Capping IT Off

Capping IT Off

Opinions expressed on this blog reflect the writer’s views and not the position of the Capgemini Group

Vendor Sourcing: a decade of changes?

If you fell asleep at MWC in 2004 and woke up in 2014 there is a good chance you would barely recognize the exhibitors; indeed, you might think you were at a different conference altogether.

Telcos are still in the same business of operating networks and offering communication services as they were 10 years ago. But now they are doing so amid fast-evolving consumer appetite for new applications and services, demanding ever higher bandwidth. Telcos are being driven to invest in service innovation and next-generation networks against a backdrop of falling revenue growth and competitive over-the-top service providers.

As a result, they are having to reassess how they buy and deploy technology. A desire to keep services innovative and cost-effective, and to reduce the complexity of provisioning, means that many are looking to consolidate their partners and platforms. Increasingly, cloud solutions and multi-tenant IT and processes platforms will enable them to scale services cost-effectively and rapidly according to demand.

Greater customer desire for mobility is also driving sourcing trends. According to Infonetics Research, mobile operators globally will spend $79 billion in 2017 on outsourcing network tasks to equipment vendors as they try to keep Opex under control and satisfy end-users. Operations outsourcing is projected to grow at an 8% compound annual growth rate from 2012 to 2017, the highest of any service type.

Telcos need partners who can help them to deliver multiple applications and services to multiple devices across different networks, all the while ensuring quality of service and safeguarding security. Often these services will not even be owned by the Telco, but rather by a third party, so they will need to be able to manage new partnerships, too.

The industry is still working through how best to develop partnerships to harness the benefits of change. Take the right steps now to put the right sourcing and vendor management strategy in place.

For a more detailed discussion please contact me, or for further information on our Global Telecoms Practice, please visit:

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Michelle Mindala-Freeman
Michelle Mindala-Freeman
1 Comment Leave a comment
Dear Michael, I agree fully with your statement. I my opinion the first right step is to adjust the current Multi-vendor and sourcing strategy what will exploit the expected efficiency and agility potentials. This current situation is a clear consequence of a highly fragmented and specialized IT market within the scope of the Telco industries. Looking for the best solution without consideration the appreciate sourcing strategy is resulting in costs explosion, in operational efficiency and in grow of complexity than the large range of business applications and mapped IT processes require high coordination effort in purchasing and IT. In addition, not existing service catalogue and poor service level agreements (SLAs) make it complex to track, manage and control every single contribution and thus achieve the transparency automation. IT Vendor & Service Provider Consolidation is in my opinion the right way to achieve the expected efficiency, agility and costs savings potentials up to 30% in IT Service Management and Application Management alone. I personally can confirm and know an proven solution approach that the implementation of the IT Vendor and IT Service Provider Consolidation strategy reduces costs by up to 40% over the full contract period as well as automate the transparency relating to overall IT Costs, Quality, Risks, Performance and Business Value of IT Service and Application Management. Step 1: Systematic standardization and automation of IT processes and application management ( RTB & CTB ) operations resulting in benefits from economies of scale concerning the standardized, simplificated, integrated and automated service processes and tools. Alone this approach can bring by up to 20% short-dated savings. Step 2: Bundling and Standardization of Application Maintenance and Development what would facilitate the comprehensive segmentation of application landscape and reduce the complexity criticality. Defining of Service Requirements (IT and Business) for each Application Domain would be the task in this context too. This approach is resulting in reduction of Redundancies benefitting in up to 10% savings in this phase. Step 3: Allocation of Complete Processes relating to the Maintenance & Development of Business Applications and ITSM to a single Trust-IT-Service-Provider will simplify the complex process of SLAs definition, their centralized negotiation, tracking and management of ITSM and SLAs. This can bring continuous improvements resulting in up to 20% costs reduction. In this context is also possible agree some well-defined success-dependent fee structure. Step 4: Launch the Transparency Automation about the Application Performance and Management, ITSM Quality, Costs, Risk and Added Business value. This allows also the continuous TCO optimization and at the same time Budgeting, Forecasting, Planning, Financial Management and Control will be aligned with enterprise objectives. The transparency automation can for example uncover some costs saving potentials among RTB which can by moved to the CTB domain, if needed. For more information and concrete business case approach for the telecom industry can you contact me directly. Today I am working as Principal – Account Management & Business Development TME-GER-Team. My track record is based on 22 years business, industry and IT experience. Kind Regards Joerg W.

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