implementing another tool or updating another application, take the opportunity to review your company’s BSS requirements from a global, enterprise perspective. One-off projects, although less expensive in the short run, will not deliver the interconnectivity or system-wide capabilities needed to deliver business intelligence—the true source of tomorrow’s competitive edge. Even if you can’t afford a large-scale transformation project right now, spend your resources on a road map that will help you prioritize projects and ensure that they work together to deliver efficiencies and capabilities across the entire enterprise.

HP RightStepOur proven methodology, HP RightStep, takes an enterprise approach to transformation planning. This helps clients identify and prioritize initiatives and optimize IT investments in a manner that best supports the enterprise’s business goals.

Key concepts for a successful transformation• Take an enterprise approach

for the long term.

• Redefine your business model.

• Standardize requirements capture and communications.

• Maintain control when mobilizing suppliers.

• Design with integration in mind.

• Keep it COTS.

• Do it now.

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HP RightStep uses a patented method and process set for enterprise architecture definition and strategic technology transformation planning. It enables HP to work with clients to define a strategic IT direction, future-state enterprise architecture, and a transformation plan so they know where they’re heading and where they should be at every step of the process.

Standardize requirements capture and communicationsAn HP transformation plan standardizes requirements capture and communications. This type of standardization ensures traceability and inclusive communication to all stakeholders during the transformation process. After deployment, it will ensure sustainable maintenance of the business and IT services.

One of the major challenges while seeking to modernize the application landscape is understanding the business value of the IT services. HP’s enterprise architecture approach—based on open standards architecture, industry standards, and best practices—provides a controlled language and method to convey and maintain requirements.

Maintain control when mobilizing suppliersSome CSPs do not possess the insight required for a successful integration of OSS and BSS applications; others lack the resources to cope with enterprise architecture complexity. In both cases, CSP will often rely on the solutioning and costing of suppliers—a situation that can be exploited by commercial vendors. When working with a supplier, you should have a clear understanding of an explicit integration framework, so you can maintain control over every phase—particularly the project definition and vendor selection. You should also have access to all the major BSS/OSS vendors to help you select the solution providers and applications that work best within your framework.

Redefine your business modelSmart phones, the iPhone, iPad, DROID, and other new products are transforming the communications, media, and entertainment industries today—much like the ATM up-ended the banking industry decades ago. Before the ATM, wage earners rushed to the bank before it closed at 3 p.m. on Friday to cash their paychecks and make sure they had enough money for the weekend. The result? Long lines of impatient patrons waiting for their turn with the teller.

Now, getting cash amounts to a quick stop at the corner ATM whenever it’s convenient. Foot traffic was so reduced that banks were able to pare down the teller staff, leaving a lot of empty real estate in the lobby. In the United States, some enterprising bankers subleased the space to become coffee shops, insurance agencies, flower stalls, and even art galleries. Others closed branches and created tiny ones in supermarkets and malls. Recently, some European bankers have transformed their lobbies to look more like living rooms, furnished with comfortable chairs and computer terminals that are configured solely for online banking. If you want to talk to a teller, you need to make an appointment and pay for the privilege.

It’s time to transform your identity. You’re obviously not a telephone company anymore. Most CSPs have moved beyond wireline and are offering a variety of services that range from wireless to cable TV to VoIP. But many are still focused on transmission and reception. The CSPs that can bundle entertainment, gaming, and information assets in ways that offer exciting new services and capabilities to their customers will dominate their markets.

Similarly, CSPs that attempt transformation with yesterday’s thinking and tools will wind up with yesterday’s results. Have you thought about cafés or art galleries lately? Or instead of the same old long-distance plans, have you considered transforming cell phones into credit cards? Dramatic changes in your strategic direction require a comprehensive understanding of the properties of the new operations and a think-through of its implications.

Design with integration in mindWith the convergence of communications, media, and entertainment driving innovation and customer demands, CSPs need to ensure their IT is built for convergence. This means a lean, agile, and highly integrated enterprise. As demonstrated in The Challenger case study, a BSS/OSS transformation can simultaneously take advantage of three cost-containment elements:1. A fully outsourced model, using IT outsourcing

services 2. Commercial off-the-shelf applications 3. A well-designed, -deployed, and -executed

service-oriented integration architecture

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A converged infrastructure requires enterprise-wide integration planning and building interfaces at every step:1. Choose a system integrator that takes an

enterprise-wide, SOA approach and has the flexibility and capability to integrate all the products you select for your BSS/OSS stack.

2. Select BSS/OSS applications that offer prebuilt integration. The applications should not only be architected as preintegrated product stacks; they should also have predefined business processes and preintegrated information out of the box.

3. Make sure your OSS architecture has multiple integration layers. Your OSS/BSS stack should be able to interface with your company’s other BSS systems, plus the CRM and ERP solutions, e-business portals, and more.

By building integration capabilities into a converged enterprise, you will be able to consolidate siloed BSS, reduce your IT footprint, and lower overall TCO.

Convergence begins with an enterprise architecture that’s designed with integration in mind. The basis of this is a modern data center with an automated, virtualized architecture. This architecture will reduce server and storage hardware requirements, make management easier, and reduce risk.

The data center should incorporate a comprehensive and cohesive monitoring and management framework that is automated to respond quickly to requests and incidents. This not only speeds up critical decision-making but reduces operating and maintenance costs. The data center should be hardened with lights-out operations, plus efficient, standardized tools and processes to deliver high availability and accommodate new business growth. Finally, convergence requires a multilayer network architecture that accommodates different types of traffic (applications, data, and core operations) and enables each network to be sized appropriately to avoid congestion, provide security, and facilitate management.

Explore new investment strategiesAlthough some regions bounced back from the global economic recession of 2008/2009, the 2010 credit crisis in Europe and the tepid overall global recovery continue to keep capital constrained through 2011. Generally, IT budgets remain tight and often are blamed for delaying or resizing transformation projects.

Another reason why many transformation projects have not moved forward is the growing demand for faster payback. According to one CSP executive interviewed by Frost & Sullivan, “Increasingly, we need to show that an investment has a ROI, and

payback typically needs to be short.” Unfortunately, most BSS/OSS projects will not deliver a decent ROI in a year or even two.

In this case, savvy managers are trying to steer their internal customers away from using rapid ROI as the only measure of success. Growing market share, improving competitiveness, and launching new revenue streams are more accurate metrics. CSPs that forego transformation projects because of delayed payback are in danger of losing market share to new, more agile entrants.

For certain, these new competitors will offer cheaper rates or better services to churn through your customers. Do you or your internal customers really want to take that chance?

Transformation is necessaryAlthough the recession may have slowed progress, it has not mitigated the need for transformation. In fact, 43% of the executives surveyed by Frost & Sullivan say that the recession did not alter their view that transformation is necessary. Another 43% say the recession accelerated the need to transform.

According to one respondent, “Our network platforms and business process systems are getting outdated and are no longer capable of catering to the increasing demand for wireless technology and mobility. This has caused the urgency for us to transform.”

Consequently, CFOs and IT managers must work even harder to get the funding they need for transformation. Many are turning to clever schemes to convert CAPEX into OPEX. As shown in the previous case studies, converting capital outlays into operating expenses generally involves turning over the day-to-day operations of your BSS/OSS or IT infrastructure to outsourced services—whether onshore, nearshore, or offshore.

HP has found that the greatest opportunity for converting CAPEX into OPEX is through a multiyear vendor contract in which the total project cost is divided by the number of years in the contract. This converts CAPEX into OPEX and also provides a predictable, flattened monthly payment. HP frequently brings its leasing and financial services subsidiary, HP Financial Services, into the opportunity to further reduce the initial CAPEX.

Outsourcing can deliver further cost reductions. Allowing a third party to host your operations eliminates the need to build and maintain expensive infrastructures. HP Enterprise Services estimates that outsourcing the management of your BSS/OSS can lower the TCO up to 30% over the life of your applications by maximizing application performance and operating efficiency. Using Best Shore® not only

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lowers labor costs but frees you from the time and expense of staffing and training technical staff. A fully outsourced model was a key success component for The Incumbent and The Challenger and holds the potential of similar success for you.

Keep it COTSCSPs are old hands at innovation. The industry is responsible for developing more than its share of remarkable new technology over the past 20 years. So the urge to develop home-grown solutions and tinker with generic applications is irresistible to many technologists. This is especially the case when end users balk at learning new systems and beg the technicians to customize them so they work “like they used to.”

Technology, however, has become highly specialized. Generally, the major BSS/OSS/CRM producers are capable of delivering a superior product at a lower cost than any developed in-house. BSS/OSS are becoming more akin to table stakes in a game of cards. It’s the investment you have to make to play the game, and the smart player will keep that investment as low as possible. COTS packages typically cost less, are cheaper to run, and require fewer maintenance and support resources than in-house systems.

Customization is a sure-fire trigger for increasing costs, slowing implementation, and impeding time to market for new products and services. By keeping customization to a minimum, rollouts, routine upgrades, and maintenance all take less time and, consequently, cost less money. Some COTS packages have integration prebuilt into the entire solution stack. This further reduces the complexity and expenditures associated with the platform’s integration layers by between 20% and 55% during the application life cycle.

COTS packages also simplify and speed up the process of making pricing or regulatory changes and launching new products. Changes no longer require developing and writing code. The newer packages provide a GUI that allows users to input changes or requests into a preformed table or template. Many don’t require a systems developer and allow less expensive, nontechnical resources to make changes. New products can be launched in days instead of months, because today’s generic COTS only require users to model the new product in a test environment and then roll it out.

Do it nowThe 30 CSP executives interviewed for the Frost & Sullivan Transformation Study identified a wide range of business imperatives for the coming year. Below is a synopsis of the internal and external drivers they cited for wanting to transform their IT and BSS/OSS environments.• Reduce costs/TCO: Consolidate IT resources,

optimize assets, and lower both unit costs and overall TCO to compete on price.

• Stimulate revenues: Improve time to market of new products and services and generate new revenue streams; offer more favorable and flexible pricing structures to improve profitability; identify and create premium pricing plans for poor credit risks and bandwidth hogs.

• Improve the customer experience: Implement new business intelligence capabilities and analytics to create new product bundles and pricing structures based on customer usage patterns; create special offers for high-churn candidates.

• Increase customer loyalty: Offer lower-cost, multichannel and self-service options to enhance customer access to support, boost customer convenience; increase customer loyalty and reduce churn.

Transforming BSS/OSS is the only way to achieve these goals. What are you waiting for? If 96% of the CSPs interviewed by Frost & Sullivan are planning to start their own transformation initiatives this year, there’s a strong probability that your competition is planning a transformation project, too.

Meanwhile, consumers aren’t waiting for you to transform. They’ll switch to the company that offers them the best price and the coolest apps. And your enterprise customers will defect to the CSPs that will help them generate new business and cut costs. The time to transform is now.

HP: Proven expertise, solutions, and qualityHP has 35-plus years of telecommunications experience serving over 130 clients in more than 40 countries. Our experience serving more than 100 million subscribers with BSS/OSS is based on our ability to maximize the telecom operating environment. HP offers integrated business solutions backed by the expertise of thousands of CME professionals.

HP is unique in the depth and breadth of its hardware, software, and services portfolio. We deliver quality solutions designed to lower total cost of ownership and reduce risk by incorporating agile architectures, governance, consistent quality, and security standards—from strategy definition through implementation and management.

We use a proven, global delivery methodology and tools based on industry standards and best practices. These include The Open Group and TM Forum management standards and the experience of our 3,700 CME Best Shore resources.

These include certifications (CMMI Level 5 Certifications, ISO 9000, Oracle certifications) and HP professionals (including solution architects, project managers, and Microsoft technologists).

HP has long-term partnerships with the best BSS/OSS, CRM, and providers.

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© Copyright 2010-2011 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice. The only warranties for HP products and services are set forth in the express warranty statements accompanying such products and services. Nothing herein should be construed as constituting an additional warranty. HP shall not be liable for technical or editorial errors or omissions contained herein.

4AA0-9713ENW, Created December 2010; Updated June 2011, Rev. 1

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About the authorsHarry Hendrickx Harry Hendrickx is chief technology officer and enterprise architect in the Communications, Media, and Entertainment (CME) industry unit at HP. In this role, he is responsible for architecture management and support of large transformation programs.

Since joining EDS (now HP) in August 2007, Hendrickx had several assignments as member of the Chief Technology Office CME industry team. His approach is based on enterprise architecture with emphasis on business IT alignment.

Hendrickx’s focus currently is on enhancing the architecture capability in outsourcing relationships, as well as within organizational boundaries. One of his specialties is exploiting open standards such as The Open Group Architecture Framework and the TeleManagement Forum framework.

Hendrickx has more than 20 years’ experience in business IT alignment and has held roles as business consultant, business architect, and enterprise architect. Before joining HP, he obtained the highest certification degree for enterprise architects at Capgemini. He also has published numerous articles and two books on architecture and governance.

Harry Hendrickx earned his master’s degree in economics and a philosopher’s degree on governance from the University of Tilburg in The Netherlands.

Paul R. VoelkerPaul R. Voelker is director of communications solutions at HP. His role in the Communications, Media, and Entertainment (CME) industry segment is to develop strategic solutions and facilitate relationships with the communications service providers and industry partners.

Voelker joined HP in 1983 and has held various business development, sales, and marketing management positions. His systems and solution sales have been in the oil, defense, and telecommunications industries.

Voelker was the Americas marketing manager for the CME industry, responsible for business development and managing the CME solution center. He was director of business development for service providers in the southwest United States, responsible for developing go-to-market strategies and qualifying companies for strategic alliances and investment. He also was the HP global client business manager for MCI and has managed teams responsible for the entire range of HP’s computer products, services, and solutions.

Voelker has been a presenter at GLOBALCOMM and TM Forum’s Management World and has served on the Texas Governor’s IT Cluster Committee.

Paul Voelker earned a bachelor’s degree in business administration from William Penn College.