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Telefónica Bets on IT Transformation

Ray Le Maistre
6/4/2015
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NICE, France – Telefónica is in the midst of a major back-office business support system (BSS) transformation that will result in the deployment of new business-critical systems in multiple markets, with the whole process taking place while the service provider's various operations continue with their day-to-day operations.

An outline of the transformation project was provided by Group CIO Phil Jordan, who was speaking at the Huawei Open Digital Telco Summit here in Nice this week. "We are doing a fundamental IT transformation in 16 countries at the same time within 18 months, led in each country by the CEO, but while we continue to run the business!" He likened the process to this (though he showed a different video of the same task):

He said such a transformation is necessary for telcos because the "money is going elsewhere." By that he means to the web services and OTT players, which are capturing the time, attention and spend of consumers. Those companies are nimble in their operations and service development, while telcos are not, thanks in part to their cumbersome back office support systems: "We have created something so complex that we need to stand back and fundamentally transform," noted the Telefónica executive.

That transformation involves a revamp of billing, charging, analytics, customer experience management, other BSS systems and (importantly) processes that are abundant and act as a hindrance across many communications service providers (CSPs).

"We have to rethink the purpose of IT... This is a root and branch transformation that has enabled us to get rid of 2,000 systems. IT systems have gone from being the necessary evil to the core differentiator."

Following a planning stage that began about three years ago, the operator embarked on a group-wide process that is still ongoing, working with a small number of "prime relationship" technology partners including Huawei Technologies Co. Ltd. Jordan noted that the Chinese vendor is now helping it transform "the IT side of our business in the same way it has in the network." And it seems Telefónica is not alone. (See Orange Looks to Huawei for IT Overhaul.)

The process is helping Telefónica to be less fragmented and more organized. "We now have one set of process framework methodology tools that we can use across all markets. We have made a big bet on standards, and we're relying heavily on TM Forum standards, Frameworx in particular. We need to be modular, standardized," noted Jordan.

The transformation will enable Telefonica to "focus less on the T in IT and more on the I -- we need to shift our focus and be the best at integration, innovation and information," said the CIO.

Key to all of that is being able to analyze and make sense of the vast volumes of data that every operator has at its fingertips, noted Raymond Meng, big data chief architect of Carrier Software Business Unit at Huawei, who said that telcos have a lot of major challenges related to the efficient use of that data. They suffer from multiple data silos, a lack of skills, a shortage of business cases and difficulties in data monetization. "Big data is key to digital transformation -- it's almost impossible to achieve data monetization without big data," said Meng.

He wasn't the only person with that view. Clare McCarthy, practice leader of Telecoms Operations and IT at Ovum Ltd. , noted that a major hurdle for telcos is a lack of centralized and organized data collection and analytics strategy.

— Ray Le Maistre, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, Editor-in-Chief, Light Reading

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Mitch Wagner
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Mitch Wagner,
User Rank: Lightning
6/4/2015 | 4:07:10 PM
Revenue
OSS and BSS are needed because a service provider like Telefónica relies on subscribers for revenue, and needs to generate profits too. OTT providers often use advertisers for revenue. Some run on investor money, and don't worry about revenue so much as building user numbers. 
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