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Horizontal communication integrations trends and impact on IT architecture

 Authors: Marie Michelle Strah- Senior Principal-Enterprise ApplicationsVishwanath N Taware- Senior Principal-Enterprise Applications

Over the last 18 to 24 months, we have seen a lot of mergers and acquisitions (M&As) in the US telecommunications industry. These M&A activities can be categorized as horizontal (network expansions or strategic service consolidations) and vertical (broadcasting or content players with cable or telecom service providers).

  • Some of the recent examples of horizontal consolidation are Charter + Time Warner + Bright House, Verizon + XO Communication, CenturyLink + Level 3, Windstream + Earthlink.
  • Vertical consolidation has just begun with Comcast acquiring a majority stake in NBCU, and the most recent acquisition of Time Warner group by AT&T, Verizon + AOL or the merger under discussion of Yahoo and AT&T + DIRECTV.

Some of the key business drivers for these acquisitions are market expansions, the introduction of new service offerings, and increasing shareholder value, for example:        

  • Market expansions (domestic and global) like  CenturyLink + Level 3,  Windstream + Earthlink
  • Introduction of new service offerings like Content Anywhere  AT&T + DIRECTV, Verizon + Yahoo

Some of the inheriting challenges these acquisitions brings are regulatory concerns on M&A, net neutrality, and privacy. As more and more multiple-system operators (MSOs) are pushing the innovation on set-top boxes to make them virtual, video on demand (VoD) can be accessed from any place and provide the content from over-the-top content (OTT) players. For example, Comcast's recent announcement on allowing Netflix integration on X1 platform.

Recommended strategy for horizontal M&A operations & business support (O/BSS) application architecture:  

Spectrum (Charter + Time Warner) is happening now, and Level 3 + CenturyLink is on the block. In the past, any horizontal M&A would have driven major IT projects, typically consolidating O/BSS platforms.

  • In the BSS domain, there are examples like product rationalizations, CRM, billing, and order management platforms, etc.
  • In parallel, the cumbersome and complex OSS platforms integration like logical and physical inventory management, and last activation and provisioning platforms
  • ERP and Data Warehousing platforms was taken separate path of integration

The key criteria in these initiatives were application rationalization and reduction in the Opex and Capex costs by eliminating redundant or duplicate systems owned by both parent and child company. These IT consolidations were time-consuming and expensive affairs, which ran for years together.

Some of the recommendations for effective M&A integration are based on our experience in working on multiple M&A O/BSS projects. Leveraging Infosys' significant experience and mature service offerings can help customers avoid long, time-consuming M&A and IT consolidations. By focusing on business outcomes, Infosys can lead initiatives that are:                

  1. Business-driven: Prioritize and phase the rationalization effort by business goals and milestones
  2. Customer focus: Leverage M&A to increase customer intimacy and revenue through expanded insights, VR/AR, IoT and big data
  3. Innovative: Use the consolidation as an opportunity not only to eliminate redundancies but also to capitalize on projects such as data center consolidation and cloud transformation to enable new service lines and horizon technologies (mobile, social, big data and machine learning
  4. Future forward: Leverage cloud and compassable architectures to simplify data and application transfer for future M&A and divestiture activities

As an example, here's an overview of our integrated portfolio approach used in horizontal mergers and acquisitions addressing data, applications, and infrastructure:

  1. Day 0 of integrated entity:
    o  Enterprise resource planning (ERP) consolidation in conjunction with finance data warehouse
    o Create common offer management
    o Standardized product branding and service bundling in the event of vertical acquisition

  2. 1st Quarter of integrated entity:
    o Integrate common offer management with existing the BSS platforms of both entities for fulfilling the service
    o Initiate single invoice by invoice stapling techniques
    o Combined application portfolio analysis based on domain; the main objective of this initiative is to deliver new capabilities as combined entities

  3. 2nd Quarter onwards:
    o Define a strategy for renewing the core IT capability required by the combined entity for BSS and service fulfillment domains and later for service assurance domain. Portfolio rationalization avoiding larger data migration projects. For example, migrate the subscriber, product, billing information in target billing platform for only active customers. However, keep the regulatory required usage and invoice details in legacy billing platform or move to the big data platform.

In the next topic, we will capture the recommended approach for IT architecture redefinition of vertical acquisitions. In recent trends, we are seeing a lot of vertical acquisitions like Comcast + NBCU, AT&T + Time Warner, and such. The communication industry intent in vertical acquisitions was to distribute acquired content via existing wireless, broadband, DTH or IPTV channels.  The vertical M&A brings different integration requirements and focus areas on content (Digital rights management, content management), the headend (content management system, streaming), and middleware (electronic program guides or interactive program guides, AAA, subscriber management) platforms in addition to market and business capability expansion plans.

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