Content and Apps Value Chains

Stephen's blog address moved

Stephen Fleece — Thu, 29 Jul 2010 20:52:37 GMT

Please note that Stephen Fleece's blog posts from me have moved to a new address:

Web:
http://www.tmforum.org/community/blogs/enabling-new-services/default.aspx

RSS:
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Value Chain Challenge #2 - Complexity

Stephen Fleece — Fri, 04 Dec 2009 15:53:25 GMT

In my last blog post, we looked at one challenge that many CSPs face in establishing winning businesses into new value chains, such as content and IT cloud computing. This challenge is the culture itself of large CSP organizations, in terms of risk avoidance. There's a growing need for more incentives (at all pay grade levels) to take additional managed risk. Winning CSP leaders are going beyond the traditional cultural focus of knowing what to expect and the old "no surprises" mentality when it comes to new business models.

Today, we look at another challenge to new value chains. It is the fundamental, high complexity in planning and managing both legacy and fast-growing service provider businesses, and especially their operations architectures. This challenge is particularly relevant for long established CSPs in mature markets that have grown by acquisition or assembly of regional operating companies. There's another variation of the challenge for fast growing providers in developing markets. And how does this challenge relate to new value chain businesses?

In general, consistency at scale is an ideal principle we want to achieve for many reasons, in balance with getting new parts of a corporate business launched on a timely basis. Whether legacy or startup, scale is generally good. But consistency and simplicity at scale is hard, especially for old voice companies now in a “post-voice world.” It takes a lot of energy and resources to truly rationalize legacy processes and infrastructure together, including simplifying fragmented business architectures with so many departments, complex technologies, and planning interdependencies. The "finish line" goal of getting to unified target architecture is allusive. Retiring things--legacy products (and their revenues and customers too), business processes, and applications--from a company's portfolio can be painful and hazardous to people's careers. It takes courage, "John Wayne" grit, and a lot of corporate perseverance.

Yet, facing and battling the complexity giant in the long term is required to achieve essential scale and lean operations. CSPs do so proactively or else their market will forcefully reduce the business and shareholder value with it. This transformation journey takes time, dedication, and unusual horizontal teamwork by executives, managers, and planners. Business managers must work with IT and Network Engineering to consolidate and retire products and business processes too -- it cannot all be about network inventory and application portfolio retirement.

But wait! This message is not a new to our industry. The lesson is a useful reminder because of relevance to success in new value chains. Scale in customers and efficiency in the business are key advantages for CSPs to compete more effectively in the digital services business of today and especially tomorrow. Legacy transformation is needed in parallel with innovation efforts into new value chains. Without rationalizing, we multiply the complexity problem with new value chain operations alongside the legacy business. We add new operating silos, new processes and applications (but similar), and setup a situation for more inter-dependencies over time. As soon as the market wants a bulk discount for all its business with a provider, you'll need a single convergent fulfillment and revenue solution more than an new ordering and billing capability for that new business alone. And what about cross-service feature integration like we're seeing with femtocell applications between fixed and mobile businesses, and femto's ability to revolutionize consumer’s headache with moving content easily between devices in the home (TVs, PC, smart phones, the cloud)?

To tactically embrace such a parallel strategy between legacy rationalization and new innovation, strong integrated business architecture is needed along with a healthy, multi-discipline partnership across departments of shared long term goals, open minds, and understanding the what and why of the future architecture. The architecture is expressed in terms of processes, information strategy, and which application systems are strategic investments. This tactic is why I personally believe in the value of the TM Forum Solution Frameworks towards supporting the work of new value chains. Sound baseline frameworks help evolve a simplified business architecture and innovation on top--not "along the side" or "over the top" by someone else. This tactic and tool addresses HOW we realize integration of “the old” and “the new” together for producing synergies and competitive advantage.

I look forward to discussing these concepts at Management World Americas in Orlando next week, especially in our New Business Models Summit and in Forumville.

AT&T and wireless VoIP on iPhone 3G

Stephen Fleece — Thu, 08 Oct 2009 20:12:13 GMT

AT&T seems to have responded to recent US Government's FCC hint at the coming of net neutrality for wireless broadband. They have lifted policy restrictions on VoIP traffic from and to customer's iPhone 3G devices over AT&T's 3G radio services, in addition to Wi-Fi which was already permitted.

The good news about the decision for AT&T is that VoIP traffic, although very latency sensitive, won't demand a lot more bandwidth capacity to a network already stuggling in places to keep up with iPhone 3G data usage traffic volumes.

This news is yet another strong data point that we're quickly approaching a world where voice is free. We must prepare Service Providers to more quickly to launch new revenue-producing services, and new business models -- the headline theme of the upcoming Management World Americas conference in Orlando on Dec. 6-10, 2009.

I found the news at Unstrung here:
http://www.unstrung.com/document.asp?doc_id=182740

Value Chains Challenge #1

Stephen Fleece — Fri, 02 Oct 2009 16:56:00 GMT

Note: This post continues a multi-part series introducing concepts about
Digital Services Value Chains. Prior post is here for background.

****

As established Service Providers are preparing for the imminent "post voice
world," they are launching new business models into digital services value
chains. To compete with advantage in these new value chains, several major
challenges need to be effectively addressed. I advise now, these pitfalls
often require bold executive-level vision, drive, and some risk-taking to
resolve.

First, the biggest challenge is with the culture of risk taking itself. In
my experience, this challenge exists at all levels of well-established
CSP organizations and in many of its entrenched
Suppliers. The established communications industry culture has been
characterized by risk aversion and super diligence. After all, the
construction and reliable operation of a national or global phone network of
such scale required incredible degree of planning, control, and management
disciples to remain so reliable for the mission critical uses it serves.
Yet, in today's post-voice world, the customer experience factors and service
levels world of PSTN voice and enterprise data services don't generally
apply. As consumers, we’re getting used to working around dropped calls and
rebooting devices. Granted, voice and enterprise data service reliability is
still important for the much of the world. Many customers will still pay for
reliability (hence, not free). But, in my prior blog post, I assert that, at
some point soon, these revenues are not enough to sustain anything more than
a regulated utility business model at best.

So, how do CSP executives address the risk aversion issue? Several change
management and structural business options exist. I'm not an expert at the
options for fully answering this question, but "network operators" must
develop clear strategies for achieving cultural change to become more a
innovative platform-based service provider. We must boldly diversify from
being a risk-averse, “old school” operator alone. Mergers, acquisitions, and
spin-offs are one structural option to experiment with in finding progress
through this challenge. Management incentives and reward/punish practices
from C-levels down to first level managers are other options and levers to
pull. We must to address this challenge one way or another. The new entrant
Service Providers are taking bold risks with hefty investor capital behind
them. Competition and risk-taking are inevitable. Not acting bold is a risk
in itself, outside the utility business model.

In my next blog post, I share a bit about the second major challenge --
fundamental complexity. So until then, keep planning for the "post voice
world," and as Martin Creaner and I say -- plan fast and faster.

Start Planning for Value Chains

Stephen Fleece — Thu, 24 Sep 2009 19:17:37 GMT

Note: This post is first in a multi-part series introducing concepts about Digital Services Value Chains.

****

"We now have to start planning for a world where voice is free."

-- Quote from Sanjiv Ahuja , Chairman, Augere, and former CEO, Orange SA
At a recent keynote at TM Forum Management World 2009 (link goes to video)

The communications industry has an awesome and daunting task ahead. Whether in mature or developing markets, incredible change and need for strategic courage and smarts is here and now.

Consider what percentage of revenue for a fixed or mobile Communications Service Provider (CSP) business comes from voice products? If you took that voice revenue away, how long would the enterprise last with its current cost structure? Unfortunately and generally, much of the operational costs under a voice business tend to be fixed, based on shared infrastructure across products across a service or coverage area. There are many exceptions, but industry leaders at all levels in a company can no longer ignore this question... How will Service Providers address an accelerating erosion of the voice business, alongside the high fixed costs of a Service Provider operation?

In Sanjiv Ahuja’s excellent keynote referenced above, he alludes to two polarized scenarios for CSPs in maturing markets that I label as:

1) The utility pipe
2) Platforms for innovation

Although these scenarios are not mutually exclusive for most CSPs, let's examine their magnified distinctions.

The utility pipe scenario clearly involves operational cost transformation for most established network operators, and spells a likely return to higher degrees of business regulation. It is certainly is a viable and attractively simpler strategic option for some providers. But with only a few explainable exceptions to find (e.g., clear monopolies), this Service provider strategy--as executed by many across the global industry--has yet to produce impressive results in a competitive market for customers and shareholders alike. I look at results in terms of both providing product capabilities for enabling global innovation leadership to its markets/societies served, and producing financial returns to corporate stakeholders.

That leaves us the second option of the "platforms for innovation" scenario. Many CSPs are gradually moving towards this strategic mode, and I applaud the opening act in many cases. Example pattern are found in the initial launches of digital content delivery services such as music and video stores, and advanced TV products. However, the open Internet, expanding global software development talent and consumer device marketplace is quickly destroying the traditional "walled garden" CSP product approach to monetize many of these new services. And the vertically-integrated infrastructure costs for traditional IPTV are staggeringly high. We need to look further at what really provides competitive advantage for platform-based businesses. I applaud the entry to the stage, but we can’t keep clapping for a dismal performance.

In the platform innovation business scenario, we will examine further the concepts of digital services value chains. Get ready to start planning—and planning hard and fast. Stay tuned.