The Bharti-IBM deal signed on March 26, 2004 is now a landmark in the
domestic IT infrastructure landscape. At $750 mn, this 10-year deal is probably
the largest domestic outsourcing contract, and in terms of a complex revenue
model too it has opened up a new vista in India.
Apart from the fixed component of the deal, IBM also gets a certain
percentage as its revenue share, which is linked to Bharti's performance. The
formula takes into account a percentage of revenues generated by Bharti as well
as predefined service-level agreements (SLA). Payments over the first five years
are expected to range from $200 mn to $250 mn, topping out at between $700 mn to
$750 mn after ten years. "This ensures IBM always has the right incentive
to support Bharti," asserts Ashish Kumar of IBM, who is responsible for the
maintenance of the contract with Bharti.
The magnitude of scale up of Bharti's operations, from the time it
outsourced IT infrastructure to IBM and how the latter successfully supported
it, bears ample testimony. From less than 6 mn subscribers in 15 circles
covering six major cities, Bharti has today expanded to more than 15 mn
subscribers in 23 circles covering more than forty cities for both its wireless
and wireline services.
Jai Menon, CIO, Bharti-considered by many to be the architect of this deal-praises
the role IBM played in supporting such a large expansion, in terms of coverage
and reach. The expansion has necessitated the following from IBM to handle the
subsequent increase in growth and complexity: IBM has made the billing
operations more robust, the CDR has grown three times, while the touchpoints to
customers have grown multifold. The transition also involved movement of Bharti's
IT staff into IBM's rolls; while the existing assets remain in Bharti's
books, all new assets are purchased in IBM's name.
The central theme behind IBM's management of Bharti's IT infrastructure
has been to bring about a homogenous entity. This is being achieved by having a
single billing engine, a common CRM application, and a pervasive BI (business
intelligence) tool across all of Bharti's business lines. While Bharti had
developed some applications in-house in areas like provisioning, mediation,
revenue assurance, analytics, fraud management; these are gradually being
replaced and management being taken over by IBM. The process is ongoing and
would remain a thrust area in the coming year too.
Another major milestone achieved by IBM was the DR capability it built for
Bharti, supporting all its revenue applications. It is currently in the process
of rearchitecting all new applications on an EAI (enterprise application
integration) framework-currently, the messaging layer of this framework is
getting deployed. It also completed the intranet employee portal as well as an
'executive information system' for internal management.
The other crucial activity for IBM was to work in perfect harmony with Bharti's
telecom network partners like Ericsson, Nokia, and Siemens.
IBM's Bharti Recipe in a Nutshell
- Bharti is working with IBM to transform its IT systems, key business
processes and establishing an EAI platform at a business linked financial
model. -
IBM Business Consulting Services, IBM Global Services -
Application Management Services, Worldwide Strategic Outsourcing and
Integrated Technology Services are building the well-defined proven solution
based on the IBM SPDE architecture and IBM WebSphere Business Integration
for Telecommunications software to deliver the value. -
Bharti and IBM created several mechanisms for managing the
relationship, including -
an IT Community of Practice organization for harmonizing IT
functions across the extended enterprise, -
a Bharti Technology and Innovation Council,
-
an architecture review board, and
-
a rapid application prototyping team of technologists.
- Bharti is working with IBM to develop an on demand IT framework called
macro architecture cube.