Project Telecommunications

The worldwide telecom industry is in a strong growth mode. In fact, telecommunications has been one of the most dynamic industries in terms of rapid technology advancement combined with deregulations. The industry’s overall revenue is estimated to be over $1.3 trillion (2007). A few well-known names in the telecom sector are Sprint, Cable & Wireless, Telstra, AT&T, China Telecom and Reliance Communications. These companies and several other similar industries are conventionally known as ‘Communication Service Providers’ (CSPs). They cater to a wide variety of cross sectional industry sectors – be it IT, Biotechnology, Health Care, Manufacturing and even a residential consumer. SAP leverages its solutions for CRM, asset life cycle management, supply chain management and financials to address the business needs. Built-in adapters connect all SAP modules to enable users to extract the data needed to accomplish their respective processes. If necessary, SAP also offers open-ended integration tools with other systems to connect and complete the processes. A customer life cycle process in a telecom industry can be broadly classified as – Pre-Sales, Sales, Order Administration & Provisioning, and Customer Support. All individual sub-functions can be grouped into each of the above processes to understand the requirement of IT tools / technology to effectively carry out the process. Depending upon the business strategy and positioning, typically Pre-Sales starts with campaigns and extends up to identifying prospective customers. However, telecom products are unique and need to be bundled / configured to meet each customer requirement. Quotes will need to be worked by a technical team. Upon the customer confirming the order, the provisioning team works on order fulfillment and customer acceptance. They will give the necessary inputs to the billing team to complete the billing process. Then the customer support team takes over and makes itself available for any support related issues / queries. Each of these processes will need robust tools to capture, share, and for timely analysis of technical / business data to effectively carry out the business functions. Multiple IT systems to meet the needs will add to the performance and maintenance issues. While the business process of each company varies with the business strategy and product positioning, SAP captures the best business practice across the industry. SAP also recommends implementing its ERP as much out-of-the box as possible to leverage the best practice. This will enable quicker ROI to companies and easy to maintain or upgrade the application later. The business process explained above relates to the best practice approach for a CSP. Each business function, however, needs to be broken down into specific units. The customer has a choice of accessing through the Web, email, phone, partner or field representative. During this prospecting process, SAP unifies multiple channels through which the customer can access, thereby enabling sales or marketing personnel to get a 360degree view of the customer. This sharing of prospect or customer information is extremely important from the point of view of new client acquisition. In addition to effectively

capturing the customer needs using the SAP CRM module, during proposal building stage, each service can be combined or bundled with other products and sub-services. This is where SAP’s product configuration and bundling come in handy. Price calculation can be done faster using the pricing engine. This flexibility reduces the time to market and addresses customer needs uniquely. Following the quote stage, once the customer confirmation is received, contracts or agreements can be captured in SAP and order processing commenced. Order types could vary among New / Change / Cancel / Add-on. Each order type can be processed as per the data required and associated workflows. The order status can then be tracked and once completed, the customer, service and contract data will be sent to billing. The modules are integrated on the same SAP platform and hence reduce redundancy. In terms of customer support function, issues can be broadly categorised into Network trouble tickets and Customer trouble tickets. The former is created by CSPs themselves when there is a network outage and multiple customers on the network get affected. Customer trouble tickets are those where there is a fault for a specific customer. In either case, SAP CRM service module can address the issues and track the complete trouble ticket cycle. SAP also equips field service engineers with the knowledge base, based on historical resolution cases. This will enable quicker resolutions and easier adaptability for new service engineers. In case companies are looking for spare parts planning SAP has ready modules to cater to. With its rich functionality, SAP supports end-to-end business processes for a customercentric organisation. SAP solution maps recommend the best practice approach to meet the varying demands of the industry and help companies to stay competitive in one of the most dynamic markets. The author is Principal Consultant of SAP practice with MindTree Consulting Limited, Bangalore.

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The global economic downturn has forced companies across the globe including Indian companies to adopt various cost-cutting measures to sustain their bottom line. However, Indian companies seem to be a step ahead when it comes to thinking ahead. SAP Indian sub-continent managing director Ranjan Das shares his insights on how India stands differently in the times of slowdown. He highlights some of the changing trends in enterprise mobility space and telecom sector, and goes on to clarify the SAP/ERP ambiguity, in an interview with FE's Ayushman Baruah What are the challenges faced by companies globally? Do you perceive India any differently? The global credit crunch has impacted all companies globally, including India. The segment that has been hit hardest, especially in India, is the SME sector. Given that the revenues are going down for most companies, everyone wants to trim costs. But the key difference lies in the fact that, in addition to cutting costs, Indian companies are also thinking ahead. Most Indian companies are already taking this as an opportunity to leapfrog the competition because there would be new things and newer business models when the good times are back. Most companies in India are really interested in adopting best practices. The next set of best practices is likely to come from India. What are the changing trends in the enterprise mobility space? The enterprise mobility space is certainly one of the hot spots. As enterprise mobility using smartphones becomes a business necessity, SAP and Research In Motion (RIM) are working to address the needs and expectations of business users through an integrated solution that enables secure real-time access to SAP's Customer Relationship Management solution. The integrated solution benefits organisations with enhanced employee productivity and service while empowering mobile users with the ability to access critical customer information. The integrated solution also leverages the inherent security, management capabilities and efficiency of the BlackBerry Enterprise Solution and introduces a number of key innovations for mobile CRM. What are technology trends in the telecom space There is an increasing demand for enterprise-wide business solutions for sustained growth in the telecom sector. SAP is leading the foothold in the market owing to its diverse and flexible solution portfolio. Eight of the top 11 telecommunications service providers comprise of SAP's customer base. This includes TTSL, BSNL, Vodafone, among others. Fundamentally, all telecom companies are building an IT platform in order to achieve more efficiency, adopt best practices from other telecom companies and be able to enter new markets, businesses and business models. In terms of technology, the trend points towards adoption of enterprise applications like Enterprise Resource Planning, CRM, Billing and Provisioning, etc. How do you react when the terms SAP and ERP are used interchangeably? SAP is a business software company that does three things. It automates and optimises business processes, offers best practices, and gives you the tools and the data to make decisions. In many years that I have been with the company, I have never seen SAP as an ERP-only company.

Evidently, ERP is a very important part of our portfolio but SAP does not equal ERP. ERP usually focuses on functions like finance and HR. But SAP does all that and more. It is involved in optimising your relationship with your supply chain partners; customer relationship management; governance and risk and compliance issues. Which are your current focus areas? Banking, financial services and insurance and utilities sector require a lot of automation in order to efficiently run their businesses. We are also working for public sector including the local, state and well as the defence.

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What are the changing trends in the enterprise mobility space? The enterprise mobility space is certainly one of the hot spots. As enterprise mobility using smartphones becomes a business necessity, SAP and Research In Motion (RIM) are working to address the needs and expectations of business users through an integrated solution that enables secure real-time access to SAP’s Customer Relationship Management solution. The integrated solution benefits organisations with enhanced employee productivity and service while empowering mobile users with the ability to access critical customer information. The integrated solution also leverages the inherent security, management capabilities and efficiency of the BlackBerry Enterprise Solution and introduces a number of key innovations for mobile CRM. What are technology trends in the telecom space There is an increasing demand for enterprise-wide business solutions for sustained growth in the telecom sector. SAP is leading the foothold in the market owing to its diverse and flexible solution portfolio. Eight of the top 11 telecommunications service providers comprise of SAP’s customer base. This includes TTSL, BSNL, Vodafone, among others. Fundamentally, all telecom companies are building an IT platform in order to achieve more efficiency, adopt best practices from other telecom companies and be able to enter new markets, businesses and business models. In terms of technology, the trend points towards adoption of enterprise applications like Enterprise Resource Planning, CRM, Billing and Provisioning, etc. How do you react when the terms SAP and ERP are used interchangeably? SAP is a business software company that does three things. It automates and optimises business processes, offers best practices, and gives you the tools and the data to make decisions. In many years that I have been with the company, I have never seen SAP as an ERP-only company. Evidently, ERP is a very important part of our portfolio but SAP does not equal ERP. ERP usually focuses on functions like finance and HR. But SAP does all that and more. It is involved in optimising your relationship with your supply chain partners; customer relationship management; governance and risk and compliance issues.

SAP LAP ANALYSIS OF NATIONAL TELECOM POLICY: INDIA Priyanka Kokil and M.K.Sharma

ABSTRACT Telecom services started in India in 1984 with an infrastructure which performed poor. The telecom sector suffers from high prices, long waiting time, poor technical performance, widespread equipment outage, excess labor, low productivity, chronic unmet demand, and rampant corruption. This has been a significant drag on economic growth and development of India since telecom is a strategic sector. Although the services started in 1984, it was only after 1991 the crisisdriven liberalization of the economy that the sector was taken seriously. The Government of India recognizes that provision of world class telecommunication infrastructure and information is the key to rapid economic and social development of India. It was also recognized that this sector contributed a major part in GDP of the county. So, it was important to see the importance to the country that to be comprehensive and looking forward telecommunications policy which creates a good framework for the development of the country. To make the telecom service an integrated part, government introduced a National Telecom Policy (NTP) in 1994 but this policy was not able to fulfill all the requirements so, government again revise the NTP’94 and introduced a new National Telecom Policy (NTP) in 1999. This paper is to analyze the evolution, cause etc. of NTP’94, NTP’99 and NTP (2005-2006) by using SAP LAP framework we do analysis with SAP and understand through LAP as to what were the various push and pulls which resulted in the NTP’99.The question framework contributes to learning and improved decision making.

INTRODUCTION India is the fourth largest telecom market in Asia after China, Japan and South Korea. The Indian telecom network is the eighth largest in the world and the second largest among emerging economies. At current levels, telecom intensiveness of Indian economy measured as the ratio of telecom revenues to GDP is 2.1 percent as compared with over 2.8 percent in developed economies. Indian telecom sector has undergone a major process of transformation through significant policy reforms. The reforms began in 1980s with telecom equipment manufacturing being opened for private sector and were later followed by National Telecom Policy (NTP) in 1994 and NTP'1999. Historically, the telecom network in India was owned and managed by the Government considering it to be a natural monopoly and strategic service, best under state's control. However, in 1990's, examples of telecom revolution in many other countries, which resulted in better quality of service and lower tariffs, led Indian policy makers to initiate a change process finally resulting in opening up of telecom services sector for the private sector. Policy reforms can be broadly classified in three distinct phases ● ● The Decade of 1980's saw private sector being allowed in telecommunications equipment

manufacturing. Mahanagar Telephone Nigam Limited (MTNL) and Videsh Sanchar Nigam Limited (VSNL) were formed and a Telecom Commission was set up to give focus to telecommunications policy formation.

● ● In 1990s, telecommunications sector also benefited from the general opening up of the

economy. NTP 1994 was the first attempt to give a comprehensive road map for the Indian telecommunications sector. ● ● Availability of telephones on demand (targeted by 1997) ● ● Universal service covering all villages and one PCO per 500 persons in urban

areas at the earliest (targeted to be achieved by 1997) ● ● Telecom services at affordable and reasonable prices ● ● World standard quality of services ● ● NTP 1999 brought in the third generations of reforms in the Indian telecommunications

sector. The Government of India (Government) recognizes that provision of world class telecommunications infrastructure and information is the key to rapid economic and social development of the country. It is critical not only for the development of the Information Technology industry, but also has widespread ramifications on the entire economy of the country. It is also anticipated that going forward, a major part of the GDP of the country would be contributed by this sector. Accordingly, it is of vital importance to the country that there be a comprehensive and forward looking telecommunications policy which creates an enabling framework for development of this industry. The Indian telecommunications sector has undergone a major process of transformation because of significant policy reforms during the recent years. It has been reported in the press that the Department of Telecommunications (DoT) has formulated its perspective plan for telecommunications from 1997 through 2007. This is the first perspective plan after 1994's Telecom Policy, and follows the earlier one drawn up in 1989 for the period 1990-2000. DoT will introduce ISDN (Integrated Services Digital Network -a communications standard that covers voice, data and image services) up to all district head-quarters by 2007. But before that, it will start introducing IN (Intelligent Network-services from 1997 in all towns with a population above 0.5 million. DoT will also introduce voice response and recognition services by 1997, and several multimedia services such as video-on-demand, remote diagnostics and interactive teleeducation by 2000. Under the Ninth five-year Plan a number of new initiatives like introduction of Package Tendering and Solar Battery systems, instructions to all the circles to have Annual Maintenance Service contracts, setting up MARR repair center have been introduced to provide Village Public Telephones (VPTs) to all villages. Today in rural areas the economy is much lower than that in urban areas; the telephone traffic is mainly confined to villages that are close by or to villages within the same telecom center itself. It is obvious therefore that unless and until telephone service is made available in all the villages, it is difficult to expect higher calling rates and better traffic loading. Long distance calls revenues are less and hence phones are far less to justify the provision of rural telephone service and consequently the service has to be subsidized. This is a heavy burden on the exchequer. The New Telecom Policy, 1999 focused on creating an ideal environment for investment, establishing communication infrastructure by leveraging on technological development and providing affordable telecom services to all. It had certain important objectives, including availability of telephone on demand, provision of world class services at reasonable prices, ensuring India’s emergence as major manufacturing / export base of telecom equipment and universal availability of basic telecom services to all villages. It also announced a series of specific targets to be achieved by 1997. As against the NTP 1994 target of provision of 1 PCO per 500 urban population and coverage of all 6 lac villages, DoT has

achieved an urban PCO penetration of 1 PCO per 522 and has been able to provide telephone coverage to only 3.1 lac villages. As regards provision of total telephone lines in the country, DoT has provided 8.73 million telephone lines against the eighth plan target of 7.5 million lines. Until 1985, the Indian Telegraph Act of 1885 and the Wireless Telegraph Act of 1932 provided the legal basis for the central government's telecommunications monopoly. Under these laws, posts and telecommunications were combined in one P&T department run by the Ministry of Communications. In the late 1970s and early 1980s protests against poor service by subscribers, politicians, industrialists, and business leaders coincided with global and national pressure for liberalization. As a result, a parliamentary committee was established in 1981, which recommended numerous structural and service improvements. Under the advice of this committee, in 1985 a separate Department of Telecommunications (DoT) was established under the Ministry of Communications, and two supposedly autonomous public sector (MTNL and VSNL) undertakings (PSUs) were created to expand, develop, and manage crucial segments of the Indian telecommunications system. •

The Mahanagar Telephone Nigam Limited (MTNL) was set up to run services in Delhi (the nation's capital) and Mumbai, formerly Bombay (the nation's commercial center), which together account for 25 percent of the nations phone lines.

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Telecommunication in the rest of the country continues to be run as a government department because of staff resistance to change.

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Videsh Sanchar Nigam Limited (VSNL) was set up to run international services.

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DoT was established as the exclusive, self-regulating provider of domestic and longdistance service.

From [1] 1992-1996, DoT doubled practically every aspect of the telecommunications infrastructure in India, from the number of telephones in service to the long distance route kilometers. DoT did not, however, succeed in reducing the registered waiting list for telephones, and in 1994, the government acknowledged the need to liberalize India’s telecommunications market. The National Telecom Policy (NTP) of 1994 provided the basis for liberalizing the telecommunications market. It recognized the importance of liberalization and private sector participation as key elements of economic development. It also envisaged, among other things, the provision of basic telephone service by private companies that would compete with DoT; the establishment of an independent regulatory body; and the separation of DoT’s operational, policy, and ministerial functions. The NTP has led to various liberalization successes. However entrenched bureaucracy, inefficient lobbying and poor public information campaigns have largely undermined the policy domestically, and demand for telephone lines in India remains extremely high. On the international front, the NTP has prevented India from making more liberal commitments to the WTO. India has refused to go beyond the NTP’s very limited policies in making commitments to the WTO Basic Telecommunications Agreement. The NTP provides that: •

DoT will not be corporatized, which ensures that labor unions have no big issue to fight;

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Private sector companies will be issued licenses for statewide operations in competition with DoT for basic telephones. This establishes a duopoly system for 15 years in 21 statewide service areas (or circles);

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Mobile telephone services will be offered solely by non-DoT private sector companies, at least two in each service area. The initial license period is 10 years, extendable thereafter in five-year increments;

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Foreign equity participation will be allowed in public telephone operations of at least 500,000 basic telephone customers and 100,000 mobile phone customers;

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Private carriers must commit to public service obligations such as rural area coverage and public telephones;

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Interstate and international telecommunications will be the exclusive monopoly of DoT and its company VSNL.

Significant changes have taken place in the telecommunications policy and market in India in the last few years, and particularly in the last two years. Favorable government policies and lower costs have now created a platform for rapid growth. Tele-density, which was around 3% at the end of 1997, is about to touch 6%, and expected to reach 10% by 2006 - more than a 100 million telephone connections. As in other markets, this is being driven by dramatic growth in cellular phone usage. For instance in the month of October 2003, India added more than 2 million cellular (GSM+CDMA) users, making it one of the fastest growing telecom markets in the world. In order to speed up the development of the telecom sector, all telecom services have been opened up to private sector participation. Unrestricted entry is allowed in the basic services, national and international long distance service, in global mobile personal communication by satellite (GMPCS) service, VSAT and Public Mobile Radio Trunked Service (PMRTS). India is among the top ten countries in the world in terms of its telecommunications network. The country has an investment potential estimated at US$ 37 billion by 2005 and US$ 69 billion by 2010. The new range of telecom services at affordable prices introduced by Reliance Info com, a sister company of India's largest Reliance Industries group, towards the end of 2002 have further galvanized the growth potential of telecom market. India has 38.44 million fixed telephone connections, growing at 22 per cent per annum and almost 10.0 million cellular phone connections, growing at 100 per cent per annum. The telecom network in the country comprises over 35,000 exchanges with switching capacity of over 47 million, 427 digital trunk automatic exchanges, and over 326,271 route km of optic fiber network. In addition to the two state-owned companies BSNL and MTNL, several private players have established a significant presence in both the basic and cellular markets. Global majors with a presence in the country include Hutchison, Singapore Telecom, AT&T, France Telecom, etc. The total inflow of FDI into the sector between August 1991 and October 2002 was around US$ 1.95 billion. The Government recognizes that the result of the privatization has so far not been entirely satisfactory. While there has been a rapid roll out of cellular mobile networks in the metros and states with currently over 1 million subscribers, most of the projects today are facing problems.

The main reason according to the cellular and basic operators has been the fact that the actual revenues realized by these projects have been far short of the projections and the operators are unable to arrange financing for their projects and therefore complete their projects. Basic telecom services by private operators have only just commenced in a limited way in two of the six circles where licenses were awarded. As a result, some of the targets as envisaged in the objectives of the NTP 1994 have remained unfulfilled. The private sector entry has been slower than what was envisaged in the NTP 1994. The government views the above developments with concern as it would adversely affect the further development of the sector and recognizes the need to take a fresh look at the policy framework for this sector. Need for a New Telecom Policy In addition to some of the objectives of NTP 1994 not being fulfilled, there have also been far reaching developments in the recent past in the telecom, IT, consumer electronics and media industries world-wide. Convergence of both markets and technologies is a reality that is forcing realignment of the industry. At one level, telephone and broadcasting industries are entering each other’s markets, while at another level; technology is blurring the difference between different conduit systems such as wire line and wireless. As in the case of most countries, separate licenses have been issued in our country for basic, cellular, ISP, satellite and cable TV operators each with separate industry structure, terms of entry and varying requirement to create infrastructure. However this convergence now allows operators to use their facilities to deliver some services reserved for other operators, necessitating a re look into the existing policy framework. The new telecom policy framework is also required to facilitate India’s vision of becoming an IT superpower and develop a world class telecom infrastructure in the country. Licensing of Cellular Mobile Services Starting in December 1991 the government followed a policy of issuing a limited number of Cellular Mobile and Basic Fixed Service licenses through a process of competitive bidding. The use of auctions appears to have been motivated by the desire to raise revenues as well as ensure transparency in allotment of licenses. However, once the licenses had been granted the winning bidders, other than those for Metros, complained that they had bid extremely high amounts and that their businesses were not viable. The government then relieved them of the obligation to pay further installments of their committed license fees and allowed them to move to a revenue sharing regime. Several other aspects of the license, such as calling charges, rentals, duration of the license and choice of technology were also altered over time. The government has now decided to hold an auction for the issue of the fourth cellular license Initial licensing procedure In December 1991, the government invited competitive sealed bids for two non-exclusive digital mobile licenses, for a 10-year period, extendible by 5 years, for the four metropolitan cities of Mumbai, Delhi, Calcutta and Madras. The license specified the use of GSM standards for offering cellular services. The annual license fee for the first three years was a given parameter, while the license fee from the fourth year onwards was fixed at Rs.5,000 per subscriber (based on unit call rate of Rs.1.10) subject to a minimum total amount. Along with the license fee, call charges were also a given parameter and the bidding was for the lowest rental to be charged from customers. The evaluation was on the basis of financial strength, experience of the partners, committed rollout and lowest rentals. At the end of the tender process, the value of lowest rental was fixed at Rs.156 per month and eight licenses were issued in October 1994.

License scheme based on NTP-1994 The framework for the initial licensing for offering cellular services was based on NTP1994. The licenses for the cellular services were divided among metros and non metro circles. In November 1994, the government first issued eight licenses to start cellular services in four metros circles. Subsequently, during 1995-1998, the government issued 34 licenses for cellular services in 18 circles. The license scheme, based on NTP-1994, allowed up to two players per circle. Based on these licenses, the first cellular operations began in August 1995, in metro circles and in December 1996, in non metro circles. License scheme based on NTP-1999 The new National Telecom Policy was announced in March 1999. Subsequently, the government decided to allow two or more operators to offer cellular services in each circle. The government decided to allow two or more operators to offer cellular services in each circle. The government offered the position of the third cellular operator to MTNL (in Delhi and Mumbai) and BSNL (the remaining circles except Delhi and Mumbai). Further, in October 2001, the government issued fourth cellular licenses in four metro circles and 13 non-metro circles. By September 2002, a few cellular operators (Bharti and Hutchison) had started cellular services in various circles as fourth operators. Migration from fixed license regime to revenue sharing regime In 1999, private telecommunication operators were offered the option to change the basis of estimating their license fees from a fixed amount to share of revenues. Further, the license period was extended from 15 years to 20 years. However, these concessions were subject to operators accepting a set of conditions. These include: ● ● The existing cellular operators had to clear all the dues by January 2000, as a pre-condition

for changing the basis of determining the license fees from fixed to a revenue share (with effect from August 1999). ● ● The clause relating to the exclusively of license was removed from the new license

agreement. (Hence, more operators could be provided licenses from a circle in the future.) All private telecommunication operators accepted the terms of migration to a revenuesharing arrangement with effect from August 1999. For cellular operators, license fees paid till July 1999 were treated as an entry fee. Licensing guidelines for entry of fourth operator The TRAI in making its recommendations on the entry of the fourth cellular operator in June 2000 pointed out that it was constrained in its ability to make recommendations because of lack of information about the availability of spectrum either for the third or the fourth operator. It pointed to the critical role of spectrum planning in sustaining competition and ensuring service quality. After receiving the TRAI's recommendations in June 2000 the government announced its guidelines for issue of license for the fourth operator. Some of the important features were: ● ● General license conditions

The bidder company can apply for any number of service areas subject to fulfillment of all the conditions of entry. The license will be issued on non-exclusive basis, for a period of 20 years, further extendable by 10 years at one time at the discretion of licensing Authority.

● ● Transfer of licenses

Resale of business / assign ability/transferability of license by one network owner to another shall be permitted subject to prior written consent of the Licensor which shall be granted after ensuring the conditions in respect of net worth, paid up equity and in accordance with other terms & conditions, procedures prescribed in Tripartite Agreement, if duly executed amongst Licensor, Licensee and Lenders. However, such permission shall be granted only after ensuring that competitiveness in the service area is not compromised. ● ● Choice of technology

Any digital technology either once already validated by TEC or having been used for a customer base of one lakh or more for a continuous period of one year anywhere in the world, shall be permissible for use regardless of its versions. ● ● Minimum roll-out obligation

In Telecom Circles, at least 10% of the District Headquarters (DHQs) will be covered in the first year and 50% of the District Headquarters will be covered within three years of effective date of License. The licensees shall also be permitted to cover any other town in a District in lieu of the District Headquarters. Coverage of a DHQ/town would mean that at least 90% of the area bounded by the Municipal limits should get the required street as well as in-building coverage. In Metros, 90% of the service area shall be covered within one year of the effective date. The District Headquarters shall be taken as on the effective date of license. ● ● Entry fee

The successful bidder will be required to pay one time Entry Fee based on the final bid before signing the License Agreement. The bidding process shall be structured as "Informed Ascending Bidding Process". ● ● Revenue share

In addition to the Entry fee described above, the Licensee shall also pay License fee annually @ 17% of “Adjusted Gross Revenue” for the Metro cities & Telecom Circles (exception being 10% for Andaman & Nicobar Circle) as Revenue Share generated from the Service in accordance with the procedure prescribed in the License Agreement document. This license fee will now be applicable for both existing and new operators. SAP-LAP ANALYSIS OF INDIAN TELECOM POLICY a) Background The case situation has been taken from Telecom services sector. Telecom services in India, until recently were run by monopolistic and monolith government organization, i.e. Department of Telecommunication (DoT). Telecom services were opened to private sector through a process of privatization initiated in 1994, under the Ministry of Communication, Government of India. Successful bidders were granted license to build and operate telecom network with conditions stipulated in the Tender document and license agreement. However, the desired objectives of increasing the Tele-density and world class service at reasonable price have not been met with only few of private operators able to commence and expands their services. Especially, in the case of basic telephony services, only one private operator has started service in Madhya Pradesh with remaining private operators grappling with Govt. on high license fees. Financial institutions were unwilling to finance the projects due to

high investment cost contributed primarily by license fees. Similarly Government has not been able to recover dues on license fees from cellular operator who have pleaded their inability to do so. The years in between also saw many litigation being filled in court for various reasons resulting in the whole situation getting messy and resulting in delayed operations. In nutshell the objectives of the NTP'94 could not be met and results of privatization have so far not been satisfactory. Therefore, these realization buy government has resulted in new telecom policy NTP' 99 which seeks to the remove the ambiguities of NTP' 99, incorporate changes necessitated by new technological development and also broaden the scope of NTP' 94 to include regulator role and Internet services. b) New Telecom Policy (NTP 2005-2006) The New Telecom Policy (NTP 2005-2006), that is in the works, is expected to have a special focus on consumer issues like ubiquitous coverage, periodic advisories on tariffs, number portability, Carriers Access Code (CAC) and a toll free national emergency number (108) for calamities. The policy is also likely to push for faster spread of broadband, local content, affordable PC's, Internet applications and e-initiatives. Going by NTP-2005/06 drafts, inclusion of telecom consumer issues will be one of the major changes over existing NTP' 99. According to draft policy all service providers must allow customers to get access to services like calling cards, toll free numbers, which are provided by other operators. c) SAP-LAP framework for National Telecom Policy To understand evolution of the NTP' 94 to NTP' 99, we can apply SAP-LAP framework, do an analysis with SAP and understand through LAP (figure 4.4) as to what were the various PUSH and PULLS which resulted in the NTP' 99. The question framework lucidly brings as to how SAP-LAP approach contributes to the learning and improved decision making.

Fig I SAP-LAP framework Source: Sushil (2000) Flexibility in Management, New Delhi, Vikas Publishing House d) SAP (Situation – Actor – Process) What is present and past situation? The situation can be understood by framing few questions and providing explanation for these. a) a) Why was NTP' 94 required?

The objectives of the New Telecom Policy 1994 are as follows: 1. 1. The focus of the Telecom Policy shall be telecommunication for all and

telecommunication within the reach of all. This means ensuring the availability of telephone on demand as early as possible. 2. 2. Another objective will be to achieve universal service covering all villages as early

as possible. What is meant by the expression universal service is the provision of access to all people for certain basic telecom services at affordable and reasonable prices. 3. 3. The quality of telecom services should be of world standard. Removal of consumer

complaints, dispute resolution and public interface will receive special attention. The

objective will also be to provide widest permissible range of services to meet the customer's demand at reasonable prices. 4. 4. Taking into account India's size and development, it is necessary to ensure that India

emerges as a major manufacturing base and major exporter of telecom equipment. 5. 5. The defense and security interests of the country will be protected.

b) Why changes were needed? 1. 1. In addition to some of the objectives of NTP 1994 not being fulfilled, there have also

been far reaching developments in the recent past in the telecom, IT, consumer electronics and media industries world-wide. 2. 2. Convergence of both markets and technologies is a reality that is forcing realignment

of the industry. 3. 3. Far reaching developments in recent past in Telecom, IT, consumer electronics and

media industries world wide. 4. 4. The new telecom policy framework is also required to facilitate India's vision of

becoming an IT superpower and develop a world class telecom infrastructure in the country. c) c) What is the objective of NTP' 99? 1. 1. Access to telecommunications is of utmost importance for achievement of the

country's social and economic goals. Availability of affordable and effective communications for the citizens is at the core of the vision and goal of the telecom policy. 2. 2. Strive to provide a balance between the provision of universal service to all

uncovered areas, including the rural areas, and the provision of high-level services capable of meeting the needs of the country's economy; 3. 3. Encourage development of telecommunication facilities in remote, hilly and tribal

areas of the country 4. 4.

Create a modern and efficient telecommunications infrastructure taking into account the convergence of IT, media, telecom and consumer electronics and thereby propel India into becoming an IT superpower;

5. 5. Convert PCO's, wherever justified, into Public Teleinfo centers having multimedia

capability like ISDN services, remote database access, government and community information systems etc. 6. 6. Transform in a time bound manner, the telecommunications sector to a greater

competitive environment in both urban and rural areas providing equal opportunities and level playing field for all players; 7. 7. Strengthen research and development efforts in the country and provide an impetus

to build world-class manufacturing capabilities. 8. 8. Achieve efficiency and transparency in spectrum management. 9. 9. Protect defense and security interests of the country.

10. Enable Indian Telecom Companies to become truly global players.

d) d) What is the demand of the Industry & Market? 1. 1. Demand of the industry was level playing filed between incumbent operator and

new operators 2. 2. Changes from licensing based regime to revenue sharing regime 3. 3. Good quality services at affordable prices for consumer 4. 4. Choice of multiple and varied services for consumer

Who were the Actors? The main players in the Telecom industry and their interest are 1. 1. Ministry of Communication- Vies it as key sector development from economic

angle as major part of GDP would be contributed by this sector 2. 2. Telecom Operators (ISP, Cellular and Basic) – They need flexibility in business in

terms of tariffs, technology choices and types of services which can be delivered 3. 3. Equipment Manufacturer and suppliers - Establish a level playing field for the

local and foreign suppliers through appropriate import duty structure, competition and protection of domestic manufacturing industry 4. 4. DOT & MTNL – Retain Monopoly and corner market share for more revenue 5. 5. TRAI – Regulate tariff, Service delivery quality and dispute 6. 6. FIIs – Profitability of their financial operations through loan arrangements, bridge

financing and debt funding in the scenario where the new Telco operators have been burdened by high license fees committed by them in their bidding and also with high infrastructure cost, the easy financing terms play important role in deciding the technology choices. 7. 7. End consumers – Improved services, cheaper services, varied services choice and

easy availability. What are the Processes in evolution? a) What is being done? The changes required in NTP' 94 have been incorporated keeping in view of actors in situation have been incorporated in NTP' 99. The license structure shift from fixed fees to profit sharing has already been done pending the passing of resolution in the parliament. b) How is it being done? This is being done through policy and empowering TRAI's role who has already announced ceiling for new structured cost based tariffs. Similarly, no license fee concept for ISP services is another push toward achieving the main objectives of NTP'99. Allowing for technology choices in cellular mobile telephony services is another step towards this direction. The world is witnessing the advent of usage of IP and Internet fueling IP-based traffic growth, VoIP (Voice over Internet Protocol) applications and Video on demand services. Similarly, CATV operators are expanding their operation horizons to venture in telephony services. Therefore, the future tomorrow lies in the technologies that will address the voice telephony and data market on single platform. Evolving CDMA 3G standards promises to deliver the same.

c) Why it is being done? The objectives of NTP' 94 stated why it is needed. e) LAP (Learning – Action – Performance) What is the Learning? a) What are the key issues related to the situation, actors and process? The key factors which are their in situation is the 1. 1. Drawbacks, limitations of NTP' 94 2. 2. Rate of change of technology 3. 3. Wrong demand prediction resulting in wrong market analysis 4. 4. Formulation of NTP in isolation of industry 5. 5. Process of distribution of licenses on NPV of license fees which resulted in different

calculations and delays in awarding license. What are the Actions? a) What is being done to improve the situation? 1. 1. Formulation of NTP'99, announcement of new tariffs, announcement of new license

structure and allowance for technology other than GSM in CMTS. As explained earlier, the variety of technology, which can be used in the new telecom market is vast. Each technology has its application in different fields and is distinct by the very attributes that make them suitable for different applications. 2. 2. Formation GOT (Group on Telecom) to suggest ways and means for improvement. 3. 3. Formation of TRAI. 4. 4. Announcement of DoT services wing.

b) What more can be done for improvement? 1. 1. Speeder NTP' 99 implementation. 2. 2. Creation of telecom fund with participation of Government and Financial Institutions 3. 3. Telecom tasks force to have more industry representation 4. 4. Higher and more focus on indigenous manufacturing 5. 5. Promotion of collaborative R&D for greater efficiency and result achievement

between Governments funded R&D's like DRDO, C-DOT, ITI and private companies R&D being taken by companies like Shyam Telecom, Professor Jhunjhunwala at IIT Madras, HFCL, and Lucent Technologies etc. What are the key performance parameters? a) What will be the impact on the situation? The improvement in situation and performance of NTP' 99 can be analyzed from the perspective of further changes in NTP' 99. This can be assessed base on 1. 1. Growth in Tele-density and its uniform distribution

2. 2. Growth in contribution of telecom industry in National GDP and state's SDP 3. 3. Improvement in QoS and measurement against set benchmarks 4. 4. Number of services choices 5. 5. Cost of service to consumer and service providers

f) Synthesis of Learning It can be seen that SAP-LAP provides framework for situational analysis and to arrive at decision improvement and making the correct choice. This general framework can be applied to varied situations to understand the situation and help in decision making either using qualitative and or quantitative approach embedded with in SAP-LAP. REFERENCES The worldwide telecom industry is in a strong growth mode. In fact, telecommunications has been one of the most dynamic industries in terms of rapid technology advancement combined with deregulations. The industry’s overall revenue is estimated to be over $1.3 trillion (2007). A few well-known names in the telecom sector are Sprint, Cable & Wireless, Telstra, AT&T, China Telecom and Reliance Communications. These companies and several other similar industries are conventionally known as ‘Communication Service Providers’ (CSPs). They cater to a wide variety of cross sectional industry sectors – be it IT, Biotechnology, Health Care, Manufacturing and even a residential consumer. SAP leverages its solutions for CRM, asset life cycle management, supply chain management and financials to address the business needs. Built-in adapters connect all SAP modules to enable users to extract the data needed to accomplish their respective processes. If necessary, SAP also offers open-ended integration tools with other systems to connect and complete the processes. A customer life cycle process in a telecom industry can be broadly classified as – Pre-Sales, Sales, Order Administration & Provisioning, and Customer Support. All individual sub-functions can be grouped into each of the above processes to understand the requirement of IT tools / technology to effectively carry out the process. Depending upon the business strategy and positioning, typically Pre-Sales starts with campaigns and extends up to identifying prospective customers. However, telecom products are unique and need to be bundled / configured to meet each customer requirement. Quotes will need to be worked by a technical team. Upon the customer confirming the order, the provisioning team works on order fulfillment and customer acceptance. They will give the necessary inputs to the billing team to complete the billing process. Then the customer support team takes over and makes itself available for any support related issues / queries. Each of these processes will need robust tools to capture, share, and for timely analysis of technical / business data to effectively carry out the business functions. Multiple IT systems to meet the needs will add to the performance and maintenance issues.

While the business process of each company varies with the business strategy and product positioning, SAP captures the best business practice across the industry. SAP also recommends implementing its ERP as much out-of-the box as possible to leverage the best practice. This will enable quicker ROI to companies and easy to maintain or upgrade the application later. The business process explained above relates to the best practice approach for a CSP. Each business function, however, needs to be broken down into specific units. The customer has a choice of accessing through the Web, email, phone, partner or field representative. During this prospecting process, SAP unifies multiple channels through which the customer can access, thereby enabling sales or marketing personnel to get a 360degree view of the customer. This sharing of prospect or customer information is extremely important from the point of view of new client acquisition. In addition to effectively capturing the customer needs using the SAP CRM module, during proposal building stage, each service can be combined or bundled with other products and sub-services. This is where SAP’s product configuration and bundling come in handy. Price calculation can be done faster using the pricing engine. This flexibility reduces the time to market and addresses customer needs uniquely. Following the quote stage, once the customer confirmation is received, contracts or agreements can be captured in SAP and order processing commenced. Order types could vary among New / Change / Cancel / Add-on. Each order type can be processed as per the data required and associated workflows. The order status can then be tracked and once completed, the customer, service and contract data will be sent to billing. The modules are integrated on the same SAP platform and hence reduce redundancy. In terms of customer support function, issues can be broadly categorised into Network trouble tickets and Customer trouble tickets. The former is created by CSPs themselves when there is a network outage and multiple customers on the network get affected. Customer trouble tickets are those where there is a fault for a specific customer. In either case, SAP CRM service module can address the issues and track the complete trouble ticket cycle. SAP also equips field service engineers with the knowledge base, based on historical resolution cases. This will enable quicker resolutions and easier adaptability for new service engineers. In case companies are looking for spare parts planning SAP has ready modules to cater to. With its rich functionality, SAP supports end-to-end business processes for a customercentric organisation. SAP solution maps recommend the best practice approach to meet the varying demands of the industry and help companies to stay competitive in one of the most dynamic markets. The author is Principal Consultant of SAP practice with MindTree Consulting Limited, Bangalore.

SAP Services Research Program Segmentation SAP Services Research Program, InDepth SAP Services Research Program | Segmentation | 2009 2 © PAC, July 2009

Segmentation First of all, it is important to understand that our scope of investigation is purely on the external market for SAP-related services. This excludes all SAP-related internal service activities on the user side and performed by internal IT departments. PAC’s reports on the SAP-related Services market analyze “Consulting & Systems Integration Services” (C&SI), derived from PAC’s Project Services segmentation as well as Hosting and Application Management Services, which reside in the IT Services Market. SAP’s Software business falls in PAC’s Business Application Software segmentation, to be found within the larger Application Software market. The following definitions are intended to provide the reader with a better understanding of where the

SAP-related Services market exists, as illustrated below. SAP Services Research Program | Segmentation | 2009 3 © PAC, July 2009

SAP Products Segmentation Definition PAC’s SAP software products figures include only revenues generated from application software licenses and maintenance / support fees, in addition to application-related systems infrastructure software and tools, namely the SAP NetWeaver platform and BI applications and tools. SAP’s revenue results from “business applications.” Business Application Software (BAS) consists of process-oriented applications that include horizontal applications, such as financials, HRM, CRM, SCM as well as industryspecific solutions, such as billing (telecom, utilities), core banking systems, etc. Application software products are often sold as packaged solutions including hardware and services, e.g. implementation services. The value of the hardware and services resold is excluded if it can be determined. All related revenues from implementation services (consulting, implementation / customization, training) are booked as consulting & systems integration services revenues. Please note that we consider highly verticalized Systems Infrastructure Software and Tools as Application Software Products in some industries, as they really are at the core of the respective applications. This applies in particular to software products dedicated to the telecom sector in areas like billing, telecom network management or platforms for enhanced services. For example, telecom network management clearly is an application area for a telecom operator, while traditional systems and network management software products are designed to help run an IT system and as such are considered as Systems Infrastructure Software by PAC. SAP Services Research Program | Segmentation | 2009 4 © PAC, July 2009

Segments & Sub-Segments Business Applications Horizontal Business Applications: Accounting & Finance Supply Chain Management, Distribution & Purchasing Human Resources Management CRM / Sales Management / Sales Force Automation Supplier Relationship Management, Procurement Product Lifecycle Management, Enterprise Asset Management BI Reporting and Decisional Tools (front-end) Vertical Business Applications: All industries need specific vertical business applications. Below you find some examples: Manufacturing: Material Requirements Planning, Quality Management, Manufacturing Execution Systems Banking: Account Management, Payment Transactions, Credit Management Systems Insurance: Policy and Product Management, Claims Management, Commissions and Partner Management Public: Tax & Revenue Management, Grant Management, Hospitals, Patient Management Telecom / Utilities: Billing / Metering, Network Maintenance Management Retail & Wholesale: Points of Sale, Merchandising Services: Services Automation Transport: Booking Systems, Traffic Control Systems SAP Services Research Program | Segmentation | 2009 5

© PAC, July 2009

Consulting & Systems Integration (C&SI) Services Segmentation This sub-category is derived from PAC’s project services segment and includes: IT Consulting; Systems Integration. Furthermore, PAC considers only the portion of Consulting Services that is Business Application Software-related (BAS-related), and of that SAP-related, as follows. IT Consulting � Planning, specification, and design of information systems; � IT-related process consulting. According to PAC’s segmentation, it includes purely IT-related services (audit of the information system, design, selection of technologies and products, etc.), but also the "process consulting" (Business Process Reengineering – BPR, change management and similar services) part of IT projects such as ERP implementation projects. - In terms of technology, application-related IT consulting services relate to: Application software products (custom development or packaged software); Application-related tools: BI, development tools, integration platforms, workflow, content management, etc. - In terms of services, application-related IT consulting includes: Consulting on the organization of information systems: all preliminary services, such as studies prior to the development and / or implementation of new applications, the overhaul of processes and procedures involving information technology, preparation of changes in application systems, etc.; Consulting on the selection / implementation of application software and packages: it covers consulting on horizontal application software products, such as enterprise resource planning (ERP), customer relationship management (CRM), supply chain management (SCM), human resources management (HRM), etc., and vertical application software products, such as points of sale, core banking systems, etc.; Assistance in miscellaneous project management tasks: support for all projects involving vertical or horizontal applications, change management, governance, IT suppliers relationship management, etc.; Also includes process and application-related consulting services in industrial information systems, control / command / supervision, simulation, and embedded software in the areas of defense, transport, energy, telecommunications, etc. SAP Services Research Program | Segmentation | 2009 6 © PAC, July 2009

Systems Integration This segment includes the following services: � Custom software development; � Packaged software implementation; � Integration of applications and infrastructure products. Important: this category includes both types of IT services invoiced on a Time & Material (also known as T&M, contract staff, staff augmentation, body shopping, etc.) basis as well as on a fixed-time / fixed-price basis. Application-related Systems Integration - In terms of technology, application-related services relate to: Application software products (custom development or packaged software); Application-related tools: BI, development tools, integration platforms, workflow, content management, etc. - In terms of services, application-related systems integration includes: Design / development of customized management information systems or

applications; Design / development / implementation of package-based information systems or applications (ERP, CRM, etc.); Maintenance of applications (customized or package-based) on time & material contracts; Integration projects for customized and package-based applications; Also includes application-related systems integration services in industrial information systems, control / command / supervision, simulation, and embedded software in the areas of defense, transport, energy, telecommunications, etc. SAP Services Research Program | Segmentation | 2009 7 © PAC, July 2009

Outsourcing Services Segmentation According to PAC’s segmentation, outsourcing is characterized by: Long-term contracts (3 to 10 years or even more); Often takeover of the outsourcing customer’s assets (human resources and / or infrastructure) by the outsourcer; Takeover of responsibility by the supplier: performance of defined services, fulfillment of defined service level agreements – not only provision of staff and / or infrastructure; Payment: still very often on a fixed-price basis, but modular in order to respond to the changes in customers' requirements. Payment conditions are increasingly variable, e.g. dependent on the degree of utilization (keyword: “outsourcing on demand”). Additionally, the price may also be based on non-IT measurements (“business metrics“). However, these criteria do not necessarily apply to all kinds of outsourcing services. Exceptions are, e.g., managed services / outtasking (normally no transfer of assets and / or staff), Web hosting or application service providing (ASP) / Software as a Service (SaaS) (often at short notice, no transfer of assets and / or staff, payment often based on a “pay-per-use” model). Hosting Services Application Hosting – hosting of an application, including server / mainframe and basic system operation, but excluding application management. Application Management Services (AM) Application management (AM) describes the maintenance and enhancement of existing applications (custom development and / or customized software products), sometimes even their initial development, under a long-term (multi-year) contract with a commitment to fulfilling pre-defined service level agreements (SLAs) on a fixed-price basis. Often, staff is transferred. Please note: PAC considers “stand-alone application management” as well as AM embedded in complete or application outsourcing deals to be included in the respective segments. SAP Services Research Program | Segmentation | 2009 8 © PAC, July 2009

Overview Segmentation SAP Services Research Program | Segmentation | 2009 9 © PAC, July 2009 SAP Services Research Program | Segmentation | 2009 10 © PAC, July 2009

About Pierre Audoin Consultants PAC is a global market research and strategic consulting firm for the Software and IT Services Industry (SITSI). PAC helps IT vendors, CIOs, consultancies and investment firms by delivering analysis and advice to address a range of growth, technology,

financial, and operational issues. Our 30+-year heritage in Europe – combined with our US presence and worldwide resources – forms the foundation of our ability to deliver in-depth knowledge of local IT markets, anywhere. We employ structured methodologies – undertaking thousands of annual face-to-face interviews on both the buy and sell side of the market, as well as a bottom-up, top-down approach – to leverage our research effectively. PAC publishes a wide range of off-the-shelf and customized market reports – including our best-selling SITSI® program – in addition to our suite of strategic consulting and market planning services. Over 160 professionals in 16 offices – across all continents – are delivering the insight that can make a difference to your business. For more information, please visit our website at www.pac-online.com. SAP Services Research Program | Segmentation | 2009 11 © PAC, July 2009

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DYNAMIC SERVICES FOR SAP® APPLICATIONS Dynamic Services for SAP® Applications •

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Dynamic Services for SAP® Applications enable you to master the complexity of SAP® software, deploy applications more efficiently, reliably, and securely – and tailor them to your real-world requirements. T-Systems offers demand-driven delivery of the three elements necessary for success with SAP: Within the scope of Dynamic Services for SAP® Solutions, we provide and run your IT and telecommunications infrastructure, operating systems, and databases – and host your SAP® systems. Via our Application Management Services, we manage and maintain your apps across the entire life cycle. And our dedicated SAP® Integration & Consolidation experts ensure your SAP landscape is harmonized. Your one-stop solution provider: T-Systems And now T-Systems is taking this approach a step further – by shifting the focus to the processes supported by your SAP software. These are based on a wide variety of ICT services and a complex ICT landscape. By means of end-to-end real-time monitoring, we keep tabs on all relevant components. So in the future, you’ll only need one service level agreement, based on your business process.