Organizational challenges of the convergence era
Date: Wednesday , October 31, 2007
The silent telecom revolution
The telecom industry today is going through a silent revolution and telecom networks are undergoing a sea change. Convergence is the new mantra driving this transformation. Transport is becoming Internet Protocol (IP) based end to end. The advent of the IP Multimedia Subsystem (IMS) is causing the telecommunication network’s core switching infrastructure to become access agnostic. Telecom applications are becoming agnostic to the type of device used by the end user. The net result is a telecom network that is no longer a wireless network, no longer a fixed line telephony network, no longer a broadband internet network, and no longer a VoIP telephony network. It is metamorphosing into a Converged Network that offers the same set of services to the end user irrespective of the type of connectivity the user has or the type of device that he uses. Not only that, it also promises continuity of service through the support of ‘Fixed Mobile Convergence’, even as the user becomes ‘mobile’, away from the comforts of his home.
Given the significant transformation that convergence is bringing to modern day telecom networks, it is appropriate to classify it as a ‘disruptive technology’. Yet, it is a silent revolution. Unlike the advent of the mobile technology which released the end user and his device from the tethers of the wire, there is no perceptible impact to the end user at this point of time due to convergence. Of course, the impact will be visible in due course of time. But, for now at least, the end user is unaware of the huge investments operators around the world are pumping in to adopting this new mantra. Hence, it is a silent revolution.
It is indeed remarkable that this technology-driven transformation is happening. However, innovation alone is not adequate to ensure the success of a new technology. Operational excellence and business excellence have to go hand in hand with the deployment of a new technology to ensure its success. Besides several other aspects, organizational structures play a key role in ensuring the success of a business. So, the key question here is whether telecom organizations are equipped to reap the benefits of the convergence technology revolution. Are their existing organizational structures well-equipped to address the challenges brought about by Convergence Technology, or is there a need for change? Here, telecom organizations include all elements of the value chain beginning with the Silicon vendor and including the software or middleware vendor, the Original Design Manufacturer (ODM), the Original Equipment Manufacturer (OEM), and finally the Service Provider who actually delivers telecom services to the end user.
Typically, telecom organizations today are organized as verticals centered on the type of service the network provides. Thus, there is likely to be a wireless division that addresses business related to 2G and 3G wireless networks, there is likely to be a broadband division that addresses business related to broadband data access, and then there is likely to be a fixed line telephony division that addresses the business related to fixed line telephony. If newer technologies such as IPTV are part of the portfolio, there is likely to be an IPTV division. Of course, within each of these divisions there is the likelihood of subdivisions that are based on customer segmentation into the enterprise user and the consumer user but broadly, this is the kind of verticalization one would expect in an organization.
In the era of convergence, this organization structure has several bottlenecks. The sales organization, for example, will have to deal with new types of product offerings and the value proposition will also need to be projected differently. Convergence is likely to lead to bundling of multiple services and, maybe, more complex pricing structures. For example, service providers are likely to start deploying customer premises equipment with the ability to deliver voice, video as well as data. It is obvious that a sales organization centered on selling Internet services is going to find it difficult to explain Voice over IP and Video over IP services to the end user. Similarly, consider a vertically structured engineering organization of a Tier-1 or Tier-2 OEM which has expertise in developing wireless systems. It is likely to find it difficult to architect and build a product such as a Home Wireless Gateway that includes IP routing and DSL modem functions in addition to the conventional wireless interface functions.
The new order
The next question obviously is, “What is the best way to structure the organization so that the business benefits of the convergence wave are not lost?” One possible approach is to have an organizational structure that follows the next generation network architecture. Moving forward, the network will be organized as horizontal layers rather than as vertical cores of wireless, wire line, or data network components. At the top of this layered sandwich, architecture will be the Applications layer comprising applications such as Presence, Instant Messaging, Video on Demand, Network address book and the like. The middle layer will be a session management layer comprising primarily IMS components, while an IP-based transport will constitute the bottom layer. The Subscriber and Billing Management functions are necessary but they will span across all the three layers. Accordingly, telecom organizations could be verticalized around ‘Applications’, ‘Core session management’, ‘Transport’, and ‘Subscriber Billing and Provisioning’.
Each vertical would, of course, comprise of engineering, business management, and the sales teams. Taking the Applications vertical as an example, the Engineering team focuses on conceiving and developing innovative next generation applications, the Business team focuses on defining, packaging, and pricing the new applications while the Sales team focuses on selling the new application. Every team is centered on applications irrespective of the device (mobile phone, PDA, set-top box, Laptop, and so on) that the end user is using or the access network the end user is using (WiMax, DSL, or Cable).
It is critical to have a dedicated vertical addressing the ‘Core network’. Overall costs can be optimized only if the thought process of the whole ‘Core’ vertical is agnostic to the access they are dealing with. Whether it is the service provider or the OEM or the middleware vendor, it is important for this segment of the organization to have a mindset exclusively focused on delivering applications independent of the access network. On the other hand, the Transport vertical has to deal with access networks. Access network is one segment of the Converged Telecom network that has the maximum divergence because of the wide variety of access technologies that are prevalent today (Wi-Fi, WiMax, DSL, Cable, 3G UMTS, CDMA, and so on). Therefore, having a single engineering organization addressing all these technologies does not make sense. However, a common sales and business organization within the transport vertical would help present a convergence view to the end customer despite the differences in underlying technology.
There is a need for every organization to review its current organizational structure and arrive at a structure that is best suited to reap the benefits of the convergence era. There does not exist a single formula that will apply to all organizations. Every organization will need to plough its own path to be operationally effective in delivering the best value to its customer.
The author is Assistant Vice President, System Engineering & Emerging Technologies, Aricent. He can be reached at firstname.lastname@example.org