I recently came across news about an old friend with who I had worked with, in my previous job, looking at statistics on network usage, billing etc., correlating the data and coming up with useful predictions about business & the network. It brought back memories of an incident involving our Equipment Supplier.
A Conflict Of Interest
Equipment Vendors play a very significant role in what I call “Upstream Processes” of technology adoption. They conduct fundamental research, come up with patentable innovative ideas, participate in industry forums to create standards and mass-manufacture telecom equipment for commercially exploiting their investments. They also research, apart from technology, on stuff besides technology that lead to efficiencies in business & design.
The incident I recalled was one of those non-technology initiatives.
One of the fundamental building blocks of our network gear was a component on which E1 trunks can be terminated. The Equipment Vendor who had supplied this component had an internal initiative to reduce floor-space footprint for this component. They came up with a new hardware version that could package 10’s of E1’s into half the floorspace as earlier.
The catch was…. One has to buy the entire setup of 10’s of E1’s even if all they needed was 1 E1 more! It was priced cleverly, lower than the older hardware of equivalent dimension. They had also declared the old hardware as “end-of-life”.
During our annual planning exercise for Capex, as one who analyses traffic data routinely, I was able to challenge the vendor representatives and show how I needed only 16 E1’s more whereas the vendor’s planning input showed that we need 80 E1’s! Further, I was able to show through traffic trend charts, how it would take us another 3 years of aggressive growth to start utilising the capacity as suggested by the Vendor. They concurred!
Now, why did they recommend a wrong quantity in the first place? They are a world-reputed supplier and have been successful in several countries with respect to telecom gear.
It was a simple case of conflict in interests… I am not alleging unscrupulousness (they are too big and very professional), but as a manufacturer of electronic hardware, miniaturisation and bundling were serious initiatives across the world, in the nineties. But, from an operator’s perspective, it did not make the business case!
Fast Forward To Another Era
Many operators today have decided that their network asset is commoditised. They would rather focus on the business of engaging their customers rather than waste efforts in running the network. A good network is still a hygiene factor and many operators have contracted Equipment Vendors themselves to run their network in a Managed Services model.
Of course, while engaging Equipment Vendors for Managed Services, apart from SLA’s, there have been clauses added on dealing with Capex too. So, the experience I had in the nineties is not valid anymore.
However, the Equipment Vendors, some of who have been around for a good part of a century are not natural players for Managed Services – their DNA is technology & manufacturing. They are not tuned to efficient, low-cost service models and continuous automation. They are bound to have conflicts in interest between their focus on manufacturing/selling telecom equipment and those of buying/consuming network gear as a Managed Services provider.
Take the case of SON – Self-Optimising Networks – a setup that analyses network related statistics and automatically adjusts network parameters in real-time. Why did it take this long to be available in the market? When I see how quickly automation was brought in by IT service providers in, say, testing, I am amazed that SON took this long and is not yet a mandatory part of equipment specifications! Perhaps, the right economic opportunity has not presented itself to the Equipment Vendors!
If I were in a role to decide a Managed Services provider for a Network, like I would have been in my previous job, an Equipment Manufacturer would not be my natural choice. I would choose a vendor-neutral provider who specializes in providing services, not one specialized in manufacturing & selling network gear.