Telecom Service Providers

High on IT investments

The telecom industry banks on IT to support its business goals, and is one of the leading spenders on IT. This is expected to continue in 2006-07, says Abhinav Singh

Of all those surveyed, the telecom vertical had the highest number of PC nodes, with an average of 625. The average turnover of the eight telecom companies surveyed also showed an increase of 20 percent from Rs 1,950 crore in 2004-05 to Rs 2,383 crore in 2005-2006. Their IT spending is in three strategic areas: hardware (predominantly servers), security and networked storage.

RISC and x86 each in its own niche

Telecom companies are investing in servers, the backbone on which all operations and applications run. As per the survey, the investment in servers was the top priority among technology areas. Of the telecoms surveyed, 43 percent had invested in x86 servers and an equal percentage had gone in for RISC servers. A source in Mahanagar Telephone Nigam Limited (MTNL) who refused to be named said, “We are exploring the possibility of using x86 servers for running many our applications in the near future, although core applications such as billing and the customer database continue to be on RISC servers.” MTNL will try migrating its applications on RISC servers to the x86 platform as it would result in 20-30 percent lower running costs without affecting performance.

MTNL has been leveraging the power of RISC servers as they offer higher performance. Since the telecom major has a large customer database, it needs high processing speed which only RISC servers can meet. Comments K P Unnikrishnan, Marketing Director, Sun Microsystems India: “The telecom industry is witnessing a boom like never before. In developing markets such as India, we see the mobile subscriber base growing very rapidly; the provisioning of value-added services is also driving the market. Across the board, the one major requirement is a reliable IT backbone. This is where RISC-based servers are still the first option for mission-critical core telecom applications.”

In developing markets such as India, telecom companies are dependent on their technology vendors to provide them with equipment which can scale up rapidly and in a robust manner to handle the ever-growing base of consumers. Their need is for an IT infrastructure which can support the deployment of value-added services rapidly to as many subscribers as possible creating newer revenue opportunities.

Many telecom companies have a data-intensive environment which requires RISC servers. Elaborates Unnikrishnan: “RISC has been synonymous with servers for over 15 years, and even today compute-intensive server applications such as data warehousing, decision-support or large ERP tasks are able to take advantage of the tremendous processing power RISC servers offer. Moreover, users can scale their systems simply by adding more processors, a key consideration for telecom organisations running billing or CRM applications that quickly grow to multi-terabyte size.” It is believed that RISC servers are being preferred by the telecoms because they provide superior throughput due to their basic architecture which gives them high operational efficiency and stable performance.

The requirement for servers at telecom service providers arises for two main reasons. First, they need servers because they want to run their network equipment-related functions such as routers, switches and the physical layer of the equipment. Second, they need to run their core applications such as billing, plus the value-added services (especially the customised location-based services).

"There will be a shift of some applications relating to the physical network to x86 servers, but core IT applications such as billing will continue to be on RISC" - Jyothi Satyanathan Country Manager eServer pSeries IBM Systems & Technology IBM India

According to Jyothi Satyanathan, Country Manager, eServer pSeries, IBM Systems & Technology, IBM India, core IT operations are run using RISC-based servers because of the high performance they offer. “There will be a shift of some applications relating to the physical network to x86 servers, but core IT applications such as billing will continue to be on RISC. RISC servers will continue to grow because the telecom market is growing at a rapid pace, and its billing applications and huge customer database can be managed only by RISC-based servers.” Additionally, many vendors have pointed out that RISC servers will continue to dominate high-end application requirements in the telecom space because the x86 server box can have 16 CPUs whereas a billing application of a telecom service provider would require 60 CPUs or more and x86 may not be suitable for that.

NAS, SAN & DR

As far as networked storage is concerned, the telecom segment has a more robust storage infrastructure when compared to other verticals. The penetration of NAS is highest in this segment, and the adoption of SAN follows NAS.

For example, MTNL is using Fibre Channel (FC) SAN and swears by it. According to sources, MTNL had installed FC SAN boxes three years ago, and subsequently has been able to consolidate its critical data. It also has full-fledged DR (Disaster Recovery) running for the duplication of data relating to its data centre. MTNL feels that SAN is easy to upgrade and protects future investments.

Besides this, e-mail archiving and storage management are high on the agenda of the telecom companies covered by the survey.

According to George Thomas, Country Manager, Network Appliance, India & SAARC, “During the past two years the number of telecom users has increased manifold, resulting in the need for robust storage infrastructure. Customer data records are usually on NAS while billing applications are placed on a SAN. DR is extremely important for telecoms because they have data centres for which they want data replication at another site. The time to recovery and the recovery point objective are extremely important for telecom…they cannot afford to let the network go down in case of a disaster.” Telecom companies also require an efficient storage management mechanism because they have upgrades to do, have multiplicity of data types, and have a huge storage infrastructure to manage. Without proper storage management all this will be difficult to handle.

Security tools in place

Most telecoms already have a robust perimeter security infrastructure with anti-virus, anti-spam and firewalls in place. All the players surveyed have a security policy, with the CIO calling the shots in formulating the same. Data security, unauthorised employee access and perimeter security are the prime concerns. About 38 percent of telecom companies surveyed reviewed their security policy once every six months, while 25 percent reviewed it once a year.

Vishal Dhupar, Managing Director, Symantec India rightly points out that telecoms need to be especially careful in keeping their systems up-to-date with security patches and solutions. He says that they have deployed anti-virus, firewalls, intrusion detection and intrusion protection solutions on client systems, and are also ensuring that they are actively monitored round-the-clock against any attack.

Nevertheless, viruses and worms, phishing and spam, continue be areas of concern. Observes Rajendra Dhavale, Consulting Director, Computer Associates, India and SAARC, “Telecom companies launch various services and offerings for their customers (including facilities such as online bill payments and online profile maintenance) so as to have an edge over their respective competitors. With such offerings it becomes imperative to secure these transactions in terms of identifying and preventing unlikely events, prevent unauthorised access, and harden the Web servers.” These organisations also face typical issues, like any other organisation, pertaining to internal security. It becomes important to manage identities and authorisation, and track activities.” MTNL has a well-documented security policy; it felt that having one was necessary because it has a subscriber database which it needs to secure and ensure that it is not stolen or tampered with.

Getting into the details is Niraj Kaushik, Country Manager, Trend Micro, India and SAARC. “The survey is largely reflective of the real pain areas. If you analyse the threats to any large business, they range from viruses, worms and spyware (that make corporate data more vulnerable) to the seemingly harmless spam and content abuse by employees. Data damage, system downtime and bandwidth issues are some of the pain areas which are critical to telecom companies. Like any other policy of the organisation, its security policy too needs to be documented to make it a process. A non-documented security policy leaves much room for interpretation and leeway, and therefore the large enterprises are going in for formally documenting their security policy.”

But it is necessary to point out that it is the depth and content of the security policy that matters—and not the fact that it exists. Implementation of the policy is the most important factor in ensuring its success; the implementation must be simple yet effective, and telecoms have understood this.

The majority of telecom companies conduct security audits as per BS 7799 and ISO 177799, and an audit is done once every six months. About 75 percent of the telecoms surveyed conducted security audits through their internal IT teams, and have a Chief Security Officer.

Outsourcing initiatives

Desktop, network and application deployments are the key areas where the telecom vertical is outsourcing. This is followed by the help-desk and data centre. While most firms have gone in for partial outsourcing, there have been some radical initiatives. Take the case of Bharti Tele-Ventures which inked a 10-year deal with IBM Global Services worth $750 million (Rs 3,400 crore). The scope of the project includes managing and maintaining Bharti’s hardware (servers, PCs, network equipment), software and IT services requirements. It also includes customer-facing IT applications (including billing, Internet banking and help-desk), CRM, data warehousing, data centres, asset management, security and disaster recovery. In addition, IBM will help Bharti migrate from its existing architecture to a new one.

While outsourcing is catching on across verticals, the telecom segment comes across as the most aggressive on this front. More IT outsourcing by telecoms is expected this year with help-desk, data centre, application deployment, business process engineering and networking being the functions most likely to be outsourced to third-party IT service providers.

Some telecom service providers such as MTNL have gone in for AMCs (annual maintenance contracts) with MNCs. MTNL has a team of trained engineers who try to solve any first-level of fault on their own, but in case they are unable to resolve the same it is transferred to the company handling the AMC. MTNL has also outsourced its call centre operations to a third-party service provider which is responsible for each and every function of the call centre and has its own people managing and operating it.

Respondents have mentioned the desire to reduce costs and leverage their core competencies as factors behind the outsourcing decision. Other factors: the telecoms want to speed up service delivery, reduce resource constraints, and gain access to new technologies.

Most Indian telecom service providers are outsourcing parts of their business such as call centre operations, application-based services, and content. Outsourcing of billing and payment solutions is another area that’s specific to this vertical. Also being outsourced is network management, which typically comprises 50-55 percent of a telecom operator’s operational expenditure. System integrators expect network management outsourcing to be among the largest chunks of business that will be outsourced to third-parties. A key cost for an operator remains billing, which includes the cost of software licences and upgrades, operations and maintenance, printing and posting.

Telecom service operators have also realised that it is expensive to maintain an internal team for handling network operations; as they roll out new services, pressure increases. Most telecom service providers in India are looking at a revenue-sharing model rather than a transaction-based one. Apart from Bharti, there is the example of Idea Cellular outsourcing to HP.

As telecom operators enter new domains, they are aiming to offer better connectivity options for enterprises. Large organisations with branches spread across multiple locations (and that are facing the challenge of integrating their processes and people) will seek point-to-point connectivity from telecom providers—who will therefore be forced to keep their IT infrastructure up to date. Service providers are increasingly introducing value-added non-voice-based services for which there will again be a spurt in the investment in IT.