Updating the OSS: The Covad Communications ExperiencePaul GranthamVP, Software and Information Systems

Jeff HicksProgram Manager, NetCracker Technology

October 13, 2004

Covad Confidential 2

Covad Overview

• Covad operates the largest national DSL network with services currently available in over 235 Metropolitan Areas in 44 States (On- and Off-Net)

• Covad Achieved Profitability in Q2 2004• Subscriber Lines: Increased 13 percent year-over-year

Covad Strategic Distribution ChannelsWholesale

• 73% of revenue and 86% of lines• Consumer and business end user focus

Direct• 27% of revenue and 14% of lines• Small business focus

Covad Confidential 3

Systems Context

• Early adopter (1998) of J2EE standards on WebLogic• All Java-based applications portfolio• Uniform technology base: Unix/Linux, WebLogic, Oracle• Large package apps: Billing, Oracle Financials, CRM,

Network Inventory Management.• Complex automated Order Management/Service

Fulfilment systems• Rich customer interface: XML, Web, Web Services

Covad Confidential 4

Systems Situation in Jan. 2003

• 66 applications

• Mostly custom built internally

• Each application addresses a single business problem

• Increasing maintenance costs; diminishing delivery

• Limited maintenance on applications and infrastructure; high level of systems failure

• Unsatisfied internal and external customers

• Success in implementing Oracle Financials and Portal's Billing

Covad Confidential 5

Supporting a Changing Business

• Regulatory Changes (FCC)• Eliminated line sharing for local data connection • Restricted voice/data bundling• Threats to third party voice services

• Customer Requests• “White label” services• Larger customer support role

• Voice over IP matures as a product• New Market Players

Covad Confidential 6

Systems Response

• Enable fast changes in subsystems• Portals• Pricing• Product Catalog• Direct Marketing through portals

• More Cost Effective• Leverage learning/standards in the telecoms and software

industry• Limit proprietary technology where there is no option• Open source software where possible• High cost infrastructure for high volume, high availability

systems• Reduce technical complexity

Covad Confidential 7

Restructure the Applications Portfolio

GOAL: Move to more cost appropriate, high value applications

Accomplish by…• Replace basic functions when possible with commercial products:

• Emerging standards reduce integration cost• Market for Broadband OSS is maturing

• Focus internal skill to focus on high value processes:• Differentiating products and services• Fast changing, complex business rules• Customer integration (stickiness)

• Leverage cost and flexibility of off-shore development partners• Deliver more improvements are now affordable

• On-going investment in stable, secure, trust worthy infrastructure and processes

• Continuously upgrade applications structure as part of product enhancements

Covad Confidential 8

The Vision

•Use packages to do basic function•Focus internal development on differentiating•Move routine development off-shore•Fill in the missing applications

Pricing

Service Fulfillment

Product Management

Order Management

Package Custom

Today

Customer Self ServiceField Service Management

Network Management

Design & AssignNetwork Inventory

ManagementKit ManagementInvoicing

Trouble Ticketing

Accounts Payable

ILEC Billing Management

Financial Accounting

Covad Confidential 9

Today’s Application Portfolio mapped to eTOM Model

Admin / HumanAdmin / HumanResourcesResources

EnterpriseEnterprisePerformancePerformanceManagementManagement

Financial &Financial &AccountingAccounting

ManagementManagement

Market AnalysisMarket AnalysisStrategic PlanningStrategic Planning

Technology PlanningTechnology Planning

Communication Bus / Work Flow Management

MarketingCustomer

ManagementOrder

ManagementBilling &

CollectionsCampaign Management

Promotion Management

Dealer Management

Market Analysis

Telemarketing

Price Plan

Revenue Management

Invoicing

Accounts Receivable

Collection

Settlement

Usage Data Mediation

Point of Sale

Customer Definition

Order Negotiation

Account Management

Order Management

Order Processing

Customer Contact Management

Customer Definition

Trouble Ticket

Account Management

Call Center Mgmt / Navigator

Billing Inquiry

ServiceMgmt

Network Mgmt

Service Level Management

Network Mediation

Address Register

Activation

Network Inventory

Warehouse

Number Management

Workforce ManagementNetwork Planning

Network DesignNetwork

AdministrationTest Management

Assurance Control / Fault

-Performance-Traffic

-Preventive Maintenance

Element Mgmt byDomain

Configuration Mgmt Alarm Mgmt Performance Mgmt Security Mgmt AIN

PDH SDH ATM Mobile SCP Other Tech

Oracle FinancialsOracle Financials

Various CustomVarious CustomApplicationsApplications

CFI, xLink,CFI, xLink,Connect,Connect,

EagleEagleInfranetInfranet

Vitria and Other Custom TechnologiesVitria and Other Custom Technologies

Various CustomVarious CustomApplicationsApplications

Covad Confidential 10

Admin / HumanAdmin / HumanResourcesResources

EnterpriseEnterprisePerformancePerformanceManagementManagement

Financial &Financial &AccountingAccounting

ManagementManagement

Market AnalysisMarket AnalysisStrategic PlanningStrategic Planning

Technology PlanningTechnology Planning

Communication Bus / Work Flow Management

2005 Application Portfolio mapped to eTOM Model

MarketingCustomer

ManagementOrder

ManagementBilling &

CollectionsCampaign Management

Promotion Management

Dealer Management

Market Analysis

Telemarketing

Price Plan

Revenue Management

Invoicing

Accounts Receivable

Collection

Settlement

Usage Data Mediation

Point of Sale

Customer Definition

Order Negotiation

Account Management

Order Management

Order Processing

Customer Contact Management

Customer Definition

Trouble Ticket

Account Management

Call Center Mgmt / Navigator

Billing Inquiry

ServiceMgmt

Network Mgmt

Service Level Management

Network Mediation

Address Register

Activation

Network Inventory

Warehouse

Number Management

Workforce ManagementNetwork Planning

Network DesignNetwork

AdministrationTest Management

Assurance Control / Fault

-Performance-Traffic

-Preventive Maintenance

Element Mgmt byDomain

Configuration Mgmt Alarm Mgmt Performance Mgmt Security Mgmt AIN

PDH SDH ATM Mobile SCP Other Tech

Oracle FinancialsOracle Financials

CRMCRMCFI, xLink,CFI, xLink,

Connect,Connect,EagleEagle InfranetInfranet

BEA WebLogic IntegrationBEA WebLogic Integration

Various CustomVarious CustomApplicationsApplications

Network InventoryNetwork InventoryManagement SystemManagement SystemServiceService

PowerPower

New PricingNew Pricing

Covad Confidential 11

Enterprise event Bus

Web

ACD IVR

Computer Telephony Integration

Fax Server

CustomerEmployeesChannelsPartners

Interactive Communications

E-mail

Mixed-Channel Contact Management

CRMCRM

Sales Force Automation & Order Config.

Customer Care

Marketing Campaigns &

Programs

Order Creation &

Mgmt.

Installation, Change, Trouble Mgmt.

Contracts, SLA’s,

entitlements

Workforce Management & Logistics

Inventory & spares mgmt.

Web Self Service & Self Sales

Churn and Analytics

Customer Records

Product Catalog

Customer Configuratio

n & Inventory

Billing Inquiry &

Adjustment

SOA Technical Implementation

BEA’s WebLogic Integration

BEA’s Portal

BillingBilling

Rating Taxation

Invoicing & Format

Accts Rec.

Assign & Design

OSSOSS

Provisioning

Net. Mgmt.Net. Mgmt.

Network Monitoring

Fault Update & Resolution

Enterprise MgtEnterprise Mgt

GL/AR/APCash Mgmt. HR/Payroll

Switch Activation

Service Fulfilment

E911/OSDA

Line Service Order Admin

Number Inventory

Elements/Features Purchasing Inventory

ProvisioningProvisioning

Applying the Strategy to

Network Inventory Management

Covad Confidential 13

Heart of the System

• Detailed inventory information provides the core intelligence to the entire business.

Covad Confidential 14

Functional Overview of Inventory Management

Covad Confidential 15

Network Inventory Management Systems is a Foundation

Task B Task C

Task F Task E Task D

Task A Check I

EMS

NENENE

NE

D

Process

OSSTechnology

NetworkTechnlogy

People &Organization

Covad Confidential 16

Business Impact

• Loss of Revenue• Billing Data Integrity:

• Collocation and circuit cost discrepancies• Business Critical Data Stored in Ad-Hoc Systems:

• Currently business critical information and site inventory cannot be maintained or stored in the current inventory management systems.

• Inefficient Use of Resources:• Performance and Availability• Redundant Dispatches• Inefficient Use of Provisioning and Repair Resources

• System Limitations• Inability to model new services• Inability to model new technologies• Inability to validate multiple systems• Incapable of enforcing business rules• Inability to reconcile inventory with fixed assets.

Covad Confidential 17

Business Need

The OSS must meet the following business needs:• Accurate Inventory• Single Data Entry Point• Standardized Interface• Unified Database• Standardized Application Architecture• Future-ready Application Design• Business rules enforced

Covad Confidential 18

NetCracker BAM! Process

BAM! is a Business Analysis and Mapping methodology to formally design business processes for incorporation into the OSS

• Determine Scope• Define Existing Processes• BAM! Workshop• Mapping & Gapping• Customer Sign-off• Configure System

Covad Confidential 19

• Documented comprehensive descriptions of:• Business processes• Systems associated with those processes• Workgroups involved in the processes• Relationships between processes

• Work together to create desired processes• The review process is iterative and will serve as input to

the BAM! workshop.

Process Definition

Covad Confidential 20

Map & Gap Analysis

Mapping

After the workshop, the customer business processes documented in explicit NetCracker terms.

Gap Analysis

Identification of the gaps between current functionality and the customer requirements: identified gap & one or more proposed solutions.

Covad Confidential 21

• End-users are involved with requirements gathering from the beginning, eliminating ambiguity and ensuring ownership.

• BAM! mapping documents are recorded at a transaction level of detail, ensuring that both NetCracker and end-users are clear regarding system functionality.

• Planned delivery can be critically reviewed against business case upon completion of mapping.

• End-users are designated as process owners, are engaged from project initiation and are an integral part of the sign off process.

• The BAM! approach forces all relevant stake holders to jointly agree on system functionality very early in the project. This provides a forum to identify, resolve, and perhaps escalate conflicts very early in the project.

BAM! Advantages

Covad Confidential 22

Project Plan

• Overview of Project plan that resulted from BAM!• Order of implementation• Issues• Timing

Covad Confidential 23

Implementation

• Challenges• Successes

Results and Lessons Learned

Covad Confidential 25

Project Analysis

• Identified all relevant processes• Defined processes• Created map & gap document• Defined configuration• Configured system• Migrated data from four sources• Created repeatable reconcile process• Integrated to universal ESB platform

Covad Confidential 26

Business Benefit: Closed Offices- ADSL

$35,863

$202,500

$30

50%

1500

1500

50%

10

300

Q4

$179,315$35,863$35,863$35,863$35,863Delayed Order-Revenue

$1,191,815Total

50%50%50%50%50%Improvement due to NIMS

$30$30$30$30$30ARPU (Sample: ADSL)

$1,012,500$202,500$202,500$202,500$202,500Lost Orders-Revenue

7500

7500

50%

10

1500

Total

1500

1500

50%

10

300

Q2

1500

1500

50%

10

300

Q3

50%50%% orders lost or delayed 1 month

15001500Total orders lost

15001500Total orders delayed 1 month

1010Avg. orders/day

300300Days closed per Quarter

Q1 Q4

Total Closed Office (ADSL) Reduction Revenue:

$1,191,815Note: Projections Based on 2002/03 Actual Performance

Covad Confidential 27

Business Benefit: Held Order Reduction

3000500500500100050016-30 days

50%50%50%50%50%50%Improvement due to NIMS

$57$57$57$57$57$57ARPU

$169,813$35,863$35,863$35,863$33,488$28,738Increased Revenue

11-16 days

2-10 days

1000

2500

Q4

4500100010005001000

95002500250010001000

TotalQ3 Q2 Q1 Q4

Total Held Order Reduction Revenue Increase $169,813Note: Projections based on 2002/03 actual performance

Covad Confidential 28

NIMS Business Benefit Summary

• Benefit of Case Studies:• Improved Revenue because 50% reduction in Held

Orders: ~$170K/yr• Improved revenue because 50% fewer delayed Orders

from Closed Offices (ADSL): ~$1.2 Million/yr• Reduced systems support cost

• Cost:• NIMS Package• NC Professional Services

• Payback Period (years): 1yr

Covad Confidential 29

Continued Improvement

• Enhanced integration to Provisioning System• Service Catalog & Service Elements• Network Audits• Management of Telephone Number Pools• Management of IP Address Pools• Telecom Cost Management• Order Management• Asset Management• Continue to broadcast the value of Network Inventory

Management

Covad Confidential 30

Lessons Learned

• NGOSS standards (eTOM and SID) are not yet supported out of the box by OSS package suppliers.

• Need augment engineering methods to avoid proliferation of SOA service interfaces

• OSS/J and other standards help mitigate these problems by:• Providing interface adapters that are standard• Reducing the time to define SOA Services

• Missing security technology to fully exploit external use of SOA• Having an enterprise and systems architecture is essential!

Covad Confidential 31

Summary

• COTS applications can deliver more features faster and reduce expense.• Telecoms standards (OSS/J and NGOSS) and vendor adoption still in infancy.

Therefore implementation more complex and expensive.• Service Oriented Architecture and supporting infrastructure has eliminated

many of the technical integration problems.• NetCracker’s products can provide many core functions and features for

Covad’s: • Network Inventory Management • Order Management• Product Management

• NetCracker’s product provides a innovative flexible, browser-based way to implement NIMS workflows

• Early stage support for standards means:• Custom SQL • No off-the shelf support for OSS/J inventory standard• Web Services benefits not immediate

• Value of working with single vendor for multiple solutions and services:• Time to market shortened• Single company that is accountable• Ability to rapidly introduce new functionality into product set as new

ideas uncovered