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Oracle approach for telecom challenges
Oracle approach for telecom challenges
Oracle approach for telecom challenges
Oracle approach for telecom challenges
Oracle approach for telecom challenges
Oracle approach for telecom challenges
Oracle approach for telecom challenges
Oracle approach for telecom challenges
Oracle approach for telecom challenges
Oracle approach for telecom challenges
Oracle approach for telecom challenges
Oracle approach for telecom challenges
Oracle approach for telecom challenges
Oracle approach for telecom challenges
Oracle approach for telecom challenges
Oracle approach for telecom challenges
Oracle approach for telecom challenges
Oracle approach for telecom challenges
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Oracle approach for telecom challenges

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  • 1. Oracle Approach for Telecom Challenges (Cost Reduction Focus) Vijay Ramaswamy Senior Director, Oracle Insight & Customer Strategy 22 November 2013
  • 2. Managing Revenue Growth While Controlling Costs Is A Huge Challenge For Telcos Revenue growth = opex growth Revenue growth (%) 14 MTS China Telecom Airtel 12 Telecom Italia China Mobile 10 8 KT America Movil 6 Very aggressive cost cutting measures due to deep decline in revenues -10 -5 4 Telenor Verizon Telefonica 2 NTT AT&T France Telecom 0 KDDI Zain Deutsche Telekom TeliaSonera BT PT -2 Etisalat KPN -4 -6 Source: Adapted from Ovum Telco KPIs – superimposed PT new KPIs on historical KPIs 2 Copyright © 2013, Oracle and/or its affiliates. All rights reserved. Confidential – Oracle and Client Restricted 5 Primary focus on revenues from emerging – sooner or later cost focus will be key 10 15 20 Opex growth (%)
  • 3. Several Of These Telcos Have Implemented Aggressive Cost Reduction Measures 7.7% reduction in Opex costs through labour costs as well as lower mobile termination rates ‘Save for Service’ project aimed at EUR 4.2 billion savings - cost saving measures including workforce reduction primarily in German operations. 6.1% reduction primarily due to exchange rate fluctuations combined with some a few cost reduction programs ‘Chrysalid’ program to control spend around EUR 2.5 billion in 4 years through best practices in network mgmt, marketing, customer relations, distribution etc Lower wages and salaries and improved adoption of M4O drove reduced Op-Ex 3 Copyright © 2013, Oracle and/or its affiliates. All rights reserved. Confidential – Oracle and Client Restricted
  • 4. PT’s EBITDA Has Exhibited A Constant Decline But Is Not Alone Among Other Incumbent Peers PT EBITDA Margins Portugal + Oi 34,7% Portugal only 44,9% 42,8% 33,3% 9M12 9M13 Industry 9M12 9M13 EBITDA average Telecom Services (B2B) Global Top 20 Telcos 55.07% 36% Source: Ovum Telco KPIs; Insight analysis; Value line Database; 4 Copyright © 2013, Oracle and/or its affiliates. All rights reserved. PT is focussed on continued efficiency improvements in order to offset the pressure on declining revenues especially within the high profit enterprise segment Confidential – Oracle and Client Restricted • Given smaller barriers to entry within the value added service provider environments, smaller players are making greater margins • For asset intensive Incumbents, its far more challenging to extract enough turnovers from existing assets
  • 5. Balancing Margins With Declining Revenues Is Tough Portugal only (In Millions) Customer growth is good given current conditions... Residential Customers Growth 3Q12 3,8 3Q13 3,9 Personal Customers Growth (mobile) 3Q12 5,8 3Q13 6,3 Enterprise Customers Growth 3Q12 3Q13 1,02 1,07 Portugal only (In Euros) But their willingness to spend as much as before is waning... Residential Customers ARPU Personal Customers ARPU 3Q12 32,0 3Q12 3Q13 32,0 3Q13 8,9 7,8 Enterprise Customers ARPU 3Q12 3Q13 23,1 20,7 Creating a greater pressure on margins given a predominantly fixed asset base 5 Copyright © 2013, Oracle and/or its affiliates. All rights reserved. Confidential – Oracle and Client Restricted
  • 6. Leisure Targets Low Bottled within individual units and can be managed as a low profile project Strategic Wins • NGN Networks • FMC Convergence Initiatives • Full blown infrastructure rationalisation & virtualisation Size of Cost Reductions Higher risk and hence senior exec sponsorship is required. Controlled change management High Several Avenues Available For PT To Address Cost Reduction Imperatives • Identification and discarding un-used assets • Signalling integration activities • Targeted motivational measures (gamification etc) Quick Wins • Phased crosschannel customer experience • Optimising traditional channel costs • Improving decision management Continuous Savings • Procurement, fleet & supply chain activities • Reducing IT maintenance costs • Process reengineering & Modernisation Low High Feasibility (Lower effort & costs) 6 Copyright © 2013, Oracle and/or its affiliates. All rights reserved. Confidential – Oracle and Client Restricted Customer touch-point operations – easy to gain sponsorship. Faster time to value Extract thick costs to release them into other areas. Lower impact on overall business
  • 7. Margin Is A 2-way Lever To Success – Impact On Revenues As Well As Costs Volume Services’ cost Workload Unit Time Service support Cost Drivers Time spent on sales Cost of sales Units sold or Retention Revenue Drivers Copyright © 2013, Oracle and/or its affiliates. All rights reserved. Retention Time to Market Price 7 Workload Upsell/Crosssell Margin Confidential – Oracle and Client Restricted Manage cost centre budgets through efficiencies Tariffs, Bundling Sales support Manage profit centres – marginal cost for every addition in revenue is low
  • 8. A Top Down Breakdown Of A Telco’s Operational Costs Will Help Determine Prioritisation Typical Telco Opex Breakdown 25%-30% • Interconnection fees, taxes, CPE etc. • Limited control over these 25%-30% • HR, IT, Finance, procurement and other back-office activities. • Reasonable potential for savings exist 50%-55% Billing 7% 12% Customer Service 10% 15% Network Infrastructure 40%-45% Opex Breakdown Sales 20% 25% Non-Process Opex Support Process Opex Operational Process Opex Quick wins Source: Deloitte, Insight analysis 8 Copyright © 2013, Oracle and/or its affiliates. All rights reserved. Confidential – Oracle and Client Restricted Network Ops & Design 18% - 23% Strategic long term wins
  • 9. Cost Reduction Can Be Achieved Across Several Areas, But A Right Balance In Prioritisation Is Important Illustrative Cost Reduction Levers • Lower cost of servicing a customer • Lower acquisition costs Network Operations IT Platform s HR Fleet, Facilitie s.. • Improved productivity of staff across functions • Improved first call resolution rates (direct impact on call centre costs) • Reduced faults across the entire Order to Provision to Cash chain • Shared service capabilities driving greater productivity for back-office • Reduce cost to market (several ways) 9 Copyright © 2013, Oracle and/or its affiliates. All rights reserved. Confidential – Oracle and Client Restricted
  • 10. Two Approaches Possible For The Role Of IT As Business Enabler To Achieve Margin Maximisation Business capability gaps determines IT Options Assess top cost buckets for the business as a whole Prioritise them against strategic goals to achieve IT Options available to address them CURRENT STATE Identify IT budget constraints and platform rationalisation needs 10 Map it against appropriate new business demand Copyright © 2013, Oracle and/or its affiliates. All rights reserved. Business & IT roadmap to achieving wins Prioritisation and IT roadmap with a balance between Business buy-in different projects IT capabilities restrict business capabilities to address Confidential – Oracle and Client Restricted Joint Execution Joint Execution END STATE
  • 11. Illustrative: Picking The Order to Cash Area For Approach To Execution CUSTOMER OPERATIONS Marketing Product Conception Fulfillment & Billing Sales Extended Revenue Chain Development Field Service Management Service Order to cash process PRODUCT Product Delivery Network Management Business Intelligence Strategic Enterprise Management MANAGE & CONTROL Financial Performance Management Human Resource Management Infrastructure Management Business Process Management TECHNOLOGY Architecture Management Information Management Source: Insight communications industry component framework 11 Copyright © 2013, Oracle and/or its affiliates. All rights reserved. Confidential – Oracle and Client Restricted
  • 12. Streamlining Order to Cash Processes Requires Several Key Capabilities Order to Cash Process Multichannels Order Capture Provision Validate & Enable Activate Invoice Collect Customer Customer Management Billing Order Capture Channel Mgmt Order Delivery Key Capabilities Superior Customer Experience (CRM) Explor e Buy Conn ect Pay Use Get Help Move Chan ge Rene w/ Term Product Design & Delivery Design of Offer Delivery of Offer CRM Delivery role of IT as an enabler to business 12 Copyright © 2013, Oracle and/or its affiliates. All rights reserved. Confidential – Oracle and Client Restricted Billing Product Fulfillment Provisioning Activation Inventory SDP
  • 13. Customer Management Each Capability Area Will Target Operational Improvements That Will Drive Cost Benefits For PT Sample Target Operational KPIs Enabling Capabilities • Unique 360 degree view of customer • Multi-channel capabilities Average call handling time • Harmonized , integrated and simplified customer processes cross-channels • Robust proactive retention and win back capabilities • Flexible loyalty program measure across products/offers Best Practice Confidential – Oracle and Client Restricted staff • Improved customer intimacy ? • Reduced customer churn 2 Number of applications in call centers • Improved Productivity of call center • Reduced cost of order management 1 integrated with CRM Copyright © 2013, Oracle and/or its affiliates. All rights reserved. ? Number of Order Capture systems • Customer scoring and profiling is 13 6.1 minutes Potential Benefits ? • Increased cross-sell rate • Reduced Opex PT - Today
  • 14. Channel Mgmt Each Capability Area Will Target Operational Improvements That Will Drive Cost Benefits For PT Enabling Capabilities • Point of service (POS) system with high reliability, performance and usability. Sample Target Operational KPIs 50% Online sales vs Total Sales • Harmonized look and feel cross-channels • Single sign on cross online services • Differentiated and personalized experience • Integrated business intelligence and RTD • Rapid time to market through unified catalogue and product hub 14 Copyright © 2013, Oracle and/or its affiliates. All rights reserved. Self service account management % of transactions over number of online visits Best Practice Confidential – Oracle and Client Restricted • Improved customer experience • Increased revenue through better ? • Integrated POS and CRM systems Potential Benefits 15% - 30% ? targeting • Increase in margins through deflecting customers through cheaper channels 30% ? PT - Today • Improved customer retention
  • 15. Key Considerations To Bear In Mind While Addressing Margin Maximisation Initiatives • Joint business & IT exec sponsorship to support strategic transformation activities Sponsor • Business Process and IT platform should be simplified to cater to future needs Simplify • Avoid hesitation to change status quo processes • Business focussed approach to streamlining processes – define success metrics Streamline • Manage cultural drivers effectively and manage change through proper communication and accountability People • Resilient and scalable support infrastructure to enable convergence around commercial as well as network functions Infrastructure 15 Copyright © 2013, Oracle and/or its affiliates. All rights reserved. Confidential – Oracle and Client Restricted
  • 16. From An Oracle Perspective We Can Help Address Issues Across The Telco Stack End-to-End Stack Potential Value Customers A Customer Experience (Sales, Marketing, Service, Social etc) Lower total cost of ownership Integration B Back Office Designed based on industry recognised standards Billing & Revenue Mgmt Service Delivery & Fulfilment C Customer Master Technical Infrastructure (hardware, Processing, Virtualisation, OS etc) Networks 16 Copyright © 2013, Oracle and/or its affiliates. All rights reserved. Confidential – Oracle and Client Restricted Vastly improved centralised control over efficiencies
  • 17. Oracle Insight Welcomes The Opportunity To Discuss With You Options In Detail And Provide Our Support Oracle Insight Composition Value Analysis Industry Experience Solution Knowledge A methodology focused on enabling greater customer business value Drives business impact by helping view technology as enablers of business value Helps build a compelling value proposition Assists with alignment with your executive team For any questions, please don’t hesitate to contact me at vijay.ramaswamy@oracle.com / Ph: +44 7825121521 17 Copyright © 2013, Oracle and/or its affiliates. All rights reserved. Confidential – Oracle and Client Restricted
  • 18. Graphic Section Divider 18 Copyright © 2013, Oracle and/or its affiliates. All rights reserved. Confidential – Oracle and Client Restricted

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