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© 2005, Monash University, Australia CSE5806 Telecommunications Management Lecturer: Dr Carlo Kopp, PEng Lecture 7-8 Corporate Strategy and Telecommunications.

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Presentation on theme: "© 2005, Monash University, Australia CSE5806 Telecommunications Management Lecturer: Dr Carlo Kopp, PEng Lecture 7-8 Corporate Strategy and Telecommunications."— Presentation transcript:


2 © 2005, Monash University, Australia CSE5806 Telecommunications Management Lecturer: Dr Carlo Kopp, PEng Lecture 7-8 Corporate Strategy and Telecommunications

3 © 2005, Monash University, Australia Reference Sources NOTE: These sources are indicative - there are many other good texts available in libraries. They are referenced here as this presentation draws on them extensively  Hofer and Schendel (Referred to as H&S in these slides) Hofer, Charles W. and Schendel, Dan Strategy formulation : analytical concepts St. Paul : West Pub. Co., c1978 234 pages  Monash Matheson Library 658.401 H697S  Gurugé and Lindgren, Communications Systems Management Handbook, Auerbach, 2000 Especially chapters by Beck and James  Monash Hargrave Library 658.4038 G981C 2000

4 © 2005, Monash University, Australia Telecommunications Manager Roles The Telecommunications Manager has two roles:  Staff Role - Provide Advice and Guidance to Corporate Mgt  eg Technology: Opportunities, Threats;  Regulatory Situation, Policies; etc  Line Role - Plans, Organises, Leads and Controls (POLC) all aspects of Corporate Telecommunications Facilities, including:  Telecommunications Strategic Plan  Contingency Planning/Business Continuity Planning  Disaster/Disruption Recovery Planning  Specification & Selection of facilities, equipment, software  Installation and Implementation of equipment, systems, networks  Operations and day to day support of users  Maintenance and Modification Other areas may be included - eg Security

5 © 2005, Monash University, Australia Questions for Later Consideration: Think about these questions as the lecture progresses: Does planning the strategic directions for telecommunications in an organisation differ from "normal" strategic planning? If so, how? What is the relationship in a (typically) large organisation between the planning and management of:  Telecommunications; and  Information systems. Is telecommunications just part of the infrastructure of a company, or something more? Does it vary between business sectors? and if so how? What are the processes in developing a telecommunications strategic plan?

6 © 2005, Monash University, Australia Philosophical Expending energy without goals or objectives in mind is wasting effort Even with goals and objectives, a strategy is needed to provide focus and coherence of the effort

7 © 2005, Monash University, Australia Survival of the Fittest From Hofer and Schendel (H&S) Biological analogy: “Over the long run, only those organisations survive that serve the needs of their societies effectively and efficiently, that is, that provide the benefits demanded by societies at prices sufficient to cover the costs incurred in producing them”  This concept applies to governments, businesses, organisations, and to sub-organisations within these.  Effectiveness or Efficiency? (H&S attribute this to P Drucker)  ‘Both are needed, but if a choice must be made it is more important to do the right things (effectiveness) than to do things right (efficiency)’

8 © 2005, Monash University, Australia Failures with ‘High Efficiency’ (from H&S) Consider also IBM and mainframes IBM through 1970s-1990s concentrated on mainframe oriented networks and systems - using PCs as user interface while others developed towards ‘empowering the end user’ and moving away from centralised networks FORD vs GM 1920s - 1930s Ford was very efficient by retaining ‘the old way’ of doing business with very limited range of models & proven engineering - but GM saw that customers wanted more than Henry Ford’s famous comment of “any colour you like as long as it is black” Baldwin Locomotive 1950s very efficient USA steam locomotive builder of 1930s and 1940s but did not change to diesel and diesel-electric technology early enough, and hence lost the race

9 © 2005, Monash University, Australia Strategic Planning Determining the ‘right things’ to do (ie effectiveness) requires Strategic Planning Strategy as a way of thinking was originally used only in military contexts - term “strategy” comes from Greek “Strategos” = General  eg Napoleon’s strategy at Waterloo Now used more broadly in sports - eg game strategy, race strategy etc in entertainment - eg TV strategies to attract viewers in normal business etc

10 © 2005, Monash University, Australia Strategy in Business Was not studied in business context until recently (after 1940s)  Before 1940, businesses had unwritten (and ill considered) ‘strategies’ eg to ‘expand’, ‘grow’, ‘make a profit’ were seen as self-evidently good ideas - but are essentially open-ended aims, not strategies  Few considered drawing up a strategic plan to achieve these aims within specified time-frames, or within specified constraints Initially strategy had a narrow focus in business:  founder or ‘driving entrepreneur’ philosophy - eg Henry Ford, and  product orientated rather than infrastructure oriented Now ‘strategy’ is a normal part of all aspects of business planning Not all organisations are effective in planning strategies since the skills set is demanding in both technique and insights

11 © 2005, Monash University, Australia What Is Corporate Strategy? Wide spread of definitions, with focus ranging from narrow to broad. Various authors have discussed it as: Drucker (1954)  ‘what is’ is our business?  what should it be? Chandler (1962)  the determination of the long-term goals & objectives of an organization  the adoption of courses of action  the allocation of resources necessary to meet goals Andrews  the pattern of objectives... purposes... goals... to define the business the company is in … Ansoff -  the common thread of the business

12 © 2005, Monash University, Australia Goals and Objectives (H&S P20-21) H&S Definitions:  Goals - long run, open ended attributes or ends desired ie unbounded and untimed statements of aim  Objectives - intermediate term targets towards achieving goals Objectives should be stated to cover:  the goal or attribute being sought  an index measuring progress toward that goal  a target or hurdle to be achieved; and  a timeframe in which to achieve the target or hurdle Strategy is the planned approach to achieve objectives  Good understanding of objectives leads to better strategy  Poor understanding OR poor objectives always lead to bad strategy

13 © 2005, Monash University, Australia Components of Strategy (P21 to P25 H&S) H&S page 25  “Strategy is the fundamental pattern of present and planned resource deployments and environmental interactions that indicates how the organisation will achieve its objectives.” Components of Strategy:  scope or domain of the activity in its environment  skills and resources available to undertake the activity (‘distinctive competencies’)  competitive advantages resulting from the activity  synergy - the degree to which activities above reinforce or negate one another The first three points are ‘effectiveness’ issues, while fourth point is ‘efficiency’ related

14 © 2005, Monash University, Australia Hierarchies of Strategies H&S pages 27 to 29 1.Corporate level - “what business should we be in”  broad and multi-divisional considerations  ‘scope’ or ‘domain’ components are main concerns 2.Business level - “how to compete in this marketplace”  business oriented - both production and marketing sides  distinctive competencies (skills and resources) and competitive advantages are the main emphasis in these 3.Functional Area  Synergy (working together) and development of competencies are the main concerns at this level  e.g. a Telecommunications Unit functions

15 © 2005, Monash University, Australia Matrix for Comparing Businesses H&S P31 Boston Consulting Group (BCG) developed this matrix in 1970s Example shows comparison of 12 products or business.  Axes show business growth rate vs relative market share.  Diameter of circles indicate relative size of or business “Stars” (upper left quadrant) high growth and good market share “Cash Cows” (lower left) well entrenched in market with reasonable growth “Dogs” (lower right) poor growth and poor market share

16 © 2005, Monash University, Australia Comments on BCG Matrix Note logarithmic scale on horizontal axis  this better reflects reality than a linear scale - ie increase in sales by $1M pa is minor to a large organisation, but major to a smaller one As shown, this example is at a Business level  however similar examples can be drawn at ‘functional levels’ Model is too simplistic  H&S Page 32 to 34 discuss conceptually similar models with more parameters A similar approach is useful to assist in determining strategic directions for telecommunications networks

17 © 2005, Monash University, Australia Product or Infrastructure? Is ‘Telecommunications’ a product for your organisation? Currently - it is for Telstra, Optus, Vodaphone, Orange etc Future - and many more  BUT - even Telcos need infrastructure networks to support operations, marketing, financial activities (bills etc) and management Is your organisation’s network only an infrastructure service?  Can today's infrastructure be tomorrow's products? Consider UE (an electricity distributor) - UE Telecomms Consider AAP (news wire service) - AAPT  Telecommunications in both started as infrastructure networks supporting their primary products/services

18 © 2005, Monash University, Australia Communications Issues (1) Visibility - The communications infrastructure can be:  ‘backroom’, keeping the company's processes running eg corporate voice or data networks, process control networks  ‘just another resource’ - visible to customer, but of low impact eg routine telephones, faxes, data services, or  the company’s ‘front desk’ (highly visible to customer) Used to be the Telephonist and ‘easy to remember’ phone numbers Now - Domain names, Web pages, customer support call centre etc Facilitator, It can be used for enabling activities that  could not be done before, or  could only be done imperfectly  eg EDI, EFT, B2B, Customer self-service (request brochures, orders, bills, etc.)

19 © 2005, Monash University, Australia Communications Issues (2) Network physical, logical and management structure can be  centralized (all power rests in the centre) “Centrally oriented”  distributed (power is shared around the sites) (can have severe coordination problems)  localized (each site does its own thing) (can lead to anarchy) Limited planning/operational horizon (max. 5 years)  Technological changes and telecommunications needs are changing too rapidly to permit longer view Enables corporate productivity gains:  fewer people  fewer levels in the hierarchy - flatter management structures

20 © 2005, Monash University, Australia Strategic Communications Planning Changing approach of management focus:  was primarily load-based - eg how much load or traffic to be carried? how many lines? what bandwidth is required?  ie was focussed on technology and cost  now focussed more on: telecommunications products and services available (existing, future) users and their needs (in-house, customers) services and products that can be offered user support, customer self-serve etc What telecommunications deals are being offered, and where ie now focuses on functionality, possibilities for its use, and on seeking best deal for purchased services The key aspect is the future requirements or needs

21 © 2005, Monash University, Australia Telecommunications Strategic Issues The Telecommunications strategic planning function needs to understand:  Mission of the organisation  External influences  Technology  Internal influences

22 © 2005, Monash University, Australia Mission of the Organisation The Telecommunications network(s) must be subordinate to the overall corporate mission But do we know what these are? Issues:  Is there a corporate mission statement?  Are there corporate objectives and strategies?  What can be done if there are no corporate level goals, objectives and strategies?  What if the corporate goals/objectives/strategies make unrealistic demands on telecommunications?  Is a Telecommunications Unit mission statement (separate from the organisation mission statement) required?

23 © 2005, Monash University, Australia External Influences An understanding the external influences is necessary, including:  Business cycle (recession, expansion, inflation,...) Which stage are we in now, and when is going to change  Competitors if a service or content provider, need to consider competitors work If telecommunications is only an infrastructure for your organisation, you need to consider how your competitors are positioning themselves for the future in terms of telecommunications  Regulatory environment & trends  Technology available in marketplace  Support levels available  Financial modeling and sources Availability of external finance (if needed)

24 © 2005, Monash University, Australia Broad Financial Models EG  Funded centrally (off-the-top) vs paid by usage  Out-sourced vs in-house operation  Minimal private network (VPNs, etc.) vs full private network Issues:  establishment and operational costs  management complexity  exposure to risk  potential new products  synergy

25 © 2005, Monash University, Australia Technology Issues What technology issues are important?  Existing Networks Architectures  existing networks and existing equipments - eg can these be upgraded? Design issues  link and equipment load utilisations - ie above / below 50% loaded?  bottlenecks in the networks - where, how severe, can be alleviated?  design parameters - lifetime, reliability, repair / replace philosophy  Marketplace What is available How stable and mature Cost and performance Maintenance and support

26 © 2005, Monash University, Australia Internal influences Understanding the internal influences, including  What is required of the network  Strategy for change  Knowing the finances available dollar value when and how  (eg initial buy, or rent now and buy later, or lease and return) cash flow issues  Operational interface  Production resources available staff - numbers, skill levels, trainable or not installed base - buildings, cabling, equipment, contracts technologies in use (or technologies known and understood)

27 © 2005, Monash University, Australia Developing the Technical Network Strategy A technical strategy study is required to guide the technical design implementation and support of the organisation’s network(s)

28 © 2005, Monash University, Australia Outcomes The outcomes are (at a broad level):  directions  policies  techniques  budgets  implementation timetables which guide the Telecommunications Manager in the ‘line management’ aspects of the job - ie the management of the Telecommunication Unit

29 © 2005, Monash University, Australia Network Technical Strategy The key point is to recognise and obtain acceptance  that it is providing infrastructure for the whole organisation, but  is not the Infrastructure Plan for the organisation WHY?  Because the network should support the organisation, not direct and control it.  Having the infrastructure network technical strategy as the Infrastructure Plan for an organisation is like putting the cart before the horse. If the network is a “Product”, then things are different

30 © 2005, Monash University, Australia Infrastructure Strategy Studies Scope Include all forms of communications in study  Voice, data, Internet, fax, telemetry, video, fire & security alarms  Don’t forget needs of ‘roaming’ or mobile users for data  ‘Scope’ may also cover non-electronic communications - eg ‘hard-copy’ communications, including couriers, mail, etc advertising brochures (consider having them on web pages, or requested via (IVR) In order to:  gain understanding of trends and intentions  look for possible rationalisation  avoid simply automating yesterday’s approach and technology,  ensure that future changes are allowed for, and  to ensure that current (and future) technology is used to best advantage

31 © 2005, Monash University, Australia Strategy Study in Six Stages Stage 1: Analysis of EXISTING Networks Stage 2:Identify FUTURE Requirements and Constraints Stage 3:Definition and Evaluation of Options Stage 4:Strategy Consolidation Stage 5:Report to Management Stage 6:Recording the Concept for Later Detailed Design

32 © 2005, Monash University, Australia Stage 1Analyse EXISTING Networks Traffic Loads and Capacity Reliability and functionality Residual working life of  current systems,  facilities (buildings and power supplies etc),  communications and support equipment Consider existing contracts for  systems,  equipment,  facilities,  provision of services such as telecommunications services,  facilities management, etc

33 © 2005, Monash University, Australia Stage 2FUTURE Req’ts & Constraints Identify Future Network and Facility Requirements  Architectural Broad Brush Estimates  Don’t worry about How, concentrate on WHAT is required Traffic Loads and Characteristics Functions and capabilities needed (not only ‘wanted’) Available buildings and environmental support eg is the company vacating suitable buildings somewhere?

34 © 2005, Monash University, Australia Stage 3 Consider Options Define and Evaluate Options and alternative solutions  This is where you consider the questions: ‘HOW to do it’ and ‘HOW MUCH would it cost if done this way’ A major creative effort  Can use brainstorming, think tanks, seminars, etc.  Essentially draws from: existing installed base information about current & emerging technology and techniques bright ideas future requirements  to produce a short list of options (combination of evolution and revolution)

35 © 2005, Monash University, Australia Stage 3a Evaluation of Options tests to be applied:  flexibility under change, particularly increased load new traffic types  cost effectiveness (use DCF techniques)  resilience (failure of components, industrial action)  future safe (ISDN, satellites, mobiles, etc.  integration of voice, data, video  security  management ease expansion monitoring record keeping diagnosis of problems (maintainability)

36 © 2005, Monash University, Australia Stage 3b Trade Studies Capture evaluation of alternatives in ‘Trade Studies’ A ‘Trade Study’ compares costs, benefits, risks, timescales and other factors of several alternatives  eg Is it better to use a cheap, slow network, or a faster but more expensive one?  Often a simple spreadsheet is used Eg comparison of coffee mugs Which is best?

37 © 2005, Monash University, Australia Stage 3c Special Issues In many organisations there are some special issues which must be addressed in a planning study:  special manufacturers and / or vendors  eg If your organisation has a subsidiary that manufactures communications equipment, then you will probably have to use their products  a pre-existing problem that is assuming high importance  often a carry over from earlier era –  eg demands for redundant equipment and power supplies (backup generators)  management and owner prejudices  must or must not use certain equipment / services etc  technologies eg  wireless LANs and mobile phones are not permitted in many areas  near explosives  in highly secure environments  in hospitals

38 © 2005, Monash University, Australia Stage 4a Strategy Consolidation Consolidate the viable options identified in Trade Studies into two or three alternate architectural designs We can usually present options as follows:  Option 0 – Do Nothing What will happen if nothing is done  Option 1 – Do minimal changes Minimum changes to continue operations as indicated No real preparation for future evolution  Option 2 etc– Progressively more changes with each option Option 2 is basically an evolution from the present Options beyond 2 are progressively more advanced (and risky)  Option n – Revolutionary extensive changes Probably too ‘state of the art’ for safety and comfort

39 © 2005, Monash University, Australia Stage 4b Prepare Study Report  Describe project background and rationale  Briefly describe each major architectural option Include Costs & Resources (dollars), people, buildings Schedule (Time Table)  Milestones and Proposed payment schedule if applicable Risks, and their mitigation Benefits of that option - absolute benefits, and in comparison to alternate architectures  Issues which are independent of the architecture (eg colour of paint on boxes, constraints on locations or vendors) Identify these issues separately for resolution

40 © 2005, Monash University, Australia Stage 5Report to Management Present the highlights of the written report to higher management and answer their questions Why do we do this?  Remember the Golden Rule Follow up and respond to their directions and guidance “The one who has the gold makes the rules”

41 © 2005, Monash University, Australia Stage 6Recording Concept for Later Document the concept or architecture for posterity  If a particular style or option has been selected then write a System Specification  This is a formalised description of the system  Use precise and quantitative language eg "The coffee cup shall hold 250cc of liquid when the liquid level is 1cm below the top the rim." is precise and testable, while "The coffee cup is to be of normal size" is vague and imprecise, and can not be tested. Whether the product meets the specification is a matter of personal opinion - thus leading to arguments.

42 © 2005, Monash University, Australia Written Requirements A project without stated requirements can never be considered to be wrong - but it will be a failure Unwritten (and un-agreed) requirements inevitably lead to mis- matched expectations between stakeholders. Verbal statements and assumptions lead to mis-understandings Interpretations/understandings of statements of requirements are renown for variations - even in co-operative environments. Common sense is very rare, and is dependent on each person’s own personal history DO NOT RELY ON ‘COMMON SENSE’

43 © 2005, Monash University, Australia What’s next? An Action Plan is needed.  This should contain (or cover development of) the following for the Telecommunications Unit mission statement goals, objectives & strategies, aligned with corporate strategies and expenditure note that this requires statements of future needs implementation plans - who is to do what, when, and under what budget  The action plan needs to be agreed with peers and higher management

44 © 2005, Monash University, Australia Points for Discussion These questions were raised in the first few slides:  Does planning the strategic directions for telecommunications in an organisation differ from "normal" strategic planning? If so, how?  What is the relationship in a (typically) large organisation between the planning and management of: Telecommunications; and Information systems.  Is telecommunications just part of the infrastructure of a company, or something more? Does it vary between business sectors? and if so how?  What are the processes in developing a telecommunications strategic plan?

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