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FedericoGermani(CH),BerndKraus(FT),AndréKrause(DU),FriedrichNeumeyer(FT),StefanSchmitgen(FT),JuergenStark(CH),SafroaduYeboah-Amankwah(CH)CONFIDENTIALPrimerDocument,Version1.0Chicago/Frankfurt,March2004Thisreportissolelyfortheuseofclientpersonnel.Nopartofitmaybecirculated,quoted,orreproducedfordistributionoutsidetheclientorganizationwithoutpriorwrittenapprovalfromMcKinsey&Company.ThismaterialwasusedbyMcKinsey&Companyduringanoralpresentation;itisnotacompleterecordofthediscussion.ITelecomCONTENTSManagementsummarySituationanddemandsonTelcoITAssessmentofexistingTelcoITenvironmentsVisionofafutureTelcoITlandscapeOutsourcingofTelcoITHowtogetstartedAppendix1: DetaileddescriptionofIT-supportedfunctionsAppendix2: Glossaryofterms2NetworkmanagementInventorymanagementDecisionsupportsystems/datawarehousingCustomercare&billingServiceprovisioningNetworkelementmanagementBackofficeapplicationsMaintenanceandworkforcemanagement

Source: McKinseyITSUPPORTOFTELCOBUSINESSPROCESSESCapacityandtrafficplanningDesignofthephysicalnetworkManagementofthenetworkinstallationEngineeringInventorymanagement...CustomercareandbillingNetworkplanningandinstallationSalesNetworkoperationServiceprovisioninganddeliveryManage/controlcorrectfunctioningofthephysicalnetworkManagetheloadofnetworktrafficMaintainnetworkManageinterfacesto3rdpartynetworks...Manage/controlsalesforceManagesaleschannelsLaunchcampaignsManageaccountsManagecustomercontracts...Manageandcontroltheorderprocessesfortelecommuni-cationservicesActivate/terminateservicesforcustomers...Rateandbilltelecommunicationservicesaccordingtopricelists,contractsand3rdpartytariffsRateandbill3rdpartyTelcoservicesMaintaincustomerrelationship...DecisiononbusinessfocusInvestmentplanningDesignofproductsandtariffschemesDesignofmarketpenetrationapproachEnterpriseresourcemanagementHRmanagementFinanceAccounting...ITsupportsallpartsofaTelcooperator’svaluechainTelcoITsystemsBack-officeadministrationStrategyandmarketingPROCESSVIEW3Backofficeapplications

Source: McKinseyOVERVIEW:FUNCTIONALITYOFTELCOITNetworkmanagementInventorymanagementDecisionsupportsystems/datawarehousingCustomercare&billingServiceprovisioningNetworkelementmanagementMaintenanceandworkforcemanagementNetworkconfigurationSurveillanceofnetworktrafficandperformanceFaultmanagementTariffandcustomercontractmanagementOrderhandlingBilling,invoicing,A/RComplaintmanagementConfigurationandsurveillanceofindividualnetworkelementssuchasswitches,multi-plexers,routers,etc.)Inventorymanagementofcustomerpremisesequipmentnetworkelements(e.g.,switches,mutilplexers,etc.)FordetaileddescriptionofsystemsandtheirfunctionalityseeAppendix1HRmanagementFinanceEnterpriseresourcemanagementManagementofmaintenanceandrepairserviceactivitiesforcustomerpremisesequipment,switchnetworkandtrunknetworkcomponentsAnalysisofcustomerbehavior,churn,etc.CustomersegmentationProfitabilityanalysisServiceconfigurationandactivation(e.g.,selectionofphonenumber,lineorSIMcardactivation,etc.)Callcollection4

Source: McKinseyCHARACTERISTICSOFINCUMBENTTELCOITSYSTEMSEXAMPLESPatchworkapplicationarchitectureHeterogeneousarchitec-turalapproachesacrossdifferentBUsNolayeredsystemstructuresSystemanddata redundancyIncompleteorunsatis-fyingsupportofbusinessprocessesPerformanceand reliabilitydriven systemoperationsReliabilitydrivensystem designattheexpenseofhighcostPerformanceoptimizationonthelevelofsinglesystemswithreducedoverallperformanceLegacyissuesHistoricallygrownarchitecturewith-outclearconceptComplexsysteminterfaces(ifany)OutdatedtechnologyDifficult,expensivesystemmaintenance5ChurnanalysisTariffplannerMarketinganddecisionsupportDatawarehouse/DatamartCampaignmanagementProfitabilityanalysisDataminingDataclean-upA/R+Billing+Contract+CustomercareBillingCust.BillingBilling+ContractBilling+ContractCust.OrderentryCustomercareA/RA/RA/R

Customercare&billingContr.Contr.

Source: McKinseyILLUSTRATIONOFREALTELCOITARCHITECTUREBackofficeapplicationsMaintenanceandworkforcemgmt.InventorymanagementServicemanagementCustomerisservedatpoint-of-saleContractisassembledbasedonstandardtemplateServiceorderisenteredintothesystemServiceisactivatedExampleofsalesandserviceprovisioning:Accesstoredundantsystemswithinonesystemdomain

NetworkoperationNetworkelementmanagementNetworkmanagementAccesstoamultitudeofsystemsacrossdifferentdomains6FRAMEWORKSTOUNDERSTANDEXISTINGITSYSTEMS

Source: McKinseyWhichapplicationsexistwithintheTelco?IssueImportanceofunderstandingFrameworksandtoolsWhatkindofsupportdosystemsprovide?Howdynamicaresystems?Whatisthetechnicaldiversityofsystems?FailuretodevelopacomprehensiveviewoftheapplicationsandarchitectureresultsinanincorrectfocusandlimitedeffectivenessWhiletechnologistsoftenunderstandtherelationshipbetweensystemsandtechnology,itistheirrelationshipwiththebusinessthatdeterminesvalueandeffectivenessThefutureviabilityofsystemsisoftendeterminedbytheirabilitytomeetchangingbusinessneeds.Stablesystemsideallyarede-coupledfromdynamicsystemsCostsforoperationandmaintenanceofsystemplatformsoftencouldbesignificantlyreducedbysharedtechnologiesApplicationinventoryApplicationmappingApplicationdy-namics/stabilityassessmentTechnologyinfrastructureanalysis43217

Source: McKinseyORGANIZATIONALDRIVERSOFTELCOITWithincreasingage,moreandmorecorefunctionsaresupportedbyoutdatedsystemsonnumerousdifferenthardwareplatformsIncreasingcompanyagecausescomplexitycostsgeneratedbyscaleeffects,multitudeoftechnologyplatforms,offeredproductsandservices,regulatoryobligations,andcomplexityofhistoricallygrownpatchworkIncreasingsizeofTelcosslowsdownspeedofdecision-makingprocessandflexibilitytoreacttochallengesIncreasingsizeofTelcosrequiresfundamentalchangeoftheiroverallorganizationalstructurewithmajorimpactontheITlandscapetomaintainoperationalefficiencyOrganizationalset-updeterminessplitofresponsibilitiesbetweencentralanddecentralITunitsandthereforeinfluencesconsistencyofITdesignandgranularityofsystems(monolithicvs.decentral)Organizationalset-upinfluencesmakeorbuydecisionsFragmentationofuserdemandandsystemownershipacrossorganizationalunitsdeterminesthedegreeofstakeholderconflictsSincetheITstructureisnotalignedtothebusinessprocesses,ITfunctionsareaccessedbyavarietyofuserslocatedallacrossthevaluechainConflictinguserexpectationsandunclearresponsibilitiesincombinationwithscarceresourcescauseconflictsOrganizationalissuesinfluencingTelcoITsystemsOrganiza-tionalageandmarketpositionoftheTelcoOrganiza-tionalset-upofTelcoITProcessorganization8ALIGNMENTOFITWITHTHEBUSINESSalignCompanyobjectives/strategyObjectives/strategyforITarchitectureNotfocusofthisworkalignBusinessunitorganization

ITorganizationalignalign

Source: McKinseyITarchitectureApplicationlandscapeTechnologyplatformsOrganizationalset-upofcompanyCoreprocessorganizationGovernancemodelKeychallenge:AlignITorganizationandstrategytocompany’sstrategicobjectivesandorganizationTargetedmarkets/customersegmentsTargetedmarketpositionProduct/servicescopeetc.WhatistherightdegreeoforganizationalintegrationordecentralizationofITfunctions?Centralvs.decentralapplicationsupportOrganizationalsplitbetweennetworkmanagementandbusinessoperationsfunctionsWhatistheappropriateITgovernancemodel?BudgetresponsibilityProcessforprioritizationofrequirementsWhatisthebestwaytoallocatethelimitedresourcesgiventheheterogeneousorcontradictingsystemrequirementsofdifferentusergroups?Howcan3rdpartieslikestandardsoftwareprovidersorsystemintegratorsbestbeinvolved?9

Source: McKinseyDESIGNCRITERIAFORAVISIONARYARCHITECTUREAlignmentofbusinessstrategyandITarchitecturetoestablishamorebusiness-focusedratherthantechnology-drivenITConsolidationofproliferatedplatformsandapplicationstore-ducecomplexityoftech-nologystacks(e.g.,hardware,OS,middle-ware,applications,etc.)andachieveeconomiesofscaleandscopeFlexible,process-orientedratherthanfunctionalintegrationofapplicationsStrictlayeringbetweennetworkmanagementandbusinessoperationstoencapsulatenetworkcomplexityandfreeupbusinessoperationsHighperformingITarchitectureFunctionalco-veragealignedtonewandemergingbusinessneedsLowoperatingcostLowcostofnewdevelopment/additionalfunctionality10Source:McKinseyARCHITECTURALVISION:MAINBLOCKSOFAN““IDEAL“TELCOITEventprocessorOrderentry/provisioningWorkflowmanagementNetworkelementmanagerNetworkconfigurationandmonitoringFrontofficeFactoryBillingContractmanage-mentBusinesspartneradministrationCorebusinessoperationsSupportsystemsManagementinformationsystemsBackofficeapplications...WirelinenetworkSharedservicesNetworkelementmanagerNetworkconfigurationandmonitoringIPnetworkProductdefinitionContractmanage-mentProductdefinitionCorebusinessCustomeraccountmanagementMaintenancemanagementBusinessunit1Orderentry/provisioningWorkflowmanagementCustomeraccountmanagementMaintenancemanagementBusinessunitn......InventorymanagementNetworkelementmanagerNetworkconfigurationandmonitoringWirelessnetworkInventorymanagement...BusinesspartneradministrationCorebusinessopera-tionsServiceprovisioningConverterandroutermiddleware(messagebroker,CDRgateway)Opportunitytoreplicateblockswithineachlayer:consciousdecisionbetweeneffectivenessandefficiency11TRADITIONALMIGRATIONMETHODOLOGIESSource:McKinsey“Patchandswap””approach“Lifeboat””approach“Isolateandreplace”approachStandardsoftwareapproachUsestandardsoftwaretoreplaceexistingsystemsUsemiddlewaretowraplegacysystemandaddnewfunctionalityinsmallstepsBuiltupnewsystemsfromscratchandmigrateinabigbangUndirectedevolutioninhighlycomplicatedapplicationarchitecturetendstoincreasethechaosOpportunisticallyreplacesinglesystemsIncorporatesthetendencytostartmega-projectwithahighlikelihoodoffailureOvertimeincreasingamountoffunctionalitybuiltintothemiddlewarecreatesadditionallegacyOftenavailablesystemsareinflexibletomatchdynamicbusinessrequirementsandrequirehugeamountofcustomizationRisks/barriersMethodology/technique12Source:McKinseyPRINCIPLEOFARISK-LIMITEDMIGRATIONAPPROACH(Partial)Implemen-tationofarchitecturalvision…Radical,revolutionarychangesasenablerforfurtherevolutionarystepsNoITmega-projects!EvolutionarydevelopmentwithintheboundariesofthestrategicvisionMigrationprerequisite:Definelong-termITvisionMigrationroadmapandimplementationplanRightmixofevolutionaryandrevolutionarymovesbasedontraditionaltechniques13Source: McKinseyRISKLIMITEDAPPROACHTOWARDSTHETARGETARCHITECTUREUpfrontdefinitionoflong-termstrategyandITvisionDeveloplong-termstrategicviewoffuturebusinessDevelopviewonfuturebusinesssystemDevelop"bestfit"architecturalvisionoffutureITinfrastructureDeveloplong-termmasterplanformigrationintonewITworldOpportunisticbutdirectedmigrationpath…(Partial)ImplementationofarchitecturalvisionEvolutionofbusinesssystemandbusinessenvironmentEvolutionofbusinesssystemandbusinessenvironmentImplementnewbusinessrequirementsinsmallstepsEachimplementationstepneedstobejustifiedbybusinesscase(NPVanalysis)MakerevolutionarymovethatbringsITclosertoarchitecturalvisionMoveonlyifeconomicalorstructuralfactorforcesyou14DEVELOPMENTOFAMIGRATIONROADMAPSource: McKinseyStrategicvisionMasterplan…Revolutionarymove

RevolutionarymoveRevolutionarychangeofITinfrastructureEvolutionaryimplementationofnewbusinessrequirementsVisionoffuturebusinesssystem(Partial)ImplementationofarchitecturalvisionArchitecturalvisionIdentificationofbusinessrequirementsValidationandprio-ritizationofbusinessrequire-mentsBundlingofrequirementsintoimple-mentationprojectsDevelopmentoftechnicalimplemen-tationalternativesDevelopmentofprojectportfolio(timing,resources)Implemen-tationDecision:Go/nogoforspecificalternative15KEYFACTORSOFSUCCESSFORMIGRATIONSource: McKinseyReductionofbusinesscomplexityInordertoavoidovercomplexityinfutureapplicationsreduceasfaraspossiblethecomplexityofthebusinesssystem(80:20)FilteroutallbusinessrequirementthatdonotclearlyfosteracompetitiveadvantageandcreatesignificantreturnoninvestmentQuickimplementationofbasicarchitecturalmovesIdentifyarchitecturalmovethatcanbeimplementedwithmanageableriskandthatcreateanmaximumamountoffreedomforevolutionarystepsEspeciallyintroducetechnologieslikemiddlewarethathelpstoreducethehandlingofsysteminterfacesSizeofmigrationstepsForeachmigrationstepchoseaprojectsizethatisstillmanageableinthelightoftheavailableskills,experience,sourcequantityandtechnicalcomplexityUnderthoseconstraintmaximisethesizeofmigrationstepsinordertoavoidunnecessaryeffortsforinterfacinglegacysystems16CONTENTSManagementsummarySituationanddemandsonTelcoITAssessmentofexistingTelcoITenvironmentsITarchitectureITorganizationVisionofafutureTelcoITlandscapeOutsourcingofTelcoITHowtogetstartedAppendix1:DetaileddescriptionofIT-supportedfunctionsAppendix2:Glossaryofterms17Source: McKinseyHOWTOLOOKATITARCHITECTURE-OVERVIEWSituationanalysis:CharacteristicsandpitfallsofcurrentincumbentTelcoITsystemarchitectureDriversofcurrentsituationToolsforassessingaspecificTelcoITsystemarchitecture18Source: McKinseyFRAMEWORKSTOUNDERSTANDEXISTINGITSYSTEMSWhichapplicationsexistwithintheTelco?IssueImportanceofunderstandingFrameworksandtoolsWhatkindofsupportdosystemsprovide?Howdynamicaresystems?Whatisthetechnicaldiversityofsystems?FailuretodevelopacomprehensiveviewoftheapplicationsandarchitectureresultsinanincorrectfocusandlimitedeffectivenessWhiletechnologistsoftenunderstandtherelationshipbetweensystemsandtechnology,itistheirrelationshipwiththebusinessthatdeterminesvalueandeffectivenessThefutureviabilityofsystemsisoftendeterminedbytheirabilitytomeetchangingbusinessneeds.Stablesystemsideallyarede-coupledfromdynamicsystemsCostsforoperationandmaintenanceofsystemplatformsoftencouldbesignificantlyreducedbysharedtechnologiesApplicationinventoryApplicationmappingApplicationdy-namics/stabilityassessmentTechnologyinfrastructureanalysis432119Source: McKinseyAPPLICATIONINVENTORY1WFA/DIWFA/DOCRASSAMLATISEMACCASSGDSWirelessalertCODE5MTASLMOSClearviewCMI(TASK-MATE)FDM/AT2TNS/SARTSOPS/INENMAMTRMeasure-mentsDSFSOPTIRKSWFA/CNSDBACISApplicationportfolio/interfacecomplexitycausesinflexibilityandhighcostofsupportExample:NetworkOSSApplicationinventory=mapshowingeachapplication(representedbyabox)andinterfacestoallotherapplications(re-presentedbylinesbetweenboxes)20Source: McKinseyMAPPINGOFAPPLICATIONSShowsfunctionalredundanciesDisplaysdivergingfunctionalcutsIllustratesdeficitsinapplicationconnectivityonacorporatelevel2ApplicationmappingFunctionalmappingCoreprocessmappingIdentifiesprocesseswithnoorweakapplicationsupportLooksforinstanceswheremultiplesystemsperformthesametask,redun-danciesandunnecessarycomplexitymayexistIdentifies““standalonesystems””(suchsystemsoftendonotsupportre-quiredcross-functionalinformationflows)AnalysispurposeAnalysisprocedureGap

BusinessprocessAssignapplicationstoindividualprocessstepsofcorebusinessprocessesAssignindividualapplicationstopredefinedfunctionalbucketsAnalysispurposeAnalysisprocedure21Source: McKinseyFUNCTIONALMAPPING:MAINBUILDINGBLOCKSOFATYPICALTELCOITLANDSCAPENetworkmanagementPhysicalnetworkInventorymanagementDecisionsupportsystems/datawarehousingCustomercareandbillingServiceprovisioningNetworkelementmanagementBack-officeapplicationsMaintenanceandworkforcemanagementDiagnosistoolReal-lifesituation222Source: McKinseyFUNCTIONALMAPPING:MAINBUILDINGBLOCKSOFATYPICALTELCOITLANDSCAPENetworkelementmanagementOrderhandlingBilling/invoicing/A/RCustomercareandbillingSalessupportComplaintmanage-mentTraffic/performancemanagementNetworkconfigu-rationPhysicalnetworkFaultmanage-mentNetworkplanningNetworkinventorymanagementServiceprovisioningServiceconfigu-rationCallcollectionServiceplanningQualitymanage-mentDecisionsupportsystems/datawarehousingHRmanage-mentAccoun-tingControl-lingMaterialmanage-mentTreasuryBackofficeCustomerpremisesequip.inventorymanagementMaintenanceandworkforcemanagementDetaileddescriptionofsystemsgiveninAppendix1NetworkoperationNetworkelementmanagement223COREPROCESSMAPPING:ITSYSTEMSALONGTHETELCOVALUECHAINOrderhandling/process.Billing/invoicing/A/RSalessupportComplaintmanage-mentTraffic/performancemgmt.NetworkconfigurationFaultmanage-mentNetworkplanningNetworkinventorymanagementServiceconfigu-rationCallcollectionServiceplanningQualitymanage-mentDecisionsupportsystemsHRmgmt.AccountingControllingMaterialmgmt.TreasuryFrauddetectionCustomerinventorymgmt.DecisionsupportsystemsNetworkelementconfigurationServiceplanningMain-tenancemgmt.Main-tenancemgmt.CustomercareandbillingNetworkplanningandinstallationSalesNetworkoperationServiceprovisioninganddeliveryBack-officeadministrationStrategyandmarketingSource: McKinsey2Strategy+back-officeactivities/systemsCorefront-officeactivities/systems24Source: McKinseyITSUPPORTINTHEVALUECHAINOFATELCOOPERATOR(1/3)CustomercareandbillingNetworkplanningandinstallationSalesNetworkoperationServiceprovisioninganddeliveryBackofficeadministrationStrategyandmarketingCustomercareandbillingServiceprovisioningSalescallschedulingOrderhandlingCreditauthorizationServiceorderprocessingDealermgmt.Contractmanagement/customerrecordkeepingBillingCallratingInvoicegene-ration/dispatchA/RcollectionCreditverificationComplaintmanagementInvoiceinquiryhandlingServicemalfunctioncomplaintmanagementFrauddetectionComplaintmanagementCraftdispatchCallcollectionPhonenumberallocationQualitymanage-ment:AnalysisofservicemalfunctiondataDirectoryservicesQualitymanagementEnd-to-endcircuit/linetestingNetworkintegritycontrollingServiceconfigurationCircuitplanningPreparationofroutingtables/switchmatricesService/productplanning/developmentService/usageplanning/developmentBACKUP25Source: McKinseyITSUPPORTINTHEVALUECHAINOFATELCOOPERATOR(2/3)CustomercareandbillingNetworkplanningandinstallationSalesNetworkoperationServiceprovisioninganddeliveryBackofficeadministrationStrategyandmarketingNetworkmanagementNetworkelementmanagementFault/alarmconditionmgmt.IdentificationoferrorsourceAlarmmessagecorrelationPreparationofemergencycircuitsAlarmclearanceTroubleticket-ing/craftdispatchTraffic/performancemanagementAggregation/visualizationofperformancedataTrafficdataanalysisPreparationoftraffic-dependentnetworkreconfigurationCraftdispatchOperatorschedulingNetworkplanningMessagecollectionAlarmsurveillancePerformancedatacollection/reportingDeviceconfiguration(e.g.,downloadingofroutingtables)BillingdatagenerationQualitymanagement:end-to-endcircuit/linetestingBACKUP26*Alsorelevantfor“Strategyandmarketing”Source: McKinseyITSUPPORTINTHEVALUECHAINOFATELCOOPERATOR(3/3)CustomercareandbillingNetworkplanningandinstallationSalesNetworkoperationServiceprovisioninganddeliveryBackofficeadministrationStrategyandmarketingDecisionsupportsystemsInventorymanagementMaintenanceandworkforcemanagementNetworkinfrastructureinventorymanagementCustomerpremisesinventorymanagementChurnanalysis/identificationofjeopardycustomers*Service/productusageanalysis*Customersegmentation*Customer/productprofitabilityanalysis*Prospectidentificationofnewproducts*TariffplanningProductinventorymanagement(i.e.,productclasses,categories,lines)SuppliermanagementNetworkinfrastructureinventorymanagementNetworkfaultmanagementServicetechnicianandcraftdispatchSparepartmanagementOperatorschedulingCustomerpremisesequipmentfaultmanagementServicetechnicianandcraftdispatchBACKUP27Source: McKinseyAPPLICATIONFLEXIBILITY/STABILITYASSESSMENT3CategoryDescriptionDynamics/stabilityassessmentSystemsthatarerelatedtobusinessareathataresubjecttoquickandconstantchange(e.g.,marketstructures,organization)Systemsthatrequireahighdegreeofflexibilitytokeeppacewithorganisationalchange(e.g.,front-endsystems)FlexiblesystemsDynamicsystemsSystemsthatarerelatedtothemorestablebusinessinfrastructure(e.g.,craftdispatchorclaimspaymentsystems)Systemsthatsupportbusinesstransactionsrequiringahighleveloftechnicalqualityandreliability(e.g.,callratingengine)Bestpracticeistoseparatedynamicandstablesystemstoavoidunwantedside-effectsonstablesystemswhendynamicsystemsarefrequentlychange.ViceversathechangingofdynamicsystemsshouldnotbesloweddownbytheneedtoalsotouchstablesystemsOverlaps(e.g.,““Billing”indisplayedexample)arepotentialhazardssincechangesrequiredinthedynamiccomponentsmaycauseinstabilityinmissioncriticalstablesystemsOrderentryTariffplanning...A/RFrauddetect....Billing(incl.tariffdefinitioncallrating,invoicedispatchDynamicStable28Source: McKinseyTECHNOLOGYINFRASTRUCTUREANALYSIS4A/RMQSeriesSybaseTCP/IPUNIXSUNBillingCrossworldsOracleTCP/IPWindowsNTTandemCallcollectionDB2/2DECNETOpenVMSDECVAXSybaseIntelServerIPXWindowsNTMQSeriesOrderentry..................Commonunderlyingsystemplatform/OSCommonmiddlewareCommonunderlyinghardware/technicalinfrastructureCommonnetworkA/RBillingContractmgmt.CallcollectionOrderentryCommondatabaseplatformContractmgmt.MSAccessIPXWindowsNTIBM486PCCrossworlds应用中间层数据库网络操作系统硬件SharethedevelopmentofcommonbusinessservicestoreducetheamountofuniqueapplicationprogrammingrequiredinordertostreamlinedevelopmentofnewapplicationsIntroducestrictlayeringinthetechnologystacktoavoidinterdependenciesandunwantedside-effectswhenchangingpartsoftheinfrastructure现阶段:每层使用不不同的技术术应用中间层数据库网络操作系统硬件未来理想的的架构:每层使用相相同的技术术29Source:McKinseyLAYERSOFTECHNOLOGY4ProtectsbusinessinvestmentsHardware(PCs,servers,mainframes,networks,peripherals)Operatingsystems(Desktop,mid-tier,mainframe,transactionmonitors)Network(Filesharing,terminalaccess,DBaccess)Database(Relational,hierarchical,objectoriented,datawarehouse)MiddlewareServices(Security,logging,dataaccess,eventmanagement)OfficeAutomation/Workflow(Groupware,wordprocessing,spreadsheets,graphics)LeveragestechnologyApplications(Financial,operational,analytical)Applicationsaretheprogramsthatsupportthebusinessandprocesses.TheOfficeAutomationSuite/WorkflowisasetofintegratedprogramsthataredesignedtoenhancepersonalproductivityandtheflowofworkinthebusinessTheMiddlewareServicesprovideacommonsetofservicesandinterfacesbetweentheapplicationsandtherestofthetechnologyTheDatabasemanagesandprovidesaccesstothedataTheNetworkisthehardwareandsoftwarethatconnectthecomputersandallowforthetransferofinformationOperatingSystemsareprogramsthatcontrolthemostbasicresourcesofthehardwareHardwareisthecomputersandworkstationsthatrunthebusinessapplications30Source: McKinseyNumberofdifferenttechnologiesperstackTECHNOLOGYSTACKSUMMARYImpactontheorganization:IncreasedcomplexityofsystemsStaffrequiredforeachcomponentDevelopmentteamsmustintegratewitheachcomponentIncreasedcosttotheorganization:CostofincreasedstaffCostofincreasedintegrationrequirementsCostofproductsLostopportunityforvolumediscountsApplicationsOfficeautomation/workflowMiddlewareservicesDatabasesNetworkprotocolsOperatingsystemsHardwareplatforms431CONTENTSManagementsummarySituationanddemandsonTelcoITAssessmentofexistingTelcoITenvironmentsITarchitectureITorganizationVisionofafutureTelcoITlandscapeOutsourcingofTelcoITHowtogetstartedAppendix1:DetaileddescriptionofIT-supportedfunctionsAppendix2:Glossaryofterms32CHAPTERSUMMARYInadditiontoexternalindustrytrendsTelcoITsystemsareinfluencedbyinternalorganizationalissues.ThreetypesoforganizationalissuesdrivingTelcoITcanbeidentified:Organizationalage/marketpositionofaTelco,theformalorganizationalset-upandtheorganizationofcorebusinessprocesses.TheorganizationalageandmarketpositionshapetheITfocusofTelcos:Whileattackershavetoquicklyimplementlargeamountofbasicfunctionalityongreenfieldwithoutbeingaffectedbylegacy,incumbentshavetoovercomelimitationsofexistinglegacysystemsinordertocopewith(external)markettrends.Theformalorganizationalset-upofthecompanydrivestheissueoftherightdegreeofintegrationoftheapplicationlandscape:TheorganizationalparadigmofincumbentTelcosischangingfromapurelyfunctionaltowardsadisaggregatedbusinessunitorganization.Inthiscontextthepossibleset-upofITdepartmentscoversthewholespectrumbetweenfullycentralizedandcompletelydecentralized.Theorganizationalset-upoftheITdepartmentimposesdesigncriteriafortheapplicationlandscape:Economiesofscalecanbegainedfromashareduseofsystems,whereasamaximumtailored,flexiblesupportoftheindividualbusinessunitswithaconsciousacceptanceofdataandsystemredundancycanbededucedfromseparateapplicationsforeachbusinessunit.Source: McKinsey33CHAPTERSUMMARY(cont.)ThecorebusinessprocessesarehinderedbygapsbetweenconflictingandquicklychanginguserexpectationsandavailableITresources.Altogether,thevariousorganizationaldriverscausethreetypesofdegeneratedfunctionalcoverage:FunctionalitynotcoveredLogicallyrelatedfunctionalitycoveredbyone“mega”systemLogicallyrelatedfunctionalityspreadovervariousseparatesystemsAllthesetypesofdegeneratedfunctionalcoveragehavehugenegativeimpactonthebusinessperformance.Source: McKinsey34Source: McKinseyORGANIZATIONALD