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IN CONCLUSION

BUILDING THE BUSINESS CASE

f ISPs and carriers build the types of management


systems discussed in the preceding pages, can
they reasonably expect to realize the business benefits described? Most would if the benefits were
guaranteed. But many service providers lack resources, like
people to complete network buildouts.
Few service providers have extensive experience with the types
of network management systems described in this special supplement, especially when it comes to IP data services. Nevertheless,
its possible to build a compelling business
case for these management systems and estimate their return on investment. And that sort
of justification will lead to the self-servicing
model envisioned by leading-edge service
providers. By visiting a customized portal,
customers could implement new services or
change existing ones, for example.

Margins & Churn


Most services eventually commoditize. Internet
access, especially for consumers, is highly commoditized. Today IPbased VPNs truly stand out. With commoditization comes reduced
margins and high customer churn. As evidence, look at ISPs that
serve consumers, like EarthLink. In its most recent quarter, EarthLink
reported revenue growth of 41 percent against a loss of $35.2 million, not taking into account its merger and acquisition activity.
A solid business case can be built for anything that keeps
you ahead of the commoditization curve.
The first antidote is the introduction of value-added services
on top of basic connectivity. Many ISPs and carriers have continually struggled with this.
The second approach centers around the implementation of
the network management systems described in this supplement.
The improved service they deliver will attract new customers and
reduce churn even in a commodity market. Just as important, it
will reduce operations costs and add to profits.
A recent Yankee Group study highlights how network management and OSSs can reduce costs. The study examined network provisioning and service configuration systems implement-

ed by frame relay and VPN service providers. Among its findings:


AT&Ts E-Order system gives customers a Web interface to
the frame relay order entry system. In parallel, AT&Ts IT department integrated order entry with element management systems
that govern frame relay transmission. In the process, the carrier
has mostly eliminated sales force involvement when customers
make changes to their frame relay service.
A European carrier estimates that it takes an expensive
engineer 27 minutes to manually provision and configure a single customer site in its MPLS VPN service.
The automated system currently being
installed should reduce that to about two
minutes for a call center operative, the
company estimates.
VPNs can be complex to configure,
due to the many policy options on the
customer equipment. But some service
providers are working with vendors so
that routers get basic connectivity functions installed on the assembly line.
The time savings multiply as the number of customer sites
increases. Manual processes, even if they are based on
scripts rather than keystrokes, are duplicated for every site.
Automated systems configure everything at once and accurately based on predefined rules.
Clearly, its time to fly the flag of Intelligent Provisioning as
carriers and service providers embark upon the road to customer self-service. The business benefits, ranging from SLAs
to MPLS network management and automated provisioning,
are significant. Hours get crunched down to minutes when it
comes to provisioning, and high churn can give way to stellar
customer retention rates.
Self-service may not hit the big time in 2000, but with
Intelligent Provisioning, it will be the year when aggressive
ISPs and carriers take a big step forward. \
Eric M. Hindin is a vice president at SunTrust Equitable
Securities, the Boston-based investment banking subsidiary of
SunTrust Banks Inc., the nations ninth-largest bank.

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