Stretegic Managemeny Vodafone Essays

Stretegic Managemeny Vodafone Essays Stretegic Managemeny Vodafone Essay Stretegic Managemeny Vodafone Essay Mobile operators are gaining the first mover advantage that enables them successfully to improve top line and build customer loyalty when they create innovative and differentiated products and services and launch them quicker than other competitors.In a fierce competitive mobile telecommunications market, gaining and maintaining cost and operational efficiency relatively has a great impact on bottom line improvements. These operators can capitalize on IT capabilities to gain and maintain competitive advantages and improve both top line and bottom line to achieve their strategies and objectives. Vodafone Group is the world? s largest mobile operator to provide a total of 333 million subscribers with its products and services globally.The Group has a better understanding of the strategic values of IT as a source of competitive advantages to continuously improve both top line and bottom line in order to achieve its organizational strategies. To improve top line, Vodafone Group has continuously developed and launched new differentiated products and services beyond traditional voice and simple data services to improve customer experience and build customer loyalty while adapting the advanced technologies faster than its competitors, optimizing entire value chains and redefining industry, and focusing on the Group Technology activities.To improve bottom line, Vodafone Group has implemented its strategic initiative, „One Vodafone? program, which transforms 16 operating companies into a united operation to achieve streamlined cost effective and efficient organization. Vodafone Group has embedded IT sharing, outsourcing, and centralization and consolidation strategies in order to achieve the objectives of One Vodafone program. Radio access network are shared with Orange, IT application development and maintenance are outsourced to IBM and EDS, and supply chain management function and data centers are centralized and consolidated.Vodafone Group has developed group-wide strategy that is associated with its better understanding of the importance of the customer experience to its business success. The Group standardized on Siebel CRM platforms globally to gain a 360 degree view of customers, and measure and manage customer satisfaction, customer loyalty, revenue assurance, revenue growth and profitability. Vodafone Group have been committed to helping all employees reach their full potential through ongoing training and development while Vodafone Group has embraced diverse workforce and created a leaner and agile structure with clear accountabilities.Vodafone Group capitalizes on IT capabilities to enable all employees to have access to a Learning Academy to deliver the one-stop shop for all learning and development solutions. IT definitely plays a decisive role in Vodafone Group as a critical enabler to gain and maintain competitive advantages and to perform its business operations more efficiently and effectively. Understanding the values of IT is essential for people in Vodafone Group in order to successfully achieve organizational strategies and objectives. iii I.Introduction The mobile telecommunications industry is one of the fastest growing sectors around the globe. Mobile operators are still able to gain the first mover advantage that enables them successfully to improve top line and build customer loyalty when they create innovative and differentiate d products and services and launch them quicker than other competitors. In a fierce competitive mobile telecommunications market, gaining and maintaining cost and operational efficiency relatively has a great impact on bottom line improvements.These operators can capitalize on IT capabilities to gain and maintain competitive advantages and improve both top line and bottom line in order to achieve their strategies and objectives. Vodafone Group Plc, which was established in 1982, is the world? s largest mobile operator that manages ultra large-scale mobile networks in 25 countries and has a presence through partnerships in another 39 countries. Based on the registered customers of mobile telecommunications ventures in which it had ownership interests at that date, the Group had 333 million customers (Vodafone, 2010).Vodafone Group is one of the most influential companies in mobile telecommunications industry and now attempting to move into the fixed voice and broadband markets. The o perator has a better understanding of the strategic values of information technology (IT) as a source of competitive advantages and has capitalized on IT capabilities to expand its marketplace more globally, and create and launch innovative and differentiated products and services like Vodafone 360 and Cloud Services more rapidly than other mobile operators in order to improve top line.Vodafone Group strategically shares with or outsources some business activities to third partied, and centralize and consolidate other activities, which each group company had previously managed in each country, to Vodafone Group, in order to significantly gain and maintain cost and operational efficiency in order to improve bottom line.IT definitely plays a decisive role in Vodafone Group. The objective of this paper is to analyze the IT management strategies, tools, initiatives and transitional planning in Vodafone Group to ensure that the operator capitalizes on IT capabilities effectively and effi ciently to achieve their organizational strategies and objectives. 1 II.Building a learning organization and a professional intellect Vodafone Group has embraced diverse workforce and offers equal opportunities for all aspects of employment and advancement, regardless of race, nationality, sex, age, marital status, disability, religious or political belief, to understand expectations of its diverse customers around the globe and have required skills and competences to create and launch the innovative and differentiated products and services that Vodafone Group meets its customers? equirements. Vodafone Group created a leaner and agile structure with clear accountabilities in 2009 to accommodate rapid growth. Three regions, including Europe, Africa and Central Europe, and Asia Pacific and Middle East, were created and each regional CEO was appointed. Along with the group-wide organizational restructuring efforts, several centralization initiatives have been accelerated, including sup ply chain, product development, IT and network programs, and terminal procurement.As the result, approximately 1,900 jobs were eliminated but the overall number of employees grew 9% because of rapid growth in emerging markers and business acquisitions. Although organizational structure has been continuously improved in response to market environmental changes, Vodafone Group has been committed to helping all employees reach their full potential through ongoing training and development. In the 2009 financial year, Vodafone provided an aggregate of 230,000 days of training, an average of three days per employee, and this training program was extended to all employees via an online interactive course that has been translated into 11 languages and rolled out to 18 countries (Vodafone, 2009, p. 18). Vodafone Group capitalizes on IT capabilities to support its one-stop shop for all learning and development solutions that enable all employees to have access to a self-service development po rtal and Learning Academy on its intranet to develop required skills and competences.The self-service portal is fully integrated for reporting and analysis purposes. Online „Source a Course? application incorporates a wide range of training options across multiple categories that all employees are able to individually select, and also provides them with opportunities to source a course if their specific training requirements are not on the system. 2 III. Taking advantage of Customer Relationship Management tools Vodafone Group has developed the group-wide strategy that is associated with its better understanding of the importance of the customer experience to its business success.Delivering value-added products and services that can meet individual customer needs and widen the scope of its relationship with its customers are essential to reshape its competitive environment. Vodafone Group has standardized on Siebel CRM platforms across three geographies to collect, analyze and share customer information across multi-channels, including customer service agents, sales and marketing teams, to gain a 360 degree view of customers, and measure and manage customer satisfaction, customer loyalty, revenue assurance, revenue growth and profitability.Employees in Vodafone Group have access to a centralized repository for customer information in the systems. Siebel CRM systems have helped Vodafone Group optimize upselling and cross-selling opportunities to grow revenues more quickly, predictably and profitably, and also significantly reduce the time to create and execute precisely targeted customer retention and acquisition while improving its ability to measure marketing return on investment.The systems also encourage Vodafone Group to improve productivity of customer care organizations by automating previous complicated workflow and reducing the time it takes to respond to answers, and Vodafone Group has gained significant cost savings. The customer experience is assessed by Vodafone Group through customer surveys, repairs and returns, mystery shops and written complaints but its challenges in existing Siebel CRM systems is to completely implement revenue assurance, churn and win-back functions from the viewpoint of a customer-centric imension. Revenue Assurance (RA) is a vital requirement in any telecommunications operators to reduce and prevent revenue leakage that is identified as a uncontrolled costs derived from network provisioning, CDR and mediation errors, billing and interconnect inconsistencies, loss of data and corrupted files, fragmented support systems, incoherent databases, and manual or ill defined business processes (TeleManagement Forum, 2009, p. 5). Donaldson and O?Toole (2007) argued that Telco may be losing 1-30% of revenues owing to leakage, and a failure to take into account the CRM dimension of RA is very costly for the firm (p. 144). RA is typically embraced in the concept of Customer Relationship Management (CRM) but the billing department in Vodafone Group has been responsible for RA activities and a customer-centric dimension to RA is missing in the CRM systems. Churn management is also another vital requirement in any operators in line with each operator? specific customer retention strategies, and promotions and campaigns. The difficulty in implementing churn management is that key performance indicators of predictive churn are little available in a relationship context and as a part of the CRM systems. Finally, win-back is the effort an organization expands to win back (or recapture) customer? s goodwill once it has been lost due to service failure (Donaldson and O? Toole, 2007, p. 146). Vodafone Group has not implemented it from the standpoint of a customer-centric dimension yet. IV. Building competitive advantages 4. 1 Top Line Improvements Vodafone Group has definitely had better understanding of the strategic values of IT to gain and maintain competitive advantages from the viewpoint o f both top line and bottom line improvements. To improve top line, general telecommunication operators consider IT as sources of innovative and differentiated products and services that they create and launch globally in a timely manner.Vodafone Group has not used the cheaper price than other competitors to attract new customers and retain existing customers to become the largest or the second largest mobile operator in the most markets the Group has ever entered but it has focused on creating and launching new value-added services that entice new customers. Arun Sarin, the former CEO of Vodafone Group stated (Hitt, Ireland and Hoskisson, 2008, p. 340). We have rededicated ourselves to delighting our customers because we believe this is the foundation for our continued success.We recognize that every customer interaction provides another opportunity to win loyalty and that? s why we continue to raise standards on the quality of customer case in our call centers and our stores and th e quality of our networks. Key to delighting our customers is our ability to deliver superior voice and data services according to differing customer needs. The choice of right IT at right time is necessary to drive current and future returns and intellectual capital that articulate and structure all the stakeholders? alues, and Vodafone Group? s three key strategic IT initiatives have been sources of competitive advantages to improve top line. 4. 1. 1 Agility to adapt the advanced technologies Telecommunication operators? agility to adapt the advanced technologies has a great impact on innovative and differentiated products and services, including the converged services of network data, services data and customer data available to improve customer experience in response to the changing customer needs and market environment.Saxtoft (2008) argued that competitive advantages in the future convergent communications industry will be based on the organizational ability of communications service providers to utilize the specific mix of network data, services data and customer data available to each of the players in the market (p. 71). Vodafone? s ability to adapt new IT continuously ensures that their customers are able to stay connected to the people and the information that are central to their lives – via voice, text, instant messaging, e-mail, music, communities, news, and applications both social and work related – whenever, wherever (Read, 2009, p. 2). Vodafone Group thus created Vodafone 360, Vodafone Vorteil, and Cloud Computing services and the Group in turn can greatly improve customer experience, and eventually gain and maintain its competitive advantages. Along with increasing bandwidth demands and a data dominated traffic mix, the ability to optimize its network capacity according to the differentiated products and services has been essential in improving quality of services for these services. 4 Vodafone launched „Vodafone 360? a s uite of new Internet services for the mobile and PC that gather all of customer? s friends, communities, entertainment and personal favorites. Vodafone 360 encompass a universal contacts address book „Vodafone People? that automatically synchronize all contacts from a customer phone, Facebook, Windows Live Messenger, and Google Talk, and an online content and data management tool. Vodafone 360 brought together many existing Vodafone mobile Internet initiatives under a common and intuitive service umbrella.Vodafone 360 represents the new service standard to take everything back in Vodafone and superimpose proprietary ownership over all service aspects while dispelling the notion that mobile operators are unable to response to the full force of the innovation that Apple iPhone brought to market. This is the first time a mobile operator has created an experience which can compete against the iPhone standard of excellence and superior user interface.Vodafone is now attempting to m ove into the fixed voice and broadband markets and has either acquired fixed Internet Service Providers in some countries or formed partnerships in the other countries where acquisitions are not feasible or not cost efficient. The previously pure mobile operator is now following a total communications strategy which includes mobile (cellular), broadband (fixed) and wireless; it has been offering combined services, with fixed, mobile and broadband services under a single bill (Mavrakis and Saddi, 2009, p. 42). Vodafone Germany launched a new multi-service discount service, „Vodafone Vorteil? for customers who purchase a bundle of fixed and mobile services in 2009. The service offered discounts at maximum EUR 20 a month for various combination of service in Germany in response to market environmental changes that loyalty discounts are coming to the fore as a key competitive advantage in the recent economic recession in Germany. Vodafone Vorteil customers also benefit from a 24 h our, door-to-door mobile phone replacement service and free 24-by-7 customer support hotline, and a 25% new handset discount. Cloud Computing has become popular in the telecommunications industry all over the world.It is a large-scale distributed computing paradigm that is driven by economies of scale, in which a pool of abstracted, virtualized, dynamically-scalable, managed computing power, storage, platforms, and services are delivered on demand to external customers over the Internet, and has become the hottest technology in IT (Jaatun, 2009, p. 559). Vodafone Group announced a strategic partnership with Decho Corporation to deliver a series of „Could Services? for both enterprise and consumer markets. The first service to emerge across the Vodafone Group footprint is the „Vodafone PC Backup? ervice that enables customers to save personal data from the PC to a remotely hosted site. They are able to view and share the data from their account through the web browser of their PC while reducing the need to transfer the data from one device to others. None of Vodafone? s key Tier 1 competitors has launched free PC backup and online storage aggressively with consumer mobile broadband services and Vodafone Group is relatively staking leadership in consumer Cloud Service provision. Emma (2009) argued that A Vodafone-branded PC backup service promises powerful value-added differentiation for the operator? mobile and fixed broadband portfolio across its key European markers by year-end (p. 1). Vodafone Group can continuously maintain its competitive advantages while launching a series of Cloud Services faster than other competitors, in addition to existing PC backup and online storage services. 5 4. 1. 2 Optimizing entire value chains and redefining industry Optimizing entire value chains beyond Vodafone Group and its traditional suppliers, and redefining industry are identified as sources of competitive advantages to create and launch innovative and diff erentiated products and services.The telecommunications industry is confronted with unprecedented challenges in breaking down traditional industry boundaries and redefining industry in response to changing market environment while the Internet companies such as Google, eBay and Yahoo have demonstrated business models that enable third parties to develop new services by combining existing services to increase the value of the traditional and original services. Service providers are no longer limited to the traditional voice and simple data services but are comprised of content, application, and other service providers.To compete against these new service providers, an effective service delivery framework is essential, to deliver and maintain differentiated services beyond traditional boundaries, achieve time to market, and conclude business agreements among all stakeholders. Vodafone Group started implementing Service Delivery Platform (SDP) in 2002 that is an infrastructure for serv ice delivery to be provided for technically enabling business to engage in business transaction (Filipe and Cordeiro, 2009, p. 21) to effectively deliver „Vodafone Live? ervice in a timely manner. Its multimedia portal was marketed extensively in the traditional media. SDP supported application development consistency and a multi-lateral settlements model to enable all stakeholders to add values to deliver the services to get paid. Vodafone Live used a home-built SDP to launch its offering back in 2002, a product that provides an integrated service across handsets, networks, content and services, and also includes video content, music downloads and games (Greene and Hayes, 2007, p. ). Subsequently, Service Delivery Framework (SDF), indeed different from SDP, was defined by TeleManagement Forum (TM Forum). SDF weaves together various Service Delivery Platforms (SDPs, IMS, IPTV, etc) offered by equipment vendors and their allied software vendors to allow uniform management of se rvices, easy to align with each Service Provider business model (TM Forum, 2008, p. 20). Vodafone was the first mobile operator in the UK to offer a portable laptop with built –in broadband in the business sector in 2005.In 2008, the launch of the Dell mobile laptop with integrated mobile broadband moved portable computing into the consumer market. Vodafone? s strategy differs from the other mobile operators in the UK and the operator ensures that the embedded route meets end users? aspirations in both business and consumer market. Vodafone has a deal with Dell whereby the vendor offers customers buying netbooks and notebooks via its website the option to include a 3G HSPA mobile broadband module in their devices, and to be contacted by Vodafone to receive a SIM card and the mobile broadband service (Roberts, Mavrakis and Jesty, 2009, p. 70). Betavine and the Joint Innovation Lab (JIL) are two API initiatives in Vodafone Group. Betavine is a research and development project t o create values around Vodafone? s network. Subsequently, Vodafone Group started the JIL initiative with its partners to use open APIs and widgets to address the commercial environment. Web 2. 0 technologies were considered as the fundamental enabler to broaden service choice for Vodafone? s customers and Vodafone Group decided to create a service innovation website „Betavine? in 2007.Betavine provided Web 2. 0 tools and resources so that developers can use to create innovative mobile services and get 6 feedback from the Betavine developer community. Its main objective was to stimulate the number of applications available for all mobile phones by providing an operator and technology agnostic development environment, and Betavine has clocked up more than 180 applications developed using the site across a range of categories, including games, utilities, mobile health, and recipes (Mendyk, 2009, p. 29).More than 1,000 registered users are collaborating on software development, an d Betavine has enables Vodafone Group to learn much more from its service incubation platform, both about Web 2. 0 technology and its development models, and about the types of mobile application that people want to create and which applications are essential in the current market environment. Vodafone? s product groups are hoping that through the Betavine initiative, they will gain access to „killer? applications that can be turned into massmarket products (Mendyk, 2009, p. 29).Subsequently, Vodafone Group has made a commitment to provide a group wide network API that encourages developers to access Vodafone? s customers. Vodafone enables developers to use its direct billing capabilities to permit customers to pay for services through Vodafone accounts rather than credit card payment (Mottishaw, 2009, p. 52) because a simple payment model has a great impact on customers? choice of services. In 2008, Vodafone, China Mobile, Softbank and Verizon Wireless announced the JIL initi ative to have common APIs and development environment.Vodafone Group launched the „App Store? that encapsulated widgets from JIL that run in any devices and use the operator? s billing mechanisms to charge users directly. The combined customer base of JIL members exposes applications to a potential 1 billion end users, by far the largest addressable market for any application stores in the market today. JIL is working closely with several industry standards bodies, including GSMA, OMTP and W3C, to encourage developers to use network enablers to enrich their applications.JIL has launched a web site to provide the developers with service development kit (SDK) and device API information to develop applications for specific handsets. 4. 1. 3 Group Technology Vodafone Group? s has driven the Group Technology initiatives that have managed and controlled group-wide projects to orchestrate the move toward significant coordination and identify and disseminate best practices to focus on expansion of service capacity while replicating business models across a number of countries and maintaining cost efficiency.Vodafone Group created two central functions, Group Marketing (to drive revenue growth), and Group Technology and Business Integration (to drive cost and scale benefits, and thy purpose of Group Technology will be to lead the implementation of standardized architecture for business process, information technology and network systems (Hitt, Ireland and Hoskisson, 2008, p. 345). The initiatives have supported the third generation (3G) network rollout, the enhancement and expansion of Vodafone Live service to Germany, Ireland, Italy, the Netherlands, Portugal, Spain, Sweden and then UK, and the development of Vodafone Group? business offering on a global basis. Vodafone Group has benefited from the effective and efficient Group Technology initiative. First, Vodafone Group is given more strategic option for marketing and sales of its products and services. Second , the time-to-market becomes shorter by consolidating its development resources and sharing the solutions. Finally, cost reduction arises from avoiding multiple development 7 resources and environments and from consolidating demand according to the collaborative IT solutions fro building IT platforms.Buchta, Eul and Croonenberg (2009) argued that A correspondingly worldwide uniform IT architecture with worldwide uniform business process is the prerequisite, for example, for developing the advantages of a global customer management from uniform coordination and universal organizations – with the lowest possible level of country-specific individuality (p. 73). 4. 2. Bottom Line Improvements On the other hands, Vodafone Group has capitalized on IT capabilities to implement its strategic initiative, „One Vodafone? rogram, which transforms 16 operating companies into a united operation to achieve streamlined cost effective and efficient group. Vodafone Group has embedded IT sharing, outsourcing, and centralization and consolidation strategies in order to achieve the objectives of the program. Radio access network are shared with the other mobile operator, Orange, IT application development and maintenance are outsourced to IT outsourcing vendors, IBM and EDS, and supply chain management function and European data centers are centralized and consolidated to Vodafone Group.One Vodafone program is analyzed in depth in Chapter V. 8 V. Using IT initiatives to transform the operator 5. 1. One Vodafone The „One Vodafone? program was focused on key initiatives to integrate business activities to leverage economies of scale and scope of Vodafone group to transform the Group into a streamlined, cost-effective and efficient organization while standardizing designs and processes, reducing duplication, centralizing and consolidating certain functions and sharing best practices across operating companies.The program was targeted at achieving ? 2. 5 billion of annual pretax operating free cash flow improvements in Vodafone Group? s controlled mobile business by the end of March 2008. Alan Harper, Group Strategy and New Business Director, explained that all our marketing efforts, branding and product development are centralized, technology is standardized, network design (switching, radio) are coordinated, and knowledge is shared via the HQ, HR, strategy, and marketing departments (Hitt, Ireland, and Hoskisson, 2008, p. 42). The program was not just an integration of a few functions and countries but a strategic transformation that Vodafone Group transformed 16 core independent national operating companies which had diverse people and markets into a united operation with a high degree of similarity with regard to product, brand, position, advertising strategy, personality, packaging, and look and feel (McLoughlin and Aaker, 2010, p. 251) in order to achieve significant economies of scale and scope.It was definitely supposed to be one of th e most difficult challenges for Vodafone Group but the transformation strategy has already resulted in significant cost savings as well as innovative market strategies, more competitive and differentiated pricing, and leading product and service offering (Booz Allen, 2006). Vodafone Group predominantly embedded IT sharing, outsourcing, and centralization and consolidation strategies to achieve the objectives of One Vodafone program that transform multiple operating companies around the globe in Vodafone Group into a streamlined, costeffective and efficient organization.Vodafone Group adopted NetCo and ServCo business model in the One Vodafone program. ServCo is mandated to provide services over the telecommunications network on the same terms as other service providers while NetCo is tasked with managing the telecommunications network backbone (Orbicom, 2007, p. 211). Network, IT application development and maintenance, and supply chain and data centers were considered as NetCo that Vodafone Group needed to pursue scalability globally to achieve the lowest unit cost.Sales, marketing and customer management were relatively considered as ServCo that Vodafone Group needed to achieve customer focus locally to improve customer experience and build customer loyalty. As a consequence, Vodafone identified key imperatives in One Vodafone program. Radio access network are shared with Orange globally, and IT application development and maintenance are outsourced to IBM and EDS, and supply chain management function and European data centers are centralized and consolidated to Vodafone Group.On the other hand, sales, marketing and customer management are relatively operated and managed by each local operating company. 9 5. 2. Network Sharing with Orange There are a number of different levels of network sharing deals and the most fundamental scopes involve the use of common sites and towers around the globe. Complete network sharing deals are also popular in some countries and these involve the building of a single network to lease its capacity between two or more licensed mobile operators.Some of network sharing deals involve radio access network that two or more mobile operators jointly deploy and own access network. In the UK, India and some other countries, network sharing deals have been actively encouraged by the government, and independent infrastructure companies have been established by two or more operators. Vodafone and Orange have established their network joint venture in the UK to deploy and own their combined radio network. Their initial scope was limited to 3G network and Vodafone and Orange planed to expand the scope to their 2G network infrastructure as well.Their objective to establish the network sharing joint venture was to gain cost and operational efficiency to deploy new 3G mobile internet access service. The radio access network includes mast, antenna, sites, site support cabinet and power supply as well as antennae, combiners and transmission links, Nodes B (3G), BTS (2G) and the radio network controllers which are linked to the core network, and they are expected to expand their existing network sharing deals to includes the costs of engineering, maintenance, and technology, in a move which is expected to save Vodafone (and Orange presumably) around US$1. 5 billion a year (Cellular-news, 2009). During fiscal year 2009, Vodafone Group announced a number of significant sharing deals in Germany, Spain, Ireland, UK and India. 5. 3. IT Outsourcing to IBM and EDS Outsourcing refers to the use of external organizations to perform some business activities that were previously accomplished in-house and outsourcing is becoming more acceptable and widespread in the telecommunications industry. Telecommunications operators re-evaluate their core business and create added values in a fierce competitive market.The two different activities are identified as non-core business activities that some mobile operators have mainly transferred to outsourcing vendors: (1) IT services including IT infrastructure, desktop and servers, BSS (Business Support Systems), software development and implementation, and deployment of new IT services, and (2) network operations and management including network planning, site acquisition and civil works, installation, network integration, network optimization and upgrade, fault management, performance management, configuration management, OSS (Operations Supp