Interview with Andrey Morozov, President of CBOSS. The interview is published in the issue under the feature story “More than one”.
Standard, August 2012 (Monthly business journal about telecommunications and broadcast in the world and Russia is issued by COMNEWS, the major Russian publisher of business ICT media.)
In the last few years, there has been a clear trend in the Russian market of corporate information systems: full-fledged convergent solutions are gradually replacing a cluster of heterogeneous software products. Andrey MOROZOV, President of CBOSS, told in an interview to Anna SHUMITSKAYA, Standard magazine reporter, what convergence is and how it can be implemented in a telco’s multi-vendor business model.
What are information system design principles and their advantages and disadvantages?
Complex information systems can be combined, i.e., assembled of solutions from different vendors, or integrated and convergent, i.e., produced by one software development company based on a unified concept. Before the global financial crisis started, there was a widespread approach when telecom operators purchased best-in-class components and united them into a set with the help of system integrators or on their own. They thus hoped to obtain the best solution. Yet, they did not always succeed in getting what they wanted. Moreover, this approach greatly increased the solution’s cost, including both its installation and further ownership, for they continuously needed to keep it operable. The upgrade of one component makes it necessary to reconfigure the integration layer and, frequently, to practically redo the whole integration work to restore intersystem communications. This does not usually happen automatically and requires new resources from the telco to make the interfaces work.
However, in recent years, another approach has been gaining popularity in the highly competitive markets. Demand arises for convergent solutions proper and the trend analysis shows that it is them the market’s future belongs to. Convergence, first of all, helps increase the economic efficiency. It lowers the cost of technology ownership and that of development and support of the integration layer between various components of the information system. All components of a convergent solution are assembled at a vendor’s plant, i.e., the vendor is personally responsible for their consistent operation. It also carries out the necessary adaptation, setup, testing, and implementation. The vendor thus distributes the cost of integration of various system components among all of its customers, which lowers the cost of the solution per customer. There is another significant advantage of a convergent system as compared to a combined one: the one and only person responsible for its end-to-end operation, including the compatibility of all the components, support of their integration and adding of new modules, is its vendor.
What exactly do you incorporate in the concept of information system convergence?
CBOSS singles out at least three “dimensions” of convergence. These include convergence of services, payment methods, and platform. A convergent system should fully support a telco’s activities, including every possible type of services, be it voice or data transfer. It should also comply with all the necessary telecommunications standards with subsequent transition to new generations. Any services should enable any payment methods as well as support hybrid tariffs that allow charging for telecom services provided to the same number based on the post- or prepaid model, depending on a variety of conditions. For example, a company can be billed for corporate calls after the fact, while personal calls can be prepaid by an individual. And, finally, an integrated set of hardware and system software should ensure the operation of as many BSS/OSS elements as possible, which is the platform convergence.
How can a telecom operator avoid dependence on a single vendor while using convergent solutions?
Dependence on a single vendor can really be a problem for a telco. When, prior to the crisis, we told the market about full-scale convergent solutions, many telecom operators were skeptical of our words and stated that this would never happen. Their logic’s simple: the more components a customer purchases from a single vendor, the more it depends on it, hence, it’s better to incur ownership costs and take risks of separate modules’ interaction than become dependent on the vendor. Such reasoning has its own grounds as in this case it gets more complicated for a customer to regulate its relationships with the vendor. It can also be more difficult for the customer to dictate its terms, not to mention the possibility to replace the installed system with a product from a different vendor.
The telco faces a dilemma: on the one hand, it needs the consistency of the system components and a single person responsible for their operation; on the other, it’s important not to become dependent on this very person.
I think the dilemma can be solved by engaging several vendors of convergent systems and divide their responsibility areas, say, by geographic location or service type. In this case, the telco can create competitive conditions for vendors by smoothly redistributing the scope of responsibility. Such a multi-vendor model mainly reduces the cost of technology ownership and enhances the reliability as the telco still uses convergent solutions. At the same time, it maintains healthy competition among vendors.
What other criteria can be applied to distribute telecom operators’ responsibility areas if using a multi-vendor model?
Apart from geographic location and service type, segmentation can, for instance, be brand-based and a separate vendor’s solution can be used for each brand. In addition, one can segment the subscriber base and choose different solutions for providing services to each segment. Yet, such segmentation calls for the creation of a single interface, first of all, for subscribers. They shouldn’t notice any difference between the interfaces of the systems from different vendors.
Please give examples of a successful implementation of a multi-vendor model.
As it is a trade secret, I cannot disclose the names of particular companies that use our convergent solutions in multi-vendor systems without prior agreement with them. However, there are telecom holdings with a very strong presence in the market, which select a number of the best vendors for a certain class of objectives. They distribute the market among them following the “one vendor for a segment of operators or countries” principle. And we know examples of major international holdings that try these new system design principles, analyze their application results and, based on them, redistribute the vendors’ responsibility areas, depending on the quality of services and products, thus encouraging competition.
Who is responsible for user interface design in multi-vendor projects CBOSS participates in?
The projects we currently participate in feature no distribution of vendor responsibility areas by subscriber base. The distribution is solely based on geographic location. This makes it crucial to create a unified interface for transfer of reporting information to holding corporate systems. After all, the holding’s executives should receive aggregated data from all of its business structures at the same time and in the same format. This does not require a unified interface for interacting with the users.
What number of vendors is optimal to build a multi-vendor model?
In my subjective opinion, there should be not more than one or two vendors. A great number of vendors may increase a telco’s costs for managing vendor relationships, and it will once again return to the “zoo” of solutions it decided to withdraw from some time ago. It makes no sense for the vendor to clearly demarcate the areas of each vendor’s responsibility, for example, by federal district. This may reduce the vendors’ interest as they will realize that the potential market volume is initially, to a large extent, limited for them and they will have no incentive to compete.
By the way, a properly built multi-vendor business model has a non-obvious, but a very important social advantage. If a telco uses solutions from Russian vendors, it will provide them with the opportunity not only to earn money but also to compete, hence, to develop and enhance technology and intelligent products. This, in its turn, will have a powerful social effect as there will be a greater demand for specialists and knowledge. This will also encourage cooperation with educational institutions and development of regional production. This is that very economic diversification and avoiding dependence on the natural resources, which the Russian Government identified as a strategic direction for the development of the country.