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VIVA Bahrain: Innovation through ITO

Dec 26, 2014

By Guy Zibi, Head of Consulting, Pyramid Research

VIVA was launched as Bahrain’s third mobile operator in March 2010. Despite entering a highly saturated mobile market (128% penetration at the time), VIVA was able to garner substantial market share and achieve market leadership within just two years, setting a new benchmark for a late entrant in the mobile and broadband segments.

Bahrain: Competition drives telecom sector

Bahrain has a population of just over 1.3 million and a total surface area of only 750 square kilometers. The kingdom’s telecoms sector has become an important pillar of the local economy, generating revenues of over USD1.07 billion in 2012, 4% of the total national gross domestic product (GDP), according to Bahrain’s Telecommunications Regulatory Authority (TRA).

In 2009, a third mobile operator license was granted to the Saudi Telecommunications Company (STC), which began operations under the VIVA brand. In 2013, the regulator announced the Third National Telecom Plan (NTP), in effect until 2015. A major thrust of this plan is the deployment of a national fiber broadband network to enable data transfer speeds of 1Gbps+ for businesses and 100Mbps+ for residential customers.

The government efforts are paying off. Today, Bahrain is a highly competitive mobile market that enjoys double-digit growth. According to Pyramid Research, by the end of 2013, the country registered 2.5 million mobile subscribers, a penetration in excess of 194%. The country has seen a surge in smartphone adoption and competitive pricing plans have driven explosive growth in mobile data, spanning more than 1.3 million mobile broadband connections in 2013.

VIVA Bahrain’s rise to leadership

VIVA was launched as Bahrain’s third mobile operator in March 2010. Despite having landed into a highly saturated mobile market (128% mobile penetration at the time), VIVA was able to garner substantial market share and achieve market leadership within just two years, setting a new benchmark for a late entrant in the mobile and broadband segments.

This remarkable rise to market leadership was possible largely due to VIVA’s high quality network and marketing prowess, as well as their innovative approach to pricing. In 2013, VIVA ended the year with 822,000 subscribers, representing 33% of the market. VIVA Bahrain’s growth trajectory is evidenced by its revenue growth in the past three years, which rose from USD209 million in 2011 to USD323 million in 2013, a 55% increase.

To date, VIVA has been able to defend its second place position by focusing on enhancing the quality of its communications network and strengthening its already vast channel structure with added retail and online touch points.

During its four years of operations, VIVA Bahrain has aimed to be the sector’s innovator. Since launch, the operator’s wide-ranging marketing campaigns have positioned the brand as “value for money,” “innovative” and “best quality.” VIVA’s chief executive has often communicated its intent to lead the market through “targeted innovations and sustained investments,” and by offering competitively priced value-added services and solutions.

VIVA’s innovative and customer-centric tactics have earned the operator lower customer churn rates (compared to its sector peers) and recognition by national and regional authorities. These accomplishments come as a result of a series of well-orchestrated network, operations and marketing strategies.

A growth agenda

Now VIVA faces the challenge of battling for second place in the mobile services space while defending its leadership within the intensely competitive broadband segment. In addition, VIVA, being the last operator to market, holds a much lower share of high-value subscribers than its competitors. The business segment accounted for only 4% of subscribers in 2013, compared to 9% for its principal competitors. Likewise, its proportion of postpaid contracts as a percentage of the total subscriber base was 12%, well below its competitors, making VIVA much more dependent on prepaid to succeed.

To drive expansion in the face of this competitive backdrop, VIVA has put forward a growth agenda based on three key strategic priorities. First, it wants to enhance revenue through leadership in VAS and pricing innovation. Second, it wants optimize cost and reduce OPEX through sustained network expansion and operations optimization. And third, it plans to diversify revenue by growing its high-value business clientele of enterprises and government.

Revenue creation and cost optimization objectives have been on the company’s strategic agenda since its inception, and have driven the development of important business transformation initiatives. One of VIVA’s most impactful initiatives to date has been the overhaul and outsourcing of its IT operation, implemented during the first half of 2013.

Driving quality through IT process optimization

Amidst its stellar market performance of 2012, VIVA began facing a number of operational issues that challenged their growth potential. The IT was experiencing a high number of system outages, sub-par service performance, and delays in time-to-market for new products. These problems were related to a number of internal gaps, including lack of technical/platforms expertise, inadequate incident management processes, and poor human resource management, among others. The IT outsourcing partnership and governance model established at launch was no longer working. VIVA had to do something or risk impact on customer loyalty and acquisition.

VIVA’s management decided to engage a new IT managed services (ITMS) partner for management and optimization, with the entire IT operation outsourced. The main objective was to raise the quality of IT services by creating efficient and transparent IT operation. The mandate for the new ITMS partner was to integrate VIVA’s multiple technologies and vendors into a unified IT organization quickly and without disruption of ongoing business operations. The company also identified a need for well-defined performance dashboards, service catalogs, and communication mechanisms. The ITMS partner was also to establish continuous service improvement (CSI) and service quality assurance (SQA) plans to guarantee sustainability of service-level agreements and continuous improvement.

VIVA’s priority was to combine vendor management and service management under an integrated system, to make the operation more responsive to customer needs.

Vendor selection and project scope

Owing to its solid performance as VIVA’s network infrastructure provider, Huawei was selected to replace the existing IT outsourcing (ITO) provider. Following a brief due-diligence period, the Huawei team outlined a governance model that organized the outsourced IT operation into five key areas.

SOC management: Administration of the service operations center (SOC) includes managing the operator’s network operations center (NOC), the IT service desk, as well as handling all hardware and application needs.

Application management: This entails managing a set of 34 applications spanning all the operational processes including CRM, billing/invoicing, back-office, data warehousing, revenue assurance and fraud management (e.g. Siebel CRM, Oracle payroll, E-business, Maqalla payment gateway, etc.).

Infrastructure management: This involves managing the databases and systems, enterprise OS/software, and network security across the operation.

Service management: Huawei offers service-oriented architecture (SOA) to ensure that all services are linked to service-level agreements (SLAs) or key performance indicators (KPIs). First- and second-level support organizations were also put in place, as were tools and applications to manage the processes.

Vendor management: Huawei is also responsible for managing all vendors engaged by the outsourced IT operation.

The execution timeline was extremely ambitious. Once the project due diligence was completed (January 2nd, 2013), Huawei had a mere two months to perform the solution’s planning, design, development and testing.

Huawei was very committed to deliver the new IT operation on time. The vendor deployed a very extensive team with transition and operations experts that worked in parallel from multiple locations, including Bahrain, India, Malaysia, Egypt and China. The teams worked day and night to make the transition successful, overcoming a number of resource limitations and logistics issues. After eight weeks of hard work, the new IT structure went live on March 4th, 2013.

The implementation of the new outsourced IT operation was followed by three months of stabilization activities, and the project was completed in June 2013. During the entire implementation process, major emphasis was placed on three important aspects.

Technical skills development: Huawei provided training on technical best practices and instructed the VIVA team on how to operate within their new IT environment.

Knowledge management: During the early stages of the process, Huawei created a knowledge portal and database to house all documents and procedures. It also trained the team members to log the details of problem resolution in a shared system (dubbed the “Remedy” system).

Continued service improvement: Upon project completion, Huawei provided a complete CSI plan and action timetable for follow-up through December 2013.

How ITO created value for VIVA

VIVA’s move to replace its IT managed services partner and optimize its IT operations’ processes has proven positive, impacting a number of key business metrics. Through the new IT managed services model, VIVA has increased core system and data center availability while reducing the length of its billing cycle, the number and life of trouble tickets, and the time required to restore service. Moreover, their ability to resolve customer issues at the first level of IT desk support has tripled since the transition.

These enhancements have allowed VIVA to better address the needs of its subscribers, allowing the company to attain the lowest churn rates in the sector.

Looking ahead, Pyramid Research expects the benefits derived from the ITO implementation to provide a competitive edge and position VIVA to increase their participation in the more profitable postpaid and business segments.


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