In the current telecommunications industry, high customer penetration and increased competition force product managers to introduce new personalized offerings regularly. The inflation in the number of products within the portfolio creates complexity while managing and maintaining catalogs. This complexity brings operational overheads and increased time-to-market, which impacts the customer experience. Building a scalable, manageable, and standardized product catalog framework helps you overcome these hurdles and let you leapfrog in market competition.
In this article, we will illustrate how DefineX approaches the subject and share a case study on how a rationalized and simplified product portfolio enables the launching of new offerings much faster in a hyper-competitive environment.
THE NEXT CHAPTER FOR TELCOS: THE NEED FOR CHANGE
Telecommunication companies are continuously exploring top-line growth opportunities and developing new strategies in the face of increased competition. Given the commoditization of core services in the consumer segment, the focus has shifted to the corporate segment, particularly in Information and Communication Technologies and cybersecurity services. This shift is forcing product managers to design and launch new types of services that they were not accustomed to.
In the early 2000s, telcos provided only voice and messaging services. The competition was on price and quality of service (mainly coverage). Later, product managers started creating bundles of voice, SMS, MMS, and value-added services to increase the value proposition. This approach resulted in constantly developing and testing new offerings to increase revenue growth. The introduction of 3G and 4G fueled the high smartphone penetration and mobile data consumption, which urged telcos to add data and various digital services to their arsenal. This speed, combined with the variety of the services, demands a different way of thinking, tooling, and maintenance of the product catalog.
Highly siloed organizations, multi-vendor landscapes, and old legacy systems provide no help in the current challenges of managing product portfolios. Therefore, without proper governance, product catalogs can easily turn into a complex and unmanageable system. This has three main implications:
- Operational Overheads: As product managers and marketers demand new offerings at speed, the common trap is copying a similar product offering and changing its characteristics. This type of quick-and-dirty workaround causes high maintenance and future development costs.
- Poor Customer Experience: Inaccurate billing, confusing product offerings, poor after-sales service, and other bottlenecks translate into a poor experience and force customers to churn, which is not desirable considering the high customer acquisition costs in competitive industries.
- Increased Time to Market: Because of the typical siloed organizational structure of telecommunication companies, it takes time to design, develop, test, and release new offerings. Add the over-engineered and ungoverned product catalogs on top of this, and you will end up with a lengthy process of product launches.
KEY PRINCIPLES OF PRODUCT RATIONALIZATION
The main goal of product rationalization is to keep the catalog lean and manageable by deciding which product will stay active, suspended, or eliminated. This requires identification of the specifications for all existing products and then classifying these products based on rule sets and pricing policies.
Product rationalization allows product managers to benefit from a leaner product portfolio to manage, which results in a faster time to market with less operational overhead.
One framework for this challenge comes from TM Forum. According to TM Forum, adopting pattern-based modeling is considered an effective method for catalog designers. It promotes consistency, reusability, and clarity in catalog design. Pattern-based modeling has three main design principles; Expanded, Balanced, and Collapsed.
Pattern-based modeling is effective since it provides a technology-independent approach and facilitates the balance between business and operational objectives.
In the expanded principle, a single offering is a different commercial combination of a product. Each product offering is created based on a predefined set of commercial specifications, such as market, channel, and other product-specific terms. This principle eases and standardizes communication between product managers and IT employees. However, due to the lack of reusability in bundling scenarios, this causes an increase in the number of offerings, which induces IT to apply workarounds impacting catalog maintainability. Therefore, this model is not recommended for volatile markets that require dynamic pricing.
The balanced principle offers the categorization of product offerings based on commercial specifications. Catalog designers need to identify common features of the offerings as well as the features that will separate distinct offerings from each other. Product offerings can differ for different business cases therefore, it is important to identify which features can be selected to distinctly differentiate products from each other while using the common ones to develop individual price policies. This principle results in fewer product offerings compared to the expanded version. However, product offerings will be more complex due to price policies, yet offerings can be differentiated and separated based on their features. This complexity can be managed by clearly communicating with respective stakeholders.
Finally, in the collapsed principle, there is only one product offering for each product regardless of their commercial specifications. This principle creates the most complex product offerings since all the commercial specifications of an offering are formulated in one price policy. Considering the requirements of the telco industry, this principle may not provide the expected simplification benefits because it will require a constant update on the price policies, putting an additional burden on IT. In addition, product managers, and marketers will have to consider different and yet more complex analyses to evaluate the performance of the products. This approach may constrain marketing-related operations since the data will not be readily and easily available.
It should be noted that successful product rationalization does not happen by just leveraging a common framework. Standardized abstract patterns give catalog designers a degree of flexibility while designing. Yet, the applicability and scalability of such abstract concepts across highly siloed organizations are challenging and require expertise.
HOW TO SUCCESSFULLY RATIONALIZE PRODUCT CATALOGS?
Successful product catalog rationalizations are tough to achieve without a clear goal and well-defined roadmap. DefineX has identified four necessary steps to design and implement an adaptable and resilient catalog framework.
Define Design Principle
Product managers or catalog designers can identify the design principle based on the business requirements and operations within the organization. When determining it is crucial to include other stakeholders’ inputs because the framework will affect their operations as well. Selecting a common pattern-based framework will enable the flexibility to migrate to a new structure. Adopting the framework to the system with minimum effort requires the participation of multiple stakeholders (marketing, sales, customer, IT, and operations) from the beginning. If implemented successfully, product managers, IT, and marketers will have a mutual understanding and a frame which will facilitate collaboration and communication between stakeholders.
Validate the Applicability
It is crucial to ensure the systems architecture and infrastructure can meet the needs of the business. Therefore, you have to ensure that the selected design principle is validated and is technically viable for the current Business Support Systems.
Identify Commercial Specifications for Categorization
Identify commercial specifications to differentiate separate product offerings and define individual price policies. Again, BSS requirements can affect the decision-making; however, it should not be the center of the decision as rapid technology advancements make technologies obsolete. Therefore, the long-term success depends on defining a technology-agnostic catalog framework and the degree of implementation quality.
Continuous prototyping and scaling
Product managers define or alter the existing product offerings based on the new framework. Instead of rolling out the design for the entire catalog, start with a sole product family, preferably with complex offerings. After adjusting, tuning, and testing, the new catalog model will be more mature and can be applied to all product families with similar structures. Though, be cautious that different product families might require slight adjustments based on their specifications and pricing policies.
CASE IN ACTION: END-TO-END TRANSFORMATION OF A TURKISH TELECOMMUNICATION COMPANY
One of the pioneers in the Turkish telecommunications industry has decided to move to a new BSS platform that consists of a product catalog, configure price quotes (CPQ), and order management modules. Before this transition, they wanted to have an external review on their product catalog as they were experiencing issues in managing it due to an inflated number of product offerings and long configuration cycles. They approached DefineX, who had extensive knowledge of the subject matter.
As a first step, our team executed a series of workshops to assess the situation. Key participants of these workshops were product managers, sales representatives, system users, and IT BSS specialists. One of our early findings was the presence of separate product catalogs for similar business lines, which was causing duplicated offerings under each catalog instance.
Another finding was on the organizational misalignment caused by complex product relationships and dependencies. Even though separate product managers were responsible for different business lines, the product catalog configuration did not reflect the separation of duties. Therefore, product managers were maintaining the same product families. The source of origin for these complex relationships was the bundling strategy. The company was creating bundled packages composed of different product families and configuring new offerings from the bundled package.
High coupling and unstructured offerings also were causing poor customer experience where internal alignment was an issue. In addition, too many offerings put the BSS systems to their limits, which was resulting considerable time loss for system users.
Client executives were aware that just moving to a new system will not bring success unless the product catalog is reworked. Therefore, they wanted to utilize our expertise further and asked DefineX technology strategists to define a standardized, scalable, and manageable framework.
Building a Scaleable, Manageable, and Standardized Catalog Framework
Following our product rationalization approach, first, we separated the catalogs and respective product families from each other in line with the organization’s objectives and identified the target design principle. Previously, the client had emphasized the extended design principle due to its ease of use. However, that model has created overloads for product managers during configurations and sales representatives during order entry. Therefore, we recommended switching to the balanced principle.
Afterward, we identified the commercial specifications by analyzing the current extended offerings. We have decided on the specifications to group the offerings based on the target system capabilities. Our main objective was to design the offerings without depending on a specific technology yet enabling the BSS to serve as desired.
Finally, all offering types are discovered and categorized in coordination with the marketing team in a prototype and scale manner.
We have fulfilled the objectives of marketing and product managers by designing a highly configurable model that minimizes IT dependency and reduces time to market.
The results were drastic. We have observed simplification of the catalog by 96%.
In addition to this dramatic simplification, a migration to a digital BSS stack is kicked off. With the future product catalog and the new model, two additional upsides will also be achieved:
- Decreased time to market: Current legacy system and catalog model restricts product managers and they can go live with any change in not less than two weeks. Elimination of this complexity will directly improve the time to market, reducing it to hours.
- Increased operational efficiency: With the new catalog model, system users and product managers can navigate catalogs easily and update prices and quotes faster with better performance.
Transformations are not only about acquiring the latest technologies but also changing the way of working and developing better frameworks that ease life. Product rationalization is a crucial activity for the success of telcos for both organizing the workflows and acting as a medium of shared understanding.
 TM Forum, Product Catalog Commercial Modeling Patterns, https://www.tmforum.org/resources/standard/ig1261-product-catalog-commercial-modeling-patterns-v1-0-0/