Here's why 40 percent of CSPs intend to change their managed services provider
In the classic managed services model, customers sign large-scale, long-term outsourcing contracts with vendors, handing over a significant portion of their operations in an effort to control operating and capital expenses (OPEX and CAPEX) while upholding technical key performance indicators (KPIs) for quality.
That’s changing — radically — in the telco space.
We at Nokia have seen this ourselves as one of the world’s largest managed service providers (MSPs). The customers whose networks we operate are increasingly seeking a more modular, flexible approach to digital transformation. They recognize the need to accommodate new technologies, more automation, artificial intelligence (AI), cloudification and security.
Network Ops teams drive digital transformation
We reached out to more than 50 CSPs around the world to learn more about what they expect from managed services in this new reality — and what that means for managed operations in the near term.
79 percent of respondents said Network Operations is one of the most important functions driving digital transformation. Putting Operations at the center of digital transformation ensures that business and infrastructure strategies work in concert. Surprisingly, cost control is not a primary value driver when it comes to outsourced operations.
We also learned that CSPs have a positive view of the ways their operation partners support digital transformation and boost their return on investment (ROI) for new technologies, particularly 5G. The overwhelming majority evaluate MSP performance in terms of how they contribute to their business goals, and they’re measuring that in terms of customer experience. Nearly half of the CSPs we surveyed — 45 percent — referred to metrics like net promoter score (NPS). Traditional KPIs are no longer the ticket to success.
Security and AI are the top areas where support is required
CSPs count on their operations partners to help them navigate new technological domains including network security, AI/ML (machine learning), data management and cloud architectures. Security concerns are growing due to new attack vectors associated with new devices, applications and 5G network functions. AI/ML offer a huge opportunity to transform CSP operating models, but a lack of skills and knowledge about how to operationalize AI use cases is fueling demand for support from operations partners
Contracts based on business outcomes are key
According to the survey, CSPs are eager to move to more flexible and business outcome-based engagement models to shape the multi-year operations contract. Such new requirements are likely to shake up the managed service provider landscape.
Of the CSPs surveyed, 42 percent say they are planning to replace their current operations partners in one or more areas, and 53 percent intend to add new operations partners to handle new strategic areas. More results of the study can be viewed here.
Three modular steps to digital transformation in operations
In response to these changing customer expectations, Nokia has developed a three-layered managed operations portfolio:
- Operations and maintenance to keep the network running with the best possible performance, availability and security. Implementing technologies like 5G is one thing. Operating them in a multi-technology multivendor environment is another. We bring the latest expertise and tools from our Global Delivery Centers to avoid any friction when network technology changes.
- Operations transformation to evolve customers’ operating models based on small, targeted, structured programs that increase productivity and operational agility through automation. The goal is to overcome siloed, non-digital operating models with phased micro-programs and clear deliverables mapped to expected business outcomes. Deliverables include data refinery and sequenced automation implementation and continuous improvement. One customer in the Asia-Pacific region was able to keep operation costs flat despite 50 percent network growth.
- Operations intelligence using AI-driven services to boost the experience and network performance CSPs offer their customers, and to enable new, high-quality services including 5G network slicing. Modular operations intelligence services can be injected into existing operations environments to solve specific issues. Use cases range from coverage and capacity optimization to predictive analysis of anomalies in complex network settings and prevention of customer experience degradation. Operations intelligence has helped raise many customers’ NPS, giving them a competitive edge in their markets.
A modular catalogue of operations services
No two CSPs’ digital transformation journeys and requirements are exactly alike. So, in each of the cases above, we offer a modular catalogue of operations services with laser focus on tangible business outcomes. This approach helps address specific market dynamics and business needs much better than monolithic, all-in-one long-term managed services contracts.
As the recognized leader in the managed infrastructure services market by Global Data for the third consecutive year, we at Nokia understand how to apply AI/ML and webscale models to telecom network operations, supported by real-world experience in security services and operational model transformation. Our goal is to meet the new expectations for managed operations by helping CSPs monetize the 5G network, improve ROI and enhance the customer experience.
