Get ready for next revolution

— Dr. Jai Menon

The Telecom industry has evolved rapidly over the past 25 years – triggered by the mobile revolution, expanding to multi-faceted services from communication to data to content to commerce to context, targeting multiple segments of human population and now branching rapidly into machines and IoT. All this has required fundamental changes to the prevailing IT model of the mid-90s in broadly three phases.

Till the early 2000s, IT was delivered as point solutions for distinct functions like billing and CRM through disparate contracts that were mainly procurement oriented. Hence telcos ended up with a collection of systems that did not necessarily talk to each other. Furthermore, the hardware and software purchases were handled independent of each other, eventually leading to huge teething troubles even though the telcos were still pretty small. Typically, these resulted in large amounts of revenue losses and it was almost impossible to get one combined meeting where the database, hardware, COTS software and implementation vendors would sit around the same table to solve problems.

Such challenges coupled with impending massive scale-up for the industry presented an opportunity for a globally unprecedented innovation in the IT model for the industry. For the first time ever, an “outcome oriented” outsourcing model was invented and implemented - covering all hardware, software and services from a single strategic partner.

The prevailing global model was for firms in the western world to outsource to countries like India, primarily for “run” work that leveraged labor arbitrage for ROI. Furthermore, different IT providers were used for software and infrastructure layers – leading to finger pointing and dilution of accountability. It was for the first time that Indian telcos outsourced entire IT (both “build” and “run”) to single IT providers.

The scope was kept extremely flexible with a rolling annual IT plan and 3-year roadmap forming the basis for end-to-end architecture evolution and implementation schedules. This replaced the traditional “new project”, “change request” and “refresh/upgrade” paradigms.

Good quality IT talent needed for such large IT platforms was difficult to recruit into telcos. With such comprehensive partnerships, talent buildup now shifted to the IT partners. The telco’s IT departments were kept at a skeletal level, primarily focusing on business engagement, architecture and governance.

Operational robustness for large scale growth coupled with building blocks of ERP, billing, CRM, online etc. started kicking in to build the basic foundation. Differentiating capabilities then came in around business intelligence, analytics, revenue assurance and security for segmentation, targeting, leakage prevention and tight compliances. Data and content capabilities with supporting APIs for app-oriented services began. IT infrastructure evolved from small server rooms into tier3 data centers with disaster recovery, business continuity and redundant (mpls and undersea cable) networks.

Telcos could now freely expand their businesses from mobile focused to full service (mobile, fixed line, broadband, TV, content, hosting, m-wallets, etc.) across multiple segments (consumer, SMB, enterprise, international, etc.)

and across multiple geographies (expansion circles in India or other countries), without getting into the nitty gritty of IT requirements for such diversification.

The IT cost curve was smoothened out by linking costs to business metrics (such as % of revenue or cost/callcentre call). The cost curve was not subject to spikes due to new projects, change requests, refresh or transformation. Furthermore, a business metric driven cost model also brought along built-in economies of scale. Consequently, rapid industry growth meant declining IT costs on a percentage basis, thus contributing directly to profitability.

The long tenure of these arrangements also meant that heavy investments in hardware and COTS applications could be made by the IT partner at an early stage of the telco’s growth cycle. This obviated or minimised expensive and cumbersome transformation programs. Thus, massive growth of the telcos (ergo growth in business metrics) resulted in meaningful revenues to the IT partner, in spite of built-in economies of scale.

Hence, it was a win-win for the telcos and for the IT partner.

However, such a model came with its slew of challenges that built up over time. Partner governance required a much higher level of sophistication and required a balancing act for both parties. Architecture debates needed to be resolved to converge on agreed roadmaps. Speed of implementation started to slow down toward the latter years since a hyper-competitive industry brought forth higher competitive pressures and the scale-up problem was replaced by the speed challenge. However, the biggest disruptor of all was the rise of internet technologies that brought along with it a new style of IT that is agile, mobile, smart and cloud based.

“e2i” stand for shift in IT methodology from “enterprise to internet” styles. “Enterprise” style IT is getting replaced by “internet” style technologies that leverage open source and deploy agile methods of development for speed and nimbleness (typically used by OTT players). Traditional IT talent pool that configured and deployed COTS packages is now being replaced by sharp coders that were keen to get “wired in” for rolling out capabilities every two weeks through scrums and sprint cycles.

This also needs a fundamental shift in the way “requirements gathering” happens wherein conference room huddles and white boards start replacing large clunky requirements (SOW) documents that feed into waterfall (slow) cycles. Everything moves to the cloud at infrastructure, platform and software layers (IaaS, PaaS, SaaS). The role of the traditional System Integrator (SI), which is on-premise data centre oriented, now gets blended in with the new internet style of IT.

Telcos have started bringing back some portions of IT through in-house engineering teams. The industry is now in the phase III of IT growth which is a blend of outsourced and in sourced models, especially with industry consolidation. Importantly, IT is no longer just for “support” capabilities like billing, ERP, and CRM but more so for “product” capabilities like content, commerce, payments, and IoT—things that directly generate digital revenues.

The talent pool is a mix of systems and configuration types with deep coding software developers/engineers led by leaders with both CIO and CTO capabilities. The partner ecosystem is a mix of traditional large IT names with new age internet giants. Governance and partnership models are going back to multi-party ecosystems with more pointed and targeted relationships.

With all this, speed and agility are becoming the name of the game, aided especially with new technologies like AI, machine learning, block chain, quantum computing and so forth.

Stay tuned: phase IV is probably just around the corner!

Over the last 25 years, technology has dramatically transformed human society. Businesses have been able to break boundaries with the help of technology and the internet. Today, seven of the world’s top 10 companies are internet technology leaders. More than 3.8 billion people, or 51% of the world’s population, are now connected, thanks to technology. India has not been much behind, with more than 500 million people, or nearly 40% of its population, having access to the internet.

However, this is still just a beginning. Almost half of the world’s population is still unconnected. Around 70% of women in countries like India have never seen the worldwide web and nearly three-fourth of all retail purchases are still being done in the physical world, while online commerce is catching up at a relatively slow growth rate of 12% every year.

The next phase of the internet has to move deeper into the society. The good thing is that we already see the new architecture for this new phase taking shape. One would have surely noticed two significant signs of a massive transformation that could take the internet everywhere for everyone and to do everything.

On one side of this transformation, we see that everything is getting converted into data. People generate 2.5 quintillion bytes of data every single day. We collect data on everything—our sleeping pattern, our eating habits, our communication mediums, and our driving style. Everything creates data.

On the other hand, we see that the world of connectivity has moved from transporting voice (telephony) to moving around data (bits-and-bytes of all kinds digital). Not only is this network technically capable of moving data, it is smarter. It can memorize, compute, and store, and it is closer to you physically at the edge of the network. It’s just a few hundred feet from the end user.

As everything becomes data and the data networks become smarter, a whole new architecture for the next phase is evolving. This nascent modern network is nimble and overcomes the constraints of a rigid physical infrastructure. It relies on the agility and upgradability of software. This radically new architecture is softwaredriven, where adaptable virtual network functions replace single-function network hardware. These virtual functions allow for centralized control with decentralized storage, compute, and memory. They allow the data network to dynamically transform to needs of end-users. They also become more accessible as they use simpler open-source hardware and software elements, which can

be made available by a host of new-generation network companies, empowering an affordable network for everyone.

Yet a major challenge remains. How do we make this new-age network available to everyone in a faster and more affordable way? That’s where we, data networks creators from India, have a defining role to play.

As a country that is representative of the world in many ways, we have a unique role to play in bringing up the new internet. We offer the meeting point of three core things—a representative populace, a global talent pool, and a relatively clean slate.

A representative populace for pervasive solutions:

India represents both ends of the class pyramid. While in the first quarter of 2019, India saw more mobile apps installed than in any other country, it is also home to 800 million people who are yet to be connected through the internet. India already consumes massive amount of data and applications, making it a dream market for many technology businesses. It is adept at making digital solutions available to common citizens across the country at low cost. For instance, Bharatnet, which aims to connect 250,000 gram panchayats, has started to generate impact, connecting thousands of people in rural India. We are most likely to give the world applications for all-pervasive education, low-cost transport, and advanced genomics, among others.

A global talent pool, massive and diverse:

India is known to have a massive software talent pool. The technology talent in the country has churned out some mind-boggling, life transforming applications in the field of education, e-commerce, and e-governance, among others. Beyond sheer numbers, we also have diversity across technologies and leadership talent, which makes us well equipped to drive businesses across the globe. Testaments to this are Sundar Pichai, Satya Nadella,

Shantanu Narayen, et al, who have gone places and are leading technology behemoths across the globe. Apart from software, the Indian semiconductor segment has been overcoming teething problems and promising fabless and chip-design startups. The semiconductor market, along with country’s technology prowess and massive telecom reach, could create an ecosystem that could take the digital revolution to newer heights and make India a powerful tech producer.

A clean slate with no legacy is a blessing in disguise:

One of the world’s biggest economies and home to more than one billion people, India does not carry any weight of legacy systems. With more than 70% of towers still to be fiberized, India can leapfrog directly to latest edge networks that could help cloud providers and service providers meet evolving demands of consumers on the go. We have seen this leapfrogging happen with Reliance Jio building the world’s largest greenfield and all-IP 4G LTE network to support millions of LTE subscribers, capturing 300 million subscribers in just two years of its launch.

Undoubtedly, this unique advantage could help India lead globally. All we have to do is to unblock India – so we can deliver what the world needs.

Despite the advantages, we still have to make major strides to achieve that. The fact is that today it is a challenge to ensure the consistency of the internet. I have three suggestions to make:

Aggressive investment by government in national data infrastructure:

There has to be a strong realization by the government that creating a strong data network infrastructure is akin to creating a strong highway, power, or railway infrastructure. Most countries globally have realized that putting this responsibility on private sector alone is not prudent. The role of the private sector, including innovative startups, will be more focussed on

using this national infrastructure platform for developing and delivering innovative applications of e-governance, education, healthcare, and entertainment. There must be an annual budgetary outlay for the next 10 years to create a high-quality national data infrastructure platform.

Embrace new-age virtualized tech: