By Edgar Aguilar, MasterCard Global Technology and Operations
Today, as consumer technology has evolved, people face a dizzying array of choices. At the same time, some technology product options have narrowed, mostly to consumers' delight. For instance, many broadband providers now offer "bundled" television, Internet and phone services. So, rather than having to go to multiple providers for each service, consumers now have a single account/provider to manage.During the last few years, banks and other financial institutions have experienced similar technological evolutions. With increasing migration to Multiple Protocol Label Switching (MPLS) from Asynchronous Transfer Mode (ATM) and Frame Relay, network architecture has likewise gone to a "bundled" service. MPLS enables application convergence, making it easier to create "virtual links" across global networks and adopt outsourcing models for operation support-network management, for instance. Because MPLS is highly scalable, cost-effective and reliable, IT managers have adopted this technology for directing and transferring data as part of payments networks.
Just as most consumers would laud that transition to "bundled" services, IT managers would cheer the transition to MPLS. Still, these technological conversions aren't without short-term implications and long-term consequences.
MasterCard Worldwide Global Technology & Operations is near completion of its migration to MPLS on a global basis and has experienced first hand the down-stream ramifications and unintended consequences.
Consider this advice on the challenges you're likely to face after the conversion. You've migrated to MPLS, and you've managed to excite the board of directors about the conversion and its benefits. You've succeeded in outsourcing the network management functions and achieved a dramatic reduction in overall telecom costs. Now what?
The challenge of fewer providers MasterCard's migration to MPLS resulted in a reduction in the number of telecommunications providers-from 70 local/regional telecos to just a few global vendors. Under the new model, each global vendor manages MasterCard network infrastructure in more than 100 countries. In total, MasterCard processes payment transactions in 210 countries and territories.
As do most companies, MasterCard previously would build a network a single piece at a time by establishing multiple agreements around the world. Now, with much fewer telecommunications providers, you would assume that managing IT would be much easier, right?
The fact of the matter is that our former 70-plus telecom providers are still part of our network. These local/regional providers are embedded in the "value proposition" and service extension of our three global vendors. Under a global service model, you must stay incredibly close to how well your providers are progressing with the service-level agreement (SLA), service-level objectives (SLO) and other key performance metrics. Your internal scorecard becomes an even more critical business tool for the CIO and CTO to guarantee the financial and operational benefits of MPLS.
As a best practice, MasterCard recommends a formal supplier management process that includes a well-defined vendor management scheme, key performance indicators and a formal escalation process. It is important to understand the answers to three basic questions, as follows: 1. What is really important to the business? 2. How do you address critical issues? 3. How do you capture lessons learned and identify process improvements?
Two of the most critical SLAs linked to business practices/drivers are time-to-market and service availability. 1. What are the implementation intervals and how does your provider perform against these targets? 2. Are your service-availability measurements linked to the customer experience?
It is imperative to build the SLAs around business drivers and the customer experience. As a result of a metric-driven program, your staff and vendors can find common ground, identifying opportunities for sustainable improvements.
The challenge of technology refresh MPLS provides MasterCard improved service quality and a roadmap to the next generation of telecommunications services. In turn, these new telecom services enable next-generation payment services such as rewards-for instance, air miles, luxury goods or cash back when you use your MasterCard payment card-or transactions made with cards embedded with RFID chips for faster "tap-and-go" payment at point of sale and transit turnstiles, and payments made with mobile devices such as cell phones.
The same migration process that allows you to capture significant cost savings and operational benefits may yield some severe outcomes. In all likelihood, you've included new hardware in your endpoint or invested in fresh technology. If done on a large scale, you have forced the acceleration of technology refresh plans. With the dynamism of technological change, it is likely that in just a few years you would be compelled to replace all in a short period of time.
As a best practice, MasterCard recommends an open conversation with your financial team about the long-term implications of MPLS. Make sure they understand what will likely be required in just a few years' time. In addition to addressing the anticipated expansions as well as new security and capacity requirements, you will require a substantial capital allocation to upgrade endpoints behind the MPLS service cloud.
MPLS...then what? In addition to the dynamic business demands for more agile solutions and higher availability, IT managers must continue to track technology trends and evaluate sourcing models. On the technology front, we should expect increased focus on mobile/wireless data services, cloud computing and application-aware networks. Again, it's valuable to keep in mind business-driven SLAs, the vendor-management process and technology refresh requirements.
Ultimately, that is the moral of the story: Planning around networks-ATM, MPLS, etc. -should be considered a journey, rather than a destination. While you enjoy the benefits of an MPLS migration, be prepared for what's around that endpoint bend.
Edgar Aguilar is group head, Engineering Services, MasterCard Global Technology and Operations.