Brian Cappellani, Sigma Systems’ CTO, discusses the effects that M&A activity has on telcos' back office operations. What is your assessment of the current telecoms M&A activity happening in Europe?

A-successful-merger-and-acquisition-requires-effective-back-office-integrationBrian Cappellani: I expect to see M&A activity to continue among operators in most segments throughout Europe, driven by the need to increase overall revenue growth in the face of declining ARPU. 

Among mobile operators M&A activity will be spurred by the erosion of organic revenue in traditional voice and messaging services. 

For those operators, acquiring a provider that offers different types of services is one way for them to increase overall revenues. 

What are the main back office challenges that operators face as they acquire or merge with another provider?

The back office is often not a main consideration for boards and management teams as they contemplate a merger or acquisition.

However, once the decision has been made, there are several issues that can have a considerable impact on customer experience and overall business success for the newly-integrated service provider.

Immediate challenges lie in the integration of the service delivery (or network) and back office platforms used by the separate organisations.

The new organisation takes on a whole new set of network and service delivery platforms, often changing their network architecture from a relatively homogenous one to a heterogeneous one.

They can then have multiple platforms provided by different vendors delivering the same service, depending on the territory of the customer.  

For example, where they once had to worry about integrating to GENBAND voice switches, they now also have another vendor like Broadsoft and Metaswitch to consider.

In the case of a cable operator acquiring a telco service provider the network architecture may be quite different right from the start for the same service set.

A similar situation exists in the back office – the organisations now have multiple billing and OSS platforms depending on territory, often including in-house, home-built solutions. 

These systems often lack centralised, common information models around concepts such as subscriber, service and entitlements, making even the initial data inventory and transition process challenging.

The initial challenge to the acquirer is simply to ensure a stable transition; the next steps require them to look for efficiencies and improvements in the delivery of existing services, and standardise systems across the operation for the introduction of new services. 

What can operators do to overcome these challenges so they achieve the business benefits of the merger/acquisition?

The operator can realise the business benefits of the merger/acquisition when they begin to standardise processes and systems across their footprint, thereby lowering costs and gaining efficiencies.  

Part of this process is to decide which BSS/OSS to use for launching key new revenue-generating services. 

Legacy services should look to be migrated to the go-forward BSS/OSS systems when ROI is evident (i.e. less than one year pay-back to migrate).

This migration of legacy services to the go-forward architecture can take many different forms, depending on the capabilities of the new system – from “rip and replace” to capability abstraction and encapsulation of legacy systems.

While the selection of the go-forward OSS is often a choice between two existing systems it represents an opportunity for the operator to look at newer, next generation systems as well.

Operators should look for several key capabilities when selecting a go-forward OSS:

  • Standards-based COTS products
  • Ability to abstract the network and service delivery capabilities into common models, such as services and actions
  • Ability to support multiple services and technologies on a single platform
  • Ability to orchestrate multiple downstream systems
  • Ability to rapidly add new services and products.

Choosing a go-forward OSS with these capabilities will ensure that the business benefits of the merger/acquisition can be quickly achieved.

What criteria should operators use to evaluate what systems to maintain and which to replace as they merge subscriber databases, content libraries, etc.?

The practice of “rip-and-replace” is often costly and time intensive, so the first step for systems administrators involves evaluating existing solutions and identifying if any can be merged or maintained.

This process should be preferential, addressing systems that represent the largest pain-point to the operator.

The transition and consolidation should occur in phases to allow enough time to identify and fully integrate each system before moving to the next.

Choosing the right go-forward OSS solution can assist in this process.

If a legacy system is working effectively but is proprietary, its capabilities can be encapsulated by the go-forward OSS, where its information needs can be abstracted and orchestrated by the go-forward OSS.

The OSS can, in effect, “sit on top of” an existing legacy component, allowing it to be managed and treated as a downstream system.

This allows the operator to achieve the benefits of the new architecture without having to totally abandon and replace legacy systems that are otherwise effective.

Photo: © Ben Chams –

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