Evolution, Not Revolution

 Evolution, Not Revolution Excelacom Perspective Dinesh Dhanasekharan Chief Technology Officer Yossi Abraham Vice President of Marketing and Products November 2014 Evolution, Not Revolution | Perspective Table of Contents Executive Summary ....................................................................................................... 3 Introducing the Challenge .............................................................................................. 3 Back Office Systems Can’t Keep Pace ............................................................................... 4 Evolution vs. Revolution ................................................................................................. 5 Case Study: Top Cable Company ..................................................................................... 6 Conclusion .................................................................................................................... 6 Merger Story ................................................................................................................. 7 About the Authors ......................................................................................................... 8 About Excelacom .......................................................................................................... 9 Legal Disclaimer ........................................................................................................... 10 Excelacom Inc. Page 2
Evolution, Not Revolution | Perspective Executive Summary The modern telecommunications industry is changing more and faster than it ever has before. For the largest carriers, this means opportunity – in the form of new products, wholesale offerings and even new lines of business – but also significant technical challenges as their legacy systems struggle to adapt to new demands. A “revolutionary” approach, defined by total systems transformation, promises to solve this problem in one swing of the ax, replacing old systems with new, flexible, modern technology. However, realizing this vision requires successfully navigating a technology Catch‐22: the complexity and intradepartmental reach of these systems that makes them such obvious candidates for replacement also makes them very difficult to replace. A “rip and replace” project of this size is costly, high risk and can take years to pay off – if it even succeeds. In contrast to systems “revolution,” an evolutionary approach works to enhance and optimize existing systems through a combination of process redevelopment and application overlays that improve and link siloed operations. The existing systems remain the engine powering the train, but their capabilities can be significantly enhanced via technology that can reduce time to market/revenue, improve customer experience, and increase operational efficiency. Enhancing, rather than replacing, allows for an accelerated timeline to improvement and significantly lower upfront costs, minimizing risk and maximizing potential return. Introducing the Challenge Telecommunications was a stable industry for decades. Analog networks evolved gradually and carriers made their investment decisions by looking at long time horizons under predictable regulatory frameworks. As the digital era dawned, policymakers changed the rules, breaking up old monopolies and opening the door to a wide range of new network‐owning challengers or over‐
the‐top players. This intense competition drove a new round of market consolidation, as traditional “voice” and “video” providers moved onto each other’s turf and grew through acquisition. These agglomerations of formerly regional providers had to deal with the challenge of providing a unified set of services across markets powered by disparate back office systems (see “mergers” sidebar on page 8). Carriers are now competing with Internet challengers and at Internet speeds – but they are doing it on the backs of aging legacy systems that were never designed for this type of environment. Today, every service that was once only available on a dedicated pipe has been duplicated, de‐bundled and pushed to a dizzying array of new devices. Carriers are now competing with Internet challengers and at Internet speeds – but they are doing it on the backs of aging legacy systems that were never designed for this type of environment. Excelacom Inc. Page 3
Evolution, Not Revolution | Perspective Back Office Systems Can’t Keep Pace Global IP traffic is five times higher than it was five years ago and continues to grow rapidly. Traffic is also shifting from PCs with wired connections to mobile and wireless devices. Wireless traffic will pass wired in two years and the majority of all IP traffic in 2018 will come from devices that are not PCs. Figure 1: Revenue / Traffic Divergence for Global Carriers At the same time traffic is growing, revenues are starting to plateau. On the mobile side, average revenue per user is shrinking due to fierce price competition, commoditized messaging services, and the economics of late‐adopting users. The result of all these trends is that the communications industry, once so quiet, is now defined by constant, rapid change. Providers are racing to match each other by constantly adding new products, better features and even new lines of business at a faster pace than ever before. For the established telecom players, the breakneck pace of expanded service offerings has already, in many cases, outstripped the ability of their existing service platforms. It takes too long to bring new products to market and it can be difficult to manage them once they’re live. Every shortcut taken just to get things out the door becomes a major source of inefficiency once the product reaches scale. In some ways, the struggles have just begun. Connected functionality is set to become a standard offering across a huge range of consumer and business products that don’t fit the billing and customer management paradigms for which current back office systems were designed. Billions of connected devices will comprise the Internet of Things in the near future. Battle lines are forming between the marketing and technology teams over these issues, as the former group sees tremendous market opportunities, while technology teams deal with legacy systems that are difficult to manage, expensive to maintain and hamper innovation. Their daily struggle: 1. Difficulties developing and integrating new products – Existing systems are so complex that introducing new products and integrating them into current offerings is slow and expensive. 2. Revenue leakage – Customers aren’t being charged correctly for the elements or packages of services they are receiving. 3. Operational issues – Over time, manual workarounds and other legacy processes lead to high overhead and staffing inefficiencies. Carriers can be managing enterprise businesses on spreadsheets. The underlying problem is complexity. As Robert Glass, the software engineer and writer, first demonstrated, for every 25 percent increase in problem complexity there is a 100 percent increase in solution complexity. Excelacom Inc. Page 4
Evolution, Not Revolution | Perspective Evolution vs. Revolution Addressing these challenges can take one of two possible approaches: Revolution, defined by total systems transformation, promises to solve this problem via a wholesale replacement of old systems with modern technology. The companies selling a solution based on system replacement promise a paradise of flexibility, standardization and forward manageability. However, realizing this vision requires successfully navigating a technology Catch‐22: the complexity and intradepartmental reach of these systems that makes them such obvious candidates for replacement also makes them very difficult to replace! There is an extensive literature in IT regarding project failure rates, reasons and responses. The Standish Group did the seminal work in this area in the 1990s, with its “Chaos Report” that found fewer than one in six IT projects was completed on‐time, on‐budget and with the full set of promised functionality. Almost a third of the projects in their study were canceled before completion. More recent attempts to duplicate this research have found widely varying ranges for failure rates – based on differing methodologies and definitions – but two core principles come through in all cases: 1. Many IT projects fail. 2. The larger the project, the higher the likelihood it will not succeed. These findings have been boiled down over time into a simple aphorism: “In IT, large projects fail and small projects succeed.” Total systems transformation is the epitome of a large project. The biggest selling point for total systems transformation is “future‐proofing.” When attempts to add new services or match a competitor’s offering have been derailed due to the high cost of adapting internal systems, starting over looks like a necessity. However, this observation turns out not to be the case. Sophisticated capabilities actually are available from overlay and linking applications that work with and connect existing systems. The evolutionary approach to systems change works to enhance and optimize existing technology so that it remains the engine powering the train, but with capabilities that are significantly enhanced. This approach to change is far more manageable for most organizations. In most cases, evolutionary options are available that allow organizations to efficiently and cost‐effectively add new adjunct products and service capabilities on an accelerated timeline. Operators can then focus on creative marketing and offers during the creation of service packages – rather than service functionality – and on revenue generation through effective operations. Each provider’s system is different, but there are commonalities that allow evolutionary providers to create reusable modules that tightly conform to those systems, while also offering forward manageability and flexibility to allow for continuing system evolution. In truth, Excelacom has solved many of the same problems over and over again, as in the following case study. Excelacom Inc. Page 5
Evolution, Not Revolution | Perspective Case Study: Top Cable Company A large cable service provider wanted to scale its Enterprise and Carrier Business by changing from selling products to customers through an Individual Case Basis (customer, product, and pricing) to a standardized service offering with standardized pricing so they could scale their business. The company also needed to change how they deployed products and managed service delivery, much of which had been a manual process. To address these issues, Excelacom worked with the customer to overlay a component‐based order management solution on top of the company’s existing systems. This kept core systems in place and provided better connectivity between them, while allowing the customer to automate manual activities and dramatically improve results. The overlay allowed what had previously taken up to a year to deploy under the legacy system to be rolled out in one to three months (depending on the complexity and number of interfaces). The approach involved configuring products out of the box as a first step using the modular product framework and then automating interfaces to eliminate swiveling between various sales, provisioning and billing systems. On the delivery site, prior to implementation, rework of orders because of errors or changes to head ends and/or products without communication to provision/network engineering groups resulted in up to 30 percent rework at Test and Turn up. The implementation has significantly reduced the rework, as discrepancies are now caught up front and the service provider is able to deliver what was promised on the date it was promised versus having to reschedule installation. Overall, the company improved customer experience by standardizing the products, managing customer expectations and delivering what was promised when it was promised. Conclusion IT systems are a critical component of business success, but the complexity of today's environments makes it extremely challenging to deliver high‐quality services that balance risk, cost and speed. An evolutionary approach to optimizing these existing systems allows for an accelerated timeline to improvement and significantly lower upfront costs, minimizing risk and maximizing potential return. To allow providers to launch new offerings quickly and at reduced cost, these services must be agile, configurable and designed with an understanding of where the industry is today – and where it’s headed tomorrow. Excelacom Inc. Page 6
Evolution, Not Revolution | Perspective Merger Story Cable companies are well versed in the management of different platforms. The large operators own multiple systems serving different geographic regions. Their long histories of growth via acquisition have adapted them to a federated system, with a single core brand overlaying distinct regional operations. The challenge comes in making these dividing lines invisible to customers. It’s simply not practical to remove and replace a core system overnight once the merger is approved, which means existing systems must be optimized to prevent customer pain. In the short term, the evolutionary approach is a system‐agnostic business architecture that overlays the multiple backend systems – keeping them in place – but offers customers a converged care platform, web presence, and product look and feel. From the end customer’s point of view, this means a single 800‐number for service and a unified website. For the provider, the system would route customer calls to different care centers, based on the region from which the person is dialing. The website would pull service offerings and prices from different regional service catalogs. A properly designed and executed system‐agnostic business architecture also makes companies more merger‐resilient. Cable companies constantly merge or cleave regional systems. A well‐designed and implemented solution supports non‐systems based processes, making it easier to bring on board additional systems at a later time. In the beginning, the merged company won’t have a unified view into any customer that has multiple locations and services from both providers. This is a customer challenge, because cable companies offer different products at different prices in different areas and customers will quickly come to expect one set of services and one bill from one company. However, by quickly addressing the most pressing customer‐facing issues, providers give themselves time and space to develop longer‐term IT strategies and consolidate their other systems. That entire process is complex and lengthy (taking up to five years), because you’re basically fixing a train while it’s moving. Excelacom Inc. Page 7
Evolution, Not Revolution | Perspective About the Authors Dinesh Dhanasekharan Chief Technology Officer Dinesh Dhanasekharan is the Chief Technology Officer (CTO) at Excelacom. As CTO, he helps drive the company’s technology strategy, leads the engineering team towards continued delivery of innovative products, and provides executive‐level consulting services. Yossi Abraham Vice President of Marketing & Products Yossi Abraham is Vice President of Marketing and Products at Excelacom. As Vice President of Marketing and Products, he is responsible for the global strategy, planning and execution of all aspects of Excelacom’s marketing efforts and the Century product suite. Excelacom Inc. Page 8
Evolution, Not Revolution | Perspective About Excelacom Excelacom addresses clients' complex business, technology and operational challenges through a combination of consulting expertise, professional services and highly‐configurable product elements. We optimize existing systems and work on an accelerated timeline that minimizes risk and maximizes return, improving business and operational performance without costly technology transformations. The company is headquartered in Reston, Va., outside Washington, D.C., with more than 700 employees worldwide. For the past 14 years, customers have spanned many industries, including telecommunications, healthcare, e‐commerce and government. More information: http://www.excelacom.com/. Excelacom’s Century Suite of Product Modules enhances existing systems to improve business and operational performance without costly technology transformations. Century coexists with existing architecture, providing a layer of added functionality and linking existing systems to put an end to revenue leakages, order fallout and manual workarounds. Century Test Automation is a feature‐rich application to organize, automate and manage all aspects of the testing process. It returns highly customizable reports and provides high‐volume backend process testing that bypasses the application’s User Interface. Excelacom Inc. Page 9
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