Telstra Analyst Event 2013: Many Rivers To Cross

Clement Teo

Telstra hosted its annual analyst event in Sydney on October 23 and 24. In his keynote address, CEO David Thodey compared Telstra’s customer advocacy journey to a triathlon that the firm has just begun, which we believe it a fitting analogy for Telstra’s progress on the path it has set for itself. The company is clearly in the race and making progress, but still has many miles to go.

While the company shared a broad spectrum of initiatives, our main observations are that Telstra:

  • Has made clear progress since our check-in last year, but its transformation remains a work in progress. Telstra is no different than other incumbent telcos working to transform beyond traditional — and declining — sources of revenue. Its dominant position in Australia is secure, but its prospects in new market categories inside and outside of Australia are less certain. We do not believe that Telstra is particularly innovative compared with service providers in the US or Europe, but we do believe that it has a viable transformation strategy and is making progress. Its progress in the Australian media and entertainment industry, including its Foxtel investments, is impressive — it has built a large IP-based digital media file exchange platform to serve global broadcasters and content providers.
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An Asia Pacific First — The Forrester Wave: Asia Pacific Carrier Ethernet Services, Q4 2013

Clement Teo

Carrier Ethernet aims to provide users with a wide-area service to connect sites, in the same way that asynchronous transfer mode (ATM), Frame Relay, and X.25 services from carriers have done in the past. While end user demand for carrier Ethernet services in Asia is relatively small, it’s growing year over year and is having an impact on service providers’ bottom lines: Carrier Ethernet services currently account for 8% to 10% of service providers’ total connectivity revenues in the region.

For The Forrester Wave™: Asia Pacific Carrier Ethernet Services, Q4 2013, we identified, qualified, and evaluated seven global and regional service providers that offer unmanaged site-to-site carrier Ethernet services to multinational companies in Asia Pacific: BT, Orange Business Services, Pacnet, SingTel, Tata Communications, Telstra Global, and Verizon. Key differentiators include the services that each vendor has on offer, such as flexibility in bandwidth bursting, granularity of access speeds, operational metrics and reporting, network coverage, and service-level agreements.

What It Means

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An Eclectic Market Of Data Management Services Is Emerging

Charles Green
Major industry dynamics such as digital disruption are causing chaos and upheaval even in mature industries. To help navigate the changes that result, companies are placing an ever greater premium on data-driven insights. Put simply, the management and effective utilization of data have become essential for competitive survival — but the growing volume and diversity of data leave companies scrambling to effectively and efficiently manage, govern, and utilize it. Companies face four main data management challenges at the moment:
 
  • Highly skilled and experienced resources are expensive and difficult to find.
  • New technologies, such as SAP HANA or Hadoop, are challenging existing capabilities.
  • New sources of data are rendering existing information infrastructures inadequate.
  • Companies still lack maturity in managing and analyzing their data. For example, few companies have a fully-fledged information management strategy (just 13%, according to Forrester’s Q2 2013 Global Information Strategy And Architecture Online Survey).
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SAP Services Will Make Or Break SAP's Platform Strategy

Fred Giron

Over the past few months, SAP Services has embarked on a major software-enabled services transformation of its offerings and operating models. The strategic intent is to increasingly rely on IP-based solutions (including SAP’s Rapid Deployment Solutions portfolio and assemble-to-order methodology) to deliver outcomes faster, with lower risks for clients and, eventually, support value-based pricing. Next on SAP Services’ transformation road map? I believe that the organization needs to quickly change the perception of the rest of the SAP ecosystem, which still views SAP Services as a competitor.

SAP Services’ business model used to merely rely on staffing “rock star” consultants on client projects in order to facilitate the implementation of complex solutions. The new strategy aims at positioning the 15,000 service professionals on SAP’s newer solutions (e.g., cloud, mobile, HANA . . .) in order to ensure that early projects generate the promised outcomes. In order to achieve this goal, the delivery teams need to be much more focused on collaborating internally (with the R&D team, for instance) as well as externally (with clients). SAP Services will also need to increasingly work collaboratively with its partners in order to ensure the success of the overall SAP-as-a-Platform strategy.

SAP Services needs to:

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Local Telcos Are Well-Positioned For Cloud Services In Southeast Asia

Clement Teo

At the 2nd Annual Telco Cloud Strategies 2013 event in Singapore, I moderated a discussion on how Southeast Asian telcos are gearing up to offer cloud services. Here’s what I observed:

  • In the cloud era, SE Asian telcos are moving faster than they are used to. A year ago, Philippine telco Globe Telecom set up a new division, IT Enabled Services, to effectively deliver cloud services, supported by more than 100 professional services people on the ground. While revenues are still low, the new division is now freed from being part of the larger parent company’s processes and can move quicker than competitors to offer managed cloud services for specific industries. Indonesia’s Indosat, on the other hand, has brought both the IT and network divisions together to offer a bundled service — cloud with connectivity — in the same period. Others, like Singapore’s SingTel, acquired IT services company, NCS, to tap into the enterprise segment.
  • Telcos need partners for cloud services. This is essential, as telcos do not typically have all the pieces for an end-to-end solution. For instance, even with a solid IaaS offering, a telco still needs partners to build the value chain in their ecosystem, e.g., SaaS, and grow together. Indosat, for instance, partnered with Dimension Data to offer enterprise cloud services in Indonesia. The partnership combines Indosat’s nationwide connectivity backbone infrastructure and its 10 data center facilities in Indonesia with Dimension Data’s cloud consultancy services.
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What Factors Can Make A Complex SAP Project More Likely To Succeed?

Liz Herbert

At a recent SAP customer event on Business Transformation, Alexander Budzier from the Said Business School at the University of Oxford presented findings on IT project outcomes and their correlations with various project factors. When determining project success rates, the researchers considered business benefits, adherence to budget, and on-time delivery.

Interesting findings from this research include:

  • Project success does not correlate (or very minimally correlates) with size or length of project, or with public versus private sector.
  • Focusing on one goal too much can have a negative effect on other metrics. Consider the extreme example of the Olympics, which had a 100% on-time result (over 10 Games analyzed) but the highest cost overruns, at an average of 207%!
  • Agile deployments (versus big bang) had greater success in some metrics, particularly schedule adherence, but not all.
  • The single biggest factor in determining project adherence to budget and timelines was benefits management. (In this research fewer than half of the projects they studied had actually tracked benefits.)  Those who focused on measuring benefits significantly reduced BOTH project cost and schedule risk. Project cost overruns averages decreased from 36% to 6% when focusing on business benefits; schedule overruns decreased from 119% to 51%.

So, what can we take away from this? Project leaders should:

  • Focus on benefits – throughout the project lifecycle. Benchmarking can help leaders to identify what benefits / metrics to track.
  • Recognize warning signs / risks early -- and address them before they result in disaster. These risks include unknowns in design, organizational resistance, and shifting project requirements.

HP Enterprise Services in Asia: Strong Message for IT, But Not for the Business

Fred Giron

HP recently hosted its Asia Pacific (AP) and Japan analyst event in Singapore. The company presented its “New Style of IT” value proposition and how it intends to position a combined HP hardware, software and IT services stack to deliver client value. After the Boston event back in February, I was particularly interested to see how HP Enterprise Services (ES) is positioning itself as the tip of the spear of the “one HP” messaging and offering in Asia.

When assessing service providers’ relevance to customer needs, I focus on two major areas:

  • Red ocean offerings – where service providers need to help their clients build scalable, flexible, secure and cost efficient technology foundations around cloud, mobility and analytics.
  • Blue ocean offerings – where service providers need to help the CIO engage business stakeholders to drive better business outcomes in areas like customer experience, for instance.
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Get a Grip on those IBM mainframe MLC Costs

Mark Bartrick

We all like free stuff and we all like saving money. I’m a big fan of any free-to-use tools that help identify cost saving opportunities. I regularly dip into online cost comparison sites for stuff I buy at home, such as house and car insurance. These sites are easy and quick to use and often highlight the savings I’ll make by swapping from one provider to another. And we all like to save money, whether it’s at home or at work.

One big cost item for IBM mainframe users is software costs; they consume a significant proportion of enterprise IT budgets and the biggest single item is usually IBM’s Monthly License Charges (MLCs). These often consume a third or even more of a mainframe software budget. In a cash-strapped world, where budgets are under pressure, it’s therefore no surprise to see IT sourcing professionals regularly challenged with finding ways to cut the MLC bill.

Last year, I wrote about some options for reducing IBM mainframe software costs in a Forrester Research paper entitled ‘How to reduce IBM System z Mainframe Software Costs’. Even so I still get asked by clients ‘what else can I do?’, and ‘are there any tools that can help me identify ways to save money?’

So I am always on the hunt for new ideas and cost saving opportunities.

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Telstra Global Is An Emerging Network Services Challenger

Clement Teo

Telstra’s recent FY13 earnings announcement recorded a strong showing of its Network Application and Services (NAS) division, which saw a 17.7 per cent increase in revenue to A$1.5 billion from the previous year. Its international business delivered a combined Global Connectivity and NAS revenue of A$566 million, or a growth of 11.4 per cent from the previous year. Telstra also plans to continue to build out its NAS division, particularly in Asia.

What It Means

A beneficiary of the NAS investment is Telstra Global, nestled under its International division, offering network connectivity and services to enterprises in Asia. In my recent report, I argued that Telstra Global is a well-placed partner for medium-size to large companies in sectors like transportation and logistics, shipping, manufacturing, and professional services looking to expand their operations out from Hong Kong, Australia, and Singapore into Southeast Asia and China. While this looks rosy, there are areas that require closer attention:

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LESSONS LEARNED FROM THE FIRST WAVE OF SAP IMPLEMENTATIONS IN CHINA

Gene Cao

With Frederic Giron

SAP officially started its first business operations in 1995 in China. Prior to that, several Chinese end-user organizations like Shanghai Machine Tool Works Ltd. tried to implement SAP through partners based outside China.  Through discussions with CIOs who have experience in such projects, all agree that these early  SAP projects did not meet expectations. During this first decade of SAP in China (1995-2005), aka the 1st wave of SAP implementations in China, many SAP projects either failed outright or continued to fall short of expectations, primarily due to shortage of local SAP skills and cultural misalignment. China is not a unique in Asia and early adopters in Indonesia and Thailand faced similar challenges since the early 2000s.

As Chinese organizations continue to rapidly grow their activities, one of their major IT challenges is shifting from legacy to more standard information systems – and SAP solutions remain a key option in this shift. But today, experienced CIOs are also setting more realistic expectations regarding business outcomes for these SAP projects. For instance, they now consider SAP as a tool to automate some of their organization’s business processes rather than misinterpret it as a primary mechanism to drive revenue growth or improve profitability – which was a rather common misconception in the past. Chinese organizations have also modified their views on external service providers and are now much more open to leveraging these providers to bring additional value to their SAP implementation projects.

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