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Communications firms need 'step change' in IT - report

Study claims in-house software often over budget

There has to be a "real step change" towards faster and more cost effective IT among communications service providers (CSPs) if they are to serve their customers effectively, according to consultancy PricewaterhouseCoopers.

PwC was commissioned by Oracle to survey 30 CSPs across Europe to see if they were working towards the business agility required to allow them to compete effectively in the market.

The research found that CSPs had to "resolve" high degrees of in-built - and often inherited - complexity in their IT infrastructures to enable them to compete.

The research also reveals that CSPs are currently spending significant portions of their budgets merely maintaining this complexity, much of which results from the continued use of bespoke applications.

PwC said many CSPs were already planning steps within the next 18 months to deliver the agility their businesses need. At the heart of this was a reduction in the use of bespoke applications, which "carry a higher total cost of ownership and bring considerable budget overruns, management overhead and time delays", said PwC.

CSPs said improving customer experience is a top driver for IT strategy in the communications industry, and a smarter use of customer relationship management (CRM) applications is the area of greatest focus for system replacements or upgrades.

PwC said CIOs are planning a move towards more standardised, off the shelf applications, as well as a more strategic use of outsourcing in order to simplify their in-house IT and improve business efficiency.

The report said 52 percent of commercial-off-the-shelf applications (COTS) are delivered under budget, and 95 percent of CIOs believe they will increase their use of COTS over the next 18months.

The research found that 67 percent of bespoke applications are delivered with a "substantial" budget overrun, while 74 percent have at least some level of budget overrun.

David Russell, UK telecommunications leader at PwC, said, "CSPs are inherently complex, with overly complicated IT systems and infrastructure supporting overly complicated business processes and products. It's not easy to get the balance right but this research suggests there are some clear steps many CIOs are taking towards improved agility and a smarter use of IT."

However, there are differing opinions among businesses around off the shelf software. Heathrow Airport recently built its own BPM platform, turning down standard software. "Against buying an aviation COTS (commercial off-the-shelf) tool ... we've saved £30 million," said Eamonn Cheverton, enterprise architect for operations at the airport's operator, BAA.

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