Telcos increase investment in IT

Mobile and fixed line telecoms companies are stepping up their spending on IT following the downturn, but only slowly, the latest research from analyst group Ovum reveals.

Mobile and fixed line telecoms companies are stepping up their spending on IT following the downturn, but only slowly, the latest research from analyst group Ovum reveals.

With budgets still tight, telcos have switched focus from big transformational IT programmes to smaller customer-focused projects that deliver quick returns, says principal analyst Clare McCarthy.

"We are seeing fewer big bang approaches which involve changing entire swathes of the infrastructure or network. Instead we are seeing relatively limited investments where they can generate a return," she said.

Research by Ovum shows that the number of IT contracts awarded by telcos rose by 24% year-on-year in the first nine months of 2010. But the projects are smaller and more focused.

"There is certainly a trend towards more commercial off-the-shelf technology," said McCarthy in an interview with Computer Weekly.

"Telcos realise that having vast amounts of proprietary systems is not viable in the long term, firstly because it is expensive to maintain the skill sets, and secondly it is harder to upgrade in response to moves by competitors."

Improving margins through automation

Most service providers are focusing on improving margins by using IT to automate and improve their existing processes.

"Telcos are looking to maintain their margins, and are looking to the business as a whole to see where they can make improvements," she said.

Some 43% of the IT contracts telcos signed during the first nine months of 2010 were for operations support systems to support telecoms services. They included systems for service monitoring, network testing and customer provisioning.

"Telcos are investing in analytics tools, customer data management initiatives and bringing in levels of automation to improve time to market, service and support to customers," she said.

In one case a telco discovered that it was not charging for around 5% of the calls on its network, because they lasted less than five seconds. A closer analysis revealed that 80% of these calls were for credit card transactions which could be charged for at a premium rate.

Outsourcing network management

Managed service deals, which allow telcos to outsource the management of their networks are a priority, reflecting some 12% of the IT contracts analysed by Ovum.

Vodafone, for example, has outsourced the management of its networks in the UK to Ericsson.

A third of the IT contracts were for business support systems. Half were for billing systems, largely from telcos in emerging markets, such as China and India.

"Transformation is still happening, but it is more about transforming the customer experience. More timely or more appropriate services, or selling information to third parties," she said.

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Photo: Jupiterimages

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