Telecom: Opportunity, Frustration

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August 09, 2004 (Computerworld) -- What does telecommunications mean to you? For most C-level IT managers, it's the greatest source of short-to-intermediate-term cost reductions, the sector of greatest long-term strategic confusion, their self-acknowledged zone of greatest ignorance and the source of their biggest all-around tactical, day-to-day administrative frustration.
These are the conclusions of a survey and a series of interviews conducted at the most recent CIO Solutions Gallery at Ohio State University's Fisher College of Business.
A frenzy of contract renegotiations is delivering cost reductions that could make even the most frugal CFO almost feel guilty. Those pricing improvements, combined with a trend within companies of standardizing the equipment installed in their networks and consolidating their network services to fewer carriers, is putting many telecom suppliers in a tough situation. As one CIO explained, "Prices are dropping all over the place. I am always re-evaluating my technology stack. I am always squeezing my providers. I am currently of the mind that short contracts are generally in your favor, and negotiating a contract midcontract is a good thing to do."
Meanwhile, a general rethinking of telecommunications is under way and contributing to the strategic confusion. Cable, wireless and fixed-line telephone carriers are rapidly entering one another's businesses. What previously were nondecisions are suddenly up for grabs. Who will provide services to us, and what will they supply? Phones have become much more than phones. Handsets take photos, access the Web, and send and receive e-mail. Some even serve as PDAs. More transition is inevitable, with the arrival of the potentially game-changing technologies of wireless and VoIP. Where should wise IT leaders place their bets?
And then there's the ignorance and frustration that telecom causes. Designing, operating, engineering and troubleshooting very large IP-converged networks is growing more difficult, and the skills needed to do all that are becoming increasingly scarce. IT leaders are the first to admit that they don't possess deep technical skills in the telecommunications area. At the CIO Conference in Pebble Beach, Calif., last month, I asked 140 executives (via an interactive electronic polling system) how they would describe their understanding of telecom: 28% said they had an "excellent" understanding, 53% said "average," and 19% said "poor."
But the responses were very different when I followed up with a more specific inquiry. When asked, "If your board of directors asked you to explain the line-item detail of your monthly telecommunications bill, would you be able to do so?" 29% said, "No worries; let's go have a beer," 32% said they were "a little worried," and 39% said they would be "in a world of hurt." One CTO summed it up this way: "There are no telecommunications vendors today that are doing a great job; they all need to be closely managed. Operational performance leaves much to be desired, and billing performance is even worse."
We are at a pivotal point in the management and deployment of telecommunication services. Future-focused IT leaders would be well advised to spend a little more time with the vendors in this area, do some homework and put together a plan for the future.
Thornton A. May is a longtime industry observer, management consultant and commentator. Contact him at thorntonamay@aol.com.

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