Decreasing OPEX and Increasing Revenues through …dpnm.postech.ac.kr/papers/TMW/TMW2004-LongBeach/TMW2983 BU… · ... Computing and Network) Enterprise Management Strategic & Enterprise

© 2002 TIBCO Software Inc. All Rights Reserved. Confidential and Proprietary.

Decreasing OPEX and Increasing Revenues through Process and Systems Automation

Jeremy Wright TIBCO

Aiyappan Pillai VSNL

2© 2002 TIBCO Software Inc. All Rights Reserved. Confidential and Proprietary.

Agenda

Industry background

Goals of complex process automation

Classic vs Orchestrated Process Management

The potential role of Dynamic BPM within Fulfilment

Case Studies & iBPM Catalyst


Returning to normal…

$22 $22 $22 $23 $23

19901990 19911991 19921992 19931993 19941994 19951995 19961996 19971997 19981998 19991999 20002000 20012001 20022002

Pre Liberalization

$84

The Bubble Correction

NewEra?$67

$103

20032003

$47

$31 $33$39

Post Liberalization -

Pre Bubble

Utility Industry Utility Industry?Growth Industry

20042004 20052005 20062006

16% 15% 15% 15% 15% 19% 17% 19% 20% 26% 35% 29% 14% 12%E 12%E 13%E 13%ECapital Investment as % of revenue

Source: RHK Telecom Economics Program

$35

Capex 1990 – 2006E ($bn)

Aberration

Normality


…leaving a fearsome operational landscape

0

100200

300400

500

600700

800

0 200 400 600 800 1000 1200

$US Revenue/line

$US

Ope

ratin

g C

ost/l

ine

NOTE: Operating costs include SG&A but excludes depreciation, based on 2002Source: RHK, Lehman Bros.

BT

FT TITelefonica

SBC

QwestSwisscom

VerizonBellSouth

Opex consumes 55% to 65% of RevenueOpex consumes 55% to 65% of Revenue


The competition is hotting up …

“Focus on accelerating revenue and earnings…”“Rigorous cost management and first-class service levels...”

• Opex reduction of $800M over 3 years

“The challenge within Telstra is to manage across this portfolio in the best possible way for our customers and our investors. Accordingly, the ability to offer multiple communication solutions to our customers in one package – bundling – is something you will see a lot more of from Telstra…”

Robert Mansfield & Ziggy Switkowski, 31/12/2003


Voice goes Mobile

Pre-select competition

Voice converges with data

Internet becomes broadband

Traditional data networksmigrate to IP/DSL

Strong competitionfrom Cable/DSL

Alternative broadband infrastructure initiatives

Voice minutes Dial-in xDSL& IPVPN

Leased Lines, Frame Relay & Transmission

Telephony subscriptions

OtherRetail

Wholesale

Competitive Threats


IT reality



Well orchestrated process line

Uusikaupunki


OperationsFulfillment Assurance BillingOperations

Support &Readiness

Customer Relationship Management

Service Management & Operations

Resource Management & Operations

Supplier/Partner Relationship Management

(Application, Computing and Network)

Enterprise Management

Strategic &EnterprisePlanning

Financial & AssetManagement

Enterprise QualityManagement, Process & ITPlanning & Architecture

Stakeholder & ExternalRelations Management

Brand Management,Market Research &Advertising

Human ResourcesManagement

Disaster Recovery,Security & FraudManagement

Research &Development,TechnologyAcquisition

Strategy, Infrastructure & ProductProductLifecycleManagement

InfrastructureLifecycleManagement

Strategy &Commit

Marketing & Offer Management

Service Development & Management

Resource Development & Management

Supply Chain Development & Management

(Application, Computing and Network)

Customer

eTOM Business Process Framework

BPM can be deployed right across the eTOM spectrumBut particularly valuable in complex and sophisticated process flow management

Complex order / provisioning managementEnd-to-end process management for service assurance Service order/ network planning / assignment


Complex Order Management Solution

CRMLayer

Delivery Network

Delivery Network

Product Repository &Rules Engine

Current Service Image

Other OSS / BSS

Ord

er P

lan

Dev

elop

Ord

er E

ntry

&

Valid

atio

n Se

rvic

es

Ord

er P

lan

Exec

ute

Act

ivat

ion

Laye

r

Blue = Could be provided by 3rd party

Complex Order Management


Dynamic BPM – Process Orchestration

ProcessComponent Repository

Order PlanCustomer

Order

Orchestrator

HomeDSL

Service X

Feature Y


Order Management Coverage

Traditional solutions characterised by lack of error handling capability, single service focus, less dynamic configurationsCOM handles this and offers much greater error handling capability, support for long running business services, ‘project like’ orders, end to end process management

Order Management Complexity

App

licab

ility

of s

olut

ion

Single Service e.g. DSL

Little automated error handling

Sophisticated automated error

handling

Long running project-like

orders

Complex Service Bundles

Traditional OM solutions

Complex Order Management


Business Benefits

Operational cost savingsFast ROI

• Flexibility protects investment• Incremental deployment

Revenue enhancements• Product Repository mapping

to processes finally allows realisation of bundling benefits

Technical Future-Proofing• Orchestration of web services • Process architecture as

recommended by TMFBusiness Transformation

• Business Agility• Continuous process

improvement• Faster product & service

rollout• Better customer

responsiveness• The ‘Lean, Agile Operator’


Other Business Needs addressed

Rapid rollout of products and services

Abstraction of order management processes from systems

Consolidation of legacy order management platforms

True support for any type of product and service, for example

• DSL Provisioning– Simple to understand, but still complexity in execution

• Bundled Triple Play– Multi service offerings on a data pipe

• GSM-UMTS Migration• Mobile Business LAN• Complex Long-Running Project Orders for Business Services


Example 1: KPN - MDF Order Management Solution

COINCOIN

MOMSCOINAdapter

Internet

MOMSTelcowebsite

MOMS

Moms

Workflow

Manager

Existing S

ystems

A business process management solutionDefined, built and implemented in 6 months

Automating 80% of the DSL order volume, supporting another 15 + %

Boosting the reliability and efficiency in MDF order processing

• FTR up from 60 to > 95%• in time delivery > 98 %• substantial reductions in FTE

High end-user satisfaction

Solid foundation to support ongoing developments


Facilitating the growth in broadband

In 2003…xDSL has become a full scale competitor to TV cable network

Packagers demanded higher volumes and reliability and shorter delivery times

Volumes in 2003 rose from 4.000 to 35.000 orders/week

Expectations for the near future…Order volume is expected to remain high

Introduction of new services and service types

Volatility in the MDF market will further increase

ADSL connections up from 310,000 to 746,000

Business DSL nationwide campaign in 2004

1


Building on the success in broadband

The potential for ‘open workflow’ solutions is huge• Split of process and application functions, apply gradual change• Recognition that BPM concepts enable restructuring of processes and IT

BPM recently chosen to be the foundation for Order Management across KPN Fixed division

• Increase % of BPM-supported orders from 75% to 90%+• Phased replacement of legacy systems

KPN have vision of unified provisioning platform• Operational & cost efficiencies• Flexibility to mix, match & bundle services• Embrace Mobile division in addition to Fixed division• Assemble multiple products from different parts of the business into one

seamless order for the customer


“BPM is the management and control of end to end business processes involving the integration of systems and people”

Example 2: BPM in Singtel Optus

Release 1 – from March 2000• Managing the business process of provisioning of Pre-Paid

Mobiles for the Optus Mobile Division

Release 2 - from November 2000• Managing the business process of provisioning of Digital TV

for the Optus Consumer & Multi-Media Division

Release 3 – from March 2002• Managing the business process of provisioning of Post-Paid

Mobiles for the Optus Mobile Division


Singtel Optus: architecture & requirements

BPM Requirements• Management of entire process

with STP of routine provisioning activity

• Control of exception handling• Integration with multiple

backend systems• End-to-end visibility including

real-time status updates to CSRs

• Ability to facilitate change including adoption of new systems

Application Hub

ONAS PIN CNUM + SIX

CRM

Users

BPM


BPM in Singtel Optus

Deployment• Total of 3,470 seats deployed• Integrated with 22 back-end systems• 2 production systems, plus 10 support• Average 139,000 case starts/day, peak of 196,000• Recently extended to handle DSL provisioning

Outcome & Benefits• Over 30,000 prepaid registrations handled on Christmas Day 2003• Average process time for registrations <7 minutes• Proven benefits in handling of exceptions• High availability & proven ability to change rapidly


Process Monitoring

Process Analysis

Repository

iBPM Catalyst

Process Analysis

Business Activity Monitoring

Define Performance Measures (KPI)

Process Model Repository

Design ‘To-Be’ Process

OSS solution

Business Drivers

ExistingProcess

Benchmark

Animation / Simulation

eTOM

Design ‘As-Is’ Process

Gap Analysis

Existing OSS

Systems Development

Executable Process Definition

Executable Process Repository

Setup & ValidationProcess Execution

Influencing Factors

OSS / NGOSS

Process Definition

EAI

OSS

SOA

OSSOSS

Process Execution Engine

Process Instance

Dynamic Process Management

Rule Engine

BPMN Business Drivers

Business Rules

Engine

Translate XPDLSync

Refer SLA Mgmt

Process Audit

ProcessManagers

SID

TOMSpider

diagrams

ExistingPolicies


Summary

Automation of complex processes can• Deliver significant bottom-line savings• Facilitate more rapid introduction of new services• Provide much tighter management control

The adoption of dynamic BPM• Offers the potential for online bundling• Opens up many new possible revenue streams• Allows real-time response to environmental changes

iBPM Catalyst (phase 1) offers the chance to view process orchestration in action (IP/VPN provisioning)

Decreasing OPEX and Increasing Revenues through Process and Systems Automation

- An Operator PerspectiveLong Beach, Oct. 11 – 14, 2004

Aiyappan Pillai

October 19, 200425

Agenda

Setting the sceneBusiness ImperativesFacing the ChallengesThe Experience - So farConclusions

October 19, 200426

Vital Stats of the Market

5th largest network in the world, second largest among emerging economies (after China)

>80 million line telephone network including mobile phones (grew 159% over 2003)

ILD, NLD, Basic and Mobile Services fully open to competition

Stiff competition, high customer churn, falling ARPU

Large suppressed demand of at least ~100 million for basic services

Broadband services- the ‘Star’ – grew 138% over 2003

* Source TRAI, DoT, Supercomm

October 19, 200427

Agenda


October 19, 200428

Local voiceValue added servicesNational Long DistanceInt’l Long DistanceCalling CardInterconnect and TransitVoIP

Leased LinesManaged Data ServicesMPLS ServicesATM, FR ServicesCo-location Hosting ServicesL2/L3 VPN Virtual LANVideo ConferencingTV UplinkingBroadbandInternet TelephonyMetro Ethernet

Wholesale Corporate

Dial Up Internet Internet CafesBroadbandInternet Telephony

Retail

VSNL Products and Services

October 19, 200429

Changing Business Profile

Intense CompetitionWholesale Business-– International voice revenues and margins (43%)– National Long distance voice revenues ~5.5%

Corporate Business– Data revenues ~30%– Broadband - Star

Retail Business– Dial-up Internet revenues ~1.1% (slow growth linked to low fixed

line teledensity)– Broadband Internet – Star

More focus required on Corporate business in order to improve the Top-line & bottom-line

October 19, 200430

Revenue Indicators

Productwise revenues FY 2003-2004

68%0%

0%

17%

4%

9% 2%

TelephoneTelexTelegraphLeased ChannelFrame RelayInternetOther traffic

Productwise revenues FY 2002-2003

83%

0%

0%9%

2%5% 1%

TelephoneTelexTelegraphLeased ChannelFrame RelayInternetOther traffic

Source – VSNL Annual Report 2003-’04

Corporate Business is the growth area

October 19, 200431

Key Business Problems

Decreasing Market Share for Wholesale business

Decreasing Average Revenue Per User (ARPU)

Lead time to activate services (Corporate)

Decreasing margins

Long lead Time to launch new Services

High MTTR

Operational costs

Poor visibility of capacity and quality of service

Poor allocation of Network assets

October 19, 200432

The Challenges

Co-existence of different

Technologies Multiple-Vendor

Element Management

Systems

Multiple-Vendor Element

Management Systems

Verifiable SLA s

Verifiable SLA s

Quick and efficient

Assurance

Quick and efficient

Assurance

LimitedIntegration

and Automation

LimitedIntegration

and Automation

Complexityof

Technology

Complexityof

Technology

Service Roll-out lead times

Service Roll-out lead times

Time to Market New Products

SLA s

Time to Market New Products

SLA s

October 19, 200433

Agenda


October 19, 200434

Designing the OSS

A two pronged approach

The TMF defined eTOM model is used as a reference for building the VSNL OSS/BSS from a business process perspective with sharper customer focus

The ITU-T specified TMN model is used at a more technical level for implementing the Network Management layer

A harmonised combination of the two models is preferred so as to set up a flexible, high service quality and responsive network that supports a customer focused processThis OSS is the underpinning for the successful centralisedmode of operations

October 19, 200435

A Holistic ApproachTo address the Key business problems we identified the key changes required in the– Organization

• Move towards centralised operations (reduced costs)

– Processes• Automated workflow implemented to ensure uniform processes

across the organization (faster fulfilment and assurance)

– Network Infrastructure • Reduced the no. of vendors for each equipment type (reduced

network complexity and easier operations)• Network/Service management systems under implementation

– Systems• Introduced CRM and trouble ticketing solution (improved

operations and customer service)• Implementing new OSS based on TMF guidelines• EAI solutions planned

October 19, 200436

Objectives of the Solution

Reduce AcquisitionCost

Reach the customer directly

Reduce OperationalCosts

Offer New Services Ahead of the competition

Provide superior services

FasterFulfilment

REVENUES

COSTS

Reduce Channel costs

Quicker Revenues Compete on Features- Not Price

First Mover Advantage

OSS/BSS – with Process and System Automation

The Underpinning

October 19, 200437

VSNL OSS MapPROCESS

FLOW

ENGINE

MEDIATION

NETWORK

Shared Information Model and Data

ResourcesActivationConfig.Module

ServicesActivation,

Config. Module

PM, SLA

FM,CorrelationService Impact

External Systems

Reroute

Existing CRM

Fulfillment Group

Assurance Or

OperationsGroup

CUSTOMERS

Billing

October 19, 200438

Operations MI 10/23/02

Fulfillment Assurance BillingOperations Support & Readiness

Customer Relationship Management

Service Management & Operations

Resource Management & Operations

Supplier/Partner Relationship Management

CRM Operations Support &

Process Mgmt.

Customer Interface Management

Sales & Channel Mgmt.

CRM Operations Readiness

Selling

Marketing Fulfillment Response

Order Handling

Retention & Loyalty

ProblemHandling

CustomerQoS / SLA

Management

Billing & Collections Management

SM&O Support & Process

Management

SM&OReadiness

RM&O Support & Process

Management

RM&OReadiness

S/PRM Support & Process

Management

S/PRM Operations Readiness

Service & Specific Instance Rating

Resource Data Collection, Analysis & Control

S/P Settlements & Billing Management

ServiceConfiguration &

Activation

Resource Provisioning &

Allocation to Service Instance

ServiceProblem

Management

Service Quality Analysis, Action &

Reporting

S/P BuyingS/P Purchase

Order Management

S/P Problem Reporting &

Management

S/P Performance Management

Supplier / Partner Interface Management

ResourceProblem

Management

Resource Quality Analysis, Action &

Reporting

InventoryMgtSys

ConfigMgtSys

Perf.Mgt.Sys

Fault Mgt Sys

The Solution – eTOM view

October 19, 200439

The Solution – TMN view

NE

EML

NML

SML

SDHATM WDMIPVoice

BML

Customer

Proposed OSS components

October 19, 200440

Agenda


October 19, 200441

The Benefits

Improved service commissioning times (54%)

Improved fault resolution (56%)

Integrated database of network, services and customers

Simpler Network to operate with fewer network element types

Single point of data entry

October 19, 200442

The Benefits

Managed workflow with automation

Supports all business groups involved in fulfilment and assurance of services

Easily configured to support new network technology

Rapidly configured to support launch of new products

Comprehensive and consistent reporting

October 19, 200443

Business Benefits

Corporate Business Growth

0

1000000

2000000

3000000

4000000

5000000

6000000

Leased Channel Frame Relay Internet

Product Mix

Rup

ees

'000

FY 2002-03FY 2003-04

Corporate Business has grown – 28%

Source – VSNL Annual Report 2003-’04

October 19, 200444

Agenda


October 19, 200445

Conclusions

Process automation has enabled improved fulfillment times, which has translated to an increase in the no. of circuits commissioned and hence revenues– (7.5% for the same quarter in FY 2003-2004)Automation of processes have enabled VSNL to improve its performance in the Corporate business segment where it has to focus in order to grow the top-lineImproved Fulfillment has been achieved with the existing workforce translating into effective OPEX savingsGiven that the competition can match one in network technology, the differentiator would be efficient service delivery and hassle-free product customization An integrated OSS with automated systems and processes is a prerequisite to meet the key business challenges

Thank You for your Attention!

Feedback : [email protected]: 91-22-5659 2445Fax: 91-22-5659 2264

Mr. S.K. George, Manager (Planning & Development)Ambuj Mathur, Manager (Customer Services)

Mr. Arunachalam, Senior GM (Planning & Development)

Acknowledgements

Disclaimer : The views expressed in this presentation are that of the speaker’s and does not purport to be that of the company

Decreasing OPEX and Increasing Revenues through …dpnm.postech.ac.kr/papers/TMW/TMW2004-LongBeach/TMW2983 BU… · ... Computing and Network) Enterprise Management Strategic & Enterprise

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