XM Canada outsources to Accenture

A Canadian satellite radio company has enlisted a large consulting firm to help it focus on delivering music and scale up its infrastructure to accommodate its growing subscriber base, which is projected to hit 75,000 by August.

XM Canada, which is operated by Canadian Satellite Radio Holdings Inc., has signed a three-year, multi-million dollar outsourcing agreement with Accenture. Under the terms of the agreement, Accenture will provide support and services through its global delivery network. These include maintenance and support, high availability, basic break/fix support and provide ongoing maintenance to XM Canada. Accenture Ltd. provides app support and services to XM Canada’s parent in the U.S.

“It’s a very complicated business,” said Michael Washinushi, chief financial officer at XM Canada. “By outsourcing the run and fix to Accenture, it allows us to focus our business on growing our subscriber base.”

Since its launch in late November last year, XM Canada has grown to 50,000 paying and trial subscribers. The satellite radio provider expects to have one million subscribers in Canada by 2010. Its U.S. parent currently has six million subscribers. Both divisions currently use a third-party software application called Portal to manage their subscriber base, customer care and billing systems. Prior to XM Canada’s launch Accenture helped it customize the software to ensure that customers would be able to sign up for their accounts once they purchased the device. The software is hosted offsite by Telus.

“They’ve got a solution that they can operate their business with out of the box,” said Dennis Melbardis, managing partner of Accenture’s communications and high-tech practice in Canada. “Our intent is to build and grow that solution with the business.”

Competitor Sirius Canada, which also recently signed a networking outsourcing agreement with managed services provider Fusepoint, launched approximately one week after XM Canada, heating up the highly contested digital media market. Both companies offer their services to consumers through retail stores such as Future Shop and OEM channels, such as General Motors as in the case of XM Canada.

Accenture developed its initial relationship with XM Canada last summer around the same time the CRTC was working out licencing details for satellite radio.

“Application outsourcing is a significant growth business for us,” said Melbardis. “We’re seeing opportunities to provide that service and a lot of customers want to talk about it now.”

Like other industries that have turned to outsourcing, satellite radio companies are looking to firms like Accenture to help them focus on the core components of their business. As satellite radio providers grow their brand and customer base, they need their infrastructure to be able to scale very quickly, said Nigel Wallis, research manager of application services for IDC Canada.

“Their core competency isn’t IT,” said Wallis. “Spending that type of resources to be able to scale for a future state would cost them a lot of capital costs that they need to move towards growing their business.”

A large part of growing that business is making sure subscribers are able to sign up and manage their accounts quickly and easily.

“Accenture’s resources ensure our subscriber management system is working 24-7,” said XM Canada’s Washinushi. “People buy the radio through the retail shops or OEM channels. They can either activate their radios online or through the call centres.”

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