The changing dynamics of Operator and Managed Service Provider relationship

The role of the managed service provider is increasingly becoming important as operators look to new avenues for “rationalizing costs” without “sacrificing customer experience”.

The thrust towards cost rationalization has emerged against the backdrop of fluctuating customer demand, escalating costs and the rapid obsoletion of technologies which has led to an increase in operator risks without any corresponding increase in their reward (evident from GSMA Intelligence which reports an increasing divergence between revenue and network traffic.)

Meanwhile, the demand for data continues to increase rapidly, day-by- day, due to the proliferation of smart connections — devices as well as data hungry mobile applications. Under these circumstances, operators have no other choice but to continue to roll out high-speed networks, like LTE, and look to managed services for cost rationalization.

However, increasing customer expectations, various competitive pressures as well as the poor perception of the operator in the eyes of the customer are driving operators to go beyond “cost rationalization “while defining their relationship with their managed service providers.

How has managed services developed over the years?

The “managed service” model has been around for many years now. In its earlier form, it was on a “break/fix” basis where you called in the outside expert if you had a problem with your computer. The solution or “fix” was usually provided for a small fee.

The early 2000s saw the emergence of managed services contract. The stress was on providing proactive services rather than reactive “fixes”. Instead of reacting to an “escalation” that needed an immediate “fix” the focus was on identifying “bugs” or “holes” in the systems that could compromise performance in the future.

This coincided with the rise of new approaches to servicing like “just in time” management which received widespread support from the industry, as well as from CEOs, like Jack Welch of GE. Instead of hiring technical support personnel directly on the payrolls of the company, the services were outsourced leading to cost savings.

The genesis of managed services in telecom probably lies in the recession of 2008 and the telecom bubble of 2001. With markets in doldrums and with no signs of revival in the future, telecom operators were looking for cost optimization opportunities to offset the huge investments in building capacity and networks. The focus was firmly on reducing costs. This was achieved by outsourcing network and operation costs to domain experts.

What is it today?

Today the role of the managed service provider has evolved from creating a network and operational efficiencies to creating value for customers.

Why is it necessary?

The shift has become necessary against the backdrop of customer’s poor perception of the operator.

The customers are comparing operator’s standard of service against the benchmarks set by companies like Amazon and finding them to be woefully short.

The level of customer dissatisfaction that has crept in telecom services is such that the customer would rather switch to another service provider rather than wait for “another five minutes” in a customer service queue.

The challenge before the operator is to reduce churn by providing reliable and easy-to-use products and services. This includes an easy interaction with the company in question, quick problem resolution and a pleasant experience overall.

How is it done?

With the specter of “customer churn” looming large, operators are bringing in the expertise of managed service providers to manage customer experiences.

The goal is to put the systems in place that would help the operator to track, oversee and organize interactions with customers throughout the customer lifecycle for increasing customer retention and adding a new customer with word of mouth advertising.

To achieve this end, telecom operators must focus on creating an omnichannel experience, use data to obtain a holistic picture of the entire customer relationship, invest in first contact resolution and identify high-risk-and-value customers.

However, as reported by Analysys Mason operators are two years behind OTT service providers as well as Large Internet Players like Amazon and Facebook when it comes to leveraging technologies for understanding customer sentiments and requirements.

Managed service providers, with their deep, understand of network operations and big data analytics can fill the gap seamlessly allowing the operators to provide best in class customer experience as well as contribute to the top line and bottom line growth.

What are the strategies?

Creating a holistic view of the customer

Since the operators own the network pipes carrying customer data they are in a unique position to understand their customer’s needs and requirements better than anybody else.

For example, a simple text classification engine can be used to process massive amounts of feedback, and discern customer sentiments. Besides customer sentiments, analytics engine can provide valuable insights by highlighting problems with the product price, quality or service.

Managed service providers with their expertise in big data analytics can leverage operator’s data pipe to create a holistic view of the customer.

Improving first-time resolution rates

One of the reasons why first-time resolution rates are so poor is the lack of a single unified view of customer’s usage data across products and services.

Convergent billing systems not only provide a unified view of customer’s usage and data but it also helps the operator to design product offerings according to customer’s usage history.

“Convergent billing systems” provides customer care agents a single unified view of customer’s usage and history which goes a long way in improving first-time resolution rates.

Managed service providers are driving “convergent billing systems” by managing OSS/BSS transformation.

Retaining “at risk consumers”

Last, but not the least, dormancy scoring models using various parameters like usage data, customer’s time on the network, on/off times can be used to pinpoint “at risk customers”.

These customers can be targeted with retention campaigns taking into account their usage and history.

Managed service providers are leveraging their deep expertise in networks as well as real-time analytics to drive contextually driven marketing campaigns to “at risk” customers.

Where is this relationship headed?

Opportunities exist for managed service providers to take a strategic role in the evolving operator — MSP relationship and help the operators to unlock the full potential of their business.

According to Informa telecoms & media, smaller CSPs are heading towards convergence with a single managed service provider handling various network and service related functions. This may be because smaller operators will find it difficult to handle multi-vendor contracts.

As MSPs evolve, operators will expect them to take up increasingly complex roles and responsibilities of service quality management (SQM) and customer experience management (CEM) that are more customer facing roles than network and operation centric roles. In the future, operators will ask their MSP to take up additional responsibility in the form Service Operation Center (SOC) rather than go to a new vendor.

The new relationship that will be built on trust and unlocking synergies of the existing operator — MSP relationships for creating value for the customers as well as business objectives and revenue projections.

Originally published at on March 21, 2016.

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