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Research finds 2012 priorities for Communications Service Providers include striking a better balance of in-house and outsourced IT and making better use of applications such as CRM

Independent research by PwC into the IT priorities of European Communications Service Providers (CSPs) has uncovered CIOs’ focus areas for 2012. The research found the majority of CIOs (60%) currently spend more than half of their opex budget on ‘maintenance’. Addressing this is going to be a major priority in 2012 and CIOs will respond with a more strategic use of outsourcing and standardization.

In order to reduce their own management overheads and combat an immediate shortage of specific skills in house, CIOs will increasingly outsource a number of areas of their business in 2012, including network and fault management, and provisioning and order management. 88% of CIOs plan an upgrade of their CRM systems in 2012. This will free CIOs to focus on more strategic requirements and revenue drivers such as portal and content applications.

Billing and mediation and reporting will increasingly be done in-house, keeping CIOs in touch with the activities and data that will shape their business.

CIOs will also push through a move away from bespoke applications, which typically carry a heavy budget overrun and require greater integration and more careful management.

More than two thirds (67%) of bespoke applications are delivered with a “substantial” budget overrun (74% have some level of budget overrun), according to the Oracle commissioned PwC research. This is compared to more than half (52%) of commercial-off-the-shelf (COTS) applications which are delivered under budget.

CIOs believe this move towards standardization (95% plan to increase their use of COTS in 2012) will create greater agility and make many of the partnerships they need to seek with content and media companies easier to switch on or off. It will also reduce the cost implications of maintaining restrictive legacy systems which can also prove a costly and problematic overhead in a business characterized by rapid mergers and acquisitions.

Increased use of COTS in 2012 and the associated lower total cost of ownership will allow CIOs to target more of their budget to growth activities.

Dan Ford, vice president, product marketing, Oracle Communications, said: “CSPs are at a crossroads. They face another year of budgetary pressure, at a time when the need for innovation and competitive differentiation has never been greater. CSPs need to increase customer retention and improve the provision of content and services such as media and applications. More CIOs are focused on simplifying and streamlining their core IT operations and focusing on the areas of their IT operation which can drive real efficiency and growth within the business.

“We are seeing renewed interest in business applications, such as CRM, Web Commerce, Self-Service, and Retail Point of Service, as companies look to better engage with existing customers. We are also seeing CIOs increasingly buying off-the-shelf applications to create a more standardized IT ecosystem, across their own business but also to tie in with standardization across partners.”

David Russell, UK Telecommunications Leader, PwC, said: “Through 2012 we see a dual challenge for CIOs as they come under increasing pressure to reduce both operating costs and capital expenditure, while meeting their organization’s desire to invest in improving customer experience to drive retention. With the squeeze on product pricing, the need to reduce operational costs, the requirement to simplify IT and increased competition, CSPs see improved customer experience as the key differentiator.”