Counteracting complexity in the       Telecommunication industryMotivation and outlook for a management     approach for c...
Changing Playing Fields result into …Incumbents in high wage countries are facing an increasing level of complexity. Copin...
… consequences for incumbents.The increase of external complexity has proven to be a major influence on the businessmodel ...
The PastRight after the monopoly, only a limited number of product variants did exist. Thereforethe complexity level was e...
But the Changing Grounds lead to ..CSPs react on the increase of external complexity with an expansion of product variants...
#1: Complex Product Bundles and Tariffs structuresThe introduction of complex product bundles and tariffs structures incre...
#2: Increasing Process ComplexityThe cost for the provision of customer facing processes (FAB) increases with thenumber of...
#3: Increasing IT-ComplexityHighly complex software infrastructure supporting the automatization of the processexecution i...
Summary of current challenges       The consequence of an increased level of internal complexity can be further broken    ...
ConclusionFor coping with the increased internal complexity an integrated management approach isrequired, tackling the mul...
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Counteracting complexity in the Telecommunication industry

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Counteracting complexity in the Telecommunication industry

  1. 1. Counteracting complexity in the Telecommunication industryMotivation and outlook for a management approach for coping with complexity 24th June Oliver Budde
  2. 2. Changing Playing Fields result into …Incumbents in high wage countries are facing an increasing level of complexity. Copingwith this complexity requires new management approaches. External Complexity Drivers are changing the game Supply Side Demand Side Organisation Technical Device Individualization of Quality Demand Convergence Convergence Convergence Needs New player, Fixed-Mobile Multiple Use Communication becomes High Product Quality is a new types of Convergence supporting new a Lifestyle-Product, must, excellent customer cooperation on the network business consisting of intertwined facing processes layer opportunities components become essential Increasing product variety Increasing momentum Rising Complexity (=Increase of Mass and Dynamics) Seite 1
  3. 3. … consequences for incumbents.The increase of external complexity has proven to be a major influence on the businessmodel of Communication Service Providers. Implications from an increased level of external complexity Customer Migration Number of Competitors (Global Markets) Approx +50% Approx +150% Quality Revenue ? Pressure ? Pressure 1990 2000 2015 1990 2000 2015 Source: Mercer Management Group Source: RegTP, 2004 Duration of the Product Lifecycle Achievable Market Prices Approx -50% Approx -50% Innovation Cost Pressure Pressure ? ? 1990 2000 2015 1990 2000 2015 Source: Christensen, The Innovator’s Dilemma, 2003 Source: Federal Communications Commission, 2004 Seite 2
  4. 4. The PastRight after the monopoly, only a limited number of product variants did exist. Thereforethe complexity level was easy to cope with and good margins have been generated. In the good old times the product variance was limited Quantity – Price - Cost • An increasing level of product individualitation, does not go along with a proportional increase of the price Price • Complexity costs are often hidden, Cost which therefore leads to cross- subsidisation of the standard Profit products Outlier Standard Outlier Seite 3
  5. 5. But the Changing Grounds lead to ..CSPs react on the increase of external complexity with an expansion of product variants. Complexity drivers come into play and change the game Quantity – Price - Cost Complexity Driver Demand Side Cost Price Organisation Convergence Technical Convergence Device Convergence Outlier Standard Outlier Seite 4
  6. 6. #1: Complex Product Bundles and Tariffs structuresThe introduction of complex product bundles and tariffs structures increase thecoordination effort and leads to higher costs. Complexity drivers come into play and change the game • Higher Quantity – Price - Cost development cost through less scaling effects Complexity Driver Demand Side Cost Loss Price • Increasing costs for Organisation Convergence ensuring product Technical Convergence quality Device Convergence Outlier Standard Outlier Seite 5
  7. 7. #2: Increasing Process ComplexityThe cost for the provision of customer facing processes (FAB) increases with thenumber of product offerings. Complexity drivers come into play and change the game • Higher Quantity – Price - Cost training efforts for Cost customer care agents Complexity Driver Demand Side Loss Price • Increased coordination Organisation Convergence effort with external Technical Convergence parties Device Convergence Outlier Standard Outlier Seite 6
  8. 8. #3: Increasing IT-ComplexityHighly complex software infrastructure supporting the automatization of the processexecution inhibits an adaptive process management. Complexity drivers come into play and change the game • Configuration Quantity – Price - Cost Cost of already highly customized software Complexity Driver Demand Side Loss Price • Integration cost with external parties Organisation Convergence through non standardized Technical Convergence interfaces Device Convergence Outlier Standard Outlier Seite 7
  9. 9. Summary of current challenges The consequence of an increased level of internal complexity can be further broken down into four dimensions to motivate the need for action. Implications in the categories of a holistic PLM Steering Level Execution Level Product Architecture IT-Support Limited Product Long product No efficient release Inconsistent product Success rate relative to development cycle times management due to a data management in Product the high number of missing consistency of relation to the whole product ideas the product architecture product life cycle ComplexityInternal Complexity Missing capabilities to High numbers of Limited exploitation of Still inadequate manage the Products in the operating automatization potential Process-IT support for Process interdisciplinary aspect systems, due to a missing in the execution of mass executing the PLM- of PLM or incomplete processes in the process Complexity retirement management fulfillment process Limited availability of Limited capabilities to High product launch IT-Systems are steering parameters on cope with challenges in costs, due to the dominated by IT an adequate quality level the billing systems heterogeneity of IT- individualized systems, systems and their the introduction of COTS Complexity individual configuration/ has started programming Seite 8
  10. 10. ConclusionFor coping with the increased internal complexity an integrated management approach isrequired, tackling the multifaceted challenges from every angle. Integrated Management Approach Lifecycle-Oriented Portfolio Management Strategy PLM- Customer Needs Management DSS Strategic Process Management Multi-Project Determines Mgmt System PLM IT Architecture Value Chain Integration DMS Supports Process PLM- Collaboration Operational PLM Process Tools Empowerment of People WFMS Shapes PDM Product Model Architecture Product- Process Model Integration Architecture Resource Model Product Data Information Framework Seite 9

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