Editor’s Note: Welcome to our weekly Reality Check column where C-level executives and advisory firms from across the mobile industry share unique insights and experiences.
U.S. wireless carriers have spent billions of dollars on the design, construction and operation of their legacy networks and with the ongoing development and implementation of LTE, these same carriers are again investing heavily in new networks. This transition to broadband wireless services poses a unique sourcing evolution opportunity to deploy LTE as “smart” and profitably as possible, using lessons learned and best practices for both leveraging and managing strategic relationships.
What’s at stake
Ineffective supplier governance and management frequently results in adversarial supplier/buyer relations, ranging from poor service level execution by the service provider to cost increases and over-runs with little or no ability for the parties to establish common ground to remedy issues. While carriers often take steps to preserve multi-supplier environments in hopes that the concern of competition or replacement will motivate suppliers to remain focused on delivering continuous value, this approach cannot be entirely successful unless a greater focus on managing the relationship is maintained. Ultimately, the successful design, build and operation of launching and maintaining nationwide wireless networks requires thoroughly evaluating supplier and technology agreements, establishing a strong governance function and enforcing the agreements for long-term value.
Rule No. 1: Evaluate available technology and supplier alignment
To get the most out of LTE partnerships, carriers should invest sufficient time and thought in considering their strategic alignment decisions. Fully understanding the breadth of technological and commercial options available in the marketplace – such as macro vs. micro cell design; capital purchases vs. managed services, etc. – and weighing the pros and cons associated with the providers of each of those myriad options is an important first step.
For example, focus on providers with a proven prior track record of fostering and supporting innovation within their own companies, such as internal research and development awards, public recognition of emergent technology design and development and significant patent activity, as well as joint innovation with existing and prior partners. These suppliers will have a higher likelihood of fostering a fair and balanced partnership. Additionally, highlighting the market focus and stated corporate goals of each technology provider can help carriers identify providers that most closely align with their own focus and goals over an extended period of time.
Finally, developing a consistent message regarding the approach and alignment expected from each strategic technology partner ensures that the carrier presents a united front to its technology partners. This move will help carriers communicate the importance of “straight talk” and collaboration in exploring and developing the framework for their potential strategic partnerships.
Rule No. 2: Establish governance and agreement on common objectives
Once it becomes clear which of the few providers will in fact become strategic suppliers, carriers can employ best practice strategies to help ensure positive and mutually beneficial relationships. Senior executive buy-in, among the carrier and technology providers, and a commitment to invest the time and energy needed to cultivate the partnership over the long term is essential.
Carriers should also develop a joint agreement with each technology provider on a specific governance structure, which supports top-level executive alignment and includes a tiered set of interaction contact points within both organizations, including managerial and line level operational staff.
Finally, carriers must come together with their partners to identify and agree on a set of joint strategic objectives. Typically, such objectives define where the parties want the relationship to go, how the parties will engage and collaborate to get there, and how they will measure success. Strategic objectives for carriers to consider may include joint go-to-market targets for new devices, features and functionality, or specific timelines and responsibilities for retirement and replacement of legacy infrastructure, in addition to the typical (but equally important) service delivery and customer satisfaction objectives.
Rule No. 3: Ensure agreements yield long-term partnerships and results
Developing and supporting a formal approach to strategic partnerships for LTE build and operate efforts, if overlooked, can prevent those relationships from evolving and growing. For this reason, implementing the strategic objectives and governance plans that were defined at the outset of the relationship is the final key to ensuring maximum value is derived from strategic partnerships.
Consistently measuring and enforcing service levels, identifying areas of strength and weakness for both parties, and driving the change management required to improve the weaknesses and further leverage the strengths are requirements for yielding productive and focused long-term partnerships. In the event either party begins to slip off track, senior executive escalation should be engaged to bring the engagement back on track. Active ongoing supplier governance and management is the heart of developing, driving, supporting and addressing the daily, weekly and monthly happenings that occur over a multi-year strategic relationship.
As strategic supplier relationships have evolved over the first, second and third generations of the wireless world – including growing pains and struggles over alignment of goals – both carriers and suppliers can leverage lessons learned to forge more sustainable and fruitful partnerships as they move into the next generation, namely LTE.
Stay tuned – the next article will discuss strategies for carriers to identify and drive value co-operatively with their competition.
Adam Cummins is a principal at Pace Harmon, an optimization and outsourcing advisory services firm providing guidance on complex transactions, process and operational optimization, and provider governance.
