Ms Demystified PDF

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S T R A T E G I C W H I T E P A P E R

The evolution to a converged world has put Service Providers under increasing market

and competitive pressure. Responding to these market pressures requires solutions that

enable a decreased time to market or newer, dierentiated multi-media services while

increasing customer service and ocus. At the same time costs must be lowered and

shareholder demands or increased value must be met. This combination can be very

difcult to resolve.

These requirements are impacting traditional business models and challenging

carriers to ask themselves: What are our core areas? What is o strategic importance?

It was once thought that the answer was the network. But convergence is shiting this

strategic importance to the actual services provided in today’s dynamic market and to

being proactive to market demands. This shit in strategy now includes an area once

thought impossible to consider – Outsourcing o the network. The possibilities o

outsourcing partnerships are exciting and have proven to be an important tool or

business transormation.

Managed Services Demystifed —An Overview or Telecom Service Providers



1 ExecutiveSummary

1 ChangingTelecommunicationsMarketplace

2 ManagedServicesBusinessModels

3 Managed Services Business Model Options

3 ManagedServicesBusinessModels–ACloserLook

3 Strategic Outsourcing

4 Selective Network Out-Tasking

4 Managed and Hosted Applications

5 BuildingYourBusiness

5 Choosing a Managed Services Provider

7 Managed Services Demystifed – How You Beneft

8 AboutTheAuthor

8 John Ramirez, Vice-President Carrier Network Operations –

Alcatel-Lucent’s Network Operations Division

Table o Contents



Managed Services Demystifed | Strategic White Paper 1

Executive Summary

Facing increasing competition and commoditization rom traditional telecom products, serviceproviders are either in the process o or planning or the move to next generation, converged,network inrastructures in order to oer new, revenue-generating services.

Making this transormation can be complex and dicult. However, i done correctly, working with

a managed services provider and outsourcing all or part o the next generation network planning,implementation and management, the transition to the new inrastructure can occur quickly andeciently and with reduced risk.

This white paper discusses a number o options available to service providers ranging rom networkoutsourcing to network management and operations to hosted applications — and the benetsassociated with these options.

Changing Telecommunications Marketplace

In today’s rapidly changing telecommunications marketplace, service providers ace a number o unique challenges. The very oundation o their business is shiting. For more than a hundred years,new technology has been the primary driver or network transormation and the creation o newcustomer services. But today this push model has given way to a pull model — technologicaladvances still play an important role, but in the new world o telecommunications, it is end-userdemand or new service oerings that is driving the move to next generation networks. Bothenterprises and consumers are demanding a more personalized, content-rich, blended liestylemultimedia experience. For example, users now want and expect their selected content, such asmusic and video, to be universally accessible and portable. This true convergence o new servicesand applications is the sweet spot or the uture growth o subscriber-based revenues and growth.

While this customer-driven marketplace presents service providers with enormous opportunity,it also provides some daunting challenges.

Traditional legacy revenue sources are eroding and operators are eeling increased pressure to reduceCapex and Opex and add new sources o revenue. Because o intense competition (especially romnew competitors in the orm o mobile virtual network operators [MVNOs] and wild cards likeSkype and Google), and cut-rate pricing o services, operators are nding that adding more end-userso inexpensive access and bundled voice, data and video does not necessarily mean increased prots.

The strategy o leveraging existing inrastructure to meet customer demand and deploy next genera-tion networks is no longer sucient — service providers are aced with the challenge o a majortransormation and a move rom their traditional comort zone o selling bandwidth. Carriers musttransition rom legacy telecom technology, networks and services to next generation IP-basednetworks that support convergence and blended, personalized, enhanced applications and services.

Although this transormation opens new sources o revenue, deploying, operating and maintainingthese next generation networks, systems, devices and services is a complex and costly proposition.In this new environment, service providers need to determine how to eciently and rapidly addnew services and applications and predict scalability as they attempt to respond to rapidly changingend-user demands. Further complicating matters are issues around reliability and security in anIP-based world, and the act that people with networking, security and systems management skillsare currently in short supply.



Managed Services Demystifed | Strategic White Paper2

In addition to these technology issues there are other barriers to convergence that need to beaddressed, such as business issues surrounding marketing skills, sales orce ability, acquiring captivat-ing content, and rening interconnect agreements. To cope with these issues requires considerabletime and eort. However, the organization’s scarce resources are increasingly being asked to supportnetworks that continue to grow in complexity. As a result, the company’s ability to ocus on thesebusiness issues is compromised.

The bottom line is that network transormation to accommodate convergence is not just a tech-nology issue — it is also a business issue. In order to take advantage o end user demand andwillingness to pay or converged, blended services there are innovative business models availableto help compete in this environment.

“Carriers will be able to increase ARPU by 40% annually over the next fve yearsby oering blended IMS-enabled “liestyle services.”Equity Research Report*

* “IMS – The Move to Sotware” Equity Research (Cannacord Capital Corporation) report:, January 2006

Figure 1. Network Complexity and Resource Allocation

Managed Services Business ModelsIn order to meet the competitive, technological and business challenges associated with networktransormation, traditional business models may need to be radically revised. Service providersrequire a strategy that nds the best, most protable way to oer these new converged services asquickly and eciently as possible while providing the highest levels o quality and security.

Outsourcing is increasingly becoming a strategy o choice among service providers, a choice thatcan help balance competing business priorities. IDC, the research house based in Framingham, MA,estimates that 25 percent o the service providers in the North American region (NAR) willoutsource network operations by 2009. And, based on a steadily increasing number o publiclyannounced contracts, the trend toward outsourcing in Europe and Asia has already outpaced NAR.

NetworkComplexity

Time Spent onNetwork Support

Time Spent onNetwork Innovation

Resource Allocation

Network Complexity



Managed Services Demystifed | Strategic White Paper 3

Managed services can provide tailored solutions that meet the requirements o your complexnetworking environment. By partnering with a managed services provider that is qualied to handleall aspects o planning, designing, deploying and operating a next generation network, you are ableto concentrate on building your business, rather than dealing with the day-to-day complexities o network support and management.

When working with the right managed services provider, you can expect:

• A single-sourced solution that provides clear accountability and a ocus on achievinghighest quality

• A well-planned and well-executed transition to next generation networks in order to realizeyour long term nancial objectives

• A technology partnership that provides seamless migration planning

• Alignment o your next generation network with your business processes, cost structure,and planned growth

• World-class network operations outsourcing experience and expertise

• Global 24x7 presence and capabilities

• A strategic relationship ocused on uture innovation

“All types o carriers across geographic regions will consider managed services insupport o their business requirements.”** Managed Services Migration: Vendors and Communications Service Providers Making the Move, Stratecast, July 2007

ManagedServicesBusinessModelOptions

There are innovative business model options available as a strategic tool to address the need ornetwork transormation and include:

• Strategic Outsourcing – A comprehensive relationship that includes business and networkconsulting, network planning and design, implementation and integration, and on-going networkmaintenance and management.

• Selective Out-Tasking – Your managed services partner manages specied parts o the network.

• Managed and Hosted Applications – Network-based services and applications that typicallyreside either at the customer premises or at the hosting partner’s acilities

Managed Services Business Models – A Closer Look

StrategicOutsourcingThis approach eatures a strategic relationship or network transormation and seamless migration tonext generation converged services to realize long-term fnancial and business objectives. This is acomprehensive end-to-end solution to support all aspects o the ull liecycle o your network. It is morethan just a relationship between a supplier and vendor — it is a relationship between business allies.




“We moved rom a world where we were spending too much time negotiating onevery single item to one o saying ‘let’s choose to work together instead.’ We believethat Lucent is best o breed in its area. Together we can actually build a better uture by ocusing on what we deliver in the market rather than how we actually

game each other.”Kevin Kenrick, General Manager of Mobile Services, Telecom New Zealand

Simply stated, an outsourcing partner manages your network so you can manage your business.Strategic outsourcing components typically include proessional consulting, planning, design,deployment, integration, ongoing maintenance and management and network evolution.

SelectiveNetworkOut-Tasking

In order to provide you with maximum fexibility, your managed services partner also oers selectiveout-tasking. In these out-tasking arrangements the ocus can be around a specic managementunction, or task, that a third-party has the expertise and experience to perorm more economicallyand eectively. Your partner can oten help to reshape or transorm the way the unction is per-ormed. The primary reasons or selective out-tasking are to address specic areas where immediateresources are not available. These could be access to skilled talent and/or nancial resources.Operating and managing such areas as your LAN or WAN, or conducting perormance monitoringin accordance with SLAs, are some common out-tasking scenarios.

The managed services partner handles many o the tasks o running a network, allowing youto ocus on strategic network planning and evaluating new technology. You can scale your levelsand terms o service to meet your changing needs. Comort with out-tasking initiatives that havedelivered clear cost benets and improved service is oten a precursor to the establishment o larger outsourcing relationships. Many service providers view the transition rom out-tasking to

outsourcing as a phased approach — what can be called an “evolution o trust”.

ManagedandHostedApplications

Managed and Hosted Applications are network-based services that typically reside either at thehosting partner’s data center or sometimes on the customer premises.

Like the overall telecommunications marketplace, the applications marketplace is changing rapidly.Yesterday’s applications, such as voice mail and text messaging, are becoming today’s applicationenablers.

A major actor driving the acceptance o the hosted services approach is the service providers’ needto increase revenue rom new sources. However, beore oering these new applications there are a

number o issues that need to be addressed. You must evaluate hundreds o new application oppor-tunities and create a dierentiated portolio o end-user services that minimizes churn and boostsrevenues. These new applications must have carrier-grade perormance and reliability, and providea consistent end-user experience across new and legacy systems and devices. Once rationalized,getting the new applications to market quickly is imperative.

For example, hosted applications solutions allow you to quickly provision carrier-class VoIP servicesor your enterprise customers, while limiting your nancial and technical exposure. This can beaccomplished using a hosted IP PBX that is either located remotely at your partner’s data center oron your premises. The hosted IP PBX is a completely outsourced, network-based IP PBX service thatsupports SIP-based calls and connections. It includes standard oce PBX eatures, such as a sharedphone number or desk and mobile phone, our-digit extension dialing, and single voice mailboxes.

Other examples o hosted applications are shown in Figure 2.



Managed Services Demystifed | Strategic White Paper

Figure 2. Hosted Applications

Building Your Business

Each o the managed service models discussed can provide signicant business benets. With thecorrect managed services partner, you will be ree to grow your business and eciently transormyour inrastructure to accommodate next generation converged services. You can concentrate onyour customers and your business development rather than day-to-day network operations.

Your Capex and Opex can become more predictable and your total cost o ownership can drop.

In the short term, Opex reduction can result rom potential economies o scale associated with

your managed services partner’s operations center, inrastructure and personnel investment. Overthe long-term, you enjoy Opex control by outsourcing all or part o your network operations to aqualied managed services organization. You are able to more accurately control and orecast thecosts related to managing the network, new service deployment, and network expansion.

At the same time you realize long-term Capex reduction by minimizing or eliminating certaininvestments in development and maintenance, and operations center expenditures.

The managed services provider’s capabilities can assure top perormance while you maintaincontrol o your network through rigorous SLA management. The collaboration between you andyour partner provides a degree o control over quality o service (QoS) levels and time-to-provisionthat ensures superior customer service and satisaction, helping to retain higher ARPU clients.

ChoosingaManagedServicesProvider

An eective outsourcing business model provides solutions tailored to your organization’s needs andenvironment. Outsourcing can bring you tremendous benets i you choose the right partner. Whenevaluating potential partners you will want to consider the ollowing actors:

• People and Experience – Your prospective partner’s sta should include a large complement o managed service experts with years o end-to-end solution experience. They should be certifedengineers and technicians who are amiliar with a wide range o multivendor systems and have anextensive track record o designing and building service provider networks quickly and efciently.

Hosting Speeds Delivery of New Applications

Benefits of Hosting

Differentiate MitigateRisk

Get toMarket Fast

MinimizeUp-Front

Investment

Location-Based Services

Mobile Music

Universal Instant Messaging

RingBack

Video & Celebrity Greetings

Remote Surveillance

Push-to-Video

Video Instant Messaging

Gaming

IP-PBX

Advanced Messaging

Advance Mobile Messaging

Active Phone Book

Mobile Service Data Portals

Call Management Services

Secure Email

Personal Security

IP Mobile Extension




Look or proessional change management capabilities and a proven methodology or networktransormation. A managed services provider with these qualifcations can provide you with world-class network quality based on aggressive SLAs that drive customer satisaction and retention.

• Knowledge Assets – Your managed services partner should be backed by research and develop-ment capabilities that provide the latest in business modeling and analysis tools to speed upsuccessul implementation. Also essential are global network operating centers to provide a widerange o services.

• Proven Methodology – The managed services provider should work with proven outsourcingmethodology and governance models, and use best in class tools, processes and metrics. Progressand process implementation should be measurable. A superior methodology spans all dimensionso next generation network planning, design, implementation and management. Also, by leverag-ing a shared capital model you optimize your return on investment and minimize risk. This typeo proven outsourcing approach goes beyond contract management and ocuses on driving valuerom the strategic relationship and enhancing overall business contributions.

Figure 3. Outsourcing Model

O particular importance, a strategic outsourcing model must have a clearly dened governancestructure. A high-perormance governance process can transorm a typical outsourcing agreementinto a strategic relationship that is ocused squarely on adding value. A governance model shouldbe designed to:

• Set expectations, goals, and measurement methodologies

• Form peer-to-peer teams to closely monitor perormance o services

• Establish clear accountability and provide an escalation path or dispute resolution

• Provide an appropriate process to change the scope and terms o the contract

• Oer a vehicle that can strengthen R&D capabilities and leverage new technologies to helpcustomers solve complex problems in novel ways.

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Viability Study

• Due diligence of PMO

• Data collection and verificationSLA metrics and range

• Scope, terms and conditionscompletion

Transition Plan

• Reporting and billing process

• Develop Operations Technical Plan and MOPs

• HR and IT transition process design

Monitor and Manage

• Joint governance process

• SLA monitoring and management

• Periodic baseline refresh

Business Opportunity Analysis

• Executive sponsorship

• Letter of intent

• Joint planning kick off

Formal Transition

• Start up

• Re-badge resources

• Implementation of oversight process

A Well-defined Outsourcing Model Should be Complementedby a Proven Service Delivery Methodology

Alcatel-Lucent

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A well-dened governance process to allow or clear accountability is illustrated in Figure 4.

A circular fow o inormation between the three entities — the executive review council, steeringcommittee and operation team members — ensures partnership objectives are met on time andon target.

Figure 4. Outsourcing Model Governance Process

ManagedServicesDemystifed–HowYouBeneft

By undertaking outsourcing with a qualied managed services provider, you can ocus on developing

new revenue generating services and oten bring them to market six to 12 months aster thanpreviously possible. This allows you to accelerate revenue growth and helps you take the lead in yourindustry segment through innovation and rapid service deployment.

Outsourcing helps minimize your Capex and Opex and can signicantly lower your cost o owner-ship. Risk can be mitigated, and working with your networking inrastructure becomes a ar simplerprocess due to the round-the-clock presence o your managed services partner. And, by leveragingyour outsourcing partner’s expertise through knowledge transer, you and your sta remain up-to-date on the latest technologies and trends that can impact your business.

“IDC research shows that operators worldwide are making the difcult transition rom network-centric operators to become customer centric organizations even asthey continually combat the decline o traditional voice and rise o competition inthe wireless, new media, and video segments. Operators that have developed well-

governed managed network services contract with a trusted partner have reportedimmediate benefts in operating cost reduction, improved time to market with newservice launches, and expects to increase their competitive agility over the long term asboth internal and partner resources are optimally engaged to serve customer needs.”Source: Worldwide Managed Services for Telecommunications Operators, 2007-2011 Forecast and Analysis, IDC document # 205156

Governance Process

• Manages the overall health ofrelationship

• Evaluates performance

• Oversees financial management

• Addresses disputes and escalatesunresolved issues

• Establishes objectives

• Approves the business plan

• Serves as the last port ofcall for escalations

• Implements processes

• Manages day-to-day operations

• Generates SLA performance reports

SteeringCommittee

ExecutiveReviewCouncil

OperationalTeam




By creatively employing an outsourcing business model, you are able to ocus you attention onmeeting the challenges and grasp the opportunities that make up today’s complex, customer-driventelecommunications marketplace. By transorming and outsourcing your next generation network,you are able to oer the advanced, blended liestyle services that your customers want. And thewillingness to embrace new operational model can be a primary source o competitive dierentiation.

Outsourcing provides the innovative business model that allows you to transorm your business

to address rapid market changes, enhance earnings, enter new markets, launch new services, andincrease ocus on end-user value. These drivers are the catalyst behind the increase in telecomnetwork outsourcing. It is a proven, time-tested strategy or success.

About The Author

JohnRamirez,Vice-PresidentCarrierNetworkOperations–Alcatel-Lucent’sNetworkOperationsDivision

John Ramirez heads the Carrier/Enterprise Network Operations Business Unit within Alcatel-Lucent’s Network Operations Division. In this role, Mr. Ramirez has the worldwide responsibilityor network operation projects in the segments o telecom carriers and enterprise verticals.

Previous to his current role, John served as General Manager or the Global Network OperationsCenters (1999 – 2004). Mr. Ramirez developed and implemented the Distributed Delivery modelthat is a key value proposition within Alcatel-Lucent’s service oerings.

John’s career has been almost exclusively in the services industry, holding numerous positions withinthe ormer Lucent both building and managing several technical support centers, billing & orderentry centers, as well as several proessional services practices. His career spans over 25 years o experience in the service industry.

Mr. Ramirez received a Master o Business Administration rom University o Phoenix in DenverColorado.



www.alcatel-lucent.comAlcatel, Lucent, Alcatel-Lucent, the Alcatel-Lucent logo and are trademarks o Alcatel-Lucent. All othertrademarks are the property o their respective owners. The inormation presented is subject to changewithout notice. Alcatel-Lucent assumes no responsibility or inaccuracies contained herein.© 2008 Alcatel-Lucent. All rights reserved. SRV2913080402 (04)

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