Transcript IBSG Knowledge Management Team Proposal Draft

TELKOM SA
Executive Briefing
April 14, 2005
Bill Brownell, Vice President
Cisco Internet Business Solutions Group
4858_04_2002
© 2002, Cisco Systems, Inc. All rights reserved.
1
Outline
• Introducing IBSG
• Service Provider Market Trends
• Next Generation Service Provider
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2
Introduction to IBSG: Capabilities
eBusiness Solutions – Customer Care, eLearning,
Outsourcing, SCM, Web Foundation, Workforce Optimization
Enterprise
Financial
Services
Health
Care
Mfg.
Energy
Retail
Public
Sector
Service Provider
Incumbent
Challenger
SP Solutions Business Planning
© 2002, Cisco Systems, Inc. All rights reserved.
System
integrator
Mobile
SP eBus and eOps Solutions
3
IBSG Areas of Focus
IBSG Programs
Drive
Revenue
Growth
SP CxO
Agenda
Drive
Productivity
Improvements
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Profitable Service
Creation
Go To Market
Effectiveness
Business
transformation
Operational
transformation
4
Outline
• Introducing IBSG
• Service Provider Market Trends
• Next Generation Service Provider
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5
Service Providers Will
Enable the 21st Century Economy
Small
Business
Consumers
$200B
$600B
• Learning and
knowledge
• Entertainment
• Mobility, convenience
• Access to customers
• Scaleable growth
• Partnering
Enterprises
$400B
• Enable the real
time enterprise
• Lower costs
• Broader reach
Service Provider
Infrastructure
and Services
$1.2T Industry WW
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6
Consumers And Businesses
are spending more on Communications
Talk More, Eat Less?
Source: OECD 2003
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7
Growth in Mobile, Data
$ Billion
1,600
1,400
Value Added
Services
(Layers 4-7)
1,200
19.5% CAGR
Layers 2-3
1,000
11.9 % CAGR
800
Mobile Voice
600
7.1% CAGR
400
Fixed Voice
200
-1.2% CAGR
0
2004
2005
2006
2007
2008
Source: IDC/Gartner/Ovum/Yankee Cisco IBSG January 2005
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8
Growth Engines
Mobile Subscribers (M)
Broadband Households (M)
2000
250
200
1500
150
1000
100
500
0
50
0
2003
2004
2005
2006
2007
2008
IP Voice over Broadband Users (M)
20
150
15
100
10
50
5
2003
2004
2005
2006
2007
2008
2004
2005
2006
2007
2008
Managed Services: IP VPN ($B)
200
0
2003
0
2003
2004
2005
2006
2007
2008
Source: Cisco IBSG, January 2005; IDC; Gartner Dataquest; Softbank
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9
Customer Are Willing to Pay
(and Stay) for Value
Security
Simplicity
Integration
Personalization
Control
Speed
Reliability
Low cost
Voice
Data
Video
Wired
Wireless
Foundational Requirements
Source: OECD Communications Outlook, 2003
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10
Challenge:
Complex, Costly Operating Models
• Market change has generated
increasingly complex hybrid
model
New networks for new services
Overlays to create integration,
bundling, and customer care
• The hybrid model does
not work
High complexity and increasing
costs, despite cost reduction efforts
Limited ability to integrate
Constrained service innovation
Vulnerable to focused competitors
10652_01_2005
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IBSG - 11
Challenge:
Intensifying Competition (US Example)
Old – Static vertical integration: Markets are generally mutually exclusive
Mobile
Incumbent Wireline
Cable
Application
Core
Access
New – Deconstructed model: Competition comes from all directions
Incumbent Wireline
Service Layer Players
(Vonage, Skype)
Cable Companies
(Comcast)
Mobile Operators
(Sprint, Verizon, Vodafone)
Source: Cisco IBSG, January 2005
10652_01_2005
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12
Traditional Revenue Streams Under Attack
Fixed Voice Market Size
$-Billions
Country
2003
2008
CAGR
USA
169
127
-5.6%
Japan
40
30
-5.6%
UK
16.9
15
-2.4%
Spain
7.2
6.4
-2.3%
Italy
12
11
-2.3%
France
14.3
12.7
-1.7%
Germany
19.5
18.2
-1.3%
Source: IDC, Yankee and Gartner, Q3 2004
10652_01_2005
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13
Regional Variations In Pace
Low
Level of Innovation
High
Low
Mexico
Germany
Price
Competition
Italy
Spain
UK
France
Japan
U.S.
General
direction of
customer
demand and
service mix
similar but
pace and
competitive
dynamics vary
Canada
High
=Less liberarilized competitive structre
= More liberalized competitive structure
10652_01_2005
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14
Outline
• Introducing IBSG
• Service Provider Market Trends
• Next Generation Service Provider
10652_01_2005
© 2005 Cisco Systems, Inc. All rights reserved.
15
Management Agenda for Most Incumbents
Keep the
Business On
Track
• Respond to
deregulation
• Limit competitive
inroads
• Get the “house in
order”
• Improve productivity
• Improve financial
performance
Grow the
Top Line
• Grow new and
existing segments;
transition to IP
services
• Manage fixed and
mobile convergence
• Become more
customer and
marketing oriented
Change the Engine
While Flying
• Reduce operating
expenses through IP
shift
• Adapt organization
• Maintain customer
quality; enhance
customer experience
• Evolve to a new
business model
Source: Cisco IBSG, January 2005
10652_01_2005
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16
Outlines of a New Model:
The Next Generation Service Provider
Service
Create and
Innovation
Partnering
Intelligent Information
Build and Operate
Network and Operations
Market,
Sell,
Customer
Service
Agent
Responsive Support
Business Processes
Dramatically change:
• Cost structure
• Time-to-innovation
• Brand value and customer experience
• Revenue and profit trajectory
Source: Cisco IBSG, March 2005
10652_01_2005
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17
Potential for Significant Profit Improvement
and Competitive Strength
50%
EBITDA
$27
$43
39%
EBITDA
$70
($95)
$230B
2004
Industry
margin
Legacy
revenue
decline
$345B
$70
Intelligent
information
network
and
operations
Responsive
business
processes
Customer
agent
Service
Innovation
And
Partnering
2008
Industry
margin
Note: Dollars expressed as billions; results displayed for U.S. and Western Europe
Source: Cisco IBSG, March 2005
10652_01_2005
© 2005 Cisco Systems, Inc. All rights reserved.
18
Customer Agent:
A Higher-Margin Customer Relationship
Services
Management
Serve as the network
capabilities manager
for the customer
Services
Reach
Extend network
intelligence to
customer devices
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Solutions
Integration
Provide tools and
services to integrate
third-party
applications
Market
Segmentation
Use brand to
offer service
packages
customized for
different markets
19
Customer Agent: NTT DoCoMo
• Offers iMode high-speed wireless data
services
• First operator to deploy 3G W-CDMA (in
2001)
• 42M subscribers
• Operating revenues (FY ending March
04) ¥5T
• Strong services reach:
Worked closely with device
manufacturers to define handset
specifications
Established content search tools
and navigation aids
Billed customers on behalf of
content providers
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IBSG - 20 20
Customer Agent: France Telecom Group
Use the best available
Network
PSTN
ADSL
@ Home
UMTS
GPRS
Users’ features
Secure
Access
Single
password
• Connection kit
• password
• Security strategy
• Users services
IT manager services
Wi-Fi public
•
•
•
•
•
•
Contract
Bill
SLA
Service deployment
Reporting
Administration services & tools
Enhance employee efficiency
with a single, simple & secure connection to the best network available
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21
Service Innovation: Top 60 SPs Getting
Traction on a Range of New Services
% Applicable
SPs Offering
2004
Growth Rate of
SPs Offering
2003–2004
% of Generally
Available
Services On or
Ahead of Plan
75%
11%
82%
62%
20%
80%
33%
Not measured in
2003
67%
52%
26%
76%
58%
65%
83%
61%
27%
68%
Enterprise
Mobile Office
Layer 3 VPN
Broadband
Video
Metro Ethernet
Broadband
VoIP
Managed
Security
Source: Cisco IBSG, March 2005
© 2005 Cisco Systems, Inc. All rights reserved.
IBSG - 22
Service Innovation:
Gaining Share of Wallet--Equant
Built a broader VoIP portfolio
based on a strong MPLS VPN
base
Enhanced
Voice
• Managed End-to-End solution
IP PBX
• VPN service with Quality of
Service
VoVPN
• Simple Migration Path from
traditional telephony to VoIP
CoS
QoS
• Broad LAN & WAN support
– Consulting
– Deployment
– Maintenance
Security
MPLS
VPN
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IBSG - 23 23
Innovating with Others: BT Rich Media
• BT Rich Media aims to be a
“one-stop enabler for the
distribution of content”
• Hosting and distribution =
premium performance
connectivity:
“BT Rich Media allows you to
create new opportunities from
your existing content … through
the ability to multicast, stream
and download to many
channels.”
• Web-services-based billing and
customer care
© 2002, Cisco Systems, Inc. All rights reserved.
IBSG - 24 24
The Factory: Intelligent Information Network
and Operations
Modular service
construction
Communications
Intelligent IP
infrastructure
Entertainment
Online
IP network (policy, QoS, security, multicast …)
Integrated, service
component
“factories”
Other
networks
Fully
extended
services
Operations
Need extensive horizontal scale to manage
billions of IP-addressable devices
Operating Expense
Savings
Network operational cost
Central office expense
Shared services
Outside plant
Customer service
40–60%
20–40%
15–30%
5–10%
5–10%
Source: Cisco IBSG, January 2005
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25
Telecom Italia: NGN
Operations expenses decline
through converged core
Total Wireline CapEx:
Innovative vs Traditional
Total Fixed Network OpEx
100%
100%
80%
80%
60%
60%
40%
40%
20%
20%
0%
0%
2002
2003
Traditional
2004
2002
2004
2006
Innovative
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26
Responsive Business Processes
Streamlined,
automated
business
processes
Customer
Care
Idea
to
Offering
Employee
Automation
Market
to
Order
Supply Chain
Quote
to
Cash
Forecast
to
Delivery
Issue
to
Resolution
Support the Business
Web
servicesbased
applications
Shared
serviceoriented IT
infrastructure
Applications
WS
WS
WS
WS
Abstraction layer
Shared
computer
services
Shared
storage
services
Processes time reduction
Employee productivity
Customer satisfaction
Source: Cisco IBSG, January 2005
© 2002, Cisco Systems, Inc. All rights reserved.
WS
WS
WS
WS
Limited
dedicated
capacity to
help ensure
real-time
operations
Dedicated
computer
services
Third
parties
Web
services
interface
Dedicated
storage
services
25 – 50%
20 – 40%
>20%
27
Automated, Customer-Focused Solutions
Capabilities of BusinessDirect:
• Pay bills electronically
• Place voice, data, and IP orders
and check status
• Report and track service problems
• Test circuits
• Reroute network traffic in real time
Results:
• Order-to-bill-cycle time reduced by 50%
through unified Web portal
• One-third of all trouble reports managed
on Web
• 18% increase in employee productivity
• 80% maintenance issues automated
• 60% increase in customer satisfaction
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28
Making the Move
• Approach the process as a broad, synchronized business
transformation
• Adopt a customer-centric perspective
• Focus on productivity and value improvement, rather than
cost reduction
• Use a strong leadership strategy. Help ensure business units
work together, silos are removed, and business goals are
achieved
• Develop a clear roadmap
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29
Pace Depends on Situation
Evolutionary
(7–10+ years*)
Most appropriate for service
providers with
• Little or no competition
• Limited capital
• Slowly developing service
markets
Business Impact
• Conserve capital
• Minimize risk of customer loss
• Avoid start-up OpEx cost
OR
Accelerated
(3–5 years**)
Most appropriate for service
providers with
• Intense competition
• Capital availability
• Rapidly developing service
markets
Business Impacts
• Maximum OpEx savings
• New revenue generation
• Platform for profitability
NPV* gains 15–20% greater
than evolutionary approach
© 2002, Cisco Systems, Inc. All rights reserved.
*Net present value
**Estimated time to convert 80% of service revenue to IP
30
Cisco Helping Service Providers to
Transform
The All Digital
NGN for Cable
Core for
IP NGN
Enabling 3G
Services
PSTN Migration
to IP NGN
Broadband for
Triple Play
Largest
MPLS/Metro E
Deployment
MS Edge+Core
for IP NGN
Biggest Broadband
Metro E for Triple
Play
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© 2002, Cisco Systems, Inc. All rights reserved.
32