Telecoms Pricing: Understanding the client


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John Burdass, Director of Pricing at Colt Enterprises Services, will be speaking at this year’s event, which will help demonstrate how to price data services effectively and create innovative personalised bundles that provide real value and increase margins…

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Telecoms Pricing: Understanding the client

  1. 1. Telecoms Pricing 2011    John Burdass, Director of Pricing at Colt Enterprises Services        John Burdass will be speaking at this year’s event, which will help demonstrate how to price data services effectively and create innovative personalised bundles that provide real value and increase margins…Telecoms IQ: John, its a pleasure to have you on the line. Thank you very much forjoining us.JB: Thank you.Telecoms IQ: Before we begin, would you just very kindly tell us about your backgroundand your experience in the industry?JB: Certainly. Ive been head of pricing at Colt now for five years, concentrating on thefixed-line telecommunications industry and as we move into more of the money servicesbusiness, managing that change from a price proposition perspective. Previous to Colt, Iworked in Motorola in the mobile infrastructure division as Global Pricing Manager, solooking very much at the mobile space in terms of the evolution from the second generationto third generation networks and the very dynamic customer models and pricing models thatwere at play at that time. And indeed, previous to that, to working at Texas Instruments inmobile semi-conductors. So probably a rich experience in the mobile space and fixed-linetelecom stuff that has evolved through time.Telecoms IQ: Very rich experience, thank you! John, getting right down to it, what is thecurrent outlook for telecom service providers in terms of pricing and what are the key issuesthat providers should be acutely aware of going into 2011 or beyond?JB: I think really the key one here is that the industry is changing very rapidly. This is allabout the evolution from what you might call traditional telecom services in terms of fixedvoice or fixed data into much more of a rich services-based environment. Were talking hereabout how to manage services, manage services with the traditional telecoms, outsourcing,etc. So certainly from a pricing perspective it presents some very significant challenges.Telecoms IQ      1 
  2. 2. The key one is to maintain the value of a proposition to a customer, not only in terms of froma vendor perspective, but also making sure the customers understand and value theservices that theyre then buying from a supplier or suppliers. And making sure that there isa two-way exchange there in terms of value understanding and value delivery.Telecoms IQ: Yes, good point.JB: I would say, I guess the second one there is certainly the current macro-economicenvironment which were all aware of in the daily news, but certainly at the corporate levelweve got a lot of anxiety in terms of budgeting certainly for 2011, whether it be in the Eurozone or the US. And its a given that its a tough environment out there and it really thenagain puts the emphasis on the pricing function to make sure that when were talking to – orwhen our sales people are talking to – say a CTO or whoever it may be. But again, theres avery good exchange of what value can be delivered to a customer, but also very importantly,what is it really customers are looking for, rather than just a lower price which is always agiven. But much more of a deep understanding of the customers business so that we canhelp them hopefully through these tough economic times.Telecoms IQ: Yes, good point. So, to be honest, what were seeing is a big challenge, asyou say, to determine new pricing models and I think its also that innovation is being seenas increasingly important to overcome that. How much emphasis on innovation and creativesolutions has Colt placed in this field – and how?JB: Well, ‘significant’ doesnt describe it. Its basically at board level, were now talkingabout how can we be more innovative in pricing and how that can then deliver value to thebusiness because its just not good enough anymore to price your products or your solutionsfrom a back-office perspective. You have to make sure that essentially you manage theend-to-end pricing process all the way from price creation at the very beginning all the waythrough to managing the waterfall of the customer through price negotiation and ultimatelythe pocket price that the customers paying. So certainly Colt is investing in a lot of time,money and effort into making sure that we get that right, that were doing the right things andalso critically adding value to our processes at the right stages of the negotiation in their lifecycle.Telecoms IQ: Youve mentioned looking towards the customers and their needs isessential. How important is an understanding of the client trends and developments acrossthe board in actually arriving at a decision as to which model to use?JB: I think it would be absolutely critical because when you start looking at it from asegment perspective or a customer time perspective, customers will value your services andproducts very differently even for arguably the same service. And it comes down to what isthe customer using the product or the service for, because yes, looking at it from purelya…lets say a ‘pipes perspective’ – in other words, giving us a telecom service fortransporting data information – that wont cut it. You have to understand what the customeris trying to achieve in their business environment and, therefore, allow you to have theinsight to decide what pricing model is the most appropriate. And an example of that wouldbe is the customer more minded towards an OPEX or a CAPEX pricing model? Are theyinterested in leasing? Are they looking for single-spend to manage their budgets or anextended, amortised spend over a long period of time, all of which can significantly drive adifferent approach in terms of pricing.Telecoms IQ: So youre almost working from back to front, looking at the finish line andthen taking an approach with that in mind.Telecoms IQ      2 
  3. 3. JB: Indeed. In fact, the approach weve always taken and now really driving is looking atwhat I would call, what is the customers problem commercially, and then putting that backinto the business so that were delivering essentially a package not only in terms of thesolution that were offering but also a commercial solution that bests fits our customersenvironment.Telecoms IQ: One thing I would like to get your opinion on, John: Are there any particularKPIs that providers should be employing within their strategy? And those may be KPIs thatyou feel, from your experience, are necessary or any that you feel are merelyrecommended...JB: I think certainly the necessary ones have become increasingly important is realisedmargin. Margin has always been a calculation of KPI in pricing decisions. It has to be, ofcourse. But I think as customers become more sophisticated, realised margin by anaccurate profitability analysis is an absolute key to track so that you can understand at theend of the day what you can get out of business if youre delivering effectively to yourcustomers. Second to that are the costs of a particular piece of business. Again, the sort ofhistorical approach would be to look at your individual cost components, track those, makesure theyre heading in the right direction. But, again, as solutions become moresophisticated, those costs start to interact with each other and become essentially fuzzy Iwould say in terms of how they, yes, what the actual cost is in a particular deal or a particularproposal. So making sure that in your pricing models and your pricing processes, youve gotthe best... to the best of your ability a measure of the cost of your business. Feed into thatprofitability analysis I just talked about.Telecoms IQ: Excellent. And just sticking with this theme of looking ahead and bearing inmind that Telecoms Pricing event is coming up very quickly, for your own professionaldevelopment, what one major question would you like to hear an answer to – or perhapsseveral answers to – when at this conference?JB: There are many, but I think the one on top of my agenda is really how do we effectivelydetermine what the realised value is, both from a supplier and a customer perspective?Value is a virtual thing, rather than a direct thing. Can we measure it? Maybe we cant. But,what is the best way of understanding delivered value and perceived value because that iscritical to positioning not only our price propositions but also, I guess, our overall marketingapproach to a customer at the end of the day.Telecoms IQ: Well, John, I hope that we can work towards finding you that answer or at thevery least a range of various perspectives on the issue. We will end there for today, but letme thank you very much again for your time, and, of course, we look forward to seeing youin just a few weeks from now.JB: Thank you. I look forward to the conference.Telecoms IQ: As do we, thanks.You can now register your attendance at Telecoms Pricing 2011. Email us or call us on +44 (0) 20 7368 9300.  Telecoms IQ      3 
  4. 4. IQPCPlease note that we do all we can to ensure accuracy within the translation to word of audio interviews but that errors may stillunderstandably occur in some cases. If you believe that a serious inaccuracy has been made within the text, please contact+44 (0) 207 368 9334 or email IQ      4