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4/25/2012
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Communications Outsourcing: How To Prep For Success

When outsourcing management of communications networks, poor prep work can do in the project. Here's advice on SLAs and related keys to success.

Outsourcing management of communications networks can cut telecom costs by as much as 20% and shift a chunk of capital expenses to accounting-friendly operating expenses--but the process needs to be tightly managed, with lots of due diligence on the part of both the enterprise and the outsourcers, for gains to be realized, according to an executive at one telecom service provider.

"The customer has to do certain things and is responsible for certain things, and so are we," said Ed Nalbandian, VP for Avaya Operations Services.

Avaya earlier this year launched an outsourcing service, Avaya Communications Outsourcing Solutions, under which it offers custom management and multi-vendor support services for large enterprises' communications networks and applications. This month, it announced a deal to provide outsourced contact center services to Indian telecom giant Bharti Airtel.

Nalbandian said the foundations for a successful communications outsourcing engagement must be laid well before the customer transitions off in-house support. In Avaya's case, that means meeting with the customers' various IT and telecom teams as much as nine months before the hand off.

"We have a lot of whiteboard sessions with them where we customize the solution," said Nalbandian. "At the end of the day, we not only have to agree on what it's going to cost them, we have to have service level agreements with financial remediation."

[ Looking beyond India for your offshoring needs? See: 12 Offshore Hot Spots For IT Outsourcing. ]

Nalbandian said enterprises that are candidates for communications outsourcing fall into a couple of categories. Many are using older, TDM (Time-division Multiplexing) systems and want to move to IP-based systems and unified communications, but do not have sufficient in-house staff or knowledge to make the transition. "That's a pretty common theme that we see," said Nalbandian. "There are more enterprises that still have a legacy TDM infrastructure than many people realize."

Others simply want to find a vendor to run their existing network, as is, due to budgetary constraints, staff reductions, or other factors. Still others simply want to move their communications infrastructure from capex to opex, so they don't have to maintain their own, depreciating assets and they can gain access to new technologies without having to buy new systems outright. "We're very flexible about keeping assets on our books and turning that into a per user price," said Nalbandian.

Once the decision to outsource is made, the enterprise and the vendor need to negotiate highly-specific service level agreements and other contracts that cover a number of variables, including cost, engagement length, and termination arrangements. "Those service level agreements are key to avoiding finger pointing later on down the road," said Nalbandian.

That's particularly important in outsourcing arrangements where more than one vendor is providing services--a scenario that's becoming increasingly common as enterprises move away from megadeals and into more selective engagements that bring in best of breed players for particular services. "The COPS (Communications Outsourcing and Professional Services) megadeals may not be dead, but they were on life support in 2011," said Gartner analysts Eric Goodness and Christine Tenneson, in a recent research report.

"The danger of disaggregating the communications tower into multiple bid opportunities (tenders) is that it creates an environment with too many vendors requiring management and oversight," Gartner warned.

Nalbandian said it all comes back to having the right SLAs and other documentation. "The process we go through documents in detail who is going to do what, and that is put down in a statement of work, and then we set up a governance process." Nalbandian said he expects demand for communications outsourcing services to "grow very quickly" as new technologies, including social media, come online.

The standard length for a communications outsourcing deal is about five years, according to Nalbandian.

At a time when cybercrime has never been more prolific and sophisticated, budgets are being cut. In response, IT is taking a hard look using third-party services--outsourcing--to meet security challenges. Our Making The Security Outsourcing Decision report outlines the various security outsourcing options available. (Free registration required.)

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