Accenture portugal-telecom-it-strategy-transformation

1. SNAPSHOT PORTUGAL TELECOM telecom.pt
Location:
Lisbon, Portugal
Industry:
Communications
Employees:
70,103
Revenue:
€6.6 billion in FY 2012
MIGUEL MOREIRA
Managing Director,
Portugal Telecom Sistemas
de Informação
Length of tenure:
11 years
Education:
BS in mechanical engineering,
Instituto Superior de
Engenharia de Lisboa
Personal quote/mantra:
“Technology innovations and
process reengineering go hand
in hand.”
CORE
STRENGTHSPortugal Telecom leverages knowledge to expand abroad and
infrastructure to grow at home.
BY FRED SANDSMARK | PHOTOGRAPHY BY TON HENDRIKS
Miguel Moreira,
Managing Director,
Portugal Telecom
Sistemas de Informação
In the Sala de Obervação (the
Observation Room), Portugal
Telecom staff can monitor
the status of all services
provided to customers—
internet, home phone, mobile
phone, and television.
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TECHNOLOGY POWERED. BUSINESS DRIVEN. PROFIT NOVEMBER 2013

2. T
he global telecommunications market has
seen unprecedented upheaval in recent years.
State-owned or monopoly operations were sold
off or broken up. Investors brutally punished under­
performers. Data-hungry mobile phones became
devices of choice. Demand in emerging markets
exploded. The internet blossomed, and television went
digital. A large percentage of global communication
today—including voice telephone calls—is an applica-
tion on a converged digital network.
Portugal Telecom (PT) has survived and thrived through all
this turmoil. In two decades, management has transformed the
company from a hamstrung incumbent in a small market into a
flexible and increasingly global provider of converged communi-
cations, IT, and cloud services. In the process, developers at PT
have worked with Oracle to create IT solutions that streamline
and standardize business and operational processes to keep the
company competitive. And they’re augmenting this intellectual
property with investments in data centers and infrastructure to
extend the company’s reach, both at home and in growth mar-
kets in South America, Africa, and the Pacific.
“This is our new core: investment in infrastructure, compu-
tation with communications, and value-added cloud offerings
that we can take to emerging countries,” says Miguel Moreira,
managing director of Portugal Telecom Sistemas de Informação
(PT-SI), PT Group’s independent IT division.
Birth of “Telco in a Box”
The company’s story begins in 1994, when Portugal’s govern-
ment began privatizing its century-old state-owned telecom-
munications enterprise. By 1997 the new company, now known
as Portugal Telecom, was 75 percent privately held—the most
privatized European carrier at the time. But privatization was
just one part of PT’s 1990s metamorphosis; indeed, the very
business was changing. Leadership rolled out internet access
and mobile phone service—including MIMO, the world’s first
prepaid mobile phone—in the first half of the decade.
In 1998 management made the company’s first overseas
investment, in the Brazilian mobile phone company VIVO.
These ventures confirmed what PT managers knew intui-
tively: communication networks were becoming virtualized,
meaning that differentiation and competition would occur in
telecom services, not in access. “We saw that the market was
changing,” Moreira says. “The telecom business was becom-
ing more and more commoditized.”
To adjust to these market changes, PT’s leadership began
planning triple-play services (television, internet, and telephone),
expanding wireless offerings, and building an IT services busi-
ness within Portugal. But this expansion required business and
operational processes that were radically different from those
PT used as a phone company. PT needed to tightly integrate
back-office IT functions such as provisioning, charging, bill-
ing, and customer care to swiftly address customer demands
and competitive pressures; old systems that might take weeks to
activate a new phone service simply wouldn’t cut it. A team at
PT-SI began redesigning the company’s business applications to
meet these new demands.
Carlos Palito, PT-SI’s general manager and a 10-year veteran
of the PT Group, remembers the challenges they faced. “If you
want to build a triple- or quadruple-play operation, you can’t
do it with a legacy approach,” he recalls. A solution remained
elusive until 2006, when PT leaders learned about the nascent
Oracle Communications solutions. PT management admired
Oracle’s strategic vision and chose Oracle Communications
solutions as the foundation for its new solution set.
Collaborating with Oracle and Accenture, PT-SI developers
devised a modular, integrated, preconfigured business support
system and operations support system incorporating customer
relationship management, analytics, reporting, and more within
an application integration architecture. They called this product
“Instant Telco” because it supported very rapid launch of new
telecommunications products and services.
And management didn’t stop there. The PT-SI team and
PT Inovação (the company’s RD division) also developed
modules to support governance, change and campaign man-
agement, convergent service delivery, and online charging (on
top of the online charging system created by PT Inovação—a
system that provides service to more than 130 million real-time
service users worldwide, including 75 million in a single instal-
lation), among other functions that a converged carrier needs.
The architecture for these modules was based on Frameworx,
an industry-standard process model from TM Forum (formerly
TeleManagement Forum). Together, the modules provide a
global convergent solution that delivers “quadruple play” capa-
bilities—television, internet, mobile, and fixed-line services—
also known as nPlay in the telecommunications industry.
The PT-SI team began deploying modules in 2009, and the
wisdom of their strategic choice was quickly apparent. “In the
past, the time needed to create new products was as long as a
full year,” says Palito, noting that existing IT systems couldn’t
respond to changing business strategy. “Today, the company can
launch a new product, and align systems with the product, in
only two months. And in cases where a rapid response is espe-
cially critical—for example, when a competitor launches a new
offering—PT can move even faster, launching a competing offer
within 24 hours.” The overall solution was named “Telco in a
Box,” and today it has 14,000 users within PT and supports 12.7
million quadruple-play customers.
Reaching Emerging Markets
As Telco in a Box took form, the PT-SI team realized that it
represented a new concept for the industry. They also knew
that new and existing telecom operators in emerging markets
were scrambling to meet burgeoning demands for services on
converged networks, so Telco in a Box—which was designed
to reduce time to market for new products and services—
could complement and support PT’s goals for growth outside
of Portugal.
10
Number of transoceanic cables
that make landfall in Portugal
22
Percentage of revenue Portugal
Telecom has reinvested in its
business—roughly double the
industry average—since 2008.
Most investment has gone to
infrastructure.
40
Percentage of homes in
Portugal served by Portugal
Telecom’s fiber-to-the-home
(FTTH) network. (The percent-
age is capped by regulation.)
90
Percentage of the Portuguese
population served by Portugal
Telecom’s 4G wireless network
“IN THE PAST, THE TIME NEEDED TO CREATE NEW
PRODUCTS WAS AS LONG AS A FULL YEAR. TODAY, THE
COMPANY CAN LAUNCH A NEW PRODUCT, AND ALIGN SYSTEMS
WITH THE PRODUCT, IN ONLY TWO MONTHS.”
—Carlos Palito, General Manager, Portugal Telecom Sistemas de Informação
Above: Miguel Moreira (right),
Managing Director, and Carlos
Palito, General Manager, Portugal
Telecom Sistemas de Informação.
Right: Portugal Telecom’s new data
center in Covilhã, Portugal
COURTESYOFPORTUGALTELECOM
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TECHNOLOGY POWERED. BUSINESS DRIVEN. PROFIT NOVEMBER 2013

3. “In Telco in a Box, we had an asset that we could sell and
deploy for operators—even the smallest ones—to solve their
problems, the same way we had done,” Palito says. Palito and
his team knew that Telco in a Box would have traction with
telecoms because a telecom had developed it. “We [telcos] have
a different approach, and a different skill set, that cannot be
found in a normal integrator,” he explains. “We speak the same
business language, and with Telco in a Box we’re sharing our
proven experience.”
Telecom industry knowledge helped PT-SI’s developers
design Telco in a Box with core functionality that could be
deployed quickly and customized rapidly. Their goal was
to deliver 70 to 80 percent utility out of the box; within the
remaining 20 to 30 percent, the solution could be customized to
support specific customer and local market needs, such as taxa-
tion schemes. The delivery model incorporates both onshore
and offshore activities to reduce costs and optimize execution.
The solution’s architecture enables PT-SI to fold enhance-
ments that it makes for one customer back into Telco in a
Box when those enhancements can benefit other customers.
“The framework evolves based on real customer and business
needs,” Palito explains. “Each new functionality is designed
and coded by PT-SI, reviewed by Oracle to guarantee best
practices, and tested in the field before being integrated into
Telco in a Box.”
The first Telco in a Box deployment outside of Portugal
occurred in 2010 at Cabo Verde Telecom in Cape Verde, an
island nation off the west coast of Africa. There, Telco in a
Box enabled a quadruple-play business with 430,000 custom-
ers. Two years later, Telco in a Box was deployed at Timor
Telecom in the Southeast Asian nation of East Timor to sup-
port a triple-play network serving 700,000 customers. In both
environments, time to market for new product bundles, services,
and promotions has been reduced to as little as three weeks.
By the end of 2013, Telco in a Box will be deployed at Mobile
Telecommunications Limited in the southern African nation
of Namibia to enable a triple-play offering reaching nearly
2.2 million customers.
Simultaneously, the company’s footprint in Brazil expanded
through investment in and partnership with Oi, that nation’s
largest telecommunications provider. In Brazil, PT leaders have
been leveraging their company’s success in developing innova-
tive, technologically advanced solutions for corporate customers,
fixed-mobile convergent offers, mobile broadband, pay TV, and
quadruple-play services. These offerings have improved Oi’s
operational and financial performance and increased the poten-
tial for future growth.
PT-SI teams delivered Telco in a Box in Cape Verde, East
Timor, and Namibia using a three-year build-operate-transfer
(BOT) model, with PT-SI providing support. BOT financing
enables the local carrier to acquire a more robust solution
than they might otherwise be able to afford, understanding
that payback will come as revenue grows. (In a classic virtu-
ous circle, revenue will be more likely to grow if the carrier
provides excellent service, which Telco in a Box can enable.)
“We’re trying to put in a software and technology package
that can serve them for the next 10 years,” Moreira says.
“It may be a little over-engineered right now, but it’s not going
to be overengineered in two or three years.” Although all
Telco in a Box deployments to date have been on premises, a
cloud version is possible in the future (see the “Ahead in the
Cloud” sidebar).
Power of Partnership
Telco in a Box is PT’s intellectual property, but its development
and deployment have been a cooperative effort between PT-SI,
PT Inovação, Oracle, and Accenture. Each party has brought
strengths to the partnership: PT-SI understands real-world
telecom operations, Oracle brings technical prowess and a solid
technology foundation, and Accenture provides worldwide reach
and knowledge of global business practices.
“We have been working on this concept together with
Oracle and PT since the beginning, in order to build up a mar-
ket solution, not a Portugal Telecom–only solution,” explains
Eduardo Fitas, managing director at Accenture. “Accenture and
Oracle can give the market confidence that Telco in a Box is an
independent, market-leading solution that any telecom operator
can leverage.”
PT’s teams are rightfully proud of their contributions to
Oracle Communications solutions. “Since 2008, we have
participated in the development and the roadmap of Oracle
Communications products,” Palito explains. PT-SI, which is an
Oracle Gold Partner in Oracle PartnerNetwork, sends people
annually to meetings of the Oracle Customer Advisory Board
and Oracle OpenWorld to share with the Oracle develop-
ment team what works, what doesn’t, and what can be better.
“Oracle hears us, and we see our recommendations reflected in
future releases,” Palito continues. For example, in 2011 PT-SI
recommended improvements to the roaming model in Oracle
Communications that, based on PT-SI’s experience, would
reduce the need for localization, and those improvements are
now incorporated into the core Oracle product.
The goal of the partnership between PT and Oracle is more-
powerful and more-flexible products for PT, its subsidiaries,
and its carrier-customers. “We’re trying to lower the barriers of
adoption for very good technology,” Moreira says. “That’s why
we are partnering with Oracle.” Looking forward, as Oracle
Communications solutions become even more complete and
integrated, PT and Oracle developers plan to jointly evolve
Telco in a Box, making PT’s solution even more agile and
beneficial to customers. Moreira foresees that PT will expand its
engineering systems and extend its solutions to improve business
performance and lower total cost of ownership in additional
functional areas within the telecom business. He adds that PT
and Oracle have also collaborated on PT’s cloud initiatives and
new data center, and that Oracle and Accenture are both help-
ing PT explore how the Telco in a Box model might apply to
solutions for healthcare, education, and other markets.
“We are looking at the long term,” Moreira concludes. “Our
main revenues and profitability still come from connectivity, but
that’s changing. We have to prepare for the future.”
Fred Sandsmark is a regular contributor to Profit.
AHEAD IN THE CLOUD
Portugal Telecom delivers cloud services from stylish, efficient data center.
On September 23, 2013, Portugal Telecom (PT)
connected a new cutting-edge unit to its network
of global data centers via high-speed optical data
network. Located in the mountain city of Covilhã,
Portugal, PT’s new tier 3 data center is a styl-
ish LEED Gold–certified structure that includes
a large photovoltaic array providing renewable
energy. “Free cooling,” which takes advantage of
Covilhã’s often-chilly mountain air, reduces energy
usage—in fact, the center boasts a power usage
effectiveness of just 1.25. When completely built
out, PT’s data center in Covilhã will be the largest
in the country and one of the largest in the world,
capable of hosting more than 50,000 servers in
four 3,000-square-meter modules.
The Covilhã data center and PT’s six other
domestic data centers are home to PT’s cloud-
based IT services known as SmartCloudPT. The
solutions range from infrastructure services such
as virtual private servers to customer relationship
management, enterprise resource planning, collab-
oration, and communications applications. João
Dolores, head of PT’s Cloud Business Unit, says
PT and Oracle are working together to make Oracle
applications part of the SmartCloudPT mix soon.
“We want to make sure that we bring together the
best of Oracle solutions and PT’s infrastructure
and market reach to provide leading-edge, afford-
able services to companies of all sizes,” Dolores
says. “The ability to render these solutions in a
utility, or pay-per-use, model is very powerful,
since it opens up unexplored market segments for
both PT and Oracle in the IT space.”
The cloud-based IT approach is being mirrored
by PT in Brazil. Dolores and his colleagues are
responsible for defining the IT and cloud strategy
for both PT and Oi, as well as managing strategic
partnerships with a global perspective. “We don’t
just look at the Portuguese market anymore,”
Dolores says. “In fact, the investments we’re mak-
ing position the group at a global scale in terms of
IT and cloud services. For instance, the new data
center in Covilhã will be connected to our existing
data center network in Portugal, Brazil, and Africa.
This global data center network, together with
the strategic partnerships we’re establishing with
players such as Oracle, enable us to serve custom-
ers on several continents with leading-edge solu-
tions at very affordable prices.” Dolores also notes
that Oracle has been a key partner in assisting PT
with data center consolidation.
PT managers estimate that just one-sixth of
the Covilhã data center’s eventual capacity will
be needed for domestic needs. Coupled with the
transoceanic cables from Africa and the Americas
that PT co-owns, the new data center may soon
be serving cloud-based applications—including
Telco in a Box—to lands far from Portugal. “We
believe that cloud is not a new line of business, but
a new way of doing business,” Dolores says. “And
we believe it is the basis for all the services that
we will offer in the future—even voice.”
“WE’RE TRYING TO
LOWER THE BARRIERS
OF ADOPTION FOR VERY
GOOD TECHNOLOGY.
THAT’S WHY WE ARE
PARTNERING WITH ORACLE.”
—Miguel Moreira, Managing Director, Portugal Telecom
Sistemas de Informação
Scan to learn more about the Oracle solutions featured in this story.
ACTION ITEM
COURTESYOFPORTUGALTELECOM
Portugal Telecom’s mobile
network provides service to
130 million customers across
four continents.
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TECHNOLOGY POWERED. BUSINESS DRIVEN. PROFIT NOVEMBER 2013