FedericoGermani(CH),BerndKraus(FT),AndréKrause(DU),FriedrichNeumeyer(FT),StefanSchmitgen(FT),JuergenStark(CH),SafroaduYeboah-Amankwah(CH)CONFIDENTIALPrimerDocument,Version1.0Chicago/Frankfurt,March2004Thisreportissolelyfortheuseofclientpersonnel.Nopartofitmaybecirculated,quoted,orreproducedfordistributionoutsidetheclientorganizationwithoutpriorwrittenapprovalfromMcKinsey&Company.ThismaterialwasusedbyMcKinsey&Companyduringanoralpresentation;itisnotacompleterecordofthediscussion.ITelecomCONTENTSManagementsummarySituationanddemandsonTelcoITAssessmentofexistingTelcoITenvironmentsVisionofafutureTelcoITlandscapeOutsourcingofTelcoITHowtogetstartedAppendix1: DetaileddescriptionofIT-supportedfunctionsAppendix2: Glossaryofterms2NetworkmanagementInventorymanagementDecisionsupportsystems/datawarehousingCustomercare&billingServiceprovisioningNetworkelementmanagementBackofficeapplicationsMaintenanceandworkforcemanagement

Source: McKinseyITSUPPORTOFTELCOBUSINESSPROCESSESCapacityandtrafficplanningDesignofthephysicalnetworkManagementofthenetworkinstallationEngineeringInventorymanagement...CustomercareandbillingNetworkplanningandinstallationSalesNetworkoperationServiceprovisioninganddeliveryManage/controlcorrectfunctioningofthephysicalnetworkManagetheloadofnetworktrafficMaintainnetworkManageinterfacesto3rdpartynetworks...Manage/controlsalesforceManagesaleschannelsLaunchcampaignsManageaccountsManagecustomercontracts...Manageandcontroltheorderprocessesfortelecommuni-cationservicesActivate/terminateservicesforcustomers...Rateandbilltelecommunicationservicesaccordingtopricelists,contractsand3rdpartytariffsRateandbill3rdpartyTelcoservicesMaintaincustomerrelationship...DecisiononbusinessfocusInvestmentplanningDesignofproductsandtariffschemesDesignofmarketpenetrationapproachEnterpriseresourcemanagementHRmanagementFinanceAccounting...ITsupportsallpartsofaTelcooperator’svaluechainTelcoITsystemsBack-officeadministrationStrategyandmarketingPROCESSVIEW3Backofficeapplications

Source: McKinseyOVERVIEW:FUNCTIONALITYOFTELCOITNetworkmanagementInventorymanagementDecisionsupportsystems/datawarehousingCustomercare&billingServiceprovisioningNetworkelementmanagementMaintenanceandworkforcemanagementNetworkconfigurationSurveillanceofnetworktrafficandperformanceFaultmanagementTariffandcustomercontractmanagementOrderhandlingBilling,invoicing,A/RComplaintmanagementConfigurationandsurveillanceofindividualnetworkelementssuchasswitches,multi-plexers,routers,etc.)Inventorymanagementofcustomerpremisesequipmentnetworkelements(e.g.,switches,mutilplexers,etc.)FordetaileddescriptionofsystemsandtheirfunctionalityseeAppendix1HRmanagementFinanceEnterpriseresourcemanagementManagementofmaintenanceandrepairserviceactivitiesforcustomerpremisesequipment,switchnetworkandtrunknetworkcomponentsAnalysisofcustomerbehavior,churn,etc.CustomersegmentationProfitabilityanalysisServiceconfigurationandactivation(e.g.,selectionofphonenumber,lineorSIMcardactivation,etc.)Callcollection4

Source: McKinseyCHARACTERISTICSOFINCUMBENTTELCOITSYSTEMSEXAMPLESPatchworkapplicationarchitectureHeterogeneousarchitec-turalapproachesacrossdifferentBUsNolayeredsystemstructuresSystemanddata redundancyIncompleteorunsatis-fyingsupportofbusinessprocessesPerformanceand reliabilitydriven systemoperationsReliabilitydrivensystem designattheexpenseofhighcostPerformanceoptimizationonthelevelofsinglesystemswithreducedoverallperformanceLegacyissuesHistoricallygrownarchitecturewith-outclearconceptComplexsysteminterfaces(ifany)OutdatedtechnologyDifficult,expensivesystemmaintenance5ChurnanalysisTariffplannerMarketinganddecisionsupportDatawarehouse/DatamartCampaignmanagementProfitabilityanalysisDataminingDataclean-upA/R+Billing+Contract+CustomercareBillingCust.BillingBilling+ContractBilling+ContractCust.OrderentryCustomercareA/RA/RA/R

Customercare&billingContr.Contr.

Source: McKinseyILLUSTRATIONOFREALTELCOITARCHITECTUREBackofficeapplicationsMaintenanceandworkforcemgmt.InventorymanagementServicemanagementCustomerisservedatpoint-of-saleContractisassembledbasedonstandardtemplateServiceorderisenteredintothesystemServiceisactivatedExampleofsalesandserviceprovisioning:Accesstoredundantsystemswithinonesystemdomain

NetworkoperationNetworkelementmanagementNetworkmanagementAccesstoamultitudeofsystemsacrossdifferentdomains6FRAMEWORKSTOUNDERSTANDEXISTINGITSYSTEMS

Source: McKinseyWhichapplicationsexistwithintheTelco?IssueImportanceofunderstandingFrameworksandtoolsWhatkindofsupportdosystemsprovide?Howdynamicaresystems?Whatisthetechnicaldiversityofsystems?FailuretodevelopacomprehensiveviewoftheapplicationsandarchitectureresultsinanincorrectfocusandlimitedeffectivenessWhiletechnologistsoftenunderstandtherelationshipbetweensystemsandtechnology,itistheirrelationshipwiththebusinessthatdeterminesvalueandeffectivenessThefutureviabilityofsystemsisoftendeterminedbytheirabilitytomeetchangingbusinessneeds.Stablesystemsideallyarede-coupledfromdynamicsystemsCostsforoperationandmaintenanceofsystemplatformsoftencouldbesignificantlyreducedbysharedtechnologiesApplicationinventoryApplicationmappingApplicationdy-namics/stabilityassessmentTechnologyinfrastructureanalysis43217

Source: McKinseyORGANIZATIONALDRIVERSOFTELCOITWithincreasingage,moreandmorecorefunctionsaresupportedbyoutdatedsystemsonnumerousdifferenthardwareplatformsIncreasingcompanyagecausescomplexitycostsgeneratedbyscaleeffects,multitudeoftechnologyplatforms,offeredproductsandservices,regulatoryobligations,andcomplexityofhistoricallygrownpatchworkIncreasingsizeofTelcosslowsdownspeedofdecision-makingprocessandflexibilitytoreacttochallengesIncreasingsizeofTelcosrequiresfundamentalchangeoftheiroverallorganizationalstructurewithmajorimpactontheITlandscapetomaintainoperationalefficiencyOrganizationalset-updeterminessplitofresponsibilitiesbetweencentralanddecentralITunitsandthereforeinfluencesconsistencyofITdesignandgranularityofsystems(monolithicvs.decentral)Organizationalset-upinfluencesmakeorbuydecisionsFragmentationofuserdemandandsystemownershipacrossorganizationalunitsdeterminesthedegreeofstakeholderconflictsSincetheITstructureisnotalignedtothebusinessprocesses,ITfunctionsareaccessedbyavarietyofuserslocatedallacrossthevaluechainConflictinguserexpectationsandunclearresponsibilitiesincombinationwithscarceresourcescauseconflictsOrganizationalissuesinfluencingTelcoITsystemsOrganiza-tionalageandmarketpositionoftheTelcoOrganiza-tionalset-upofTelcoITProcessorganization8ALIGNMENTOFITWITHTHEBUSINESSalignCompanyobjectives/strategyObjectives/strategyforITarchitectureNotfocusofthisworkalignBusinessunitorganization

ITorganizationalignalign

Source: McKinseyITarchitectureApplicationlandscapeTechnologyplatformsOrganizationalset-upofcompanyCoreprocessorganizationGovernancemodelKeychallenge:AlignITorganizationandstrategytocompany’sstrategicobjectivesandorganizationTargetedmarkets/customersegmentsTargetedmarketpositionProduct/servicescopeetc.WhatistherightdegreeoforganizationalintegrationordecentralizationofITfunctions?Centralvs.decentralapplicationsupportOrganizationalsplitbetweennetworkmanagementandbusinessoperationsfunctionsWhatistheappropriateITgovernancemodel?BudgetresponsibilityProcessforprioritizationofrequirementsWhatisthebestwaytoallocatethelimitedresourcesgiventheheterogeneousorcontradictingsystemrequirementsofdifferentusergroups?Howcan3rdpartieslikestandardsoftwareprovidersorsystemintegratorsbestbeinvolved?9

Source: McKinseyDESIGNCRITERIAFORAVISIONARYARCHITECTUREAlignmentofbusinessstrategyandITarchitecturetoestablishamorebusiness-focusedratherthantechnology-drivenITConsolidationofproliferatedplatformsandapplicationstore-ducecomplexityoftech-nologystacks(e.g.,hardware,OS,middle-ware,applications,etc.)andachieveeconomiesofscaleandscopeFlexible,process-orientedratherthanfunctionalintegrationofapplicationsStrictlayeringbetweennetworkmanagementandbusinessoperationstoencapsulatenetworkcomplexityandfreeupbusinessoperationsHighperformingITarchitectureFunctionalco-veragealignedtonewandemergingbusinessneedsLowoperatingcostLowcostofnewdevelopment/additionalfunctionality10

Source: McKinseyARCHITECTURALVISION:MAINBLOCKSOFAN“IDEAL“TELCOITEventprocessorOrderentry/provisioningWorkflowmanagementNetworkelementmanagerNetworkconfigurationandmonitoringFrontofficeFactoryBillingContractmanage-mentBusinesspartneradministration

Corebusinessoperations

SupportsystemsManagementinformationsystemsBackofficeapplications...

WirelinenetworkSharedservicesNetworkelementmanagerNetworkconfigurationandmonitoring

IPnetworkProductdefinitionContractmanage-mentProductdefinition

CorebusinessCustomeraccountmanagementMaintenancemanagement

Businessunit1Orderentry/provisioningWorkflowmanagementCustomeraccountmanagementMaintenancemanagement

Businessunitn......InventorymanagementNetworkelementmanagerNetworkconfigurationandmonitoring

WirelessnetworkInventorymanagement...BusinesspartneradministrationCorebusinessopera-tionsServiceprovisioningConverterandroutermiddleware(messagebroker,CDRgateway)Opportunitytoreplicateblockswithineachlayer:consciousdecisionbetweeneffectivenessandefficiency11TRADITIONALMIGRATIONMETHODOLOGIESSource:McKinsey“Patchandswap”approach“Lifeboat”approach

“Isolateandreplace”approachStandardsoftwareapproachUsestandardsoftwaretoreplaceexistingsystemsUsemiddlewaretowraplegacysystemandaddnewfunctionalityinsmallstepsBuiltupnewsystemsfromscratchandmigrateinabigbangUndirectedevolutioninhighlycomplicatedapplicationarchitecturetendstoincreasethechaosOpportunisticallyreplacesinglesystemsIncorporatesthetendencytostartmega-projectwithahighlikelihoodoffailureOvertimeincreasingamountoffunctionalitybuiltintothemiddlewarecreatesadditionallegacyOftenavailablesystemsareinflexibletomatchdynamicbusinessrequirementsandrequirehugeamountofcustomizationRisks/barriersMethodology/technique12

Source: McKinseyPRINCIPLEOFARISK-LIMITEDMIGRATIONAPPROACH(Partial)Implemen-tationofarchitecturalvision…Radical,revolutionarychangesasenablerforfurtherevolutionarystepsNoITmega-projects!EvolutionarydevelopmentwithintheboundariesofthestrategicvisionMigrationprerequisite:Definelong-termITvisionMigrationroadmapandimplementationplanRightmixofevolutionaryandrevolutionarymovesbasedontraditionaltechniques13

Source: McKinseyRISKLIMITEDAPPROACHTOWARDSTHETARGETARCHITECTUREUpfrontdefinitionoflong-termstrategyandITvisionDeveloplong-termstrategicviewoffuturebusinessDevelopviewonfuturebusinesssystemDevelop"bestfit"architecturalvisionoffutureITinfrastructureDeveloplong-termmasterplanformigrationintonewITworldOpportunisticbutdirectedmigrationpath…(Partial)ImplementationofarchitecturalvisionEvolutionofbusinesssystemandbusinessenvironmentEvolutionofbusinesssystemandbusinessenvironmentImplementnewbusinessrequirements

insmallstepsEachimplementationstepneedstobejustifiedbybusinesscase(NPVanalysis)Makerevolutionarymovethatbrings

ITclosertoarchitecturalvisionMoveonlyifeconomicalorstructuralfactorforcesyou14DEVELOPMENTOFAMIGRATIONROADMAP

Source: McKinseyStrategicvisionMasterplan…Revolutionarymove

RevolutionarymoveRevolutionarychangeofITinfrastructureEvolutionaryimplementationofnewbusinessrequirementsVisionoffuturebusinesssystem(Partial)ImplementationofarchitecturalvisionArchitecturalvisionIdentificationofbusinessrequirementsValidationandprio-ritizationofbusinessrequire-mentsBundlingofrequirementsintoimple-mentationprojectsDevelopmentoftechnicalimplemen-tationalternativesDevelopmentofprojectportfolio(timing,resources)Implemen-tationDecision:

Go/nogo

forspecific

alternative15KEYFACTORSOFSUCCESSFORMIGRATION

Source: McKinseyReductionofbusinesscomplexityInordertoavoidovercomplexityinfutureapplicationsreduceasfaraspossiblethecomplexityofthebusinesssystem(80:20)FilteroutallbusinessrequirementthatdonotclearlyfosteracompetitiveadvantageandcreatesignificantreturnoninvestmentQuickimplementationofbasicarchitecturalmovesIdentifyarchitecturalmovethatcanbeimplementedwithmanageableriskandthatcreateanmaximumamountoffreedomforevolutionarystepsEspeciallyintroducetechnologieslikemiddlewarethathelpstoreducethehandlingofsysteminterfacesSizeofmigrationstepsForeachmigrationstepchoseaprojectsizethatisstillmanageableinthelightoftheavailableskills,experience,sourcequantityandtechnicalcomplexityUnderthoseconstraintmaximisethesizeofmigrationstepsinordertoavoidunnecessaryeffortsforinterfacinglegacysystems16CONTENTSManagementsummarySituationanddemandsonTelcoITAssessmentofexistingTelcoITenvironmentsITarchitectureITorganizationVisionofafutureTelcoITlandscapeOutsourcingofTelcoITHowtogetstartedAppendix1: DetaileddescriptionofIT-supportedfunctionsAppendix2: Glossaryofterms17

Source: McKinseyHOWTOLOOKATITARCHITECTURE-OVERVIEWSituationanalysis:CharacteristicsandpitfallsofcurrentincumbentTelcoITsystemarchitectureDriversofcurrentsituationToolsforassessingaspecificTelcoITsystemarchitecture18

Source: McKinseyFRAMEWORKSTOUNDERSTANDEXISTINGITSYSTEMSWhichapplicationsexistwithintheTelco?IssueImportanceofunderstandingFrameworksandtoolsWhatkindofsupportdosystemsprovide?Howdynamicaresystems?Whatisthetechnicaldiversityofsystems?FailuretodevelopacomprehensiveviewoftheapplicationsandarchitectureresultsinanincorrectfocusandlimitedeffectivenessWhiletechnologistsoftenunderstandtherelationshipbetweensystemsandtechnology,itistheirrelationshipwiththebusinessthatdeterminesvalueandeffectivenessThefutureviabilityofsystemsisoftendeterminedbytheirabilitytomeetchangingbusinessneeds.Stablesystemsideallyarede-coupledfromdynamicsystemsCostsforoperationandmaintenanceofsystemplatformsoftencouldbesignificantlyreducedbysharedtechnologiesApplicationinventoryApplicationmappingApplicationdy-namics/stabilityassessmentTechnologyinfrastructureanalysis432119Sou壯rce杰: M公cKi析nse仿yAPPL鼓ICAT遇ION迷INVE玩NTOR脊Y1WFA/DIWFA/DOCRASSAMLATISEMACCASSGDSWirelessalertCODE5MTASLMOSClearviewCMI(TASK-MATE)FDM/AT2TNS/SARTSOPS/INENMAMTRMeasure-mentsDSFSOPTIRKSWFA/CNSDBACISApp醋lic礙ati慨onpor晨tfo取lio牛/in膝ter腦fac使ecom季ple洪xit籠yc弟aus蹲esinfl棒exib愿ilit便yan蛾dhi匯ghcost嶄of鬼supp襖ortExa昆mpl葡e:形Net寇wor密kO扶SSAppl透icat辭ioninve瘋ntor遠(yuǎn)y=步map擾show圖ingeach良app妖lica佳tion違(re匪pres督ente膽dbya述box貼)an硬din慶terf臭aces春to程alloth肉er鳴app扁lic欲ati容ons敞(r排e-pres熱ente類dby絡(luò)lin隆esbet糞wee作nb飛oxe艙s)20Sou鬧rce莫: M進(jìn)cKi伶nse橡yMAP幻玉PIN稈GO役FA鉛PPL悠ICA擊TIO奸NSSho鹿ws鮮fun億cti賠ona根lr世edu頂nda碼nci謀esDis魚pla脫ys澇div繳erg床ing滿fu渴nct朽ion銅al練cut疏sIllu洪stra墻tes貢defi孔cits地in聰appl貍icat進(jìn)ion喊conn跌ecti晉vity話on乳aco濃rpor沃ate俯leve叨l2Appl懷icat珍ionmapp變ingFunc晉tion岡almapp周ingCorepro鄭ces狼smap返pin燙gIde導(dǎo)nti映fie宜sp蟻roc嫌ess共es仔wit勉hn尼oo暫rw框eak襪ap刪pli測cat畏ion驅(qū)su似ppo賀rtLook螺sfo斜rin叨stan塘ces秒wher遍emu霧ltip悅les劫yste忍msp而erfo求rmt數(shù)hes慢ame進(jìn)task慚,re蘋dun-倍danc宗ies閑and護(hù)unne緞cess辭ary峽comp革lexi織tym依aye原xistIde雨nti自fie憐s“席sta良nda劑lon健es焰yst癢ems顫”(頁suc豎hs女yst鬧ems嗓of掠ten嘗do隔no偉ts貝upp宿ort隱re活-qu絕ire襲dc牽ros指s-f鵲unc羊tio慶nal竹in著for亮mat秀ion拾fl謀ows春)Anal春ysis師pur孫poseAna血lys暮is城pro起ced鋼ureGap

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