Building Competitive Business Model in the Opening Marketdpnm.postech.ac.kr/papers/TMW/TMW2004-LongBeach/TMW3045 H… · base billing system. •Start to build national wide roaming

Building Competitive Business Model in the Opening Market

Tele Management WorldEliza Zhou Sep. 2004

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Agenda

• China Communication Market Overview

• The challenges of China Operators– Business Process Reengineering– Enterprise IT planning– Make v.s Buy

• How to use IT to enhance the competitive business model

3

China operator is not far way from leading operator

Total subscribers

Average User Value（$）

China Telecom

China Unicom

Netherlands Telecom

New Zealand Telecom

NTT

SBC

ATT

Swiss Telecom

Deutsch Telecom

Spain telecomBT

Bellsouth

PCCW

Italian telecom

Telstra

France Telecom

SKT

Vodaphone

-

500

1,000

1,500

2,000

2,500

3,000

3,500

- 20,000,000 40,000,000 60,000,000 80,000,000 100,000,000 120,000,000 140,000,000 160,000,000 180,000,000

Global leader

Large scale competitorChallenger

Leader

China Mobile（HK）

Market Value = $100B

Market Vaule= $50B

Market Value = $10B

Leader

?

?

?

?

?

?What is the key successful factor becoming a leader?

Data Source: Factset

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China’s telecommunication industry income exceeds $ 33.9B in 1st half 2004, growing 13%

0

10

20

30

40

50

60

70

80

2000 2001 2002 2003 2004 2005 2006

Year

Rev

enue

($B

/yr)

PagingMobileOther Fixed LineInternationalDLDLocal

1st half of 20004 Summary

Revenue CAGR of 13% - Mobile: 13.8%- POST: 5.9%

Wireless Subscribers: 310M, grow 14%.

Still exists huge diversity in large provinces and the west south China. The developed province is double revenue of the developing province.

Chinese Telecommunications Market

data source : MII

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Agenda

• China Communication Market Overview

• The challenges of China Carriers– Business Process Reengineering– Enterprise IT planning– Make v.s Buy

• How to use IT to enhance the competitive business model

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These carriers face challenges which will drive demand for IT services

• In order to access capital markets (and/or IPO), carriers are seeking to demonstrate improved business performance

– Extreme growth is no longer a given– Need new services, cost-improvement opportunities

• Carriers struggling to identify, attract, and retain high-end users– Wireless carriers facing decreasing average revenue per user (ARPU), focusing on mobile applications– All carriers struggling to unlock enterprise market, increase differentiation between consumer and business offerings– Focusing on enhanced customer care, CRM, DSS ability

• Increasing competition– China Telecom broken up into 2 separate, full-service carriers in 2003. – New licensees expected (3G in both wireless and wire line)– WTO will bring foreign entrants

• Carriers looking to consolidate vendors around higher quality solutions– Currently many small vendors with incomplete solutions

• Decision-making continues to be largely at provincial level, but will likely evolve to a more centralized model to capture economies of scale

– Key eastern provinces lead, others follow– China Mobile, Unicom have mix of central/provincial decision-making– Challenge is realizing benefits of centralization while preserving ability of provinces to react quickly

Key Challenges Facing Chinese Carriers

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Challenge 1 - Business Process is behind the system building

Current Market Position & environment :

• Business process is changing every day.

• Lack of competition experience.

• Legacy systems built up for support basic product, not complicated services and product bundling.

• Provinces requirement is diversified, cause the confliction in headquarter and provinces carrier.

Key Business Challenges:• Looking for method and tools to improving process, preferred

customer oriented marketing and sales process.• Urgently to enhance the business intelligent capability, to support

the time to market decision. • standardize cross area and cross organization process to achieve

economies of scale benefit

Recent Moves :• Headquarter is planning to cooperate with consulting firms to start the

pilot of new business process execution. • Trying to consolidate the standard customer services process in

different regions and define the KPI of each process. • Build and optimize the business intelligent system to support decision

making.

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Challenge 2 - Enterprise IT strategy and planning need evolutionary improvement. Enterprise IT architect is in high priority.

Current Market Position & Environment :

• Over 80% IT system was built by local system integrators.

• Each province level operator is dealing with 30-40 small and mid size system integrators.

• No well defined data modeling, and one carrier has different versions for same application.

• IT organization function is decentralized and shared by business department and IT department

• Start enterprise IT strategy and planning one year ago.

Key Business Challenges:• Looking for strategy to have global leading IT company and local SI

work together, serving operators from business planning to solution roll out.

• Define the well-planed data model base on across provinces business and different platform.

• Build 3G IT architect v.s 2/2.5G existing platform.

Recent Moves :• Start to evaluate and downsize the small and mid size local vendors.

• More and more focus on IT long term planning, and start the trail run in 2-3 selected provinces before national roll out.

• Keep building BSS/OSS system followed with well defined data model and EAI consolidation roadmap.

• Evaluate the services cost v.s. h/w and s/w, thinking about outsourcing strategy.

• Build up the carrier own knowledge management system.

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Challenge 3 – Build v.s. Buy

Current Market Position & Facts :

•Heavily reply on existing local IT vendor however supported by non-reasonable services budget.

• Facing the local IT vendor turn over risk.

•Culture confliction between packaged s/w and client current business process

•Different business scenario make the pkg. s/wlow efficiency, still existing much customerlizationworkload.

Key Business Challenges:• Lack of pkg. application production selection experience.• To avoid decision risk, the carrier need long time decision cycle,

which extended SI and S/W vendor longer time selling cycle.• Data model is difficult matching pkg. S/W• Lack of local SI drop-off strategy

Recent Moves :• Plan to evaluate pkg. s/w , and consider to implement pkg. s/w to take place of local developed application.

• Involve consulting firm to assess business process and capability.

• Team up the local SI with global SI, trying to work out the costeffective vendor strategy.

• Start to prepare for 3G BSS/OSS operation.

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Agenda

• China Communication Market Overview

• The challenges of China Carriers– Business Process Reengineering– Enterprise IT planning– Make v.s Buy

• How to use IT to enhance the competitive business model

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China telecommunication carriers IT strategy evolution

•Mediation & Provisioning is upgraded from off line to on-line, start to build decentralized billing and settlement system with local SI.

•Achieve across provinces connections.

1997-1998 2000-2003 2004-2005

• Start to build convergence billing and settlement systems at provincial centralization to replace legacy city base billing system.

•Start to build national wide roaming settlement system across the different carriers and territories.

•Focus on BSS/OSS efficiency and flexibility capability enhancement

•Build up data services billing system

•Define B/OSS KPI in terms of infrastructure application and process

•Start 3G and 2/2.5G B/OSS consolidation planning

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• B/OSS flexibility

• Real time billing

• Billing Accuracy

• IT KPI matrix build up

B/OSS drives competitive business model in the opening market

Support thousands product and services bundling, and reduce time to market. Each new product roll out only need 5 days, especially in China wireless competition, each provinces has almost 2000-5000 services and product bundling options.

Real time billing and invoice, full cycle fraud management.

Double refund for error billing, miscalculated invoices.

Business department lead the customer satisfaction KPI to measure the IT and supporting department performance.

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KPI about China one wireless operator

Provincial operators market research

Supported bundle product

0-500

500-1000

1000-2000

2000-6000

unlimited

Time to upgrade the existing billing system：

•Rate Adjustment

•Invoice Format and Alternative

•Pricing Structure

•Response to new business

Source from A.T.Keaney 2003 客户

客户基本信息客户背景信息 客户行为信息客户价值信息客户交易信息

客户基本属性客户联系属性

客户人口统计属性

客户关系网络属性

心理态度属性

客户账户属性

客户产品属性

合同和订单属性

客户服务行为属性

产品使用行为属性

账户付费行为属性

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HQ

Province

cities

B/OSS is the strategic competence of marketing and sales

City level Call Center

Nation billing & settlement

2000年

City level billing

Province Billing

City level call center

Province B/OSS

2001年

Provincecenter

2003年

National B/OSS

National CRM National ERP

Province B/OSS

Province Call Center

Province DSS

BOSSBOSS BASSBASS

BOSSBOSS BASSBASSFunctional

GroupB/OSS evolution

Province B/OSS

Province call center

National B/OSS

National DSS

2002年

ComprehensiveB/OSS sys

Nation billing & settlement

Build up key account team focus on national enterprise servicesCompete in high value customer retentionCost effective strategy to increase ARPU

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Scales of behavior change

Small

Large

Communication RangeSocial Personal

Personal multimedia

Messaging

Information

Transactions

• Including ring tones, caller rings, livescreen

• Focusing on person-to-person expression

• Including SMS, MMS and messenger, etc.

• Focusing on person-to-person communication

• Official and unofficial websites, community and public communication

• Focuses on information needs without social involvement

• Including E-banking, e-commercial, mobile credit card, etc.

• Focuses on transactional needs, without social involvement

China Telecom Carriers is going to move to leading markets andcompete with killer apps

Plan to release Use killer apps

= Direction of evolution

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The NGWS services have been implemented in a variety of business models

Sponsored Walled Garden

Business Models Access & Transport Provider

Content & Service

Aggregator

FulleCommerce

player

MobileOffice Enabler

ApplicationServiceProvider

PaymentCollector

Web Surfing

Data transfer

Physical goods purchasing

NGWS Services

China telecom operator is in the transformation to NGWS Servicesand Business Models

Location Based Service B2B

Digital goods purchasing

Corporate Application

Location Based Service B2C

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Accenture provides China telecom operators with “customer feature IT architecture”, which helps client to build leading services

Data Sources – Customer Channels (Internal, External, Supply chain) and Source Systems (Internal, External, Supply chain)Customer Identification Architecture – Customer identification batch and/or real time modulesData Movement Architecture – An integration layer containing real time messaging architecture and/or a batch population architecture.Customer Repository – Physical Customer focused data stores: Customer ID DB, Profiles, DW, ODS, etc.Relationship Marketing Architecture – Campaign Management, Content Management, Marketing Strategy and CoordinationCustomer Analytic Architecture – Data Mining (Modeling, segmentation), Reporting, OLAP, Metrics Operations Architecture - The Operations Architecture provides the services to support the overall IVoC architecture, to ensure that all data is moved properly and in a timely mannerIt overlaps with many of the components found within the Data Movement Architecture.Development Architecture - The Development Architecture, while not really different for IVoC than for any other project, it is typically more complex due to multiple organizations and technical platforms touched and affected.

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Leading business model include 5 core capability

1.Customer insightful capability

4. High efficiency organization

5. Enterprise consolidation capability

2. Service and product development capability

3.Customer interactive capability

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Key Successful Factor for China Carriers

• Culture transformation– Cooperation with global leading vendors and partners to build key

business process and IT system.– Local IT vendor recruitment and optimized strategy.

• Enterprise IT capability evolution– Evolution from pure customer built application to commercial S/W,

enhance enterprise wide IT architecture framework. – IT capability and market & sales capability alignment

• Capital efficiency– Leverage capital market operation experience– Involved foreign operator to develop the international market

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THE END

Thank you!