BENCHMARKING - Measuring Up
Telecoms providers challenged with the need to transform their technology to 
meet next generation service requirements are looking to IT benchmarking for the roadmap ahead, says Paul Michaels
A recent study by Ovum entitled IT Governance for Telcos, reports that: "IT for the telecoms vertical is currently going through an exciting period of change as telecoms operators gear up for the long haul of business transformation - from a traditional vertically-integrated telco into a competitive service provider based on a next-generation, all IP-network."
Yes, the European communications industry has entered cyberspace and the future is advancing at warp velocity. Whatever else the next ten years may bring, one thing is certain: telecoms providers will continue to face fierce competition, especially from new players ‘born' in the Internet era, and will be forced to cope with unrelenting pressures to deliver services ever faster, better, cheaper. According to Ovum: "Transformation into an ‘infotainment' or ICT company - to name just two examples - requires intelligent, responsive infrastructures and running costs that are more in line with today's competitive business environment."
To be among this new breed of telecoms provider, organisations need access to enabling technology that can drive next generation IP networks, content and value-added customer support services. However, technology itself is only part of the equation - to be fully optimised it must be supported by a progressive corporate culture. To be in the vanguard of the next generation communications industry, organisations must be committed to reducing operational costs, making continual performance improvements and bringing to market new services along with best practice customer support.
Transforming current telecoms technology and operational support structures (OSS) is no trivial task, especially when faced with the need to juggle such opposing pressures as cost reduction on the one hand and investment in new services on the other. So where should one start? Any journey towards change must begin with a clear picture of one's current situation - a frequently non-straightforward task, particularly in the case of large organisations burdened with multiple, often duplicated, legacy systems and broadly dispersed infrastructures. However, without this initial clarity, many fundamental business decisions cannot be made.
Consider, for example, the question of whether it is more cost efficient to support, say, the customer billing service or the enterprise desktop environment through the in-house ICT department, or instead turn these applications over to an outsourcing provider. This issue can only be addressed effectively when management has a full set of detailed, current baseline data on such items as cost and key performance indicators (KPI) on all relevant IT components and OSS methodologies. Without this type of granular metric, it is very difficult for management to evaluate trends-over-time of improvements in cost management and/or performance levels. And it is virtually impossible to make an accurate ‘apples-to-apples' comparison between in-house and outsourcing costs.
Because of this increased appetite for business information, benchmarking - both in the back office and at the customer-facing end of the operation - has become an increasingly popular way to achieve best practice and thereby win competitive edge. Whether it is analysing the cost, quality and performance measurements of IP networking infrastructures, client-server and help desk support, or making cost-vs-quality comparisons between supporting fixed line, 3G and global m-banking services, benchmarking parameters are potentially vast. Benchmarking provides the analytical data upon which management and business consultants base their advice. Its aim is to measure an organisation's own operational methodologies, pricing structures, service levels, technology infrastructures and customer service levels and compare this with the competition (peer group), and against best practice within the industry as a whole. Whether analysing IT, service quality or any other element of the business process, benchmarking has in the past been viewed as a somewhat mundane back-office activity. These days it is coming into the boardroom as telecoms leaders realise that without these metrics, it is hard to see where they stand in a fast-moving industry, or what they must do to stay ahead of the curve.
Generating a set of cost and performance metrics that provides the launching platform for transformational change is not always easily achieved from inside the organisation - this can be for several reasons. Stakeholders do not always feel incentivised to upset the status quo. Even where there is enterprise-wide buy-in (as in the majority of cases), it can still be difficult to achieve the objectivity needed to assess one's own strengths and weaknesses, or to obtain a 360 degree view of the operation. It's like the blind men attempting to describe an elephant, each one focused on a different part of its body. To one, it's a tree trunk, to another a sail flapping in the wind, to the other a swinging rope: not one of them is able to perceive the complete entity. In a similar way, a company looking to benchmark itself may see the wisdom of employing outside help to gain an impartial view of the company's situation.
It's frequently easier for an external consultant to sidestep a company's internal politics and enlist staff participation. Perhaps most importantly, they offer a unique level of access (because consultants tend to work with many companies in the same industry) to comparative peer group metrics on cost, productivity, service quality, and so on. These specialists also have ‘insider' data on service pricing data for local, near-shore and off-shore outsourcing providers and a wealth other independent market information resources. They often also act as intermediaries in the negotiation of service provider contracts, helping to clarify the deliverables and make cost structures more transparent.
Many established organisations - and telecoms providers are no exception - suffer from an accretion of legacy hardware, applications, databases, desktop and network systems glued together with complex links that need ever greater levels of maintenance to function. This situation is further compounded by a variety of disjointed workflow methodologies that impede a company's end-to-end efficiency.
Identifying and benchmarking those load points in the system that are causing higher than necessary costs and reducing performance can result in significant savings and lead to streamlined workflows that mean a more nimble service to customers. This is equally true whether a service is run in-house or it is outsourced. Often external provider costs are inflated because they are forced to support clients' overly complex systems. These costs are then passed onto the customer, often without the causes for the surcharge being clear. Just this fact alone can account for much misunderstanding between clients and their outsourcing partners.
Organisations with an eye to transformational change are beginning to take a broad-based view of benchmarking. Instead of viewing benchmarking as a one-off, crisis-driven expense, it is increasingly being implemented as a strategic tool for generating key business intelligence data.
In this broader role, benchmarking moves beyond cost-only considerations to examine, among other things, the balances between a technology or a service's cost and quality, or cost and performance. As anyone knows from the high street, the lowest cost does not necessarily represent the best value. Assessing the value of a particular system, whether it is a sales or finance system or a corporate tool such as e-mail, is arrived at by looking at the balance between running cost and service quality, complexity and productivity. Being intelligent and responsive to the future and leveraging the disruptive technologies that are driving change, depends upon access to good business metrics. As organisations get more forensic, and begin to introduce IT costs and KPI measurement as part of their ‘good housekeeping' procedures; and as they get into the habit of regularly comparing the quality of their service levels against best practice models, the more the telcos of tomorrow will be in a position to ‘benchmark their way to success'.
Paul Michaels is Director of Consulting at Metri Measurement Consulting, and can be contacted via paul.michaels@metri-mc.com
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