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9/18/2003
02:32 PM
David Ewalt
David Ewalt
Features

Telecommunications: Technology Drives Telecom Comeback

Still reeling, sector builds self-help Web sites and consolidates systems



Maybe the best thing that can be said about the last 12 months in telecommunications is that at least it wasn't 2002. In last year's InformationWeek 500, we called that period "the industry's annus horribilis"--a time marred by fraud, bankruptcy, plummeting revenues, and the sharpest drop in spending in decades.

But time passes. Companies that took monumental hits in 2002, including Global Crossing, Lucent Technologies, and WorldCom, live on. Some even are proving still to be smart and innovative. Revenue is slowly climbing, with a few vendors breaking into the black, because of strong growth in wireless. And phone companies, hardware vendors, and Internet service providers alike are using technology to lower costs, improve service, and become more efficient.

"Over the past year, the disaster of WorldCom, and the bankruptcies, and all those other things have begun to ebb, and that's allowing us to focus on our key priorities," says Fran Dramis, chief information E-commerce and security officer at BellSouth Corp. "Growth is our key issue now. We're continuing to focus in terms of IT and how we can make our business work well."

Things may be starting to look a little better, but it's still tough out there. Bankruptcies and closures have left the market tighter and more competitive than ever. In that environment, many companies are focusing on technology to improve customer experiences.

"We've done a lot of work in the customer-care area," says Roger Gurnani, VP and CIO of Verizon Wireless. The company's IT department recently finished building a Web-based management platform that lets it more easily integrate services and content from partners, sell customized services based on the specific device a consumer owns, and display help-desk and support information from multiple sources on a single screen.

As a result, Gurnani says, Verizon Wireless is able to build useful, comprehensive support sites for its customers. Presumably, that means happier customers who buy more services--and lower costs for the company. And since the system is made of modular, reusable Web services, it can readily be upgraded to support new products and services, allowing Verizon Wireless to bring products to market in a matter of days, Gurnani says.

"It's all in the spirit of improving the level of service as well as improving efficiency," he says.

"As we provide more and more self-service capabilities on the Web, customers have instantaneous gratification, so more and more customers are choosing to serve themselves. That's a good thing, because then the resources can be used to take care of other matters."


Thaddeus Arroyo, CIO of Cingular Wireless

The success of an IT project depends on keeping team members a part of the larger corporate culture, says Gurnani, VP and CIO at Verizon Wireless.

Photo by Rachelle Mozman
That opinion is shared by Thaddeus Arroyo, CIO of Cingular Wireless. "What's becoming paramount here is the customer's desire for simplicity," he says. "We're starting to see a focus in the company on making the product more simple and using IT to enhance the customer experience."

Cingular spent the last year building up customer service in numerous ways: A self-help Web site lets users see and pay bills as well as change the features of their service without ever directly contacting the company. Extended functionality of voice-response systems on toll-free lines draws from the company's business-intelligence software to predict what customers might be calling about and customize their experiences appropriately.

Cingular also built a Web-based point-of-sale system that combines every bit of information and all the tools a sales agent might need: credit checks, unit activation, product information, and so on. In the past, a customer would have to wait in the store while agents made multiple phone calls, sent faxes, and contacted overloaded credit bureaus. It might take an hour or two for the phone to be up and running. But thanks to the new system, customers get a faster, more satisfying retail experience.

And the great thing about these tools, Arroyo says, is that while the platform was new, all it did was draw together systems that already existed and worked across the enterprise. "The innovation is the extension of tools that have historically stayed within our walls," he says.

More businesses are learning that more-efficient customer service means not only happier customers but an improved bottom line. "If you put more information into the customer's hands, they're not only going to be more satisfied, they're going to do a lot more themselves," says Dan Wagner, CIO of Global Crossing. The more capabilities you give customers, the less attention you have to pay, and that means cost savings.

A year and a half ago, Global Crossing came under fire following accusations of fraudulent accounting and entered into Chapter 11 bankruptcy protection. But the company has rebuilt itself using IT. "This year has been about transforming into a completely different organization," Wagner says. "We've come a long way from a company that's produced a lot of negative press to one that's growing again."

Key to that rebirth has been massive cost cutting through improved service. Over the last year, Global Crossing has built up and enhanced uCommand, an internally developed strategic delivery platform that gives customers the ability to manage their accounts. The platform integrates systems from across the company, including trouble management, billing, and ordering. Today, uCommand receives more than 2 million hits per month; in some parts of the business, it accounts for 80% of service orders.

A side effect of the new platform is that it lets Global Crossing consolidate many of its servers and applications, replacing legacy systems that have been around for ages. "A lot of our systems and operating capabilities have grown over years and years," Wagner says.

But when Global Crossing set out to build the uCommand platform, it was forced to tame some of those legacy beasts, a task that Wagner says too many of his colleagues have yet to address. "It's a really important issue," he says. "Telecom was one of the first industries to embrace technology, but it may be one of the last to address the legacy problem."

Consolidation has been a huge issue for Cingular Wireless, which was formed as a result of the merger of 11 brands. During the last year, CIO Arroyo oversaw the conclusion of a massive rationalization effort, resulting in the consolidation of more than 1,400 applications into fewer than 300. Cingular consolidated locations as well, collapsing its customer-care environment from 60 contact centers to 22 in the last 18 months.

"Over the past few decades or so, we have created a lot of complexity," says Hossein Eslambolchi, CIO and chief technology officer at AT&T. "For a lot of CIOs, it's leading to what I call the migrate headaches. We have to eliminate a lot of legacy systems. When you keep buying product after product because vendors keep pushing equipment, you're creating a data-quality problem that causes you to have a lot of inefficiency and a lot of worries."

Eslambolchi practices what he preaches. At the end of 2001, AT&T had 500 ways to perform data encryption. Now it uses only one. In 2001, the company had 64 systems for ordering and provisioning. That's now down to 20. In the last year alone, AT&T retired 79 legacy systems from across the enterprise. By the end of 2005, the company expects to shed a total of 270.

While AT&T continues to plan for more consolidation, other companies are getting ready to launch different projects. Cingular's Arroyo is ramping up to deploy Amdocs Ltd.'s Clarify customer-relationship-management software. The system will let Arroyo offer a more-personalized relationship with customers and script interactions for call-center representatives, he says.

Verizon Wireless is planning for IT challenges posed by new local-phone-number portability regulations. The Federal Communications Commission has mandated that all wireless carriers let customers keep their phone numbers if they change carriers--a likely boon for customers, but a tough nut for IT departments.

"It does require all of our embedded base of systems and capabilities to be upgraded," CIO Gurnani says. "And there's a lot of interaction required among the various carriers to make this happen electronically."

And CIOs are looking even further ahead than the next 12 months. Qualcomm Inc. CIO Norm Fjeldheim is looking at collaboration technologies, trying to figure out a way to implement "follow-the-clock" engineering projects. It's the ability to take work from one group at the end of the day, pass it to another in a different time zone, and then pass it back again, so work can get done faster.

But even the smartest forward thinking will come to nothing if IT workers don't understand what they're doing and how it's going to benefit the business overall. The success of any IT project is dependent on keeping team members a part of the larger corporate culture, says Verizon Wireless' Gurnani. "My people are required to not just be knowledgeable about systems but to be knowledgeable about our business," he says.

For that reason, Qualcomm CIO Fjeldheim spends a lot of his time explaining the company's strategy and objectives to his IT staff. Once a quarter, he hosts an all-hands meeting. "The presentations are only 10% of what's going on in the IT department, since they already know that," he says. "The other 90% is what's going on in the business, what our goals are."

Fjeldheim also takes time to host a Q&A breakfast every other month. All the IT employees who have had a birthday in the time since the last meeting are invited, and they're encouraged to offer suggestions, air complaints, and ask questions.

At BellSouth, monthly meetings of leadership teams serve as an opportunity for high-ranking business executives, including the CEO, CFO, and chairman, to talk strategy with IT staff. That helps make sure that employees feel appreciated and understand their critical role in the company, says CIO Dramis. "People really feel like they're a part of something," he says. "We operate the business, we're the engine that drives it, and they need to know that."

INDUSTRY LEADERS
Rank Company Revenue in millions Income (loss)
in millions
IT
employees
4 Verizon Wireless $19,260 $2,584 2,080
10 Verizon Communications $40,712 $4,387 9,668
103 BellSouth Corp. $22,400 $1,423 1,231
105 Scientific-Atlanta Inc. $1,450 $100 120
131 Global Crossing Ltd. $2,878 ($1,226) 399
162 MCI -- -- --
256 Cingular Wireless -- -- 35,000
300 SBC Communications Inc. $43,138 $5,653 15,550
309 Hughes Network Systems $1,170 ($161) 135
345 AT&T $37,827 $963 6,545
346 Qwest Communications Int. Inc. $15,487 -- 530
370 QualComm Inc. $3,040 $360 605
381 Nextel Communications Inc. $8,721 $1,386 800
Financial data is from public sources and company supplied.
Revenue is for latest fiscal year.
Employee data is from InformationWeek 500 qualifying survey.

SNAPSHOT
INSIDE COMPANIES
Average portion of revenue spent on IT 4%
Average percentage of industry applications and business
processes that have Web-based front ends
62%
Companies with real-time business processes in place 77%
HOW COMPANIES DIVIDE THEIR I.T. BUDGETS
Hardware purchases 13%
Services or outsourcing 20%
Research and development 0%
Salaries and benefits 31%
Applications 26%
Everything else 10%
INDUSTRY FINANCIALS
Average year-over-year revenue change -13%
Average year-over-year net income change -10%
DATA: INFORMATIONWEEK RESEARCH
See year-over-year shifts in business-technology practices for this industry. Compare and contrast this year's data with last year's.

Return to the 2003 InformationWeek 500 homepage

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