You're wrong if you think COTS applications will cut telco IT costs

As seen in European Communications.

A report last year on the IT priorities of European communications service providers by Oracle and PricewaterhouseCoopers made for interesting reading.

One of the headline assertions in the report – entitled "Rethinking IT Strategy ... Can It Enable a Step Change in CSP Performance?" – was that that there would be a mass migration by telecom CIOs to commercial off-the-shelf (COTS) applications during the following 12 months because they reduce costs and simplify operations.

Now that this timeframe has more-or-less passed, I believe we can safely say this is an incredibly silly assertion by the report's authors. In fact, it is the requirement to integrate and customise COTS applications that created most of the "the spaghetti" in the first place within CSP IT infrastructure.

COTS applications can reduce initial deployment costs and development time but often at the expense of more software component-integration work and a dependency on third-party component vendors.

Real and meaningful cost savings come from how the business and IT organisations within operators work more closely together to meet industry demands for continued cost reduction, and also to take advantage of critical opportunities for growth.

Furthermore, if CSPs want to truly differentiate their customer experience, then the solution needs to be customisable. So what's the value of a COTS application?

Yes there should be some common building blocks. But then increasingly what a CSP needs is an agile IT environment within which it can support a unique customer experience. The results are then unique to the CSP to allow differentiation, and unique to every customer based on their needs.

COTS solutions by definition make differentiation challenging – they lock the customer to someone else's dictated roadmap. Moreover, many COTS applications require the business to adapt its business processes to fit the software rather than the other way around. This approach will not deliver the business transformation and customer centricity operators desire.

Taking the airline industry as an analogy. Airlines can use standard aircraft and then adjust the configuration for different customer experiences and branding. This is fine if you want to compete for incremental gains. However, it won't help when someone invents teleportation.

This is essentially what many of the CSPs are facing today; Apple, Google, Amazon, even the BBC are not in the (paid) CSP business and yet they cost CSPs money and customers by delivering what customers want, when they want it and how they want it, all over the top of the CSP's networks.

To achieve real differentiation, CSPs need to be able to implement changes quickly without incurring significant costs. By adopting a process-centric approach to business transformation, CSPs will be able to respond rapidly to emerging opportunities and threats and deliver the needed functionality and applications to maintain competitive edge.

By automating business processes and integrating back office and front line activities, telecom providers will be able to achieve cost efficiencies, while better aligning IT functions with their business objectives.

Furthermore, by extending process automation to different lines of business, CSPs will be able to share and reuse the best practices across the organisation and customise existing processes to accommodate the specific needs of a product line, channel, customer segment, request type or other criteria.

This highly customisable and flexible process framework can drive business growth not only by automating and simplifying work processes, but also by intelligently managing and analysing company data and customer interactions with real-time decision management capability.

COTs have and will have a place in the IT infrastructure of CSPs but their role will become less central, especially as CIOs expect these core systems to be more dynamic and adaptable to change.

By marrying process automation with decision management, telecom providers can significantly cut IT costs, while achieving competitive edge, strong brand differentiation and improving operational productivity.