The Chief of KPN has heralded a new wave of mergers and acquisitions (M&A) for the telecoms industry (see Comcast/Time Warner announcement).
Whilst many in the industry will welcome this news, believing – perhaps correctly – that it will bring the benefits of scale, reach and investment into our world, there will be others with their heads in their hands.
M&A activity is a double edged sword. For the ‘front office’ it means they can go back to their powerpoint slides and make the bits they cover and control bigger. For the ‘back office’ it means that horror of the telecoms conference – the IT system spaghetti slide.
The very scariest spaghetti slide that BillingViews has ever gazed at with incomprehension was just after three or four cable companies in the UK had merged. Silence fell as the IT guys tried to follow the strings from one section to another without being diverted into a random ERP system belonging to someone else. The business guys started making notes, well, probably shopping lists, as their brains shut down in fear.
The speaker finished her pitch, was given a sympathetic round of applause, a hug by the chairman and was asked what the most difficult part of her job was. When the laughter had died down, she said ‘the politics’ and sobbed slightly.
Big integrations, like big conversions – which are sometimes the same thing – need vice like control, clinical decision making and large resources. Each system must stack up in the cost/benefit spreadsheet and a good manager will ignore the emotional/political lobbying of those in charge of their favourite system. “Go fast, get it done, fix things afterwards,” as one VP of IT who has done these before says. And beware, the detail will derail almost anything it can. In the example above, each billing system involved had different formats for the ‘age’ field. In one, you entered ’27’ in the field, in another you entered ’17/07/1975′ – not pretty!
One of the problems, of course, is that – with some notable exceptions – the ‘front office’ does not care. As a blog on the subject of M&A in the financial sector says, there are reasons not to get a job in the ‘back office.’
Reason One: The Front Office doesn’t care.
Reason Two: Top business schools don’t care.
Reason Three: No-one cares.
You get the picture.
Whilst this is better in telecoms than other industries, because our very business is based on IT, there is no doubt that people work in areas such as billing only get noticed when things are going wrong.
What M&A activity means, in practice, is that the very resources that are fully engaged trying to support the current business model will be diverted for a year or more. The same, of course, is true of large vendors and this always has a knock on, uncertain, effect for customers and partners.
Whilst the industry will focus on the potential and need for real time functionality, the billing guys are still struggling to get out old fashioned bills, on time and with a deal of accuracy.
Start talking to them about fully integrating real time into the core…and the meeting might well be cut short.
M&A is good for shareholders and the profit and loss accounts. It is a nightmare for those who have to integrate the businesses, processes and systems. And as a result, it may be bad for customers.
Spare a thought for them as they try and figure out how to get that many systems onto one slide.
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