Component Governance as a Key Factor for IT Business Alignment of Telecommunications Companies

Modern telecommunications companies currently undergo remarkable structural changes to be successful in the Next-Generation markets for communications and content products. The implementation of capable IT structures will be a key success factor to be profitable. This paper describes the market challenges of telecommunications companies and illustrates a comparison of different governance methods. It also introduces a new governance method and finally outlines which structures are appropriate to meet the shifted market requirements. 1 Challenges for Modern Telecommunications Companies Currently, modern telecommunications companies (TelCos) undergo enormous structural changes towards IP-based telecommunications companies (IPTs). The product portfolio of IPTs contains bundles of products e.g. IP-based broadband Internet access (www), IP telephony (Voice over IP VoIP), IP television (IPTV) and premium content (e.g. movies, games, music). Many TelCos aim at scenarios, where it is possible to produce, buy and consume all connection products (IP access), all service products (www, VoIP, IPTV) and all the content anywhere and anytime online. In this target scenario time-to-market (T2M) for new products and the production time for product instances should be as short as possible. These are strategic business objectives for IPTs to meet the market requirements of the future and to ensure long-term success(cf. [SMA08]). These strategic requirements can only be fulfilled if telecommunications companies can meet certain operational goals. Due to the high number of customers in mass markets, product instances need to be produced and provided fully automatically (zero touch). Otherwise it is infeasible to reach the required quality and to provide fast online-provision of products. Manuel steps in the production process would make it impossible for IPTs to be profitable in mass markets. To ensure the fast introduction of new product types it is necessary to find a simple way to “plug” new products into the existing product infrastructure without interfering with existing product instances or production processes. This paper introduces component governance as an approach to tackle these challenges. The remainder of this paper is organized as follows. The next section briefly describes the impact of IT on the business objectives of a company. Section 3 outlines that governance is a key factor of business alignment and describes on which levels governance could be established. In section 4 we compare different governance methods and introduce component governance as a new governance method. The last section concludes the paper and outlines future work. 2 The Impact of IT on Reaching the Operative Business Objectives To be successful in telecommunication markets it is mandatory to meet the market requirements of the future. TelCos have to provide their products in mass markets to be profitable. Therefore TelCos need to produce the required products in a fast and flexible way. With regards to these circumstances an analogy to different types of manufacturing can be found. In general there are three categories of manufacturing: • Job-shop production: In Job-shop production or batch processes a product is assembled by several activities step by step. It is not necessary that every product runs through all process steps. For example in a bakery the products are produced in batches and in a high variety but the activities are fulfilled one after another. The job-shop production model is an approach which is very flexible but the number of produced products is rather moderate. • Mass production: Mass production or assembly lines are very common in automobile industries. The activities and sequences to assemble a product are fixed. Therefore the outcome is very high but the variety and flexibility is rather low. For the company it is very cost and time-intensive to change the production line. • Continuous production: In the continuous production model the product is produced in a non-stop flow. Famous examples for continuous production flows are oil refineries or the salt production. With a high process speed it is possible to produce a high quantity of products. In a continuous production scenario the outcome is measured in weight or volume. A changeover is very time-consuming, causes a lot of efforts and is in most cases nearly impossible to reach. The main differences between the three types of manufacturing described above are the output volume and variety and the process flexibility. In continuous production processes the output of products can be very high but as a result the flexibility is very low. In a mass production scenario the volume can be high but the variety and the flexibility is still low. Job-shop production processes are very flexible and also the variety can be very high but the outcome is rather moderate or low compared to the continuous production model and to assembly lines (cf. [Sch98a]). For TelCos it is critical to be very flexible and move fast in mass markets. Within modern TelCos exist very different and complex considerations to reach the ideal production process. On the one hand in a TelCo the production structures are very similar to the Job-shop production but on the other hand the products are produced for mass markets. With regards to both requirements we introduce a new approach that allows to treat a job-shop model as a conjunction of a number of assembly lines. The component governance model is the most adequate strategy to be adopted by telecommunication companies to be profitable in mass markets and to reach a TelCo‘s business goals. The information technology (IT) of a company is exclusively used to achieve the overall business objectives (cf. [RR06]). In an ideal business scenario the IT of an enterprise follows the company’s business model without limiting it. Strategic changes to the business model of an IPT should only provoke operative changes of its IT without affecting the strategic IT landscape of the entire company. To reach the previously described situation it is necessary to align the IT landscape and the business model of the company (Business Alignment) in a proper fashion. The strategic business models of TelCos include distinct scopes: • Trading: TelCos offer their own products and services as well as third party products. • Production: To produce and finish their own products. TelCos have a complex production infrastructure. • Usage: TelCos provide their products 24/7 to their customers. To meet the resulting requirements, a TelCo needs high quality processes in Operations, Performance Management and Assurance. • Innovation: To maintain the competitive advantages it is necessary that IPTs assure a extraordinary innovation cycle to launch new products and related technologies. All these various scopes affect all different business processes of a company. Companies have to provide a consistent interface for customers, have to ensure the interoperability of different related products, have to meet the requirement of distributed production and have to solve the problems of shared and highly dependent communication infrastructures (Platform). The processes of a modern TelCo are not longer manageable with any reasonable efforts. In fact it is virtually impossible to solve the dependencies of processes of TelCos. Therefore the IT of a TelCo has a strategic key role to act profitable in the markets. Modern TelCos are strongly affected by fully automated IT processes. More and more all the manual activities and services will be replaced by central automated IT processes. That means IT will be a key factor for success moreover IT will gain a central function to control the company. Governance will be the key method to align the IT with the operative business objectives of the company. 3 Governance as a Key Factor for Business Alignment of IT Governance assures the Business Alignment of IT through the implementation of appropriate management and controlling strategies. Based on the reasons described above governance will be a strategic key factor for the success of IPTs in the future. Governance could be established on various levels: • Execution Governance: Many of today’s famous governance methods try to achieve an execution governance by using the concepts of service oriented architectures (SOA [BCK98] [HWSD07] [RFPK07]). To reach these goals companies often use catalogues to manage services (service-repository) or define overall data structures (business-object-models). It is very common to use abstract modeling notations e.g. Unified Modeling Language (UML [FEL97]) to harmonize the concepts and documentations. From a generic perspective these mechanisms solely ensure the accessibility of programs (services), the clear programming (data models, etc.) and the executable deployment of programs. The important conclusion is, that these models do not ensure that the implementation supports the business model and business objectives of the company (cf. [AS08]). • Process Governance: The basic idea of the governance is the formalization and the harmonization of the whole process landscapes (cf. [Sch98b]). In huge complex process landscapes (e.g. TelCos) it is almost impossible to realise this approach. Because of the rapid pace change of businesses and the decentralized processes, the process models cannot be maintained in a sufficient time frame. A requirement of company-wide process models are company-wide data models. Data models have the same problems as process models: It is almost impossible to maintain consistent models in a fast changing IT landscape. Governance of company-wide processes and data models requires constant monitoring and is affecting thousands of individual factors. This endeavour requirements generate huge efforts and costs. In addition, the adoption of standard IT systems evokes that process elements and data models are driven by external IT products but not by a strategic specified company process model. • Business Transaction Governance: Each relevant process will be initiated by the corresponding business transaction (e.g. product request or beginning of product usage) Every business transaction holds a binding inand output functionality. The governance is responsible that all business transactions are executed by the IT. A TelCo for instance has around 30 different business transactions. business transaction governance can possibly replace process governance. To a certain degree that is possible because IT could support some business transactions without knowledge of every process detail. • Structure Governance: Structure governance determines which business transactions are allowed to trigger other business transactions. The rules for structural governance will be aligned with important company structures e.g. product structures. The attempt of the structure governance is to provide a consistent mapping of the business model of a company. Business Transaction Governance Process Governance Execution Governance S er vi ce s