Creating Value from Voice Communications
© 2002 - 2010 IT ServiSource. All rights reserved.
We hope to demonstrate a unique, yet comprehensive approach to the management of Voice Communications and the associated benefits to Your Organisation.
There are 5 key questions that any organisation should seek to answer:
Have you reduced you overall expenditure in the area of Voice Communications by at least 30% in the last three years?
Have you received regular rebates/credits from Telkom over the past 3 years?
Has your Telecommunications cost reduced or at least remained in line with business growth, consistently over the past 3 years?
Have you identified fraudulent activity on your network? And has Telkom refunded your for this?
What is you total cost per deployed instrument? And how does this compare against other companies?
Our approach will ensure that Your Organisation are able to address these questions in a manner that reduces Operational Expenditure in the area of Voice Communications, and provides a platform for managing this environment more effectively, and efficiently, in the future.
We will also demonstrate an approach that we believe fosters a true win-win approach to providing services and the financial implications thereof.
1. Background
The South African Telecommunications market is pre-eminently defined by the structure of licensed Telecommunications operators and the legislation surrounding this structure. With the delayed announcement of the SNO and speculation surrounding a fourth cellular operator, Telkom, and the three established Cellular operators are not only scrambling to protect their market space, but each are stretching ICASA regulation as far as possible to encroach upon one another’s markets. The number of legal interventions that have taken place over the past few years between the parties is testament to this situation.
The introduction of rebate systems and discounting by the major telecommunication suppliers has led to a lack of management control which in turn is causing business to reduce focus on these operational expenses.
The current state of Supply and Consumption, of Voice Communications Services and Products on South Africa presents an industry that has very little in the way of local benchmarking. Cost to the consumer is therefore not comparable to any local market. Given the increase in the size of the market over the past few years and the advent of ‘new’ service offering and the rate at which these are being offered, it stands to reason that costs are out of control in this area of business.
Given the state of Fixed Line voice communications, the advent of cellular technology, and the structure of Telecommunications Vendors supplying products and services, organisations in South Africa can reduce operational expenditure associated with Voice Communications by at least 30%.
Due to the this monopolistic market, combined with the length of time required for any ‘new-entrant’ into the market to establish any form of competitive offering, organisations will continue to increase expenditure in Voice Communications, doing only what is absolutely necessary to keep costs in line with expected economic measures of increase.
Voice Communications are regarded as a Utility Service by most South African organisations, and as such are regarded as a necessary operational ‘evil’ that means they only receive obligatory organisational control and financial focus.
Give this background and current state of a Utility market, Corporate Consumers should focus on a number of key strategies with respect to managing its consumption of products and services, and associated costs in this area of business:
- Flexibility in operational structure is vital. Long Term vendor agreements must be avoided where possible.
- Intervene directly wherever possible. Establishing direct vendor relationships that are value based, as opposed to re-sellers and agents.
- Manage diversity. Develop methodologies and invest resources in managing a multi-vendor environment.
- Exercise control. Redirect operational expenditure to create value.
Finally, the ICT (Information and Communication Technologies) by its title, more than by its expertise, experience or focus has claimed to manage Information and Communication technologies and services in a unified, or seamless manner. Whilst this may true in some highly developed markets it is not true in South Africa.
The Telecommunications industry comprises a number of niche Organisations that are exclusively Carriers, Second Tier Carriers (Discounters) or Equipment Suppliers. Telkom in its own right has spawned an entire industry that focused on delivering products to a single client.
Given this scenario, the ICT industry only exists through association in South Africa. Many specialist IT organisations have started introducing Communications Technologies to their portfolio through agreement with international vendors. Many specialist Telecommunications have started introducing IT services in an attempt to diversify their business interests. Finally there is the concept of convergence of IT and Communications technologies. ‘Voice-over-IP’ (VoIP) has been an accepted technology for many years now. Yet the solution behind the Technology has never quite found the market it expected – and nowhere is this more evident than within South Africa.
Voice over IP (VoIP) will not necessarily bring the cost reductions companies expect says Gartner analyst Neil Rickard. He warned that companies considering putting in VoIP applications over their networks could run into bandwidth constraints even though they presently feel they have the capacity. “There is no such thing as free bandwidth. One simply has unused capacity. The problem is that if VoIP is deployed into that extra bandwidth space and then another application is also deployed, the bandwidth costs increase incrementally and the original reason for cost savings disappears.”
2. Executive Summary
Unlocking excessive Operational Expenditure and increasing Return-on-Investment
Whilst Telecommunications, and in particular the Voice aspect of Telecommunication, are an irreplaceable, and in some respects and invaluable function of business, most organisations can do something about managing the cost of these services more effectively.
By virtue of the fact that organisations and management have tended towards the attitude that telephony is a Utility service; the associated costs are treated in the same way. Included in these costs, which are essentially sunken Operational Expenditure, there normally exists a fair percentage of excess. This excess cost will have been introduced over a long period of time and is usually a result of the manner in which the Telecommunications Vendors have delivered services and products, and the manner in which the organisation has treated these expenses.
Given the background of Voice Communications and Telecommunications in South Africa, most organisations can optimise the balance between business need, value and cost of these requirements. A Voice Communications Strategy and Service that correctly sub-optimise these organisational resources will create value within the enterprise.
It is a well-documented fact that Telkom costs are of the highest in the world. Add to this the fact that they are the only fixed line operator in South Africa, it then becomes clear that their costing structure has a direct impact upon the costs of other Telecommunications services. For example, Least-Cost-Routing is a service that has become synonymous with Cellular networks and in particular cellular-to-cellular calls. Yet the concept itself is not new and has many other applications beyond cellular that organisations are not aware of. Yet one of the direct pitfalls of implementing Cellular Least-Cost-Routing is the escalation of the cost of cellular calls due to an increase in volume.
In contrast to the Monopolised Carrier segment of the Telecommunications market, is the fragmented Voice infrastructure and services segment. There is an abundance of vendors ranging from global organisations to niche service vendors that make up the balance of the market. The manner in which infrastructure, services and solutions are deployed into business demonstrates this very lopsided market structure.
ITSS has developed a number of methodologies and services that form part of a comprehensive Voice Management Strategy aimed at restructuring the manner in which an organisation engages the services and products supplied by the Telecommunications market in a manner that increases value, and decreases cost.
Unlike many other vendors who are quite capable of assessing communication cost in selected areas, our methodologies not only assess all associated communications costs but also deploy services and processes that actually reduce cost and then manage these on an ongoing basis.
The ITSS approach is therefore focused on unlocking excessive Operational Expenditure and allowing the organisation to re-deploy this expenditure in areas where it will gain greater return on investment.
ITSS will assist Your Organisation in re-structuring its Voice Communications Service, deploy a proven Voice Management Strategy and reduce overall the Operational Expenditure (OPEX) associated to voice communications and possibly the Capital Value of assets deployed into its environment.
What we hope to illustrate in this proposal is our unique approach Voice Communications Management. This approach is recommended on the basis of what we have the experience of deploying these methodologies at a leading SA retail company with over 700 separate stores countrywide.
We will highlight how and why the ‘traditional’ approach Voice Management Services is both less effective and expensive for all parties concerned and illustrate our competence and experience in reducing capital and operational expenditure on Voice Communications while improving the technology and service to the business at the same time.
We will also highlight the commitment and synergies the consortium delivers to true broad based Black Economic Empowerment as joint partners. ITSS will take on the role as prime contractor and ITSS as a sub contractor.
3. Scope of Service
ITSS propose a Service Integration approach to Voice Communications rather than a traditional Consultancy approach to these services. The implications of this approach being:
- Our clients are positioned to engage directly with the key industry vendors, thus removing the middle organisation layer of re-seller/agent, and thereby reducing capital and operational expenditure requirements.
- All reductions and/or rebates in operational expenditure are passed onto our clients in full.
- All solutions implemented will either lead directly to reduction in operational expenditure, or to improvements in the use of existing assets or expenditure.
- This approach ensures that maximum value is created from the collective operational and asset base within Voice Communications environment.
ITSS has developed a set of methodologies that can be implemented in order to ensure that the above takes place.
© 2002 - 2010 IT ServiSource. All rights reserved.
These methodologies, as represented in the diagram above, have been developed
to ensure that maximum Return-On-Investment is attained through an appropriate
amount of organisational effort. ITSS will deploy these methodologies
through a structured Project Management approach that leads to the establishment
of ongoing Management Process for the continued maintenance of the activities.
3.1 Establishing a Voice Communication Strategy
Key to restructuring Voice Communications to ensure improved OPEX deployment
is the strategy that guides the structure of corporate Voice Communications.
ITSS will assist Your Organisation in defining and deploying a Voice Communications
Strategy by implementing a transformation methodology.
© 2002 - 2010 IT ServiSource. All rights reserved.
This methodology will ensure that the future strategy that guides Voice
Communications is structured around the key concepts of:
1. Consolidation
Consolidation covers a number of different elements. One of the key elements
is the Vendor environment. All services and products deployed in the Voice
environment are likely to be fragmented, including those provided by Telkom.
The net result of this fragmentation is disparate spending which implies
that costs are excessive in certain areas.
Consolidation will not be limited to the vendor environment alone, and
will cover amongst others the following elements:
- Billing and billing systems
- Architecture and technology platforms
- Charges required in the physical environment
- Internal management controls and systems
2. Ownership
Whilst Voice Communications remains fragmented from a business ownership perspective, so too will its use, as well as organisational and operational decision making be fragmented. As the overall objective of the methodologies implemented is to structure the service and release OPEX back into the business, ownership of the strategy, and management control, is key to determining how OPEX is redeployed.
Whilst this element of Ownership is key, there are other areas in which ownership will be a result of transformation and the eventual strategy. These include:
- Policies and process
- Architecture
- Vendor management
- Procurement
3. Centralisation
A decentralised Voice Communication strategy and structure is one of the factors contributing to excessive and uncontrolled expenditure. Combined with a highly fragmented Telecommunications Industry, a decentralised structure cannot ensure efficiency or effectiveness in the deployment and use of infrastructure and services. Needless to say, this only leads to inflated and uncoordinated cost. Further more, ownership without centralisation is not management but rather custodianship. Centralisation therefore applies equally to Ownership, and visa versa.
4. Optimisation
Quite arguably a result of the previous three, that once implemented will ensure the basis for an accurately optimised structure through balanced sub-optimisation of the three previous areas. Without optimisation, costs reduction and containment will not be possible and OPEX will remain unstructured and locked up in a inefficient environment.
3.1.1. Managing Transition
The value that ITSS bring to Your Organisation is in the manner in which this transition takes place and how the service is structured post transformation. There are essentially two approaches that can be adopted when establishing a strategy that deploys the key elements mentioned above.
1. Fixed Project
2. Shared Risk / Shared Reward
Should you wish to enquire about our unique Voice Communications Management Services, please send us an eMail.