How To_Becoming an Agile Business

BECOMING AN AGILE BUSINESS

C-SUITE HOW TOGUIDE

ABOUT THE AUTHORS CHRIS LEWISChris Lewis is a highly-regarded and experienced telecoms industry analyst who has been covering the depth and breadth, and demand and supply issues of the ICT sector, on a global basis, for 30 years. He specializes in drawing together the many varied technology and business components that will shape communications in the future digital marketplace. He has been registered blind for over 30 years, and now brings his technology knowledge to help the RNIB (a national U.K. charity) and the global organization Vision 2020 leverage communications technology for the blind and partially sighted community.

KEITH WILLETTSKeith Willetts, Founder, TM Forum, is widely regarded as one of the worlds leading authorities on the business management of digital services and networks. His achievements have been internationally recognized: He has been voted as one of the Top 100 most influential people in the communications industry on multiple occasions; awarded the GTB lifetime achievement award; honored twice in Top 25 awards for industry visionaries; and awarded Gold Medals for Innovation by both the British Computer Society and BT. He is a frequent writer and author of two influential books, The Lean Communications Provider and Unzipping the Digital World.

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C-SUITE HOW TOGUIDE

BECOMING AN AGILE BUSINESS

CHRIS LEWIS AND KEITH WILLETTS

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Foreword 4

Chapter 1 6 Why your business needs to be agile and what that means

Chapter 2 18 How to manage the transformation process to make your vision real

Chapter 3 28 Leadership, changing roles, organization and culture

Chapter 4 38 How to simplify your portfolio, channels and processes

Chapter 5 48 How to simplify your information systems

Chapter 6 62 What to do now

A final thought from our sponsor 68 Transforming for agility in the networked society

CONTENTS

4 BECOMING AN AGILE BUSINESS

FOREWORD

The digital onslaught is challenging established ways of doing business everywhere. New competitors with different business models and innovative ideas seem to spring up overnight. Yet pragmatic advice about how to navigate the digital storm successfully is thin on the ground a scarcity this new series of how-to guides from TM Forum is designed to address.

These guides are intended to help people at different levels within organizations ensure their businesses thrive in the global digital economy. They will be living documents in print and digitally added to over time, bursting with recommendations and examples drawn from companies and people around the world at the sharp end of transformation.

To become agile enough to succeed in the digital world, IT must move from being a back office function to become the engine for service creation and delivery, and the primary source of market intelligence. Technology is nothing though, without vision and leadership, and an innovative culture.

A companion to this guide, also for the CEO and team, Transforming to a digital business, is available now. Well publish further guides for senior executives this year covering how to make your business more information-and customer-centric, and how to create new digital revenue streams.

All the guides will focus on pragmatic steps your organization can take now. TM Forum has a lot of information, proven tools and best practices readily available which are free to our members to implement. They have been crowdsourced that is developed and constantly evolved to meet market

FOREWORD

BECOMING AN AGILE BUSINESS 5

FOREWORD

needs by the tens of thousands of people around the world who make up and have contributed to the Forums unique Collaboration Community.

The guides do not provide the answer to everything and must be adapted to your particular business situation, but they can prevent you wasting a great deal of valuable time, effort and resources reinventing the wheel. Our extensive library of case studies is testament to this.

In addition our own research, this document draws on the research from organizations like Capgemini Consulting, the Massachusetts Institute of Technology Sloan School of Management and McKinsey & Company, plus documents from companies such as AT&T. We are most grateful to Duarte Begonha, Partner at McKinsey & Company, for his companys support.

Several TM Forum members and friends of the Forum kindly agreed to be interviewed for this guide. They include: Pierre Blanchard, Vice President Telecoms Practice, Capgemini; Even Chlanda, Product and Services Director, Telefnica O2 Czech Republic; Dr. Qian Chang, China Mobile; Scott Gegenheimer, Group CEO, Zain; Monte Hong, former Managing Director, Communications Industry, Accenture; Albert Hitchcock, Group CIO Pearson plc and former Group CIO, Vodafone; Erik Hoving, Group Chief Technology Officer, KPN; Phil Jordan, Group CIO, Telefnica; Ilker Kuruz, Chief Technology Group Officer, Turkcell; David Moffatt former CEO, Lebara Group, and former Chief Financial Officer, Telstra; Wu Choy Peng, Group Chief Information Officer, SingTel; Steffen Roehn, former CIO, Deutsche Telekom; Peter Sany, Chief Information & Technology Officer, Swiss Life; Ben Verwaayen, former CEO of Alcatel-Lucent and BT; Pascal Vignier, Group CIO, Orange; and Neil Ward, Vice President and General Manager, Global Business Operations, Skype. Many thanks to all of you for your time and valuable insight.

We hope you find these guides enjoyable, useful and inspiring all feedback about this guide and other topics is most welcome.

Keith Willetts Founder, TM Forum

WHY YOUR BUSINESS NEEDS TO BE AGILE AND WHAT THAT MEANS

#1.



THE DIGITAL WORLDA hallmark of successful digital companies is their high level of operational effectiveness, delivered at low cost; yet they are super-agile and innovate fast they can turn on a dime. They put their customers at the heart of decision-making, and the bar set by companies like Apple and Amazon continues to rise, along with customers expectations of every company they deal with.

All this is hard to do if youre a startup, but at least you can build your company around these principles when youre starting from scratch. Making an established business agile enough to keep up with market changes and enabling it to adapt constantly the market never stands still is orders of magnitude more difficult. It requires changing a huge number of moving parts in terms of embedded cultures, practices and processes, all while continuing to run core activities.

CEOs need to recognize that vision and leadership are the most critical success factor.

The single biggest critical success factor in becoming an agile business is the vision and leadership to drive the necessary changes through, which is why weve started this series with guides for the executive team. Success in the digital world needs able, experienced people who understand that the rules of the game are changing fast and new competences are required. More than that, leaders need to carry all the stakeholders in the company with them (internal and external), through clear, consistent, regular communication explaining the changes that they want to make and the business reasons for them.



WHAT DO WE MEAN BY BUSINESS AGILITY? Business agility is being able to rapidly adjust your business model and product portfolio to reflect the needs of your customers and the actions of competitors. If you cant react as fast as your competition, youre going to get hurt. Of course, thats always been the case, but the difference is that today customers can desert you and tell thousands of others why at the click of a button. The speed of change in the marketplace is driving the need for greater business agility.

Speed and agility simply arent possible if the underlying organization, systems and processes are highly complex and every new or updated offer involves major reengineering and integration efforts. Most companies underestimate the level of change needed to transform peoples attitude to support an agile business, and the level of change needed in ITs leadership and people to effect change. This is something we see constantly. If you dont deal with these issues, the rest will fail.

Successful players look at their business goals and operations from outside their organization (an outside-in approach), at what their customers want. Then they work backwards to figure out how they are going to deliver it, rather looking at what theyve got and whats possible now (the inside-out approach).

INTERCONNECTEDNESS MEANS CHANGE AFFECTS EVERYONEThe outside-in approach brings up fundamental questions about your companys future business goals, where you want to go and how you plan to get there. Which services you want to offer to whom depends on what role you want to play in the increasingly complex ecosystem (the strategic options available to communications service providers are discussed in TM Forums how-to guide for the executive team, Transforming to a digital business1).

CEOs need to watch the market and customers constantly.

In the digital world, new services are limited only by the creativity of the human mind and the digital ecosystem makes that creativity available on



a global scale. However, since every part is connected the definition of an ecosystem when one part changes, many and perhaps all others are impacted to varying degrees, and often in ways not foreseen.

For example, communications companies were generally able to roll out ADSL-based broadband rapidly because the underlying big capital asset copper wires did not need changing. Broadband fueled greater digital content consumption, but also rapidly spawned services like Netflix and the BBCs iPlayer. They, in turn, created an almost instant need for much faster broadband and major investment in fiber-based infrastructure. Mobile networks have seen the same kind of need for rapid evolution, driven by the desires of customers for content or applications, and especially a growing appetite for streaming video on smart devices.

ALL ECOSYSTEM PLAYERS NEED TO BE AGILETo survive and thrive in this innovative, fast-moving, digital world everyone needs to be agile so they can address new situations in innovative ways. All the ecosystem players need to adjust their cost bases, organizational structures, business models and cultures. Simplification of the product portfolio, streamlining systems and processes, and being able to interface and interact with other ecosystem players to deliver services customers need are all vital.

For established businesses, this means transitioning lots of moving parts at the right time and in harmony with many others for the transformation to work rather like trying to integrate several ballets, with huge casts, on one stage at the same time. It is up to the executive management to manage the choreography.

THE NEED FOR SPEEDThis sounds daunting and make no mistake, getting fit for the digital world is a complex and time-consuming process, but delay could be fatal. The list of casualties caused by the digital revolution is growing, as companies find that the degree of change was deeper than they anticipated and the time it takes to react is longer than they thought.



Still, some bricks-and-mortar companies that built their businesses on excellent customer service have successfully carried that ethos across into the digital extensions of their businesses, such as Nordstrom in the U.S., and The John Lewis Partnership in the U.K. Regardless of their origins, the companies enjoying success in the digital world are all customer-centric and driving customers expectations.

Gartner published research in September 20132, based on a survey of 151 executives which found digital business incompetence will cause a quarter of businesses to lose competitive ranking by 2017. The next decade will move beyond the notion of using technology to automate businesses and toward positioning technology as revenue builder, market maker and customer finder, said Diane Morello, Managing Vice President, Gartner.

She added, When companies have those targets in mind, digital business becomes real. The impact of digital business will be undeniable: It will introduce new business models, cause industries to be digitally remastered and change the way that businesses put great minds to work.

EVERYTHING TO PLAY FORSo theres everything to play for, as outlined in recent report by Capgemini and MIT3, which found companies that leverage digital technologies outperform their peers and on average:

n are 26 percent more profitable than their industry competitors;

n generate 9 percent more revenue through their employees and physical assets; and

n create more value, generating 12 percent higher market valuation ratios.

The growth drivers behind digital services are staggering. For example: photo uploads have increased 5,000 percent over five years; digital music sales now represent 60 percent of the total, up from less than 1 percent in 2004; and 75 percent of travel is booked online. These and other changes in customers



behavior have driven a 4,000 percent increase in mobile data traffic over the past five years.

The rate of change is accelerating, too. For example, a household today creates enough data to fill 65 iPhones in a year, but by 2020 that will rise to 318. The number of connected devices is expected to grow by around 3,000 percent over the same time period. By 2025, all new cars will have embedded telematics. As Erik Hoving, Chief Technology Officer, KPN Group, says, There is enormous value in providing the ramps on and off the digital highway.

SPEED AND AGILITY ARE RELATIVEIs agility the same for all part of the business? No. The range of investment cycles required in a business will define different expectations of agility. Introducing a new app via an app store and building out a national fiber infrastructure are entirely different in scale and scope. Yet both need to be approached with the same mind-set of avoiding unnecessary complexity it will be expensive and slow you down.

DONT WASTE TIME AND RESOURCESAnother crucial element runs through every area, too. Although every business has a tendency to see its circumstances and operations as unique, there is a fundamental commonality to them. Businesses offer products and services to customers who pay for them. Further, companies aim to evolve their offerings and develop new ones (including by finding and partnering with suppliers) to stay relevant to changing markets and tastes, and to nurture and expand long-term relationships with customers. They also want to attract new customers to increase revenues and create new revenue streams.

Save time, resources and effort using crowdsourced, proven tools and best practices, which are freely available.

TM Forum recognized this commonality long ago and its members come together, by forming working groups to address specific business issues in our unique Collaboration Community. Over many years, thousands of experts from organizations all over the world have developed and continue to evolve



best practices and tools to meet changing business needs. They are all freely available to our members to implement and adapt.

As the Forums Founder Keith Willetts says in his foreword, They do not provide the answer to everything and must be adapted to your particular business situation, but they can reduce risk and prevent you from wasting a great deal of valuable time, effort and resources reinventing the wheel. TM Forums library of case studies from many different kinds of service providers in varied markets around the world is testament to this. We will be highlighting relevant tools and best practices, and real-life examples of how theyve been implemented throughout this guide.

Currently TM Forum has some 85,000 professionals from more than 900 member companies sharing their experiences, collaborating and rapidly addressing critical business challenges including IT transformation, business process optimization, big data analytics, cloud management, customer experience management and cyber security.

SIX ASPECTS OF AN AGILE BUSINESS Agility depends on multiple, interdependent factors within the business working in harmony. The failure of any one will scupper your efforts and hinder agility. Broadly speaking there are six key steps that are essential to creating an agile business, as shown in Figure 1-1 on page 13.

n Really understand your customers who should be at the heart of everything an organization does. As David Moffatt, former CEO of Lebara Group, says, Your greatest competition is your customers future expectations. Customers expect to be able to bundle, converge and select a range of services to support their personal and business lifestyles. Expectations are high, and Internet access across a number of devices used by individuals at work and home allows them to access services as and when they want. The customer is infinitely agile, and you need to be able to match their rising expectations and stay in business. If you dont understand your customers needs and desires, you wont get your vision right and everything flows from that.



FIGURE 1-1: THE SIMPLICITY-BASED APPROACH TO BECOMING AN AGILE BUSINESS

RADICALLY SIMPLIFY

PROCESSES

SIMPLIFY PORTFOLIO &

CHANNELS

CLEAR VISION AND STRONG LEADERSHIP

Source: TM Forum, 2014

SIMPLICITY = customer experience

and agility up, operating costs down

RADICALLY SIMPLIFY SYSTEMS

OUTSIDE-IN CUSTOMER

FOCUS

DONT ADD BACK

COMPLEXITY



n Develop a clear vision and strong leadership they are the two biggest critical success factors. Organizational culture is perhaps the hardest thing to change, but arguably the most important. Although people are infinitely more flexible than technology, if not managed correctly they and consequently the organizational structure and culture are highly resistant to change. The top team needs a clear understanding of where it wants to go and why, and a plan for how to get there (see Chapter 2). This must be driven through excellent, consistent and constant communication otherwise the default mode among staff will be to keep their heads down and wait for this latest management craze to go away. At best this will slow progress; at worst it will prevent it. In addition, the leadership team needs a good understanding of the new skills and talents required by an agile business expertise in analytics is a good example and ensuring you have the right people in the right roles (see Chapter 3).

n Radically simplify your product portfolio and and channels to market. Complex product portfolios, with many options and variants, usually result in highly complex channels to market. The more complex the channels are, the more moving parts are involved in the business processes supporting them. Complexity kills from agility, cost and customer experience viewpoints. Making the decision to withdraw a product or option needs determination and vision.

One major service provider we interviewed identified an overly complex product portfolio as being at the heart of its lack of agility. Yet no one was prepared to rationalize it for fear of the short-term financial hit the company could take if customers churned. A new CEO rapidly assessed the situation and decided the potential downside would be relatively small and short-lived compared to the long-term drain of complex business processes and systems, which ultimately the business could not sustain. The service provider took the decision, carefully managed customer issues arising from it, and rationalized its processes and systems. Just 18 months later that company has gained much improved business agility, reduced operating costs and raised customer satisfaction.



n Radically simplify your business processes as they are frequently over-complicated and fragmented, with a lack of end-to-end visibility and ownership. Each department tends to do its own thing in respect of core processes, which by definition results in a lack of cohesive, optimized and agile operations. Optimizing processes for minimal cost and enhanced customer experience is often an afterthought, not a primary concern. Established companies tend to be encumbered by years, or even decades, of added layers of reporting, bureaucracy, regulation and so on.

Retailers are good examples of companies that often have very highly optimized business processes. They operate in markets where margins are typically slim, customers preferences change rapidly and competition is fierce. There is usually a senior executive responsible for end-to-end process optimization, resulting in high levels of automation and low operational costs. For instance, a supermarket checkout can automatically update systems to replenish stocks from a central depot and can also be integrated with suppliers production systems to run just-in-time ordering, which benefits all parties. Data analytics also use this real-time data to monitor customers buying patterns and allow sophisticated tuning, right down to which shelf the goods are displayed on.

n Radically simplify your IT systems and platforms by nature, infrastructure tends to be somewhat rigid. A road, rail, gas or water infrastructure is designed to last for decades with little change required. Previous generations of communications and IT infrastructure were also inflexible and hardware-centric, but are becoming increasingly soft and much more adaptable. Virtualization techniques (in network, storage and processing) are offering far greater opportunities for configurable capabilities, which allow more rapid and easier changes.

The flexibility they bring, in terms of both technology and business models, can underpin all permutations of the truly agile approach which is so essential to success. Managed services/outsourcing and network resource sharing, and the need to accommodate partners to deliver digital services are also critical infrastructure considerations.



In addition, the move to commercial, off-the-shelf hardware and software is key, getting away from proprietary and home-grown solutions, which cost many multiples of their initial investment to run, maintain and update.

n Avoid reintroducing complexity across all parts of the business. Quick fixes typically turn into long-term handicaps. Incompatible data formats and definitions between multiple systems are common root causes of complexity and inefficiency as they often lead to a lowest common denominator approach. Hard coded, proprietary interfaces between systems create huge complexity when anything is changed and a consequent lack of agility. The combination of these and other factors typically mean it is impossible to gain a single view of the customer, resulting in a fragmented view of customers needs and poor customer service. Remember, configurability, not customization, is the rule.

The six key steps outlined here, and their interdependencies, need to be woven into a simple how-to methodology, as we describe in this guide. This methodology is founded on simplifying as much of the business activity as possible.

TAKEAWAYSTo succeed in the digital world and become agile, established companies need to make big changes to the way they run their business.

Remember the building blocks of agility shown in Figure 1-1 its all about simplicity, but remember the sequence. Theres little point in simplifying your systems without having completed the others steps first:

n Without understanding the customer and putting them at the core of your vision and strategy, you cant simplify your products and channels.

n Without simplifying these, you wont be able to simplify your business processes.

n And if you dont do that, you wont simplify your systems.



n And if you dont simplify systems, you wont become agile, your cost base will be higher and your customers less satisfied than those of your competitors.

n And we all know where that will lead.

Becoming an agile business will require a rethink as to what role your company wants to play in the digital ecosystem, as well as consideration of the central role of IT, how it fulfills that critical role and how you make sure it delivers.

Wherever possible exploit proven tools and best practices to save time and money, in the short and long term.

Dont be tempted to reintroduce complexity in the interests of short-term gain: Quick fixes tend to turn into long-term handicaps.

1 www.tmforum.org/howto

2 www.gartner.com/newsroom/id/2598515

3 www.capgemini-consulting.com/SMR

HOW TO MANAGE THE TRANSFORMATION PROCESS TO MAKE YOUR VISION REAL

#2.


The CEO and team needs to figure out where it wants the company to be and what roles it wants to play in the digital ecosystem. This will depend on where you are now, your assets and resources, the markets you operate in and many other factors. No two companies will be in exactly the same position, nor have identical ideas about where they want to go or how to get there.

THE STRATEGIC OPTIONS Whatever your business goals, the transformation to an agile business has to begin with the customer and provide clear answers to the following:

n which customers do you want to serve;n with which products;n in which markets;n through which channels; andn where will the company differentiate itself?

Understanding customers needs and behavior goes far beyond simple What do you want? type of market research. It needs to embrace how customers use your products and services, how they interact with your company, what they are saying about the company on social media and so on across a wide base of customers, and ideally in near real time. It demands an outside-in culture that looks at everything from the viewpoint of the customer and market, rather than an internal view looking out.




This, in turn, drives the need for greater competency in data analytics and using the information you derive from them to gain clear insight into your customer and in some business models, your customers customers and truly have them at the heart of every decision you make.

CEOs need a clear vision of what the company is transforming to and how to do it successfully.

You will also need a clear vision of how to organize and deliver the transformation program. As in all great performances, vision, timing and coordination are key. Vision and the will to make change happen have to come from the CEO and executive team. This is not to be confused with micro-management, nor is it only about top-down enforcement. Its about discovery and iteration, about acting on bottom-up feedback and constantly refining thinking and implementations. That way youll benefit from the huge expertise of those on the front lines, who know more about day-to-day operations than those further up the hierarchy, and it also includes everyone.

UNDERSTAND THAT IT IS THE BUSINESSAlong with customer centricity, you must understand ITs fundamental part in becoming an agile business. In many companies, IT has been seen as the back office providing utility support. Frequently treated as a cost center where costs are to be minimized, IT is often the last to hear about major changes to strategy, new products, acquisitions and other news. No wonder IT is often seen as a bottleneck that stops the company moving quickly and flexibly. However, this has to be a two-way street: the CIO and incumbent IT people need to change their attitudes and behavior to meet the business needs.

Digital native companies, on the other hand, view their IT in a fundamentally different way. Their business is not built on bricks-and-mortar and run by large numbers of people who are slowly being automated out of a job by IT rather IT is front and center. For many digital natives, it is the business.

So part of transforming the IT infrastructure is about transforming the role of IT within the company, moving it from the back to the front of the business;



from being a support function to the major enabler of the business, from being viewed as a cost center to becoming the innovative powerhouse of a digital company.

GETTING THE BASICS RIGHT AND LEADERSHIPThe very word transformation can be off-putting as large-scale transformation projects have a reputation of failing to deliver what they promised, going way over budget and exceeding deadlines. This results in a cynical, demoralized workforce; furious customers and churn; and damage to the organizations reputation.

Failure often happens because some of the basics arent in place, particularly strong leadership and vision. McKinsey & Company conducted some interesting research4 across a wide range of industries into success factors behind major transformation programs and the reasons why many fail. They put the average success rate at fewer than 40 percent, but also found that by applying some basic principles, the average success rate can be doubled to around 80 percent.

There are two dimensions to McKinseys observations on increasing the odds of success:

n Timing the failure rate of major change programs is highest when a company is in a defensive position and reacting to events, and lowest when an already successful company is proactively striving to do even better. While this seems to contradict the common wisdom that it should be easier to transform a company when its back is against the wall, this advantage is usually outweighed by the difficult circumstances that the company is in management is often fighting fires daily to keep the business on track while trying to implement fundamental change.

n Leadership factors while these are somewhat obvious McKinsey found that their absence was the major cause of transformation program failure. For example, establishing well-defined stretch targets for the transformation program is the single biggest success factor scoring a massive 167



percent improvement in success between companies that did and did not set them. Strong CEO involvement is also critical, with over 100 percent improvement in the odds of success, while clear organizational structure for change and frontline ownership improved success rates by nearly 75 percent.

BUILD CHANGE MANAGEMENT INTO YOUR PLANSAn important factor in transforming to an agile business is that your goals may change during the transformation process itself because the market is changing so quickly. A traditional waterfall approach of a well-researched requirements specification, then multiple implementation projects running through traditional design, implement and test phases may not be suitable. If you wait until youve perfected a three-year plan that will take five years to implement in full, the market will have changed beyond recognition.

So the transformation process to become an agile business itself needs to be agile and adopt the kind of modular, learn fast, fail fast techniques that are prevalent in many digital businesses. If you wait for perfection or think about it for too long, you could well enter the fatal zone of your market collapsing faster than you can transform. So its better to set off in the general direction you want to go, use agile program techniques (discussed in Chapter 5) to break down the problem into small, manageable chunks and accept from the outset that there will be changes, many unforeseen.

You must be able to accommodate change in your strategic plans without derailing the whole transformation effort.

This still means you need a clear vision of your goals and proper control and methodologies for how the project will be run. But you must be able to accommodate change as you go without derailing the entire transformation indeed it is a mistake to see transformation as something that will be completed one day. Market conditions, customers wants and expectations, competitive pressures and technological advances will make constant change essential youll never arrive because the destination will change and your goals will keep moving further out.



We look at the strategic options for service providers in the companion volume to this how-to guide, Transforming to a digital business, which is written for the CEO and executive team, and available now.

INNOVATION, INCREMENTS AND ITERATIONWe use the word transform throughout the TM Forums series of guides to mean tangible, radical change, in both the companys business goals and how it runs its businesses to achieve them. Due to the underlying fear of failure, most people persuade themselves that small, incremental steps are much more successful than radical leaps there isnt a right or wrong answer and both have their uses in transforming a company.

However, big changes will typically be made in steps, ideally with many iterations, to refine and evolve business processes, applications, services and products, and peoples roles.

Incremental is not the same as sequential, although things do need to happen in a particular sequence and getting this wrong can be disastrous. It also means that many incremental changes are managed in step, with close attention to interdependencies and to ensuring the company starts to reap business benefits as soon as possible. This orchestration and timing is where the leadership team plays a key role.

THE SWISS-WATCH SYNDROMEEvolution through incremental and continuous steps has been a very successful approach in many industries and is the basis of the Lean or Kaizen approach. This is useful for improving the business efficiency and quality of a companys products and services where the underlying business model and service portfolio are not changing radically and has been used extensively in manufacturing industry, for example among automobile makers.

There are dangers in this evolutionary approach though: Its a bit like changing a part inside a Swiss watch in order to keep it working, the new part has to fit exactly with the rest. Sure, you get a new gear wheel or whatever, but the watch continues to work in exactly the same way. Its also expensive, since



the new part, or application, usually has to be custom-built and integrated in a customized way.

The idea is to be in a position to build new products and services in a standardized way, replicating elements of processes to design new ones quickly, avoiding the costs and delays of customization. We are striving for configurability.

As we investigate in Chapter 5, standardized application program interfaces have an important part to play in linking previously separate entities, and can unlock the power of underlying systems without having to replicate them.

SUCCESSFUL APPROACHESHaving said all that, a really helpful aspect of Lean, even in a radical transformation program, is the fact that typically 80 percent of the hindrances to the agility and effectiveness process will cluster in 20 percent of that process a typical Pareto analysis. The Lean approach helps pinpoint where process and systems bottlenecks stifle agility, introduce cost hot-spots and damage customer experience. Addressing these early in the transformation program can generate big early wins, bolstering confidence, unleashing enthusiasm and investment to go further.

The Lean approach can also be used in tandem with elements of TM Forums Frameworx suite of standards-based tools and best practices (which we look at in more detail in Chapter 4). One of those elements, the Business Process Framework, was used with Lean by Telekom Malaysia. The framework enables a company to map its processes to a multi-layered model. It can also be used to design new, efficient end-to-end processes. This is becoming increasingly important when most services will be delivered through partnership and gaining visibility and control of end-to-end processes is even more challenging.

Telekom Malaysia reported substantial business benefits, from reducing fault-resolution time by 80 percent and cutting the time needed to install a new line by 70 percent, to being able to configure innovative bundles and tariffs in a week, down from three.



QUICK WINS ARE ESSENTIALDelivering a constant stream of business benefits from the transformation program is important to build confidence in senior management, typically starting with areas where results can be achieved that dont incur great upheaval and cost, but can deliver strong results. It also gives investors and other stakeholders the confidence to unlock investment and resources for more complex parts of the transformation program.

MULTIPLE OPERATING COMPANIES MULTIPLY THE CHALLENGESThe challenges of transforming into a digital business are much greater for an enterprise with a complex group of operating companies, which serve different markets and have varied product portfolios, cultures, operating processes, systems and suppliers. The group culture itself may vary from one characterized by strong central direction and control of the operating companies to one that allows for a high level of local decision-making.

CEOs must control from the center to be cohesive and benefit from economies of scale.

Transformation in this context is difficult, because it multiplies the number of transformation tasks required. Agreement on common goals and targets are harder to reach, especially as operating companies may need to work differently from others in the group: A target of handling 90 percent of bills and customer payments online through direct-debit or credit-card transactions makes sense in the U.S., but in Greece 60 percent of customers prefer to settle bills in person, with cash, at a retail outlet.

Smaller, individual operating companies often view the umbrella organization as remote, out of touch and with no understanding of local needs and issues. Building trust right across the group is essential for transformation.

The method for controlling the transformation process depends on the organization some companies mandate certain suppliers, others coordinate procurement via a committee of CIOs from the various operating companies.



Peter Sany, Chief Information & Technology Officer, Swiss Life agrees with the six critical steps that are key to becoming agile, as outlined in Chapter 1 and depicted in Figure 1-1 (see page 15), but adds some that are helpful in driving a common approach across a group of operating companies:

n Convince the umbrella groups board and CEO of the need for change, identifying the critical pressure points and a transformation program based on what the company could become, not where it is. The group CEO must endorse and support the direction, and help bring regional companies and subsidiaries into line with the program.

n Form a cross-functional, cross-regional steering group and hold workshops to create a positive platform among regional operating company executives, so that everyone shares the same goals and enthusiasm.

n Scan the regional operating companies for examples of best practices that can be implemented on a group-wide basis. This not only delivers results, but helps the regional companies feel invested by creating the understanding that it is a shared vision, not one dictated from the center.

n Centralize procurement with a relatively low purchasing threshold devolved to local executives. This ensures that major components are sourced from agreed strategic suppliers and that configurations and specifications are aligned with the agreed target architecture.

n Agree on a common implementation plan, with leadership of various component projects being distributed to individuals in different regional operating companies, to build a positive and forward-thinking approach.

n Consolidate data centers into fewer, large centers which serve multiple operating companies.



TAKEAWAYSVision and leadership are fundamental to the success of becoming an agile business and driving support for that vision right across the workforce.

Start with your customers and how you can best serve them, and work backwards from your business goals (which should be synonymous with best serving your customers) to where you are now, and then fill in the steps you need to get from here to there.

Understand that in the digital world, IT is the core enabler of your business, and identify changes you need to make so that it can fulfill its role.

Dont delay; if you wait until the company is in crisis, your chances of successful transformation are much lower.

Transformation is about a combination of steps ensuring they occur in the right sequence and cater to interdependencies is down to the executive.

Beware the Swiss-watch syndrome; use established best practices and tools in the interests of speed, reduced costs and risk. Strive for configurability, avoid customization.

Chose some quick wins so that the company enjoys a flow of business benefits and all stakeholders have increased confidence in the transformation.

Becoming agile is harder and has additional issues when a group of operating companies is involved. Centralize as much as you can but dont ignore local market conditions.

4 Corporate transformation under pressure, McKinsey Quarterly 2009. www. mckinsey.com

LEADERSHIP, CHANGING ROLES, ORGANIZATION AND CULTURE

#3.



An agile business, based on an agile operational platform of simplified and rationalized processes and systems, wont necessarily happen unless the team responsible for delivering it has the right culture and skills. The culture of corporate IT organizations has typically been biased towards a technology-centric, development-oriented approach combined with a degree of centralized control, that is, the bottom left-hand quadrant of Figure 3-1 (see page 30). Anyone who has ever seen the British TV comedy The IT Crowd5 will get the picture.

However, many factors are shifting the focus upwards and to the right to a business-oriented, customer-oriented approach and a similar shift towards user freedom. These are:

n an increased focus on customer experience and service;

n the need for more agile business models;

n integrating with partners in complex value webs;

n cloud, virtualization, consumerization and managed services;

n bring your own device, work anywhere, anytime etc.; and

n an increasing understanding by CEOs of the strategic importance of IT.



FIGURE 3-1: THE EVOLVING ROLE OF IT

Source: TM Forum, 2014

LINES OF BUSINESS

IN-HOUSE DEVELOPMENT

CUSTOMER

VIRTUALIZATION / COTS

BUSINESS FOCUS

TECHNOLOGY FOCUS

CONTROL USER FREEDOM



This shift has been underway for some time, but pressures created by a rapidly moving digital world are accelerating the change. As Businessweek put it,6 The successful CIOs profile has changed profoundly. Knowledge of either technology or the business is insufficient. In sum, the successful CIO needs an intimate idea of how current technology can increase the companys sales and not just reduce costs or improve clerical productivity.

Pascal Viginier, Group CIO, Orange concurs with that position: All of the IT teams and management within Orange have to be extremely business-oriented; extremely good at understanding the business issues and have got to be highly proficient at interacting with the business teams. They have to speak business language and never IT. I have progressively changed the way we recruit the CIOs across the group more and more are recruited with business backgrounds. Even the architects in IT have a program through which they improve their business skills.

Recruiting leaders with the experience and mind-set that chimes with the shift to the top right of the diagram is an important step in changing the culture of the IT organization.

In short, the CIO must lead a cultural, technological and investment change within the organization. The shift in technology, the supply side and the role of the company in the broader digital economy all demand that the CIO adapts to the digital world, which means balancing the four areas in Figure 3-1.

To ensure this happens and support the changes needed, the CEO must understand how the CIO fits into the structure and empower change, and also make sure that the organization around the CIO is open enough to exchange ideas and work together properly. No throwing things over the wall and running!

GET CLOSE TO THE CUSTOMERA constant theme of this guide is how IT must deliver an agile platform that meets customers needs across all channels of interaction. When systems are used by customer-facing staff, there is a buffer between the customer



and the technology, but in a self-service, self-care world, the customer interacts directly with the IT, and has high expectations of the interaction.

Neil Ward, Vice President and General Manager, Skype, understands this very well: Proximity to the customer is part of the daily routine there isnt a minute in the day when Skype isnt connected to its customers asking questions about products, product features, and policies. So, the real distinction from the traditional players is the time to market for an idea or a business case is short circuited by a factor of at least ten. Traditional players are not as tuned to their customers and have become more of a wholesale infrastructure rather than an intuitive customer play.

Actionable plans come out daily and we even have to be careful not to have too many, he continues. These are coming from direct input from customers via old channels like email but also via the community and social media. A senior executive can stop a product from being developed but has to justify why. Otherwise the product manager goes back into the infrastructure to build the product. It isnt the other way around.

If someone else can do part of the delivery better than Skype can, go source it, Ward says. Oh, and by the way, Skypes team for billing, for example, for 250 million customers is a dozen people, not several thousand.

Skype runs its $1.5 billion business with 2,500 people.

BRING THE RIGHT TEAM TOGETHER, USE NEW WAYS OF WORKINGIn an agile business, the concept of the IT function getting closer to the customer and the business demands all functions in the company move toward a much more cohesive and integrated approach, where IT is an inherent part of strategic thinking and product development. IT is the companys partner in business, not a contractor.

Peter Sany, Chief Information & Technology Officer, Swiss Life, says, In the agile approach, the outcome is more important than the structured proceedings. All of the stakeholders have to be prepared for short sprints



to produce tangible results. Moving the business forward is about putting the people with stakes in the business together, such as marketing, product sales, IT, customer service and finance. A mega-project is three to six months these days. A sprint is a month maximum.

Your product teams needs to involve all the disciplines that have a stake in it from the start.

As Sany says, the teams developing product need to come from all disciplines within the organization. Not everybody needs to be a software engineer, but increasingly all parties in this new age team need an appreciation of their aspect of business and how it dovetails with IT and technology.

As we discuss in Chapter 5, it will become increasingly difficult to do everything in-house. The opportunity that virtualization, cloud and the other building blocks bring to the table mean that sourcing all aspects of the agile IT business can become much more flexible. No longer do all systems and infrastructure need to be built in-house to address business requirements. To do this effectively, the team needs to be open to new ideas and to what innovation in its broadest terms can bring to the business.

AGILE METHODS FOR AGILE BUSINESSESIt almost goes without saying that the IT organization needs to use new, agile methodologies to produce an agile operating platform, which in turn enables agile business. Approaches like DevOps are aimed at bringing the development and operations communities together with the goal of reducing friction and increasing speed. Like many new ideas, the concept came out of the huge-scale worlds of companies like Amazon and Google, which need people to work together highly effectively and quickly.

Steffen Roehn, former Group CIO, Deutsche Telkom, says, DevOps has shifted because of cloud. Cloud is helping demystify the myth around building a large-scale high-availability environment. The traditional barriers between development and operations people have come down because of cloud.



You now take the ops people on board early in the design process and build that into the development.

Use agile methodologies to increase speed, reduce friction and mine your talent.

Hothouses and hackathons are other techniques that can deliver real business benefits by getting IT and business stakeholders together for short, sharp, tactical brainstorming sessions aimed at rapid solutions. David Moffatt, former CEO, Lebara Group, comments, Hackathons can produce unbelievably creative solutions to your problems. Dont underestimate the talent available, especially from the Millenials in your organization.

Sany adds, Use a hackathon as a small project which can generate results in weeks to show the principles. Have a software development, OTT [over-the-top] mind-set to kick it off. Then, when it becomes a little more earnest, define a vision and business-case roadmap. Dont start asking for a ton of new money; sweat it out of the budget. Keep it away from the legacy side of the organization.

BUILD A TEAM THAT LOOKS OUTWARD AND REACHES OUTSocial networks, forums and chat rooms are increasingly part of everyday life. We are beginning to see companies leveraging these communities to help solve problems. It is perhaps bizarre to think that somebody completely disconnected from the organization could answer a customers problem before it even hits any formal lines of communications but that is the reality. As with many other examples in the digital world, it is essential that your team can constantly tap into smart thinking and ideas.

The Forums online Collaboration Community is an example of how like-minded people, who dont know each other and perhaps are on different continents, can share ideas, swap experiences, discuss common suppliers and so on. This is a vital part of your team constantly learning from and developing in a crowdsourced environment. There are many other



communities, but TM Forum is one of the few not-for-profit organizations focused on transforming business operations.

CIO OR CTO OR A COMBINATION OF THE TWO?Many technology-based companies, particularly communications providers, have maintained a chief technology officer (CTO) to steer the physical technology assets such as the network infrastructure and a CIO to look after the back office. This has always been a messy split of roles; after all, the totality of the technology forms (or should form) one seamless, technology-based service delivery platform.

As we shift toward a software-oriented organization and the focus on delivering excellent service to the customer increases, this divide is breaking down, lines are further blurring, and many companies are merging the CIO and CTO roles.

Whatever the role is called, make sure its driving the IT bus to where the company wants to go.

Every company has its own organizational idiosyncrasies, but whatever the situation, the urgent requirement is to make sure that all stakeholders are absolutely clear as to where the company is aiming and what role IT has to play in that vision. If, as David Moffatt says, the CEO needs to be a master conductor: the CIO/CTO, or however that role is defined, in turn, has to bring their pieces of the orchestra in on time and in total harmony.

UNDER PRESSURE OPERATING EXPENDITUREOperating expenditure is under pressure in almost every business, but when competition is driven by sometimes seismic shifts in the market, this pressure can become extreme. Some early casualties, such as music and book stores, simply could not reduce costs fast enough to compete with digitally-supplied products and went out of business.

In the communications sector, pressure on traditional voice and messaging revenue is rising rapidly. Ben Verwaayen, former CEO of BT and Alcatel-



Lucent, believes that, CapEx should remain relatively constant as a proportion of revenue, but OpEx needs reducing dramatically: a 50 percent [reduction] has been mentioned on many occasions.

Youll have to be creative to fund transformation, but theres plenty of scope for savings.

It is unlikely that there will be pile of new money to fund transformation programs, so the CIO and CFO will need to be creative. Vodafone, Orange and Telefnica are good examples of this creativity in action often through a combination of some new money matched by cost savings on IT expenditure. This is largely from accelerating the retirement of legacy systems.

For example, Vodafone has increased operational efficiency by around 50 percent over the past five years and has shifted expenditure from running cost to investment by a radical simplification of its systems estate. Similarly, Telefnica decommissioned 1,300 systems worldwide in 2013.

DONT WAIT FOR THE CRISIS TO HITA number of CIOs we interviewed commented that a crisis had to happen to push the company into finding investment to get transformation underway. However, it is much better for companies to plan this investment before a crisis hits. Too often the temptation to make hay while the sun shines wins over planning for stormy weather. As the McKinsey & Company analysis cited in Chapter 2 shows, waiting until the company is in trouble is likely to greatly reduce the chances of successful transformation.

If savings from the radical retirement of legacy systems are typically as large as those experienced by Vodafone, and the simplicity it creates drives up agility and customer experience at the same time, why dont all companies do it? The probable answer is because there was no overriding pressure to do so. As Ilker Kuruz, Chief Technology and Information Officer, Turkcell, concludes, You have to have an aggressive software and legacy system retirement policy. Anything over five years old should be considered as legacy.



5 http://www.theitcrowd.co.uk/

6 http://www.businessweek.com/articles/2013-05-22/the-new-role-of-the-cio

TAKEAWAYSWhatever your organization calls the role(s) of the person/people responsible for providing an open platform that is sufficiently flexible to enable the business to be agile, make sure they are closely aligned with your business goals and customers needs.

Listen to your customers feedback, whether through email or your call centers or via social media and act on it.

Ensure that all the relevant disciplines in the company are involved in product development from the outset, rather than come up with an idea then expect someone outside the loop to execute it.

Look to DevOps, hackathons, hackfests and other techniques to reduce friction, speed progress and exploit the talent pool innovation can come from anywhere inside or outside of an organization.

Accelerating and sometimes seismic changes in the digital world are driving the need for agility, as well as putting your operating expenditure under enormous pressure get rid of legacy systems wherever you can to save money and create the simplified IT environment you need to compete, now and in future.

Dont wait until youre in trouble to take action transformational funding will be even harder to find and management will be too occupied fighting fires to look at the bigger picture.

HOW TO SIMPLIFY YOUR PORTFOLIO, CHANNELS AND PROCESSES

#4.


As weve said throughout, you have to start with the customer and what they want even if they dont know it yet. Many new digital products and services have emerged without an obvious customer pull at first, but when customers see something they like, it can spread like wildfire. But beware, huge and complicated portfolios, multiplied by offering them in various combinations and many versions, presents a bewildering array to customers.

Confused customers who cant figure out which is the best deal for them, and have a limited amount of time to spend trying, will probably find it easier to go somewhere else. Its the companys job to figure out what products (through an outside-in approach) they want and offer them in an easy-to-understand, accessible way, through integrated support channels.

CEOs need to recognize that less is more.

One of the first things Steve Jobs did on his return to the almost-bankrupt Apple in 1997 was massively reduce and simplify its portfolio. When Apple became the worlds most valuable brand in May 2011, an article in Forbes7 noted, Its extraordinary to think that the worlds top brand has a product portfolio that could fit on a small table.

FEWER PRODUCTS ENABLE BETTER CUSTOMER CHANNELSBy radically reducing the number of products on offer, you can also rationalize the processes and systems that support them, making it easier to integrate your channels to market. Hence a simpler, rationalized portfolio enables




streamlined systems and the opportunity to reduce operational costs while improving customer service. Whats not to like?

Simplifying, rationalizing and integrating all customer touch points so that they are consistent is generally referred to as an omnichannel approach in other words, a unified approach across all channels to market, web, telesales, stores etc. This allows customers to use all channels as and when they wish, and companies can also track customers across all channels, gaining full visibility of their preferences and behavior.

For example, digitally-smart consumers entering a store are likely to be well-informed about a products features and prices from the website, and expect store employees to know more than they do. This is not just an overlay over existing channels in an omnichannel approach, all channels work from the same database of products, prices and promotions. Merchandise and promotions are not channel-specific, but rather consistent across all retail channels.

This makes marketing more efficient with offers that are relative to a specific consumer determined by purchase patterns, social network affinities, website visits, loyalty programs, and other information gleaned from data analytics techniques. (TM Forum will be publishing a how-to guide, also for the executive team, about customer and data centricity later this year.)

THE POWER OF PROCESSIn general, the longer a company has been in existence is directly proportionate to the complexity of its processes. They have grown organically over a long period, with one imperfect set of processes overlaid on or added to other sets of faulty processes, as well as those gained from acquisitions. Complex, inefficient processes are one of the chief causes of a lack of business agility and effectiveness. As Wu Choy Peng, Group Chief Information Officer, SingTel puts it, If your business processes are agile, your business is agile.

The task is to look at core business processes end-to-end and radically simplify them wherever possible, removing non-essential steps and the effects of legacy that have built up over the years. The slimmed-down,



efficient processes have to be fully joined up across the business with duplicate or multiple processes for different products or channels to market rationalized into one common set.

Although most companies have unique business processes, the vast majority of them will not be in any way unique. After all, nearly all companies do much the same thing: They have a route to market, take orders, fix customers problems, collect money and so on. The argument for custom special business processes is usually an excuse for not wanting to change and preserving the status quo.

Sure, each country and culture has minor differences in things like tax, how customers prefer to pay and so on, but these should be configuration options in most cases, not a reason for expensive custom processes and systems.

Remember, every time you support a custom special process or task, it usually means adding complexity and cost because customized software likely will have to be developed to accommodate it. You should avoid this option wherever you can the more your processes can be normalized, the more you can use commercial off-the-shelf systems to implement them, reducing costs and complexity (as we see in Chapter 5).

It is important to appoint end-to-end business process owners who can understand the processes end-to-end, across the whole business, and who are empowered to strip away every non-essential task along the entire delivery chain and rationalize multiple process variants into one core set of company-wide process.

PROCESS AUTOMATION A DOUBLE-SIDED WINThis simplification is essential because in the digital world, customer self-care and self-service demand much higher levels of process automation, which should also reduce operating costs and, if done right, provide much improved customer experience.



Legacy systems with a web front-end do not qualify as user-friendly self-care.

As your systems become the primary interface to the customer, good design is imperative. Dont forget that most legacy systems were designed to be used by staff, not customers, and simply putting a website on the front end is almost certain to fall way short of the mark if it is masking incompatible and dirty data, and if the underlying systems are fragmented giving the customer an incomplete view of their service and contract.

From a cost point of view, your aim is to have as little human intervention in these processes as possible, relying on so-called zero-touch automated processes wherever you can. This means that the processes, systems and data sitting behind a product offering need to be linked and aligned so that customers, or prospective customers, can find their way into the systems through their preferred channel and not the preferred channel of the business.

These systems, data and processes must be as simple as possible while accommodating the complex reality of linking many services together.

NEW BUSINESS MODELSAnother major consideration when defining new processes is the need to embrace new business models. For example in Googles business model the user and the customer are different entities. The people using the search service do not pay; rather subscribers to Adwords are the paying customers.

Business model agility is important since they are often baked so deeply into a companys culture, processes and systems that change is very difficult. Communications companies run on a business model that Alexander Graham Bell would have recognized the customer pays to connect to the network and also pays to use the network. That worked fine for a hundred years of telephony, but has increasingly limited application in todays dynamic, partner-oriented market where new business models abound and revenue from phone calls is falling fast, displaced by services like Skype.



EXPLOITING READY-TO-GO TOOLS AND BEST PRACTICESTM Forums Business Process Framework, part of our Frameworx suite (see panel on page 44) defines a comprehensive set of industry-standard, efficient, clear and effective business processes critical to running any kind of service providers business. You can map your processes to it to identify gaps and duplications, at various levels of detail, and use it to design new processes, end-to-end.

Its not necessarily the case that the framework offers better processes than your existing processes, but it does offer a rationalized and simplified set of them, around which commercial, off-the-shelf systems can be procured and integrated with other conformant processes and systems in other parts of your company or in partners. Its also fully aligned with the main IT process approach called ITIL.

There is no need to live with gaps, overlaps and badly designed processes there are tools and best practices to help you change them.

The Business Process Framework has been deployed all over the world by service providers, ranging from the cable industry to cloud service providers, and telematics and digital healthcare companies. For example, Hughes Telematics Inc. (now Verizon Telematics) used the Business Process Framework to get a new system live, from scratch, in 100 days, thereby gaining an additional $30 million in revenue.

There is also considerable interest among and on-going work in the Forum with energy utilities and digital health service providers: The frameworks syntax and terminology were originally designed for use by communications companies, but it can be adopted and adapted for all sorts of purposes the first new area to be addressed was digital health in the fall of 2013.



GETTING THE MAXIMUM BENEFITSThe Business Process Framework can be implemented on its own to map and assess existing processes, and design new ones (see page 43), but to reap the maximum benefits, it is typically best used in conjunction with other elements of TM Forums Frameworx outlined below.

n Information Framework The management of services, customer experience, networks and enterprise functions demands consistency of data across an enterprise. The Information Framework provides a comprehensive, industry-agreed, structured set of definitions for the information that flows through an enterprise and between service providers and their business partners. It is a widely adopted model that is supported by off-the-shelf tools for implementation into software solutions, reducing time and effort for creating standardized integration points.

This is fundamental to the success of analytics for any purpose. If the data isnt consistent throughout its lifecycle, then were just looking at a twenty-first century version of that old computing maxim: garbage in, garbage out.

n Application Framework Understanding how your business processes are implemented in your software systems environment is essential. This Framework provides a model for grouping processes and their associated information into recognizable applications that span the service providers operations, business and enterprise management functions. It provides a common language and identification scheme between buyer and supplier for all application areas. It helps in the design of enterprise architecture through a better understanding of systems.



Sometimes its easy to forget why applications have that name. They are about how the technology is applied to carry out particular business functions. The mantra when considering how effective they are should be: What have you done for me lately? The origins of applications are the stuff of history lessons; their role should be constant improvement in terms of shortened cycles, such as faster time-to-market and meeting new needs, fast.

n Integration Framework This framework provides direction on how operational processes can be automated using standardized information definitions from the Information Framework to define standardized Service Oriented Architecture-based management systems. It also provides an automated means to create standardized interfaces and use these interfaces to integrate applications within the enterprise and with partners.

We look at the increasingly important role of interfaces in Chapter 5.

Future how-to guides from the Forum will explore these frameworks and how they can help in more detail at chief architect level and also for implementers.

CASE STUDY RESOURCESTM Forums extensive library of case studies, with details of tangible business benefits gained from using elements of Frameworx in various combinations to achieve a range of outcomes, is freely available to everyone from our website at www.tmforum.org



TAKEAWAYSRationalizing your product and service portfolio is a critical step. Your business cannot sustain the costly, cumbersome back-office systems and processes needed to support hundreds or thousands of offerings and variations of them.

A bloated portfolio confuses customers and almost inevitably means disjointed, difficult-to-use customer channels due to the inefficient flow of incompatible information.

Fewer, simpler processes and their associated applications and systems will allow you to integrate customer channels and implement much higher levels of automation, which if designed with the customer in mind, will reduce operating costs, and improve customer satisfaction and loyalty.

By using proven, evolving standards, tools and best practices, you can save a great deal of time, effort and money. Also an external, industry-standard approach is often more appealing than trying to foist an approach from one part of the organization elsewhere.

7 http://www.forbes.com/sites/carminegallo/2011/05/16/steve-jobs-get-rid-of-the-crappy-stuff/


NOTES


HOW TO SIMPLIFY YOUR INFORMATION SYSTEMS

#5.


The other half of an agile operating platform is the IT systems and applications that deliver the processes, and you need to recognize IT as being central to your transformation, not an overhead you have to tolerate. Many established IT approaches, especially legacy systems in major companies, are inflexible, with changes often taking weeks or months, which is simply not sustainable in the digital ecosystem where things change so fast. Hence, the aim is to design highly effective, but very agile, automated systems.

In the past, the IT platform was typically custom-engineered, and many companies have evolved highly customized platforms, which are too expensive to maintain and update, as well as potentially unstable when changes are introduced. They are also typically only integrated with external parties in a rudimentary way, whereas a digital business is increasing tightly interconnected with many types of partners to create and deliver services to customers, whether they are individuals or enterprises. The latter could be end customers, or communications companies, cloud providers, application providers or go-to-market partners.

PARTNERSHIPS A WHOLE NEW BALL GAMEPartnerships are a big topic on their own, and an area in which many traditional companies lack experience. Its a competence they need to develop or acquire as a matter of urgency, though. TM Forums B2B2X Accelerator Pack8 is a very good place to start; as with all the Forums work it was compiled by professionals with first-hand experience of both the challenges and possible solutions. It includes a comprehensive set of tools and best practices to enable:




n quick setup of partnering arrangements;

n efficient on-boarding of new partners through consistent, repeatable processes;

n swapping out of products; and

n evolution of partnerships.

FEWER SYSTEMS MAKE FOR GREATER AGILITYGiven the need to cut costs, increase automation, introduce simplified systems and accommodate partnerships, it is perhaps not surprising that there was a lot of consensus on the target IT architecture among our interviewees. Their views can be summed up as, From an architectural point of view, the fewer systems we have, the more agile we will be.

DEVELOPING AN OPEN ARCHITECTURETM Forums members have been working to develop a sufficiently flexible overall IT architecture in the form of the Digital Services Reference Architecture. This is a set of principles, integration patterns and open operational APIs. It is designed to provide an industry standard for best practice to enable open, interoperable, virtualized digital services through the maximum re-use of components, agile operations and scalability to meet future demands.

As more services are developed using a mash-up of existing capabilities as well as incorporating new technologies, a consistent framework is necessary for end-to-end management of these services across the ecosystem. To remain agile, the development work pays particular attention to integration to reduce customization while ensuring delivery of excellent customer experience.



The Digital Services Reference Architecture leverages industry standards and best practices, such as the Forums Frameworx suite (see page 44). It is designed to cater to multiple different business models, and builds on work in TM Forums Business Partnering Guide, which rationalizes the many different types of business models such as sell to, sell through and sell with.

As we virtualize more infrastructure and use open APIs to link formerly separate pieces together, the focus shifts to integration. Organizing and standardizing this aspect of IT opens up the power of the underlying infrastructure without having to replicate it.

CLOUD AND VIRTUALIZATION KEY PARTS OF AN AGILE PLATFORMVirtualization is a fundamental concept that must be inherent in the design of an agile business platform. As infrastructure will increasingly need to be provided on-demand and support a growing array of virtualized applications, companies need to consider their options carefully concerning which aspects of their agile platform they should supply in-house, and which capabilities they should source from partners.

Virtualization techniques originated in data centers to make the most of processing and storage assets. Through virtualization software, idle processing and storage assets typically commercial off-the-shelf products could be called upon to meet peak demands in systems they were not physically part of. As servers tend to run at about 30 percent capacity much of the time, this promised data center operators and users a massive new resource, exactly when they needed it, for little extra expenditure.

FIGHTING THE HYPEAs with any new approach, virtualization has positive and negative aspects. As Peter Sany, Chief Information & Technology Officer, Swiss Life says, You have to get to the underlying values of virtualization and location-independence, and change your underlying architectures, security systems and privacy systems. The consequences of cloud are not thought through sufficiently within many businesses. Sometimes you need a compelling and



appealing new concept to make a company move cloud can be one of the compelling enablers to initiate and support that move.

Simply having virtualized technology doesnt make you agile you need to work to gain the full benefits.

The promise of cloud technology leveraging virtualized networking, processing and storage to provide a more effective infrastructure for business has been through an enormous hype curve. Whether your preference is for a private cloud for security reasons, or public cloud for economy of scale and breadth of choice, or a hybrid of the two, your decisions still revolve around business processes, systems and workflows. Cloud is not fundamentally new; it is just the latest evolution of IT, but it does open up lots of new possibilities, as shown in the case study below.

CASE STUDY: BT LIFE SCIENCES HELPS TO FIND CURES IN THE CLOUDBTs Life Sciences R&D division recently applied principles provided by TM Forums Frameworx suite of tools and best practices (see page 44) to address the pharmaceutical industrys growing need to accelerate innovation, as well as time-to-market. This was accomplished by designing and developing a cloud solution that aids the life scientist significantly, particularly in analysis and simulation tasks.

BT for Life Sciences, launched in 2012, not only provides numerous collaborative and computational advantages to the pharmaceutical industry, but the underlying platform could also be offered to organizations in other verticals, including the financial industry, logistics and local governments.

ADDRESSING THE NETWORK PIECEA major weakness in cloud implementations has been that the network linking the virtualized assets is not as agile as the data center enter software-defined networking (SDN). This technology is evolving to enable network capacity to be turned up and down (by aggregating unused bandwidth), at will, to meet demands in concert with the demand for storage and processing. SDN and related developments, such as network functions



virtualization (NFV), are exciting new approaches that could bring significant benefits to communications providers and their customers as they are introduced over the coming years.

In conjunction with NFV and SDN, cloud offers a much more flexible platform into which new applications can be plugged, benefiting from the broader IT ecosystem. Companies are moving away from dedicated systems for particular functions and building an all-purpose, extended, digital infrastructure to support all aspects of their businesses.

THE IMPLICATIONS FOR MARGINThis is not to say that each level of the infrastructure is not vital, but as long as these are properly architected, an appropriate API can be used to allow access to the underlying resource. Hence, integration and software engineering become the focus for business agility in the future.

Monte Hong, former Head of Telecoms, Accenture, notes, There will be more use of cloud-based technology, more agility. The move to digital technology used to be best of breed or best of suite, but now there seems to be a greater willingness for the users to exploit some nimble new players based on a more agile infrastructure. This is allowing people to retire their legacy systems and build a better streamlined approach.

These developments allow players from different backgrounds to pull together functional components of services to form a business. A hosting company, a software provider and an integrator can all build a managed services offering, leveraging the underlying building blocks. It will become increasingly difficult to segment and differentiate IT suppliers in future.

Keep in mind that the cost base for different suppliers and their margin expectations will differ. Maintaining high percentage margins will be impossible. This is both an opportunity for, and a threat to, your business.



TM Forum has created a set of practical business and developer tools to help service providers and all players in the multi-cloud value chain implement and manage services that span across multiple partners. Organized as packs, these tools focus on managing service level agreements between partners8.

OPERATIONS AND INTEGRATIONHowever, if those benefits are to be fully realized, there are major challenges with the operational management and integration that need consideration. Pierre Blanchard, Head of Telecoms Practice, Capgemini, notes, As NFV kicks in, it will lead to a major architectural shift for the telecoms players.

For one thing, the volume of nodes involved will be unprecedented. Further, each of those domains will need to supply information to operational systems, in the interests of being able to offer new products and services, and great customer experience. This is just not possible through integrating many thousands of point-to-point linkages running up and down the hierarchical structure of support system stacks which is where TM Forums Zero-touch Orchestration, Operations and Management (ZOOM) Program is of interest see panel on page 55.

NEVER CUSTOMIZE UNLESS THERE IS NO OTHER CHOICEVirtualization aside, increasingly companies are deploying commercial off-the-shelf (COTS) hardware and software instead of expensive customized proprietary solutions. The aim is here is to leverage the economies of scale that COTS systems can deliver while exploiting other advantages such as being able to hire staff already familiar with popular COTS systems, leveraging supplier support across multiple countries and aiming for much simpler integration though plug-and-play standardized interfaces.

AVOID COSTLY AND INFLEXIBLE INTEGRATION TAXIntegration is very important as the level of automation of processes rises (see page 41). This is particularly true across the growing digital ecosystem where custom integration between systems starts to break down. There are potentially thousands of interfaces, many of which need to be updated manually, which is unsustainable and leads to poor agility and high costs.



USE ALL THE HELP YOU CAN GETTM Forum members are working on how virtualized network operations need to evolve to get to a zero-touch position of automated operations. AT&T, IBM, Huawei, Oracle, Orange and Telecom Italia are working to define a vision of the new virtualized operations environment and management architecture based on the seamless interaction between physical and virtual components that can easily and dynamically assemble personalized services.

In addition, ZOOM aims to identify and define new security approaches to protect infrastructure, functions and services across all layers of software and hardware, and complement on-going work within the European Telecommunications Standards Institute and other organizations.

The pressure for IT and operational agility to enable new digital service revenues and continuing demand for cost reduction makes it essential to radically rethink network, operations and service management, says Nik Willetts, Chief Strategy Officer, TM Forum. Virtualized environments can open up previously unimaginable expectations for service personalization, speed, flexibility, automation and customer centricity.

The Forum already has widely-deployed tools and best practices that can be evolved and leveraged to minimize the cost of integrating with business and operational support system environments, originally developed to lessen the burden of the integration tax in converged networks.

Assets in the areas of fulfillment, assurance and billing are applicable, along with many replicable, reusable elements of the Forums Information and Busine

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