News From Telecom World

Managed services: A new paradigm?

Posted on: December 14, 2008

In today’s evolving telecommunications market, operators are looking to save money while making the most of existing investments. Increased competition is forcing operators to focus on customer-facing operations and to allocate their non–core, back-end operations to vendors, which may include outsourcing network management and design.

Network vendors, therefore, have become a key component in operators’ day-to-day operations, and can really make a difference. Carriers and vendors have had long relationships, and operators trust vendors to know their gear and how to keep the network running smoothly. As such, more and more carriers are moving toward managed services as a way to do business.

But what does this trend mean?

The promise of managed services
‘Managed services’ is a broad concept denoting various, usually flexible, solutions and engagement models. It enables moving responsibility for operations or business process to an outside party. When resources are tight, outsourcing shifts the burden of network responsibility away from the operator and over to the equipment vendor.

These engagement models vary based on the processes outsourced. For example, out-tasking is a model in which one process or functional area is managed by an external party – this is usually a specific pain point solution. A build-operate model means the service provider out-tasks implementation and transition as well as operation of a new service. Hosting represents a different solution, in which an entire service is outsourced, while business process outsourcing concerns outsourcing a process and not a specific function; it is about looking for end-to-end efficiency within the process.

Unlike several years ago, the managed-services-as-engagement-model is now quite mature and organised. Much more is known regarding what works and what does not, thereby significantly lowering the risk in choosing this model as a way to do business.

The managed services advantage
A managed services solution’s ability to make operators more efficient and cut costs is based on three major factors: service levels, skills and relationships. The service level agreement is an integral part of a managed services agreement. Customers benefit from the proactive response of vendors in adhering to SLAs and reducing mean time to repair.

The second factor, skills, includes how one interacts with multiple vendors and deals with a high ratio of technological changes. Professionalism also demands investments in training, allowing for learning curves and providing support contracts. Customers benefit from vendor expertise and do not have to conduct their own training courses.

The third, and perhaps most important success factor of managed services, is the relationships formed between the operator and the managed services provider. Eventually, like many other human systems, the relationship covers forming proper communication and management processes, defining roles and responsibilities.

If all three factors are in sync, managed services have the potential to bring both sides financial advantages by reducing costs and providing management relief from non-core operations. The above elements can also set the criteria for choosing a vendor that is suitable to the organisation’s culture, with proven working methods and professional skills.

Maintenance versus managed services
SLAs and access to skilled experts also exist in any good maintenance agreement with a vendor – so what is the difference between a maintenance agreement and a managed services contract?

The first and perhaps most significant difference is responsibility.

Managed services usually encompass an entire operational or business process, for example, taking responsibility for all network faults monitoring and resolution, or network capacity planning and management. This way the vendor is not involved at specific points of failure but has an overall perspective of the service and network to be maintained, and can sometimes prevent faults proactively.

Another area of difference is the service level agreement. In a managed services arrangement, the service level KPIs are more comprehensive and performance-driven, rather than purely operational and point-specific. For example, a managed service KPI will dictate network availability (x% down-time) or the time it takes to resolve faults end-to-end, while maintenance arrangements will be more operational oriented.

Moreover, some managed services models involve a risk-sharing engagement, in which the payment for the services is set by the operator’s service level performance.

Choosing vendors
It is a complex triangle – seeking professional skills, service levels and low costs – but equipment vendors find themselves in well-known territory. They are unparalleled in knowledge of their own equipment and they already have support organisations in place and are able to share resources, knowledge and skills, providing a good baseline for providing successful managed services.

If the economic times set a tone of making the most out of what exists, investing as little but as efficiently as possible in the short run, network vendors find themselves at a significant crossroads. The game is not only about boxes, but also about services, making it even more natural for them to leverage their already-existing capabilities and offer their skills to manage networks as efficiently as possible.

The services market has always been attractive but was more focused on the IT industry and less on outsourcing the networks, and vendors have always taken advantage of it. But it is now a significant capability required for answering their customers’ needs.

Managed services: Buzzword or the real deal?
In the current unstable market, managed services will become the way to do business. It offers cost predictability, the ability to best use existing networks, and long-term commitment to business success from both sides – the operators and the vendors.

The maturity of the model and the way it is structured provide an operator a long-term commitment of qualified service, along with predictability of costs, giving this model vast potential for further development.

Managed services is about gaining operational and management efficiencies. It is about handing wide responsibility to the experts while allowing the operator to manage the core of the business, which has the potential of bringing focus to the operator’s business in difficult times.

Source: Total Telecom

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1 Response to "Managed services: A new paradigm?"

Very interesting article. I found it while researching this issue for my company at http://www.ProgressiveOffice.com. Good blogging to you. Keep up the good work.

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