Providing voice telecoms service is a low revenue and increasingly risky business. Telcos in the fixedlines and mobile vertical markets are reporting, often off the record, that voice over IP services such as Skype are beginning to really hurt their revenues. So the more dynamic members of the business have moved into more lucrative businesses including managed services such as network and datacentre provision. Enterprise data is growing at a phenomenal rate, so it is no surprise that business communications specialists COLT is looking to move into the data market.
"Voice is a challenge," says Mark Leonard, CIO at COLT. "It is a case of how you manage the decline of voice revenues." Leonard's position at COLT is an example of how the CIO can be involved in both ensuring that an organisation has the IT needed to function day-to-day as a business and how IT can be used to manage the decline of one revenue source and reinvent the corporation as a serious player in a new revenue-generating area.
Some may argue it's an easier game to play at a telco, which is virtually a tech company, but as Leonard explained to CIO UK recently, it was not without its challenges.
"Voice services is an application, just like email. The other major part of our business is data connectivity," Leonard explains. In May, COLT revamped its Managed Services division, headed by managing director Maggy McClelland.
McClelland and Leonard work closely together; Leonard is both McClelland's customer, but has also been instrumental in developing a managed service offering that CIOs will consider. McClelland joined COLT from BT Global Services and set up the new managed services offering built around standard platforms, the COLT network of course, cloud based applications and a network of 18 datacentres.
It was this network of datacentres on the COLT network that directed the managed services strategy. COLT is already selling network services into a lot of major enterprises, especially in financial services. As these organisations look to reduce costs, particularly in the downturn, COLT is able to offer expanded services, and reduce costs for CIOs. McClelland believes its primary markets are also increasingly open to buying their computing needs in from third parties. "The economic climate makes these services more attractive as they are less capital intensive for the CIO." She believes the appetite for managed services is increasing. Leonard agrees:
"There is a sea-change in the mood of the CIO community to no longer being ‘I must be the owner' towards CIOs having a clearer understanding of the benefits of managed services and outsourcing. As an industry we are moving into a mature capability to manage these types of service."
Cost reduction will be the main driver, the duo expect. At a recent event they held in conjunction with Gartner, the CIOs attending all stressed the need to reduce costs as their main reason for interest in managed services and cloud computing; business transformation came in second.
"CEOs want more for less and they want to re-do the business model at the same time. So the CIO has a dual purpose to take costs out and to change the business," Leonard explains. He believes a widespread adoption of cloud computing and managed services will actually give CIOs more control of their organisations. Those that don't will find the CFO does it any way, putting the CIO in a precarious position.
"There is a nervousness about ‘where is my data'", McClelland says. She believes these fears are due to the public nature of the cloud at present, citing examples like the Amazon EC2 cloud offering.
Leonard believes that COLT and others will herald a second cloud canopy. "Where it will be interesting is where the cloud develops a difference between the Amazon cloud and a secure performance guaranteed cloud that is like an enterprise-class infrastructure. The difference between the cloud and the managed service model is that managed services is an extension of your own environment. So you will have all the control as if it was in your datacentre, but without the cost of setting one up. For COLT to offer an increased managed services business, it had to increase its own IT capacity, which are partly delivered by the managed services division of COLT.
"We had to invest in our datacentre estate in order to offer the quality of provision that CIOs expect," he says.
Virtualisation played a major part in the overhaul of COLT internal IT. "Last year we virtualised our own internal IT estate very successfully for our Windows and Linux estate and now I am looking at doing the same for our Unix estate.
"We had 83 major programmes going on in IT last year, including moving 1400 users to Salesforce.com," he says of the investments made in IT.
"I tell the board we had 83 planes in the air and only 52 landing spots [weekends], and the virtualisation project meant that we were also resurfacing the runway at the same time." He smiles and adds, "There was not a single hour of downtime."
Leonard joined COLT in 2008. "COLT understands the value of IT, that was a key decision in me moving," he says.
He was also attracted to being a CIO that owned a development team in India. "My team in India gives me a real edge. We have the right ingredients to move very quickly." COLT hired the serial telcos CIO to bolster a strategic decision to connect its services and technology together. "COLT has plenty of legacy IT that needed to be joined together. So we have been carrying out lots of projects on the billing systems, go-live systems, a new billing system for new countries that join the COLT network, sales force automation and the introduction of Salesforce.com." This was all planned investment, he explains, of the breathless career he's had since moving to the City of London based firm. To achieve all of the above he said he had to really focus on building good relationships between his department and the rest of the business and a strong relationship with the Indian team in particular.
"I have done a lot of career planning and individual development there, which has a very high relevance to Indian staff." As a result, development and vendor relationship management is carried out by the Indian team and owning an IT team in India has strong cost benefits.
"Offshore providers have become expensive, as they have learnt that they have to factor in some risks into the business and there has been significant wage inflation. Leonard has 260 IT people working for him in India and 190 in the UK.
Leonard prides himself on being a CIO that can talk both "techie" and business. "You have to have both. My team really appreciated a good techie talk and they sometimes test you and I have to be able to covert that interest into business outcomes," he says. He's clearly got a knack for communications, one that nearly led him into the murky world of journalism during a short stint as a cub reporter at the Westminster Press, but then he went and got a proper job and has been a leading telco CIO, having spent four years as a CIO at Vodafone and over a year now at COLT.
COLT is one of those corporations that everyone in business knows the name of, but you are not always sure what it does. Its bunting style logo seems to be on dozens of London cabs, yet it is not the household name that its telco rivals are, despite being, arguably as successful.
COLT is a pan-European telecoms provider. Its network connects 15,000 buildings, all of them corporate buildings.
"We have never been distracted into the consumer world," says CIO Mark Leonard.
Its high-end networks are popular with major enterprises, especially in the financial services and small and medium sized businesses who use COLT connected buildings. "If you are in one of the COLT buildings, our network is an attractive offer," he says.
COLT has 18 datacentres sat right on top of its own network. The network connects the major cities of Europe, the prime locations of 13 leading nations.
COLT itself employs 4500 people with 25 per cent of that workforce now in India supporting the managed services business and COLT IT.