For years now I've been preaching that the way to profit growth for service providers was to concentrate on the ‘golden triangle' of driving up new revenues from new services; driving up customer care levels to retain business and focussing on driving down operating costs. A lot of companies have got the message and we see ‘transformation' programs running in many communications service providers around the world.
But one bit of it is wrong. Driving up revenues doesn't actually help if they don't deliver a healthy margin. Many new services involve sourcing content or information from 3rd parties taking a big slice out of the revenue meaning they are very thin margin services if the cost base is not razor thin – Welcome to the world of retailing ! - the real approach is driving up contribution from new services i.e. the profit.
Negotiating hard with the content owner is one way of course, just like Wal-Mart or Dell does every day. But they also have superb and ultra low cost supply chain management. The medicine of taking costs out of service delivery doesn't just apply to traditional services where margins are falling; it applies to new services where margins must start off being razor thin. Have you bought a CD or DVD lately? It's not just the price of phone calls that's going through the floor and prices of media goods continue to drop sharply. Digital content services like IPTV or mobile TV is subject to the same pricing pressures and the costs of delivery need to be very low if the service is going to return a positive margin after the ‘upstream' partners like content aggregators get their slice.
Right now loads of communications companies are doing deals with loads of media providers with a lot of various intermediaries in the picture too. Mostly these are ‘hand crafted' deals with the emphasis being put on the price of the content, not on developing a really slick and low costs delivery chain. The costs of handling issues such as order handling, customer care, problem resolution, payments /settlements manually across multiple trading boundaries will kill the margins on any service. While customer volumes of services are quite low, maybe people can get away with it but as the services scale, meltdown will quickly follow. A business plan that relies on the service not selling in order to keep costs under control isn't much of a plan!
About a year ago, the TM Forum launched an initiative to look at how to automate business processes across trading boundaries, to solve just this kind of problem. The first step was to build an incubator to flush out the issues. Called the Content Encounter, it's a state of art, live technology consortium of companies working together to deliver content based services at least cost with the highest quality that can be seen for real at some of our conferences around the world.. From that beginning we recently launched the Value Chains Initiative to agree standard business-business interfaces to automate basic inter-company functions, taking costs and hassle out and providing a better end-end service. After all, the end customer sees the amalgam of all of the players in the value chain and if the end customer isn't happy, nobody in the value chain makes any money.
To add to that and ensure that those interfaces have a rock solid enabling technology foundation to build on, we've launched another initiative to ensure that our work is as relevant to other players in the value chain as it is to our core communications and cable membership. Any industry has a way of looking at things and its own special jargon, but if the Forum's work is going to be relevant and adopted by players all the way along the value chain, the work needs to be as easy to understand as possible, based on approaches common throughout all industry sectors yet farming the expertise and skill that service providers have built up over years in delivering high service volumes at low cost. We're taking all of the core frameworks and standards that we've developed for the communications industry and overhauling them to make them relevant to the services that are emerging today and will emerge over the coming years. The Service-Oriented Enterprise Blueprint is a unified, more tightly integrated and industry neutral set of building blocks for and enabling platform for creating, delivering and monetizing digital services. It combines the best of what the communications industry has pioneered with other industry best practices like Service Oriented Architectures and common IT business processes such as ITIL. Work is underway right now fleshing out this Blueprint and early realises will be available later this year.
As communications and cable companies start to invest billions of dollars transform themselves into providers of a wide portfolio of digital media services, it's timely that the Forum is launching its Transformation Resource Center aimed at building a library of relevant information and best practices relating to transformation topics. The Center will be undertaking original market research work and has already attracted a number of seasoned industry professionals with a significant track record in market research. The aim is to help our members reduce risk on major transformation programs by sharing best practice and ideas between providers and their suppliers around the world.
Finally, the Forum itself is undergoing a transformation of its own. With over 80 technical projects running, our collaboration program is world class and many of its deliverables have been adopted by many service providers and suppliers around the globe. But times are changing. Timescales for developing solutions for our members are forever speeding up. With more and more companies implementing the Forum's work, much of our emphasis is changing from developing common approaches and standards to working with companies to implement them and ‘farm' the experience they gain in doing so.
While we successfully introduced our training and education services a few years ago and these services play a major part in that information sharing, it's still not enough. Webinars are another great tool and we now run a large number of these on a variety of topics. The web is a great tool for people to access and share in our work and, building on last years' success in launching online user communities; we are now moving much of our collaborative development work into an online approach and significantly changing the way our collaborative program works. Just like Wikipedia or Google's Knol, members will be able to interact with Forum documents and software directly, online, making changes and adding what they are learning in the field. A new range of levels of maturity of Forum outputs will ensure that ‘hot off the press' issues are readily available to members worldwide while retaining the integrity and quality of our formal standards program.
To get a better view of all of the latest initiatives that the Forum is driving, click here.
Posted
08-28-2008 7:21 AM
by
Keith Willetts