John Burdass, Director of Pricing at Colt Enterprises Services, will be speaking at this year’s event, which will help demonstrate how to price data services effectively and create innovative personalised bundles that provide real value and increase margins…

1. Telecoms Pricing 2011
John Burdass, Director of Pricing at Colt Enterprises Services
John Burdass will be speaking at this year’s event, which
will help demonstrate how to price data services effectively
and create innovative personalised bundles that provide
real value and increase margins…
Telecoms IQ: John, it's a pleasure to have you on the line. Thank you very much for
joining us.
JB: Thank you.
Telecoms IQ: Before we begin, would you just very kindly tell us about your background
and your experience in the industry?
JB: Certainly. I've been head of pricing at Colt now for five years, concentrating on the
fixed-line telecommunications industry and as we move into more of the money services
business, managing that change from a price proposition perspective. Previous to Colt, I
worked in Motorola in the mobile infrastructure division as Global Pricing Manager, so
looking very much at the mobile space in terms of the evolution from the second generation
to third generation networks and the very dynamic customer models and pricing models that
were at play at that time. And indeed, previous to that, to working at Texas Instruments in
mobile semi-conductors. So probably a rich experience in the mobile space and fixed-line
telecom stuff that has evolved through time.
Telecoms IQ: Very rich experience, thank you! John, getting right down to it, what is the
current outlook for telecom service providers in terms of pricing and what are the key issues
that providers should be acutely aware of going into 2011 or beyond?
JB: I think really the key one here is that the industry is changing very rapidly. This is all
about the evolution from what you might call traditional telecom services in terms of fixed
voice or fixed data into much more of a rich services-based environment. We're talking here
about how to manage services, manage services with the traditional telecoms, outsourcing,
etc. So certainly from a pricing perspective it presents some very significant challenges.
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2. The key one is to maintain the value of a proposition to a customer, not only in terms of from
a vendor perspective, but also making sure the customers understand and value the
services that they're then buying from a supplier or suppliers. And making sure that there is
a two-way exchange there in terms of value understanding and value delivery.
Telecoms IQ: Yes, good point.
JB: I would say, I guess the second one there is certainly the current macro-economic
environment which we're all aware of in the daily news, but certainly at the corporate level
we've got a lot of anxiety in terms of budgeting certainly for 2011, whether it be in the Euro
zone or the US. And it's a given that it's a tough environment out there and it really then
again puts the emphasis on the pricing function to make sure that when we're talking to – or
when our sales people are talking to – say a CTO or whoever it may be. But again, there's a
very good exchange of what value can be delivered to a customer, but also very importantly,
what is it really customers are looking for, rather than just a lower price which is always a
given. But much more of a deep understanding of the customer's business so that we can
help them hopefully through these tough economic times.
Telecoms IQ: Yes, good point. So, to be honest, what we're seeing is a big challenge, as
you say, to determine new pricing models and I think it's also that innovation is being seen
as increasingly important to overcome that. How much emphasis on innovation and creative
solutions has Colt placed in this field – and how?
JB: Well, ‘significant’ doesn't describe it. It's basically at board level, we're now talking
about how can we be more innovative in pricing and how that can then deliver value to the
business because it's just not good enough anymore to price your products or your solutions
from a back-office perspective. You have to make sure that essentially you manage the
end-to-end pricing process all the way from price creation at the very beginning all the way
through to managing the waterfall of the customer through price negotiation and ultimately
the pocket price that the customer's paying. So certainly Colt is investing in a lot of time,
money and effort into making sure that we get that right, that we're doing the right things and
also critically adding value to our processes at the right stages of the negotiation in their life
cycle.
Telecoms IQ: You've mentioned looking towards the customers and their needs is
essential. How important is an understanding of the client trends and developments across
the board in actually arriving at a decision as to which model to use?
JB: I think it would be absolutely critical because when you start looking at it from a
segment perspective or a customer time perspective, customers will value your services and
products very differently even for arguably the same service. And it comes down to what is
the customer using the product or the service for, because yes, looking at it from purely
a…let's say a ‘pipes perspective’ – in other words, giving us a telecom service for
transporting data information – that won't cut it. You have to understand what the customer
is trying to achieve in their business environment and, therefore, allow you to have the
insight to decide what pricing model is the most appropriate. And an example of that would
be is the customer more minded towards an OPEX or a CAPEX pricing model? Are they
interested in leasing? Are they looking for single-spend to manage their budgets or an
extended, amortised spend over a long period of time, all of which can significantly drive a
different approach in terms of pricing.
Telecoms IQ: So you're almost working from back to front, looking at the finish line and
then taking an approach with that in mind.
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3. JB: Indeed. In fact, the approach we've always taken and now really driving is looking at
what I would call, what is the customer's problem commercially, and then putting that back
into the business so that we're delivering essentially a package not only in terms of the
solution that we're offering but also a commercial solution that bests fits our customer's
environment.
Telecoms IQ: One thing I would like to get your opinion on, John: Are there any particular
KPIs that providers should be employing within their strategy? And those may be KPIs that
you feel, from your experience, are necessary or any that you feel are merely
recommended...
JB: I think certainly the necessary ones have become increasingly important is realised
margin. Margin has always been a calculation of KPI in pricing decisions. It has to be, of
course. But I think as customers become more sophisticated, realised margin by an
accurate profitability analysis is an absolute key to track so that you can understand at the
end of the day what you can get out of business if you're delivering effectively to your
customers. Second to that are the costs of a particular piece of business. Again, the sort of
historical approach would be to look at your individual cost components, track those, make
sure they're heading in the right direction. But, again, as solutions become more
sophisticated, those costs start to interact with each other and become essentially fuzzy I
would say in terms of how they, yes, what the actual cost is in a particular deal or a particular
proposal. So making sure that in your pricing models and your pricing processes, you've got
the best... to the best of your ability a measure of the cost of your business. Feed into that
profitability analysis I just talked about.
Telecoms IQ: Excellent. And just sticking with this theme of looking ahead and bearing in
mind that Telecoms Pricing event is coming up very quickly, for your own professional
development, what one major question would you like to hear an answer to – or perhaps
several answers to – when at this conference?
JB: There are many, but I think the one on top of my agenda is really how do we effectively
determine what the realised value is, both from a supplier and a customer perspective?
Value is a virtual thing, rather than a direct thing. Can we measure it? Maybe we can't. But,
what is the best way of understanding delivered value and perceived value because that is
critical to positioning not only our price propositions but also, I guess, our overall marketing
approach to a customer at the end of the day.
Telecoms IQ: Well, John, I hope that we can work towards finding you that answer or at the
very least a range of various perspectives on the issue. We will end there for today, but let
me thank you very much again for your time, and, of course, we look forward to seeing you
in just a few weeks from now.
JB: Thank you. I look forward to the conference.
Telecoms IQ: As do we, thanks.
You can now register your attendance at Telecoms Pricing 2011. Email us at
enquire@IQPC.co.uk or call us on +44 (0) 20 7368 9300.
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4. IQPC
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