Organizations in the telecommunications branch must be structured to better reflect the market and its customers. Using ‘NetCo – ServCo – SalesCo’ assumptions as a starting point a number of organizational principles can be derived which lead to competi­tive and customer oriented structures. Here the ServCo is the central pivot of the organizational concept. Alongside concrete recommendations concerning the organizational structure this article will identify a number of critical aspects which must con­sidered when looking at reorganization. A seven-point program gives a checklist of important steps on the way to excellence.

To describe the competitive situation presently faced by incumbents in a nutshell two facts need mentioning: on the one hand penetration rates in areas such as mobile and Internet access are approaching saturation (with falling tariffs). On the other hand there are an increasing number of competitors who concentrate on individual specific parts of the value chain and are thus presenting the incumbents, who are still generally the classic ‘full service providers’, with a tricky competitive situation. This situation is illustrated in Figure 1, which shows the positioning of individual providers along the value chain.





In addition the collusion of different specialized providers into value-adding groups able to offer a complete competitive service spectrum is also increasing the competitive pressure on the incumbents.


This means that incumbents have to prove their (‘best in class’) competitive ability in comparison with specialized suppliers or value-adding groups along the entire value chain. The clear strengths of the traditional providers are to be found in the supply of a complete product and service range from one source (one-stop-shopping), covering technical developments such as:


> Fixed-mobile convergence

> Everything over IP (Voice over IP)

> Triple Play and > Next Generation Networks


In order to maintain and extend competitive strength this service spectrum including appropriate service offers, whether standard or solutions business, must be positioned in the market with reference to the critical success factors price, quality, time to market and flexibility. The foundation needed for this is, in addition to the cost-efficient provision of the network services (NetCo) and a professionally organized sales unit (SalesCo), an organizational unit which is structured in such a way that the growing expectations in the market can be met by optimal service provision. At present the common organizational form in the incumbents’ companies is dominated by the individual business units ‘fixed’, ‘data’ and ‘mobile’. Each area takes responsibility for developing products and solutions and positioning these on the market. If an attempt is made to produce cross-unit services in this environment a number of problems often arise (see table).
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