New research suggests that priorities for telcos and service providers in 2012 include striking a better balance of in-house and outsourced IT and making better use of their systems. Guy Daniels reports.
“Stop me if you’ve heard it before” is a phrase that goes hand in hand with “Did you hear the one about…?”. But like the worst jokes and their tellers, it is also applicable to the strategists within the telecoms industry who keep telling us that they’ll do better next year.
Stop me if you’ve heard this one before, but a new survey of CIOs working at European telcos and service providers suggests that they are planning smarter use of their IT systems next year. Well, believe them or don’t believe them; how far they actually manage to execute their strategies is their concern, but it is always interesting to find out what they would like to do in an ideal world.
Commissioned by Oracle and undertaken by PwC, the survey of European Communications Service Providers (CSPs) found that maintaining IT systems was actually one of the biggest concerns. 60 per cent of surveyed CIOs currently spend more than half of their opex budget on maintenance, and they plan to reduce this cost burden in 2012 through more strategic use of outsourcing and standardisation.
In part to combat an in-house shortage of specific skills, CIOs say they will outsource network and fault management, as well as provisioning and order management, although billing and mediation will increasingly be done in-house.
Dan Ford, VP of product marketing at Oracle Communications, said that CSPs face another year of budgetary pressure, at a time when the need for innovation and competitive differentiation has never been greater:
“CSPs are at a crossroads.
They need to increase customer retention and improve the provision of content and services such as media and applications. More CIOs are focused on simplifying and streamlining their core IT operations and focusing on the areas of their IT operation which can drive real efficiency and growth within the business.”
The survey says 88 per cent of CIOs plan an upgrade of their CRM systems in 2012. This will free CIOs to focus on more strategic requirements and revenue drivers such as portal and content applications. Ford adds that CIOs will move away from bespoke applications, which typically carry a heavy budget overrun and require greater integration and more careful management:
“We are seeing renewed interest in business applications, such as CRM, web commerce, self-service, and retail point of service, as companies look to better engage with existing customers. We are also seeing CIOs increasingly buying off-the-shelf applications to create a more standardized IT ecosystem.”
The survey suggests that more than two thirds of bespoke applications are delivered with a “substantial” budget overrun, with 74 per cent having “some level” of budget overrun. This is compared to 52 per cent of commercial-off-the-shelf (COTS) applications which are delivered under budget.
95 per cent of CIOs plan to increase their use of COTS in 2012, which will free up budget for other uses and should make it easier for them to form the necessary partnerships with content and media companies. This move to standardisation will also reduce the cost implications of maintaining restrictive legacy systems – not helped by the spate of mergers and acquisitions that just add to the legacy maintenance issues. David Russell, UK Telecommunications Leader at PwC said:
“Through 2012 we see a dual challenge for CIOs as they come under increasing pressure to reduce both operating costs and capital expenditure, while meeting their organization’s desire to invest in improving customer experience to drive retention. With the squeeze on product pricing, the need to reduce operational costs, the requirement to simplify IT and increased competition, CSPs see improved customer experience as the key differentiator.”
Photo by Daniel Schwen, via Wikimedia Commons
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