【正文】 CHZXP829022jsmCH CONFIDENTIAL Presentation at the worldwide tele conference Bangkok, June 1999 ITele Telco IT Excellence Bernd Kraus, Chip Hardt, Stefan Schmitgen, Juergen Stark CHZXP829022jsmCH 1 CONTENTS OF TODAY’S DISCUSSION Agenda Introduction Key findings Levers to improve performance McKinsey service line CHZXP829022jsmCH 2 MAJOR FIRM INVESTMENT IN TELCO IT KNOWLEDGE Comprehensive study of 5 . ILECs and 1 EU Telco ? Ameritech ? Bell South ? GTE ? SBC ? USWest ? Swiss Understanding of critical IT issues through interviews ? CIO ? Chief Architect ? CIO’s direct reports ? Vendors ? System integrators ? IT capabilities ? IT performance ? IT impact on overall ILEC performance ? Complexity ? Strategy ? Migration ? Organization ? Benchmarking tools ? Understanding of capabilities and issues ? New thinking and approaches Research on industry issues and vendors ? Needed capabilities ? Architectures ? Attacker economics ? Key success factors ? IT alignment ? Vendor strategies CHZXP829022jsmCH 3 Key findings ? Recent and future industry trends are likely to force major telco IT transformation ? IT spending by Telcos is increasing but ... ?…Incumbents’ current IT performance and transformation approaches vary widely ? None of the incumbents studied are more than half way through their IT transformation OUR WORK IDENTIFIED MANY IT ISSUES Levers to improve IT performance ? Seven IT excellence attributes drive performance ? Five will be highlighted in today39。s presentation – IT strategy aligned to business strategy – IT anization aligned to business anization – Clear IT blueprint and migration plan in place – Commitment made to simplify business – Appropriate funding levels and mechanisms working CHZXP829022jsmCH 4 CONTENTS OF TODAY’S DISCUSSION Agenda Introduction Key findings Levers to improve performance McKinsey service line CHZXP829022jsmCH 5 Move from circuitswitched to packetswitched work ? Build, provision, manage and operate data service works ? Manage plex data work elements Move from productcentric to customercentric architecture ? Provide services oriented to specific customers ? Manage around customers, not specific telephone numbers Move from internal (closed) business model to an external (worked) business model ? Enable full WEB/EDI access for ordering, billing, customer care, provisioning ? Provide controlled access to systems by third parties Will these shocks force a major overhaul of incumbent systems? Cycle time of products and services is much shorter ? Market demand for rapid introduction of new products/bundles ? Smaller, niche players have more flexible systems to pete 4 SHOCKS COULD FORCE TELCOS TO FUNDAMENTALLY OVERHAUL THEIR IT STRATEGIES Telco IT Business units Customers/ suppliers Competitors Network CHZXP829022jsmCH 6 * Including hardware, software, internal spending, professional services and support services. Includes wireline (62%), wireless (19%), and media distribution (19%) ** Including Canada Source: G2R Research IT SPENDING INCREASING 1 3 , 01 4 , 51 6 , 51 8 , 52 0 , 82 3 , 31 0 , 01 1 , 61 3 , 01 4 , 51 6 , 06 , 06 , 77 , 65 , 86 , 67 , 48 , 69 , 05 , 34 , 74 , 04 , 84 , 1100% = US$ billion Rest of world Japan Worldwide tele IT spend* distribution by region – 1998 301442141996 1997 1998 1999E 20xxE 20xxE Projected growth of spending by region Europe North America** CAGR=13% Europe Rest of world North America Japan US$ billion Percent CHZXP829022jsmCH 7 INCUMBENTS TAKE WIDELY DIFFERING APPROACHES IT anization ? Decentralized IT functions into business units ? Heavy use of external resources ? Seeded IT management from outside pany and from BUs IT strategy ? Focused on transforming IT to deliver new functionality ? Replacing legacy application with new applications ? Focused on using standard software systems from emerging vendors ? Embedding current processes in new solutions ? Centralized IT functions ? Focus on using only internal resources ? Focus on developing and promoting from within ? Focus on reducing overall IT costs ? Delivering new functions using legacy systems (with addons) ? Heavy use of installed IT vendors or internal resources ? Committed to change business processes/practices CHZXP829022jsmCH 8 443525SPENDING VARIES WIDELY 9 . 46 . 64 . 9IT costs to sustain $1 of revenues Cents IT cost to support an access line Dollars per line Highest Average Lowest 35% 92% Highest Average Lowest 40% 76% CHZXP829022jsmCH 9 Application area Capability Best Worst ? Flowthrough % rate of POTS service order 96% 77% CAPABILITIES ALSO VARY... EXAMPLE ? Cycle time to create “friends and family”like billing product 60 days 8 months ? % of region with ADSL provisioning support 25% 0% Network OSS Billing ? Ability to offer crossservice discounts All LEC products POTS and CO features only ? Ability to perform scripted needs analysis for upselling/crossselling Can perform for all products based on customers’ installed base, needs, and profile Cannot do scripted needs analysis Customer care ? Ability to perform predictive modeling Can predict customer churn based on general behavior patterns No ability MDSS vs. CHZXP829022jsmCH 10 ? Legacy applications in use for most core systems ? Significant capability gaps ? Core legacy applications still in place ? Most new applications w