WHI TE PAPER

Ma ki ng t he Bus i nes s Ca se f or Te l ec om- Spec i f i c Ne t wor k

I nf r as t r uc t ur e Ma na ge me nt
Sponsored by: Hewlett-Packard

Elisabeth Rainge Randy Perry
Morris Edwards
July 2005
EXECUTI VE SUMMARY
Network infrastructure management is becoming critical for service providers (SPs)
as they seek ways to increase customer satisfaction and simultaneously adopt
new technologies, introduce new value-added services, and hold down costs.
One company that is addressing these business challenges is Hewlett-Packard (HP),
with its telecom-focused HP OpenView TeMIP management product, which
manages telecommunications infrastructures and networks for service providers
around the world.
To determine the business benefits of telecom-specific network infrastructure
management solutions, IDC conducted in-depth interviews with a number of service
providers using HP OpenView TeMIP. IDC asked detailed questions about the
implementation costs and the savings realized to validate and quantify the business
benefits of the management solution. IDC also applied its proprietary return on
investment (ROI) methodology to the results to determine the average ROI and
payback period the surveyed companies realized from deploying the HP OpenView
TeMIP solution.
IDC found that the companies deploying the HP management solution saved an
average of more than $1.64 million annually from improved operations staff productivity.
The annual savings from improved productivity with problem resolution tasks amounted
to an average of more than $1.08 million, while the improved productivity with
administration tasks saved an average of $564,571. In particular, the managers
interviewed reported that they had realized substantial savings in staff hours expended
on asset management, network performance management, root cause analysis,
network troubleshooting and repair, and creating and supporting new features.
Improvements in operations staff efficiency yielded an average reduction in IT
headcount of 31 full-time employees (FTEs) a year. With an average first-year loaded
salary of $62,533 and annual increases of 5%, the payroll savings from increased
operations staff efficiency averaged more than $2.07 million a year over the three years.
Further efficiency savings came from the elimination of other management tools, the
reduced need for outsourcing, and lower travel and training costs. These savings
averaged $2.46 million a year. Taken together, the savings from improved operations
staff efficiency and cost reductions yielded an average total of more than $4.53 million
a year.
G
l
o
b
a
l

H
e
a
d
q
u
a
r
t
e
r
s
:

5

S
p
e
e
n

S
t
r
e
e
t


F
r
a
m
i
n
g
h
a
m
,

M
A

0
1
7
0
1

U
S
A




P
.
5
0
8
.
8
7
2
.
8
2
0
0




F
.
5
0
8
.
9
3
5
.
4
0
1
5




w
w
w
.
i
d
c
.
c
o
m

2 #05C4505 2005 IDC
On average, the companies surveyed reduced the direct revenues lost from downtime
by $362,215 annually. The number of downtime incidents and amount of downtime
fell by an average of 23% after deploying HP OpenView TeMIP. Some companies
were able to leverage their better-managed networks to offer higher levels of services
with higher-priced SLAs.
Overall, the companies invested an average of close to $3.26 million over three years
in deploying the HP OpenView management solution, including hardware, software
and implementation, and training and maintenance costs (see Table 1).

T ABL E 1
ROI An al y s i s f o r De p l o y i n g HP Op e nVi e w TeMI P So l u t i o n
Item Average
Three-year cost of investment $3.26 million
Annual cost savings and increased revenue $5.46 million
Net present value of three-year savings $11.86 million
Payback period 11.99 months
ROI over three years 364%
Source: IDC, 2005

For the HP customers surveyed, the total benefits averaged more than $6.54 million
annually, resulting in an average annual cash flow of close to $5.46 million. IDC
accounts for the opportunity costs realized by not having invested the initial amount in
some other instrument yielding a 12% return. This results in a net present value for
the three-year cash flow of close to $11.86 million for the companies surveyed.
Based on an average investment of close to $3.26 million over the three years, the
payback period from deploying the HP OpenView TeMIP solution averaged
11.99 months for the companies surveyed, yielding an average ROI of 364%.
2005 IDC #05C4505 3
I NTRODUCTI ON
In their efforts to grow data services revenues, increase value-added service offerings,
and convert infrastructure to IP or IP-friendly systems, service providers face a growing
number of challenges in managing their network infrastructures. Ongoing demands to
optimize efficiencies and reduce the cost of operations are putting pressure on IT
executives to manage the increased event volumes with existing or even reduced
resources. Likewise, some service providers are working to blend the experiences of
network, network operating center (NOC), and other operations staff with those of the IT
staff, creating organizational and communications challenges. Above all, the increased
efforts by SPs to optimize operations mean that divisional or regional operations are
being rolled into common, broader reporting structures, prompting local, regional, and
corporate staffs to scrutinize practices in many other groups and areas. Typically, this is
driving top-level demand for better flows of information.
Cost cutting remains a critical issue for virtually all service providers. However, there
are some signs that senior SP strategy staffs also may be thinking in terms of growth
again. This suggestion that priorities may be shifting fuels the need for operational
staff to optimize existing management practices before new initiatives are layered
on top.
After a period of conservative spending from 2001 to 2003, SPs are starting to adopt
new initiatives, with their attendant technical challenges. Key initiatives around
SIP-based VoIP infrastructures, 3G Mobile, MPLS networks and IP VPN services,
and mobility and content services require both higher- and lower-level visibility of the
network. Most important, the current strategic approaches encourage the idea that
the management of networks and services is equally important to the success of the
services. However, the goal should be the delivery of the services to customers.
Customer-centric management, when set as a goal, will often help network
management staffs prioritize effectively.
The pressure is on networking staffs to ensure the integrity of the services without
having much visibility into the service management objectives or related systems.
Driving toward increased automation and integrity of the network layer requires
ever-closer management.
As network staffs work through the issues of today's networks where inventory
records may be incomplete or lacking, or where changes may not be effectively
tracked future technology has its own issues to challenge operations staffs. Two
key issues are next-generation networks and services, and mobile technologies.
As IP technology and MPLS in particular becomes the new consolidated core of
communications networks, service providers require multivendor management
solutions that understand routing protocols and label-switched paths. Because the
new IP services are more flexible than traditional services, they can be better tuned to
the needs of customers. However, new activation, assurance, and billing capabilities
are required to take advantage of this flexibility.
In the mobile market, service providers must consider not only the impact of IP
technology but also the issues surrounding 3G, WiFi, and fourth-generation technologies.
For instance, 3G usagebased services must be closely managed for service quality.
4 #05C4505 2005 IDC
The mobile terminal itself usually the mobile phone becomes a manageable entity
with an IP address. This means that the scale of managing the mobile network can grow
dramatically. At the same time, the services are more complex.
Many users of operations support system (OSS) products cite the need for
conformance to standards, especially for APIs, as a way to manage deployments
throughout the service or infrastructure life cycle. The cost to manage such new
technologies as MPLS, 3G, and WiFi often includes not just the cost to acquire the
infrastructure but the effort to link that infrastructure to the management system for
network-, service-, and business-level functionality. Although the network technologies
are standardized, the specific operational practices around them have long been highly
specialized. As these new technologies roll out, some of the standardization efforts from
the OSS community suggest that service and network complexity is prompting some
standardization in approaches to management, which represent a moving target for
network, NOC, and operations staffs running or using OSS systems.
One company addressing these SP management challenges is Hewlett-Packard, with
its HP OpenView TeMIP solution, which manages telecommunications infrastructures
and networks for service providers around the world. HP OpenView TeMIP is part of
the HP OpenView Operations Support System (OSS) portfolio, the application
component of HP's Integrated Service Management solution for OSS.
HP OpenView TeMIP's capabilities in fault and performance management rely on
telecom-specific capabilities for network-level and element-level management, such as
the access network, switched voice network (TDM), IP/MPLS, and ATM and transport
(DWDM/SONET/SDH) networks. Existing customers use the solution to manage
wireless, transmission, switching, IP/MPLS, managed data, and SS7 infrastructures.
The solution's ability to ensure the high reliability of such telecommunications-specific
equipment is based on its collection, correlation, presentation, state management,
and service impact analysis features. The system's root cause analysis capabilities
drive its value proposition as a manager of managers. Through such event correlation
capabilities, HP OpenView TeMIP contributes to the stability of a service provider's
operations. With the Service Impact Analysis feature of HP OpenView TeMIP, service
providers gain added operational efficiencies because the events and outages can be
correlated with a high-level service.
HP OpenView TeMIP addresses a variety of infrastructure challenges. Functionally,
the product is positioned to help with the consolidation of diverse and acquired
operations. It is a real-time troubleshooting and problem-solving system that can work
in conjunction with historical performance monitoring, help desk, billing, and activation
systems. Strategically, the product is positioned to reduce operating expenditure
(opex); manage to SLAs; reduce downtime; unify IT, IP, and telecom environments;
improve operational efficiency; and reduce training requirements. On a practical level,
HP OpenView TeMIP support for standards such as eTOM, NGOSS, and OSS/J
positions the solution to serve the needs of service providers for open solutions. Many
will integrate HP OpenView TeMIP with key OpenView applications, such as Service
Desk and OpenView Operations, as well as with third-party applications, such as
Vallent's Metrica or Cramer, to complete their solution. The functional, strategic, and
practical aspects of the HP OpenView TeMIP solution taken together are structured to
support flexibility in the use of the product.
2005 IDC #05C4505 5
To determine the business benefits of telecom-specific network infrastructure
management solutions, IDC conducted in-depth interviews with a number of service
providers using HP OpenView TeMIP. IDC asked detailed questions about the
implementation costs and the savings realized to validate and quantify the business
benefits of the management solution. IDC also applied its proprietary ROI methodology
to the results to determine the average ROI and payback period the surveyed
companies realized from deploying the HP OpenView management solution.
I DC' S ROI METHODOLOGY
To determine the effectiveness of IT management solutions, IDC has developed an
ROI methodology that measures the total costs of deployment and the sum of the
savings achieved. The methodology calculates the ROI in a three-step process:
1. Ascertain the investment made in the purchase and implementation of the
solution and the associated training and maintenance costs. To get an accurate
assessment of the investment in deploying HP OpenView TeMIP, IDC asked for
the deployment, setup, upgrade, and maintenance costs, as well as the total cost
of the software and training. This investment included the loaded costs of the
incremental staff required to operate the HP software.
2. Measure the gains in productivity of the IT and operations staff members from
deploying the solution, as well as the revenue recaptured from reduced downtime
and the cost savings from increased operations staff efficiency and lower capital
and operating expenses.
! Productivity savings. Operations staff productivity indicates how effectively
individuals use their time. Besides reducing operations costs, gains in
operations staff productivity can free up people to implement new initiatives
more rapidly, helping to create a competitive edge.
! Recaptured revenue. Higher system availability contributes to businesses'
top lines because less revenue is lost due to downtime and potential service
penalties are avoided. Additionally, downtime can be costly in terms of
diminished customer satisfaction and possible loss of a customer's business.
IDC converts revenue, a top-line benefit, into a bottom-line benefit by
applying a margin rate (in this case 20%) to account for the costs associated
with generating the additional revenue.
! Operations efficiency. Operations staff efficiency is a measure of how well
the operations organization can achieve economies of scale and scope of
work with its people, tools, and practices. To remain competitive, companies
must be able to grow their systems and networks at a faster rate than the
operations staff required to support them. Skilled operations professionals
continue to be scarce, so companies are expecting existing staff members to
take on more work and responsibilities. If operations departments are unable
to achieve the required economies of scale and scope, they restrain
corporate managers' business decisions and discourage aggressive
deployment of technology to gain a competitive advantage.
6 #05C4505 2005 IDC
! Other cost savings. Further cost savings may be realized by eliminating other
management tools and lowering the costs of hardware, software,
maintenance, and training, as well as the loaded costs of the incremental staff
required to operate the HP software. Centralizing management can also save
on travel expenses by reducing the number of visits to remote sites for repairs.
3. Calculate the payback period and ROI for the deployed solution. From the
results of the interviews, IDC is able to calculate the average payback period and
rate of return from investing in the management solution, as well as the net
present value of the savings.
IDC bases its calculations on a number of assumptions:
! Time values are multiplied by burdened salary (salary + 40% for benefits and
overhead) to quantify efficiency and staff productivity savings.
! The impact of unplanned downtime is quantified in terms of lost revenue.
! Lost revenue is a product of downtime multiplied by the average revenue
generated per hour.
! The net present value of the three-year savings is calculated by subtracting
the amount that would have been realized by investing the original sum in an
instrument yielding a 12% return to allow for the missed opportunity cost.
Because operations solutions require a deployment period, the full benefits of the solution
are not available during deployment. To capture this reality, IDC prorates the benefits
on a monthly basis, then subtracts the deployment time from the first-year savings.
Survey demographics. IDC recently applied the ROI methodology to its survey of
service providers using HP OpenView TeMIP. Specific figures for savings and costs
came from interviewing executives at service providers around the world that have
deployed the HP management solution. For the survey, IDC asked a series of
questions on specific administrative processes and the associated time and staffing
requirements before and after deploying the HP solution.

D e p l o y me n t D r i v e r s
In the interviews, the service providers gave a variety of reasons for deploying the HP
management solution. One European service provider with 4.5 million subscribers
deployed HP OpenView TeMIP when it added a 3G network and overloaded the old
management system. Although TeMIP was initially installed for the 3G network, it is
now handling the SP's entire network infrastructure, and doing so without requiring
the company to hire additional IT personnel.
"Deployment was surprisingly smooth and rapid," the respondent said. "We had a core
team in our company, and we worked extremely well with the contractors that HP set up
for us."
"We're saving money because of TeMIP, maybe a few hundred thousands of dollars
a year. We are also saving a lot of downtime, which is important since we have major
agreements with very large customers with regard to downtime."
2005 IDC #05C4505 7
"TeMIP shows us if the equipment in the network is up and running and what
services are affected when we have problems. Also, it allows us to go back and
figure out what's repeatedly faulty and what needs to be worked on."
Single-screen solution. The main driver for another European service provider to
deploy HP OpenView TeMIP was to have a centralized management system. "We were
monitoring by multiple screens," the respondent said, "and we wanted a single screen.
Now we can integrate different technologies and different types of equipment into a
common screen and present the information the way we need it. The filtering is very
good, and we can tailor the presentation to the way we manage our 24-hour centers."
TeMIP has allowed the service provider to add networks and subscribers without
having to hire additional people. "Before TeMIP, we had about 2 million subscribers,"
the respondent said. "When we deployed TeMIP, we had about 5 million subscribers,
and now we have 11 million. We've also added 3G and another network. If we didn't
have TeMIP, we'd need an additional 15 FTEs. Also, we're responding to fewer false
alarms now, which is also saving people's time. I'd estimate we're saving one-third of
the time of 50 people."
One cellular SP using HP OpenView TeMIP as a manager of managers is saving on
resource, training, and client application costs and increasing revenue by closing new
business after corporate clients visit the NOC and are impressed with the SP's
management capabilities. "We have 25 operations people, but we would need 35 if
we didn't have TeMIP," the respondent said. "We're saving about 250,000 euros a
year on training costs and about 300,000 euros a year on client applications."
The SP uses TeMIP to manage 85,000 alarms a day from 26 different management
tools without any operator intervention and to present the information as an aggregated
view. It chose TeMIP after deciding to manage its network with one presentation format,
instead of using separate systems for each piece of equipment. "We were faced with a
lot of new products and vendors, so the old solution was impractical."
The company has increased revenue by an estimated 1% or 2% by arranging visits for
prospective clients to the NOC. "Our salespeople tell us that clients sign immediately
after the visit. We've had five visits recently, and each one resulted in a new contract. I'd
say those contracts alone have generated about 100,000 euros a month."
Another service provider deployed HP OpenView TeMIP when the NOC could no
longer handle the network's growth or increased complexity with its existing resources.
"If we didn't have TeMIP, we would need another person on each shift, or six people in
total," the respondent said. "There is only one interface to perform fault management,
so if we didn't have TeMIP, we'd have to train them in several interfaces, which would
be more costly and time-consuming. Also, without TeMIP, we'd need 10 more
management systems and more workstations, which cost 20,000 euros each."
TeMIP has also cut the time needed to identify faults. "Now it takes an average of
about 15 minutes to identify a problem. Before, it took 25 minutes each, and we may
have 500 critical faults a day."
8 #05C4505 2005 IDC
Improved customer service. An Asian wireless operator deployed HP OpenView
TeMIP to improve control of its business and to cut costs. Before the deployment, it
had no central management system; rather, it relied on local operators to deal with its
element management systems. "Besides cutting costs, we have improved the quality
of the network and reduced the response time to calls," the respondent said. "We
have reduced the number of operators from 250 to 120 and cut their overtime by
60%. Availability has increased, and trouble ticketing is under more control."
Another Asian cellular operator deployed HP OpenView TeMIP to improve customer
service and realize the benefits of a centralized management system with an
integrated view of its networks. "We have four transmission technologies and a local
access and long distance network, so having an integrated view of the networks with
a common alarm system was a major driver," the respondent said. "No matter which
type of customer called, we could tell them what was going on. We also do proactive
monitoring, so we can call customers before they know there's a problem. It really
makes us look good."
The company has also grown its networks without having to add operations staff.
"Something like 3,000 network elements are reporting alarms to TeMIP. We have a
two-level fault management team, and TeMIP saves us money because more faults
can be handled by the less skilled, lower-priced people. Our 12 help desk people are
more efficient because everyone has the same network view, and the trouble ticketing
process is better. We also expect to save on capex [capital expenditure] because of
what TeMIP allows us to do."
By resolving problems centrally, the company has saved an average of 10 to 15
minutes in fixing faults. "We're winning 60% of new business. Customers think [our
services] are more reliable than our competitors'. Certainly, our reaction is faster."
SURVEY RESULTS
IDC's survey focused on the cost savings and other benefits of telecom-specific
network infrastructure management. From the results of the interviews, IDC was able
to determine the average ROI and payback period that the surveyed companies
realized from deploying the HP OpenView management solution, based on improved
IT management productivity, increases in operations staff productivity and efficiency,
other cost savings, and the recapture of previously lost revenue.
Operations staff productivity. To ascertain the cost savings from improved
operations staff productivity, IDC asked questions about staff time needed for
activities related to network administration and problem resolution, before and after
deploying the HP OpenView management solution.
Among the companies surveyed, the annual savings from improved productivity with
administrative activities amounted to an average of $564,571 (see Figure 1). The
managers interviewed reported that they had realized substantial savings in staff hours
expended on asset management, network performance management, root cause
analysis, network troubleshooting and repair, and creating and supporting new features.

2005 IDC #05C4505 9
F I GURE 1
Av e r a g e An nu a l Be ne f i t s f r o m De p l o y i n g HP Op e nVi ew T eMI P
S o l u t i o n
Operations staff
productivity
administration
($564,571)
Operations staff
productivity
problem resolution
($1.08 million)
Recaptured
revenue
($362,215)
Operations staff
efficiency
($2.07 million)
Cost reduction
($2.46 million)
Total annual benefits: $6.54 million

Source: IDC, 2005

Time savings in network performance management averaged 52.6% (see Table 2).
Companies surveyed also reported an average 40% reduction in time spent on root
cause analysis and an average 11.5% savings in time spent on network
troubleshooting and repair. Time savings in asset management averaged 90%, and
the mean time to repair dropped by an average of 65.1%.

T ABL E 2
Av e r a g e T i me S a v i n g s i n Op e r at i o n s St a f f Ac t i v i t i e s f r o m De pl o y i ng
HP Op e nVi ew T eMI P So l u t i o n
Activity Time savings
Network performance management 52.6%
Root cause analysis 40.0%
Network troubleshooting and repair 11.5%
Asset management 90.0%
Creating and supporting new features 30.8%
Source: IDC, 2005
10 #05C4505 2005 IDC
To determine the impact of the HP OpenView management solution on SP operations
staff productivity with problem resolution activities, IDC asked questions about the
number of alarms for critical reported events and the number of trouble tickets
generated, as well as the time needed to generate, address, and resolve them, before
and after deploying the HP OpenView TeMIP management solution The number of
alarms dropped by an average of 44% following the deployment of the HP OpenView
management solution. The time needed to generate, address, and resolve trouble
tickets dropped by 34%. Among the companies surveyed, increased operations staff
productivity with problem resolution activities contributed an average savings of more
than $1.08 million annually over three years.
Operations efficiency. To determine increases in operations efficiency, IDC asked
questions about the average number of subscribers and the number of full-time
employees (FTEs) in the NOC, before and after deploying the HP OpenView
management solution. IDC also asked about the operations staff salaries.
For the companies surveyed, the improved operations efficiency yielded an average
reduction in operations headcount of 31 FTEs a year. With an average first-year
loaded salary of $62,533, and annual increases of 5%, the payroll savings from
increased operations efficiency averaged more than $2.07 million a year over the
three years.
Other cost savings. Further efficiency savings came from the elimination of other
management tools, the reduced need for outsourcing, and lower travel and training
costs. These savings averaged $2.46 million a year. Taken together, the savings from
improved operations efficiency and cost reductions yielded an average total of more
than $4.53 million a year.
Recaptured revenue. IDC asked about the number of downtime incidents and
amount of downtime, as well as the estimated revenue lost per hour of downtime,
before and after deploying the HP OpenView management solutions.
On average, the companies surveyed reduced the direct revenues lost from downtime
by $362,215 annually. The number of downtime incidents and amount of downtime
fell by an average of 23% after deploying HP OpenView TeMIP. Some companies
were able to leverage their better-managed networks to offer higher levels of services
with higher-priced SLAs.
Payback and ROI. Overall, the companies invested an average of close to $3.26
million over three years in deploying the HP OpenView management solution, including
hardware, software and implementation, and training and maintenance costs.
For the HP customers surveyed, the total benefits averaged more than $6.54 million
annually, resulting in an average annual cash flow of close to $5.46 million. IDC
accounts for the opportunity costs realized by not having invested the initial amount in
some other instrument yielding a 12% return. This results in a net present value for
the three-year cash flow of close to $11.86 million for the companies surveyed.
Based on an average investment of close to $3.26 million over the three years, the
payback period from deploying the HP OpenView TeMIP solution averaged 11.99
months for the companies surveyed, yielding an average ROI of 364%.
2005 IDC #05C4505 11
CONCLUSI ON
Service providers are putting increasing demands on their network infrastructure
management as they adopt IP and mobile technologies and introduce new value-
added services and simultaneously attempt to increase customer satisfaction and
keep costs in check. To quantify the business benefits of telecom-specific network
infrastructure management, IDC conducted in-depth interviews with service providers
using HP OpenView TeMIP network infrastructure management solutions and asked
a series of questions regarding specific operations activities and associated time and
staffing requirements, before and after deploying the management solution.
IDC found that deploying the network infrastructure management solutions generated
significant cost savings, especially from improved operations staff productivity and
efficiency. Further savings came from the elimination of other management tools, the
reduced need for outsourcing, lower travel and training costs, and a decrease in
revenues lost from downtime. On average, the companies surveyed realized more
than $6.54 million in benefits annually from deploying the management solution,
yielding a payback period of 11.99 months and an ROI of 364%.



C o p y r i g h t N o t i c e
External Publication of IDC Information and Data Any IDC information that is to be
used in advertising, press releases, or promotional materials requires prior written
approval from the appropriate IDC Vice President or Country Manager. A draft of the
proposed document should accompany any such request. IDC reserves the right to
deny approval of external usage for any reason.
Copyright 2005 IDC. Reproduction without written permission is completely forbidden.