Ip transformation beyond the boxes
Download
Sponsored Links
This presentation is the property of its rightful owner.
1 / 22

IP Transformation Beyond the Boxes (2007) PowerPoint PPT Presentation


“IP Transformation Beyond the Boxes” presented at the Marcus Evans NGN Summit in Montreux, November 2007.

Download Presentation

IP Transformation Beyond the Boxes (2007)

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript


Ip transformation beyond the boxes

IP TRANSFORMATION

Beyond the Boxes

Marc Jadoul

Montreux, 20 November 2007

IP TRANSFORMATION CENTER

Partnering for change


Read in the press

Read in the Press …

2 | NGN Europe - Montreux | 20 November 2007

All Rights Reserved ©Alcatel-Lucent 2007


Why service providers are transforming their

Why Service Providers are Transforming their Business

3 | NGN Europe - Montreux | 20 November 2007

All Rights Reserved ©Alcatel-Lucent 2007


Why doing nothing is no alternative

Why “Doing Nothing” is NO Alternative …

‘Legacy’

dominates

revenue mix

Low margins on

new services

Fast erosion of

legacy revenues

Impact on

EBITDA margins

=

+

*

Growth

Growth

~ 25 %

~ 45 %

(~ 2- 4 %) YoY

42 %

35 %

~ 75 %

Legacy

~ 55 %

Legacy

Revenue Mix

2000

2003

2004

2005

2007

EBITDA Mix

Legacy revenues

Source: service provider reports, Morgan Stanley

Low return (RoA, RoI) due to ‘legacy’ & ‘proprietary’ infrastructure.

Limited innovation capacity due to network silos & heavy processen/IT.

Market Cap

/Revenue

EV/PPE

OPEX/Revenue

CAPEX/Revenue

Traditionele telecom

service providers

< 3

< 5

> 62%

> 18%

New market players

(Google, Yahoo, eBay, ...)

> 8

> 53

< 47%

< 10%

RoA= Return on Assets; RoI = Return on Investments

EV = Enterprise Value; PPE = Property, Plant, Equipment

Source: the Yankee Group, Alcatel-Lucent

4 | NGN Europe - Montreux | 20 November 2007

All Rights Reserved ©Alcatel-Lucent 2007


The approach business transformation vs network

The Approach — Business Transformation vs. Network Upgrade

“Upgrade” approach

• Tactical infrastructure upgrades

• Unchecked/uncontrollable TCO

• Poor user experience

• Technology and operations “silos”

“Transformation” approach

• Strategic network transformation

• Cost control & investment protection

• Managed end-to-end QoS/QoE

• Global IP transformation project

Optimize for “where you have been”

Optimize for “where you are going”

Costs

Costs

QoE

QoE

OpEx

OpEx

CapEx

CapEx

Time

Time

Increased churn - ARPU erosion - margin pressure

Customer focus - ARPU expansion - margin protection

5 | NGN Europe - Montreux | 20 November 2007

All Rights Reserved ©Alcatel-Lucent 2007


The scope 1 cost optimization along the entire

The Scope (1) — Cost Optimization along the Entire Value Chain

Developing

new markets

& products

Acquiring

& managing

customers

Developing

& providing

network services

Enterprise

management

10%

31%

49%

10%

OPEX

Network

Develop-

ment

Finance &

Accoun-

ting

Mkting

and NPD

Customer

Care

Billing &

Collections

Order

Fulfillment

Service

Assurance

Procure-

ment

Sales

HR

IT

10%

5%

12%

14%

9%

8%

32%

5%

2%

2%

1%

OPEX

4%

1%

1%

2%

3%

2%

83%

1%

1%

1%

1%

CAPEX

Notes: *Global spending breakouts are an average of Europe, Asia Pacifi c and U.S. wireline carriers, and were derived from U.S. benchmarks using

total cost of goods sold (COGS) and Sales, general & administrative (SG&A). ** CAPEX breakouts are based on U.S. benchmark only.

Source: Global service provider annual and quarterly reports, FCC ARMIS Database; IBM Institute for Business Value analysis.

6 | NGN Europe - Montreux | 20 November 2007

All Rights Reserved ©Alcatel-Lucent 2007


The scope 2 convergence in network and services

The Scope (2) — Convergence in Network AND Services

Service Provider’s perspective

End-User’s perspective

+

+

+

Voice

IP

VoIP

Phone

iPod

PDA

iPhone

+

+

Fixed

Mobile

FMC

Gaming

Communication XBox360, Wii, PS3

+

+

+

Internet

Telephony

Video

Triple Play

TV

Personalization

ShareTV

+

+

+

Fixed

Mobile

ISP

Nextgen SP

Mobility

Office

Mobile Office

7 | NGN Europe - Montreux | 20 November 2007

All Rights Reserved ©Alcatel-Lucent 2007


The benefits bottom line improvement across

The Benefits — Bottom-line Improvement across Different Domains

Cash Benefit

(x1000 NZ$)

• Outsourcing benefits

• Operational cost savings

• Sales & support

• New business opportunities

• “One-off” Benefits

• Other

70,000

60,000

50,000

• Vendor reduction benefit

• NGN transition benefit

40,000

30,000

• Inventory mngmnt savings

• Depreciation savings

• Promotions

• IP edge margin retention

• DSL business penetration

• DSL consumer penetration

20,000

10,000

2002

2003

2004

2005

Source: Telecom New Zealand, Gartner

8 | NGN Europe - Montreux | 20 November 2007

All Rights Reserved ©Alcatel-Lucent 2007


What are other service providers doing today

What are Other Service Providers Doing TODAY ?

Integration of networks

to allow cost synergies

Optimization of the

network and operations

Streamlining processes

and IT systems

Number of

OSS/BSS systems

Cost synergies from

integration & transformation

Cumulative OpEx savings

€850M

>$5B

1252

>$3B

€450M

$1.1B

€150M

~50

2006

2007

2008

2005

2007

2009

2006

2011

Simplifying the product

portfolio and the

‘customer experience’

Transforming the

legacy network to

support growth assets

Focus on investing

in growth services

Broadband share

in CAPEX mix

Revenues from

new-wave services

Products in portfolio

~100

36.5 %

64%

~50

18.3%

27%

2000

2005

2005

2006

2004

2007

Source: service providers reports and analyst presentations

9 | NGN Europe - Montreux | 20 November 2007

All Rights Reserved ©Alcatel-Lucent 2007


Ip is a means not the target

IP is a Means, NOT the Target ...

Services

Infrastructure

• Portfolio rationalization

• New customers, higher ARPU

• Enhanced ‘user experience’

• ‘All IP’ network

• IMS and SDP

• Getting rid of silos !

Operations

• Time-to-market

• Cost reduction

• Processes & organization

10 | NGN Europe - Montreux | 20 November 2007

All Rights Reserved ©Alcatel-Lucent 2007


Case study an european fixed incumbent

Case Study* — an European Fixed Incumbent

Revenues (M€)

EBITDA margin (%)

3.500 €

45%

40%

3.000 €

35%

2.500 €

30%

25%

2.000 €

20%

Baseline scenario

Baseline scenario

1.500 €

Target scenario

Target scenario

15%

1.000 €

10%

2004

2005

2006

2007

2008

2009

2010

2011

2004

2005

2006

2007

2008

2009

2010

2011

Environmental impact from:

Transformation impact from:

Price erosion

Take rate

Customer churn

• Service Delivery (NGN/IMS/SDP)

• New services/bundles (VoIP, IPTV,

Multimedia)

• Network transformation (All-IP)

• Process re-engineering and NG OSS/BSS

• Competition

• Regulation

• Internal/external costs evolution

(*) business case simulation based on anonymized service provider reports, analyst data and extrapolations of the former

11 | NGN Europe - Montreux | 20 November 2007

All Rights Reserved ©Alcatel-Lucent 2007


Impact of transformation on the business results

Impact of Transformation on the Business Results

Impact on revenues

Impact on EBITDA

71%

64%

13%

6%

29%

17%

Transformation impact from:

Service Delivery (NGN/IMS/SDP)

New services/bundles (VoIP, IPTV, Multimedia)

Network transformation (All-IP)

Process re-engineering and NG OSS/BSS

12 | NGN Europe - Montreux | 20 November 2007

All Rights Reserved ©Alcatel-Lucent 2007


Some lessons learnt from this case study

Some Lessons Learnt from this Case Study

• IP Transformation changes everything

• Regain economies of scale and allow cost synergies

• User-centricity is the new paradigm

• QoS is more than ‘bits per second’

• “Less is More” and “Simpler is Better” …

• … but don’t under-estimate end-to-end complexity

• No service innovation without network capabilities

• OSS/BSS modernization goes hand in hand with BPR

• Need for a “holistic” vision and roadmap

• Migration will not happen overnight

• Internal alignment & external communication

• Each transformation project is unique …

QoE

13 | NGN Europe - Montreux | 20 November 2007

All Rights Reserved ©Alcatel-Lucent 2007


Why telco supplier relationships are changing

Why Telco-Supplier Relationships are Changing

“ As more IP transformation projects launch, their inherent

complexity will steer carriers towards closer ties with fewer

vendors. It is happening already.”

“ As time passes, carriers will invariably be drawn into closer

relationships with fewer vendors — and those vendors will

play a more active role in planning and building networks.”

Andrew Chetham, Gartner

14 | NGN Europe - Montreux | 20 November 2007

All Rights Reserved ©Alcatel-Lucent 2007


Approaches to carrier vendor partnering

Approaches to Carrier-Vendor Partnering

Leverage

partner’s

experience

for an

aggressive

roll-out

• Streamlined decision, 3rdparty

procurement, implementation

and management process

Strategic Partner

Retain

in-house

control of

multiple

projects

• Selected suppliers directly

managed by the Service

Provider

Multiple Vendors

“ With Telstra following the example of SBC and with other operators such as TNZ

also adopting this approach… [Alcatel-Lucent]’s turnkey proposition does seem

to be resonating well with a growing number of major global operators.”

JP Morgan, November 2005

15 | NGN Europe - Montreux | 20 November 2007

All Rights Reserved ©Alcatel-Lucent 2007


Benefits of a strategic partnering model

Benefits of a Strategic Partnering Model

Tech. strategy

& CapEx

allocation

Technology

selection

& planninjg

Tender

spec

preparation

Evaluate

& select

vendor

Delivery /

post-sales

support

Business

driver

need

Negotiate

& place order

Traditional Decision Process

Strategic Partnering Model

Strategic Partnering Model

Multiple Vendor Model

Benefits

Short process (3-4 months); vendor assists in

technology evaluation, rapid pilot and rollout

Long process (12-18 months) of technology

spec, tender selection, pilot & rollout

Time to Market

Integrated network with lower total cost of

ownership, low vendor management costs

Complex network, high total cost of ownership;

high vendor management costs

Network & Cost

Telco has access to Strategic Partner’s global

expertise, R&D, products, solutions

Global expertise generally not provided unless

at a cost or little incentive

Global Expertise

Pricing outcomes vary dependent on state of

market, number of competitive vendors,

incumbency

Benchmarking and risk-reward model ensures

that vendors provide attractive price

Pricing

Risk-reward model allows vendors to get more

upside

Incentives

No incentives for vendors

Vendor can work in alignment with telco to

prepare business cases and help make good

investment decisions

Good investment

decisions

Widespread deskilling in Telcos can potentially

lead to slow and poor decisions

Enables telco to focus on core competencies by

outsourcing/outtasking non-core activities to

vendor

Limited opportunity for Telco except when

functions are outsourced under contractual

relationship

Focus on

competencies

16 | NGN Europe - Montreux | 20 November 2007

All Rights Reserved ©Alcatel-Lucent 2007


Alcatel lucent s partnering approach

Alcatel-Lucent’s Partnering Approach to IP Transformation

Cross-domain

Multi-vendor

End-to-End

Business

Transformation

Network

Transform.

Service

Transform.

Consult

1

Stakeholder

Engagement

Maintain

& Operate

5

Design

2

Deploy

4

Integrate

3

Full-lifecycle

Professional Services

Prime Integrator

17 | NGN Europe - Montreux | 20 November 2007

All Rights Reserved ©Alcatel-Lucent 2007


Alcatel lucent ip transformation centers

Alcatel-Lucent IP Transformation Centers

Regional competence centers

•Business/Technology Consulting

•Network/System/Solution Design

•Network/System Integration & Validation

•Technology/Services/Subscriber Migration

•Project/Program/3rdParty Management

End-to-end hosted integration facilities

•Multi-technology, multi-vendor

•Network, CPE, IT and applications

Alcatel-Lucent IPTCs launched in Europe,

North America and Asia Pacific

IPTC’s mission: “Assist Service Providers in defining,

executing and managing their transformation journey.”

18 | NGN Europe - Montreux | 20 November 2007

All Rights Reserved ©Alcatel-Lucent 2007


Alcatel lucent iptc in antwerp belgium

Alcatel-Lucent IPTC in Antwerp, Belgium

First center of such scale in Europe

•1500 m2lab and integration floor

•50+ cutting-edge technologies (network, IT, ops, apps., test, …)

•80+ multi-domain experts (consultants, designers, engineers, …)

•End-to-end: from satellite antenna to 500 xDSL modems bank

•Can handle up to 10 large projects

Flexible integration of reliable solutions

•More than 150 km UTP cable and fiber

•More than 15000 patch ports, AC/DC everywhere

•Unique concept, no sub-floor cabling

•One ‘virtual’ lab across ALU Antwerp campus

•Secure interconnection with other ALU, 3rd party

& customer premises/network

Serving customers in Europe, Middle-East, CIS,

Africa and Central/Latin America

•300 IPTC visits since opening in September ‘06

•About 30% of customer audience is CxO level

19 | NGN Europe - Montreux | 20 November 2007

All Rights Reserved ©Alcatel-Lucent 2007


The conclusion 1 making ip transformation

The Conclusion (1) — Making IP Transformation “Predictable”

Containing costs and De-risking investments

• Shareholder-proof business case

• Scalable all-IP architecture

• Market-proof service roadmap

• The right skills and experience

• End-to-end integration

• Streamlined business processes

• Cost-effective OSS/BSS

Hidden costs

and risks !

• Overall project management

20 | NGN Europe - Montreux | 20 November 2007

All Rights Reserved ©Alcatel-Lucent 2007


The conclusion 2 ip transformation beyond

The Conclusion (2) — IP Transformation “Beyond the Boxes”

Infrastructure: reduce costs

• Strengthen IP footprint and BB coverage

• Simplified architecture, getting rid of

network and service“stovepipes”

Services: fuel growth

• Right portfolio mix

• Streamlined and redesigned

end-to-end delivery process

Operations: free up cash

• Leverage cost saving programs

• Automated processes with

optimized systems & tools

• Alternative partnership models

Transform predictably. Transform comprehensively. Transform profitably.

21 | NGN Europe - Montreux | 20 November 2007

All Rights Reserved ©Alcatel-Lucent 2007


Www alcatel lucent com www alcatel lucent iptc com

www.alcatel-lucent.com

www.alcatel-lucent-iptc.com

www.alcatel-lucent.com

marc.jadoul@alcatel-lucent.be

22 | NGN Europe - Montreux | 20 November 2007

All Rights Reserved ©Alcatel-Lucent 2007


  • Login