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How to Build a Strong Service Provider Business

- April 20, 2015 - 3 Comments

The world of the service provider, specifically for cable and telco providers, is becoming an ever-changing environment. Previous funding models, like USF and ConnectAmerica, are in flux. Customer demands are shifting from lower bandwidth consuming web browsing to immersive video, cloud services, the Internet of Things, and other bandwidth intensive applications. These changes, if not planned for and adapted to, can weaken service provider operations and customer satisfaction.

Developing a strong service provider business that can pace itself with these changes and stay profitable along the way requires focus in four primary areas:

  1. Customers
  2. Service Offerings
  3. Talent
  4. Network

Customers

It is essential that each provider understand their customer’s motivators and incentives for adopting certain technology and use patterns. Cisco VNI forecasts 132 Exabytes per month of IP traffic by 2018—over 2X more than 2013 traffic (figure 1). Embrace this growth rather than fight the adoption of new technologies like peer-to-peer, video streaming, and cloud applications by creating services with marketing programs that embrace and celebrate the growth of broadband. Be the customer advocate—make your customers fall in love with your services.

Make sure to keep current and understand consumer technology and the implications it will have on your business. If unable to attend the CES, follow it in social media or through other sources. Understand where consumer technology is evolving to and adapt the business strategy for customer adoption of these trends.

Keep your customers, their feedback and behavior at the center of your service strategy.

Figure 1. Cisco VNI Forecasts 132 Exabytes per Month of IP Traffic by 2018

Figure 1. Cisco VNI Forecasts 132 Exabytes per Month of IP Traffic by 2018

Service Offerings:

It is hard to stay profitable by offering only broadband and make the network changes required to keep pace with data consumption patterns. Providers need to create business models that provide additional customer-focused services for residential, mobile and business customers. Use customer feedback and industry trends to create a unique, differentiated set of services that meet the potentially unique demands of each provider’s serving areas. These new services should become the most profitable. As the services become ubiquitous or expected, new services should be developed to keep customers engaged or sticky.

Some common services offered today include:

  • SP WiFi – Cisco VNI forecasts substantial growth in WiFi by 2018 (figure 2). Capitalize on this growth and create new revenue opportunities by blanketing common areas, downtown corridors, venues and other high population areas with WiFi to provide cell offload, analytics, location services, hotspot access for customers, and pay for access. Also providing custom SSIDs, portals, and advertisements for businesses are a compelling value add.
Figure 2. Global Internet Traffic, Wired and Wireless

Figure 2. Global Internet Traffic, Wired and Wireless

  • Managed IT – Businesses should be focused on what they are best at and options for outsourcing their IT needs to their local provider can be compelling.
  • Managed Security – Security for businesses and even residential users is a growing revenue source for providers. From managed firewall services to hosted malware protection— there are plenty of options to customize for different customer types.
  • Cloud + Circuit Bundles – Guarantee SLAs by building a private or hybrid data center. Providers can offer 1G or 10G pipes to their business customers in conjunction with DR storage or hosted applications.

Cisco Q2 FY’15 shows Data Center and Wireless as large growth areas (figure 3). This is in line with the above analysis of creating service-oriented businesses and networks.

Cisco Q2 FY'15 Revenue Highlights

Figure 3. Cisco Q2 FY’15 Revenue Highlights (from Cisco’s Investor Relations website).

 

  • Linear content + Video Anywhere – Create a uniquely branded solution by developing a ROKU-based solution that brings together linear or live content in conjunction with video anywhere options like HBO Go or the up and coming Disney and CBS.
  • Many other services are out there—for example, Hosted VoIP or Collaboration.

Talent

The saying goes, keep your employees happy and they will keep your customers happy. Every provider should have a strategy built around attracting, acquiring and retaining knowledgeable and talented employees. Happy and knowledgeable employees work more efficiently and are more likely to go above and beyond to solve customer problems and keep customer satisfaction high. This doesn’t mean you have to hire the most expensive employees—sometimes that’s just not in the cards. Develop strong training programs and development plans for as many employees as possible. Provide employees with a career progression and attainable goals to go after. Don’t only focus on technical skills but train soft skills, especially those that are related to customer and social interactions. By engaging and mentoring all employees you will bring out the best talent, and in some cases, talent you didn’t know you had.

Network

A provider builds the foundation for success by creating a customer centric strategy, researching and building a compelling service set, and training and hiring the best talent. The last piece of the puzzle is to create, manage, and maintain the infrastructure that delivers the service to the customer. Always plan ahead and have a running 3-5 year network and infrastructure plan. This plan should be built and modified based on customer feedback and trends as well as what service offerings will be relevant both short and long term. Tie your customer and service plans together with your network and infrastructure plan.

Build the infrastructure in as redundant of a way as you can afford. Reliability of delivery is one of the main customer satisfaction metrics. It only takes one outage to tarnish a reputation but takes a long time to get that brand value back. Don’t skimp here.

Create a modular and adaptable network. MPLS provides efficient ways to transport different types of traffic. By creating a base physical layer with a logical MPLS network on top, “virtual” architectures can be created using VPLS, AToM and L3VPNs. This combined with network function virtualization (NFV) can enable modification of services and delivery without rolling a truck to make the changes. The idea is to create the architecture and network in way that it can handle different types of services without making major changes to the network. It must be able to adapt.

Conclusion

A service provider can create a strong business by focusing on the four primary areas: Customers, Service Offerings, Talent, and Network. Customers will be satisfied, engaged and willing to work with the provider to evolve their experience. Each provider will see satisfaction increase when focus areas have strong strategies in place and are kept at the center of decision making.

For more questions or comments, Tweet us @CiscoSP360. We would love to hear your thoughts!

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3 Comments

  1. You said "Every provider should have a strategy built around attracting, acquiring and retaining knowledgeable and talented employees." -- This seems like the most difficult challenge for the typical incumbent service provider to overcome. In the past, they didn't have to hire the best qualified networking talent to be successful. However, as more networks become software-defined the required skill-set changes. In order to innovate, you need the best talent. So, what's the appeal for the top software developers, who likely never considered working for "the phone company" before? Given the traditional SP legacy culture, how do you make them seem attractive to high-caliber developer talent?

    • David - thanks for your comment. I would agree it is challenging. Success will absolutely hinge on changing the culture. There are a few approaches we can all take in our businesses to get closer to the mark on this. For example, hiring motivated technical-minded folks is key. Then having an established training and career development plan for each of those key employees. Programming and networking training courses are a good start. I believe employees that are treated well, invested in, and provided a path to success will stay far longer. I've been personally motivated by this path. Attracting = build solid training and technology plans, when interviewing candidates or advertising for candidates if you show you are organized, strategically clear, and have solid personal development ideals, motivated individuals will be interested Acquiring = finding motivated individuals that like to explore and learn new things and are personally driven by learning and technology Retaining = track and reward success, hold employees to a high-standard but give them the tools and training to be successful, and make sure your pay is at least in the general ballpark of averages for that type of position Make sure your plan has a bench of players mentality. You'll hire some people with the skill sets already some you'll build up from entry level. The key is having this mix and training and development plans around getting everyone to the next level.

      • Sorry, formatting on my last post was lost.

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