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R O A D STo New Growth

#EnablingOperationsTransformation

AUGUST 2017 | Huawei Southern Africa Region

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Enabling Operations Transformation

CORE TOPICS

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ForewordDigital Transformation is an Urgent Requirement

Industry Insights &TrendsDigital Transformation: Enabling New Growth

Huawei’s View The ROADS Experience — Embracing Digital Transformation With an Open View

Success Stories Network Experience PLUS, Driving Performance Beyond

Huawei Cloud Data Centers Empower South Africa EMM’s Critical Services to Achieve Zero Down-time

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FOREWORD

DIGITAL TRANSFORMATION

IS AN URGENT REQUIREMENT

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The world is now in the midst of a far-reaching, rapid, and crucial change called digital transformation. Driven by digital technologies, this is a process that is revolutionizing and redefining our world. Digital technology advances include sensor technology development, which enables cost-efficient and wide-range data collection. It also comprises technology for artificial intelligence, machine learning and big data to help enterprises translate massive non-structured data into rules and decisions. The Internet of Things (IoT) and cloud technologies make decentralized data analysis and usage a digital era reality.

In addition, it also consists of, but is not limited to, manufacturing technology improvements in such fields as nano techniques and 3D printing, which facilitate dispersed, small-scale manufacturing. Acquiring, using and sharing information becomes more open and efficient with digital technologies. New business models and ecosystems are being shaped and traditional industries are being urged to adapt to the disruptive new technologies that are changing the way people live and work. Digital technologies are reshaping global economic structures and are altering the basis of industrial and economic competition. Digital technologies help enterprises open new sales channels, drive sales growth, create new products and services, and improve customer experience.

The digital trend is rewriting business rules and restructuring global economic development. With emerging technologies and applications undergoing rapid development, a fully-connected world is gradually becoming a reality. The new market landscape is one in which success comes not from battling competitors, but from creating a ‘Blue Ocean’, of untapped new market spaces that are ripe for growth. Today, the ‘Blue Ocean’ market is evolving into a growth engine for operators, and injecting new momentum into economic growth. According to Accenture research, digital technologies will contribute US $527 billion to China’s GDP by 2020.

Telecom operators across the globe are addressing digital transformation at full speed; digital transformation being the way to secure strong advantages over competitors as they continuously develop. Only digitalized enterprises can achieve significant improvement in customer experience and business efficiency and stand out amongst competitors. Enterprises that sit by idly as the world around them changes will be squeezed out of the market.

With digital transformation, many enterprises still remain unable to resolve the time-sensitive issue of seizing the opportunities and dividends of the digital era that come from gaining first-mover advantage. The bottom line is that digital transformation for most enterprises is a long and laborious process.

In the ‘Blue Ocean’ that thousands of operators must navigate - the ICT industry faces unprecedented growth opportunities. ICT technologies are already strategic focal points in today’s comprehensive international competition. In terms of market potential, digital services are set to create massive connections and tremendous market value for the future.

DIGITAL TRANSFORMATION IS AN URGENT REQUIREMENT

DIGITAL TRANSFORMATION IS AN URGENT REQUIREMENT

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INDUSTRY INSIGHTS & TRENDS

DIGITAL TRANSFORMATION:

ENABLING NEW GROWTH

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INDUSTRY INSIGHTS & TRENDS

DIGITAL TRANSFORMATION:ENABLING NEW GROWTH by Mobile World Live

obile operators across the world face the challenges of slowing growth and ongoing disruption of core services by

new Internet players, even as the broader mobile ecosystem continues to see significant revenue growth.

According to a June 2016 report from GSMA Intelligence (GSMAi) and the China Academy of Information and Communications Technology (CAICT) “Mobile operators: the digital transformation opportunity”, digitization has already disrupted the mobile industry and is now beginning to transform a range of other industries, including healthcare, finance and retail. This in turn is creating opportunities for innovative new services, with consumer engagement and data traffic increasingly focused on mobile devices and mobile networks.

Indeed, in its Global Mobile Trends report for 2016, GSMAi noted that five “megatrends” emanating from the mobile-ecosystem are driving major changes that will see the world move from the current age of digitization to an age of automation and the connected life.

These trends are the geographic shift in mobile user growth; the increasing use of mobile technology to access the Internet; the massive growth in connected devices; the platform economy; and the adoption of the “open” approach at the network level. The first two trends reflect the shift in user growth from the developed world — where mobile markets are increasingly saturated — to developing and emerging markets where it is often the case that a person’s first experience of the Internet is on a mobile device.

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INDUSTRY INSIGHTS & TRENDS

The Internet of Things (IoT), meanwhile, is expected to drive the average number of connected devices per person to three by 2020 compared to 1.5 in 2015, “providing improved efficiency and controlled automation in daily life”, according to the GSMAi. The platform economy, meanwhile, uses smartphones, software and open APIs to create and scale new digital marketplaces for a huge range of services and products, from over-the-top messaging apps through to a broad range of consumer-focused sectors reinventing how business is done through digital platforms, and major industrial sectors putting analytics and automation in the cloud. According to GSMAi, mobile operators are increasingly opening up their APIs to third-party developers.

Around 15,000 open APIs are available, with 40 new ones created every week. There has long been a debate about the trade-off of scale versus value leakage by opening up a network or database to third parties. GSMAi argues that the web experience points firmly in favour of open. “Amazon, eBay, Netflix, Uber, Facebook, Google, Twilio and the fintech cohort are all testament to this,” the research company said.

“This is a scale transformation that will define the future of telcos and the whole industry.”

- Phil Jordan, Telefonica

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INDUSTRY INSIGHTS & TRENDS

CLAIMING NEW DIGITAL TERRITORIES

By building digital ecosystems, operators can also play a central role in stimulating innovation and staking a firmer claim on new digital territories. The risk of being marginalised is much less likely if they are instrumental in bringing together the likes of application developers, device manufacturers, distributors and systems integrators.

AT&T has created six Foundry Innovation Centres, for example, in order to specialise in different digital areas. Ranging from the IoT and the connected car to software-defined networks, the centres allow AT&T’s innovators to work with outside experts in developing consumer and business solutions. Telefonica’s global M2M partnership programme, focusing on the B2B market, has over 500 partners. QIVICON, Deutsche Telekom’s smart home platform, has more than 40 partner companies working on various products and services. SK Telekom and AT&T also have smart-home digital hubs.

Certainly, telcos face a number of changes and challenges as they transform themselves from traditional communications service providers into digital service providers.

Phil Jordan, global CIO at the Telefónica Group, does not under-estimate the digital transformation challenge: “It is a complete transformation of business model, processes, policy, product design, systems and ultimately culture, skills and mindset. This is a scale transformation that will define the future of telcos and the whole industry.”

Drivers Of Growth And Profit For MEA

(Source: TMT practice | Vol. I | 2016 from McKinsey & Company)

The MEA telecommunications market is far from homogeneous. It comprises 1.4 billion people living in countries as poor as Niger, with USD 441 GDP per capita, or as wealthy as Qatar, with USD 93,000 GDP per capita. Mobile penetration is as low as 25 percent in Ethiopia. Likewise, average monthly revenue per user ranges from USD 3 to 30. Price wars are common: in some markets, data was discounted long before it became a mainstream product; in others it has remained at sky-high levels.

The high diversity of the markets addressed is reflected in financial disparities among telecommunications providers. Most companies equal or even exceed the sector’s high financial-performance averages. Twenty percent of operators, however, do not reach threshold margins for positive shareholder returns.

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INDUSTRY INSIGHTS & TRENDS

In order to better understand the structure and dynamics of the wider regional telecommunications industry, the constituent markets have been mapped into three archetypes according to growth stage of the market.

Three Diverse Market Archetypes

As shown in the figure above, each telecommunications market in MEA has been situated in one of three archetypical groups: growth, polarized, and mature. The groups have been defined according to GDP per capita, mobile and fixed penetration, and smartphone presence. By using these parameters, analysis has revealed dramatic differences between groups in terms of macroeconomic context, urbanization, stage of market development, and importantly, competitive dynamics and future growth opportunities.

As any segmentation, this one is meant to directionally help understand specific characteristics and future challenges.

Growth Markets Growth Markets possess the greatest remaining opportunity for increased penetration, though their low per-capita GDP and rurally dispersed populations will pose challenges. To capture the opportunities, cautious investment management will be needed, as margins will have to be maintained against the high capital requirements amid limited purchasing power.

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INDUSTRY INSIGHTS & TRENDS

There may be additional growth opportunity to provide infrastructure for public services in the areas of healthcare, education, retail, and finance. The outlook in these markets is for 5 to 8 percent annual growth and a slight improvement in the EBITDA margin (up to 10 percent) above the present average of 38 percent assuming they can avoid price wars.

Polarized Markets

Polarized Markets include the wealthier economies of Africa, with per-capita GDP ranging between USD 1,500 and 7,000. These countries have a median urban demographic of 50 percent and mobile penetration around 100 percent. They are distinguished by a polarized consumer base, with wealthier metropolitan and lower-income rural populations. A typical example, where the divergence of the two consumer groups is immediately clear, is the Nigerian market. The division between the urban and rural populations in these polarized markets is clearly defined. Furthermore, the urban segments tend to behave like the consumer base in mature markets, while the rural segment presents much the same picture as the base in the growth markets. Analysis in this report has focused more closely on

the mature and growth markets, since the consumer bases in those two archetypical markets separately present the same opportunities and challenges that exist in the dual consumer bases of the polarized markets.

Mature Markets

Mature Markets are the high-income countries of the Middle East. The populations of these countries are mainly clustered in cities and have mobile penetration far above 100 percent. Fixed infrastructure in the cities supports median fixed penetration of 30 percent. In these markets, any further noteworthy growth may come from data consumption and content – if monetized. In mature markets, pricing will be a very important lever for profitability; unlike in growth markets, price cuts beyond current levels will most likely destroy value. The relatively high price of voice service compared to data creates a significant risk of the erosion of voice revenue and thus profitability. Operators in mature markets should focus on capturing growth in consumer data and entertainment spending, selectively emphasizing fixed and mobile convergence to achieve this.

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HUAWEI’S VIEW

THE ROADS EXPERIENCE

EMBRACING DIGITAL

TRANSFORMATION WITH AN OPEN VIEW

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HUAWEI’S VIEW

Advances in ICT technologies are blurring the boundary between the physical and digital worlds. This has impacts far beyond computing and communications technology; it affects and shapes how we live and think. For business, it is clear that companies able to leverage this digital transformation will have a competitive advantage and achieve long-term success.

According to a 2015 user experience survey, more than 49% of respondents believed that online shopping delivers the best user experience compared with other industries such as radio, TV, telecommunications and media. The reason online shopping stands out is because it can best satisfy the five dimensions of user experience, i.e. Real-time, On-Demand, All-online, DIY, and Social at the same time. Satisfying these five dimensions,

which can be abbreviated as ROADS, is why online shopping has emerged as the “most preferred” option among the available industries. Nevertheless, this research is alarming for Telco operators, as it means new pressure and challenges for their businesses. Telcos facing demand for the ROADS experience are looking to digital transformation as the ultimate goal for both operators and solutions providers.

Huawei’s challenge is to demonstrate how an operator can successfully deliver the ROADS experience for end users such as individuals, families and enterprises. At the same time, Huawei needs to develop a roadmap for helping operators navigate digital transformation, showing how it can be achieved systematically when aiming to deliver the ROADS experience.

Improving user experience and satisfying user demands in a timely manner has become the driving force for Telco operators in managing digital transformation.

Operators must be able to understand end-user demands and customer experience by using an outside-in approach. By leveraging this as measurable metrics, they can transform their operating models and overhaul their legacy infrastructure more easily. From the operator’s perspective, the driving force for digital transformation is to be able to quickly provide users with their favorite services, and the ROADS experience should set the standard for service in the consumption process - “purchasing-using-sharing”.

A paradigm shift in their business operations and applications will mean fundamental changes for operators in their operating models and enabling platforms for ICT resources and business. At the same time, ICT infrastructure will need to adapt to changes in operations, migration to software-defined networking, virtualization, data-center cloudification and ultra-broadband. All of this aims to provide real-time, flexible, and scalable ICT resources for enterprises.

The process of implementing the ROADS experience for end-users does not happen overnight - nor will reconfiguration of operations and infrastructure. Implementation and optimization takes place via the accumulated learning of each customer experience and changes in operations and infrastructure.

To create the necessary guidance and improve the operability of the concept, Huawei took the initiative to establish the Open ROADS Community in 2016. We brought operators, solution providers, industry opinion leaders and analyst firms together and explored the future direction of digital transformation and user behavior. We helped to facilitate expert opinion exchanges and alignment of the ecosystem, so as to achieve our common goals.

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HUAWEI’S VIEW

Recently, Huawei and HKT signed a letter of intent to create a strategic partnership in order to resolve customer challenges over the next five years. The partnership is an outcome of the research of the Open ROADS Community and learning experiences from other project implementations. With a goal to promote openness for the public good, the Open ROADS Community advocates that all parties in the ecosystem collaborate more closely together.

First - Promotion of industry openness. The ROADS experience is applicable to various industries. Collaboration across industries is a key driver in order to deliver a better user experience for all end users.

Second - Openness to partners in the ecosystem. The establishment of an ecosystem creates value and opportunities for all the participating businesses. Experience tells us that by sharing capabilities via APIs with partners in the telecommunications market for example, more new, innovative and valuable services are created. Such services would be difficult, if not impossible, to implement outside of an ecosystem context.

Third - Openness to industry organizations. To promote industry development, trade associations such as GSMA, TM Forum, The Open Group as well as the Open ROADS Community can together play an important role in promoting broader industry consensus on digital transformation.

Fourth - Openness to cloud laboratories for innovative incubation and validation. The objective of the Open ROADS Community is to incubate best practices. To meet this end, Huawei is committed to opening up cloud laboratory resources for validation of Open ROADS Community projects. We believe in keeping our minds open to the future possibilities - Huawei hopes that service providers will be able to open up their production environments for project validation and implementation.

Driving demand for the ROADS experience are the digital natives of the millennial generation. They represent a massive market segment on the rise, but even within their demographic, there are huge discrepancies with ages ranging from 19 to 35. Consider the range of income levels, consumer behavior, preferences for communication, and content consumption across that demographic.

A comprehensive understanding of consumer needs should be the basis which operators use to drive their digital transformation and optimize their operating models, as well as to reengineer their infrastructures and resources.It is difficult to imagine how digitalization and ICT technologies will shape our world, but we believe that by continually improving users’ ROADS experience, improving service delivery response, transforming operations and infrastructure, and adopting a more open-minded approach, we can create a better connected world.

Open ROADS

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HUAWEI’S VIEW

Service Driven Distributed Data Center Drives Carriers Business Success

Data Center is the Foundation of Carrier’s ICT Transformation

As we are transforming into the digital economy, the role of Data Center (DC) has evolved from mere an IT infrastructure to a business and service driver. DC is now playing as an enabling service that is flexible, agile and software defined supporting the ROADS (Real-Time, On-Demand, All-Online, Do It Yourself and Social) framework. The data center should be the strategic focal point and the foundation of the Carrier’s ICT transformation in the next generation of digital economy.

The challenges of building a business driven data center

In digital economy, the data center should be transformed from a cost center to a profit center, enabling business service creation that supports both internal IT departments and vertical businesses.

To address this, the challenges of business-driven data center are as follow:

1. How to plan and design the technical evolution path to making the software defined data center

2. Take advantage of the carrier’s network and data center landscape in order to promote increased customer experience

3. Designing a business migration plan that ensures the business operations achieves a zero down time migration.

4. Enhances the business continuity plan (BCP)

5. Ensuring a unified management that delivers quality and timely integration with multiple vendors.

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HUAWEI’S VIEW

The importance of prime system integrator (PSI) in business driven DC’s building

The data center hosts a number of systems and products from various vendors they need to be integrated and operated seamlessly for provision of services. The PSI can support carriers focus on the business strategy supporting the growth of the business enablement of services and hybrid unified management, PSI will manages both the Public and Private clouds along with traditional data center environments that should follow modularized, standardized, automated and orchestrated approach.

Summary

In all, Service -driven distributed data center is key for the carriers ICT transformation. As a long-term trusted partner, Huawei is dedicated to helping carriers succeed in business. Huawei’s data center solution and services can help customers save on ICT infrastructure investment and Operational &Maintenance. The Huawei SD-DC2 (service-driven Distributed Cloud Data Center) architecture accelerates service innovation by reducing service rollout time from months to hours, unified management efficiency, and achieves 99.999% service availability.

Huawei SD-DC2 architectureRecently, Huawei and TBR jointly released carriers ICT transformation whitepaper. The whitepaper is based on carrier’s successful experience and summarizes the reasonable path of ICT transformation. Meanwhile, it also published the cloud data center maturity model and assessment guidance which defines key competency models of each stage in the transformation program, combined with cases to show the cloud data center construction model.

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NETWORK EXPERIENCE PLUS,

DRIVING PERFORMANCE BEYOND

SUCCESS STORIES

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SUCCESS STORIES

s global 3G networks are upgraded to 4G or 5G, mobile social networking, mobile video, and online gaming have

become the most representative services being used by mobile users. In addition, mobile video now demands higher end to end (E2E) network quality. For example, a minimum of 10 Mbit/s is needed to ensure smooth playback of 1080p mobile videos. A global investigation jointly performed by Huawei and Ovum in 2015 indicated that more than 55% of mobile subscribers regard speed and coverage as key factors when selecting an operator. Therefore, investing in a better network to create superior network experience, is one of the most effective was to continuously retain and grow customer base.

Huawei developed the Network Experience PLUS solution. Based on different operator requirements and on the planning & optimization, and successful experience with 1,000 networks delivered all over the world, Huawei believes differentiated network experience to be the core of Network Experience PLUS. A differentiated network experience helps improve subscriber experience and network brands, and retain and attract subscribers. With the help of service and network development strategies, differentiated network experience facilitates business success.

Analysis of Differentiated Network Experience

Many operators have an urgent need to construct Network Experience PLUS network, but their ideas differ in the details. For example: In 2012, Operator S in Switzerland was ranked last in Connect test, which was a very bad influence for its industry-leading brand. High level Operator S executives publicly declared that they expected to improve benchmark ranking, increase the net promoter score (NPS), retain and attract more subscribers, and construct industry leading mobile broadband network. In China, Operator M (Hangzhou branch) proposed VoLTE development strategy in 2015 to improve basic voice services and to fight off the competition.

In Korea, about two years after Operator S launched VoLTE services, its VoLTE subscriber penetration rate quickly increased from 6% in 2012 to 80% in the beginning of 2015, efficiently facilitating its business success. In Saudi Arabia, the Hajj pilgrimage is the largest annual event for Muslims. In the last third of September, each year, over three million pilgrims gather in and around Mecca in an area covering 26 km2. Ensuring normal communications during the event is a top priority for all operators in Saudi Arabia.

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It is critical that normal communications are guaranteed during this event.

In Korea, the subscriber quantity of Operator L’s 3G networks increases slowly. Its brand reputation lags far behind the competition, and revenues are insufficient. To beat the competition, Operator L started launching LTE networks. They focused on high-value, subscriber-sensitive areas, enhancing coverage in hotspots. In 2013, subscriber experience and network performance in selected hotspots surpassed that of the competition, and operating income increased by more than 300%.

The typical business scenarios of the four operators indicate that improved branding; differentiated service experience, key event assurances, and hotspot improvement were all based on network experience differentiation. These four aspects are also key factors helping operators compete and win.

SUCCESS STORIES

“Huawei developed the Network

Experience PLUS solution. Based on different operator requirements and on the planning & optimization, and successful experience with 1,000 networks

delivered all over the world”

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SUCCESS STORIES

Huawei Cloud Data Centers Empower South Africa EMM’s Critical Services to Achieve Zero Downtime

Background

Ekurhuleni Metropolitan Municipality (EMM) is the third largest city in South Africa and covers an area exceeding 2,000 square meters with a population of approximately 2 million. As one of Gauteng province’s five districts, the city is secure as a manufacturing hub and the second largest industrial area in South Africa. EMM provides a large number of public services for its customers, including water, electricity, transportation, social services, public security, and sporting events.

Challenges

1. Zero data loss in core service systems: EMM has 30+ core applications and database service systems. Ensuring zero data loss in the event of a stoppage across an entire data center is paramount. 2. Zero service interruptions even when data center failures occur: The customer requires automatic fault detection and switchover in both databases and VM services for easy O&M with no increase in manpower.

3. Reduced server costs and even faster deployment

Solution

1. Active-active architecture for same-city applications: Uses VIS + OceanStor 6800 V3 + FusionSphere DR Architecture and deploys Oracle RAC across regions to achieve active-active at the database layer. 2. Active-standby architecture for remote applications: Uses OceanStor 6800 V3 storage-based replication + FusionSphere UltraVR. 3. Visualized management: Employs an internally-developed DR management platform that monitors health status in real-time and offers one-click automatic switchover between remote active-standby applications.

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SUCCESS STORIES

Benefits

1. Active-active DR for core systems and active-standby DR for remote applications ensure zero data loss and service downtime while providing the most robust guarantee in service continuity

2. The visualization platform contains 90% of running services, boosting operational efficiency while reducing power consumption

3. Complete DR views and automatic switchovers reduce O&M costs and lower maintenance requirements

“Visualized management: Employs

an internally-developed DR

management platform that monitors health status in real-time

and offers one-click automatic

switchover between remote active-standby applications.”

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