By: Becky Bracken
Cost compression is the name of the game.
Increasingly IT department heads are being drawn into solving fundamental business issues and focusing on areas of innovation. Rather than just deployment and maintenance, IT needs to support and enable innovation across all business centers. Technology is shifting from a business tool, to a fundamental business enabler. As a result, IT resources are becoming increasingly valuable and finite.
"There is no easy answer," Mike Phelan, CEO of SevOne, a leading provider of performance management solutions says. "Telcos and enterprises are under enormous pressure to drive down costs while facing increasing complexity and competition."
This couldn't be any truer for the battle-worn CSP sector. Much of that pressure is cascading down to CIOs and CTOs, forcing them to make tough choices about the future role of in-house IT.
A recent report released from Oracle and PricewaterhouseCoopers titled "Rethinking IT strategy...Can it enable a step change in Communications Service Provider Performance" indicates outsourcing of IT will continue to grow over the next three years across the globe. PwC was commissioned by Oracle Communications to survey a mix of 30 communications CIOs, CTOs and senior IT executives in ten countries within the EMEA region. Forty-five percent of respondents provided both mobile- and fixed-line services. The rest of the respondents' organizations were split between either a mobile provider only (32 percent) or a fixed-line provider only (23 percent). "Outsourcing will continue to grow in the next three years across all functional domains with the exception of portal and content applications," the report says. "This is true for Western Europe, Russia/Eastern Europe and Middle Eastern respondents."
The report indicates that billing and mediation will increasingly be brought in-house so that CIOs can stay in touch with these kinds of activities, and the data it yields, that will continue to shape their business. The data that billing and mediation generate alone can be a significant bottom-line differentiator. Self-service, pay-as-you-go customer interactions are going to help drive customer acquisition and retention. Focus on mediation allows providers to get the most out of networks and helps identify and service the most lucrative customers. These are the business issues in-house IT departments will turn toward, leaving other functions to outsourced providers and COTS solutions.
Ninety-five percent of those surveyed say they plan to increase their use of COTS solutions in 2012, which can be delivered quickly and under budget. In fact, the report says that 52 percent of COTS applications are delivered under budget. Eighty-eight percent of CIOs also plan an upgrade of their CRM systems in 2012. This is a significant about-face from the built-it-ourselves approach that permeates the culture of most IT organizations. IT departments are increasingly looking toward legacy, standardized solutions from outside the organization so that in-house IT departments can focus on innovation and differentiating services.
