Convergent Charging and Digital Transformation: A Fundamental Platform Serving New Ends. Author: Andy Hicks

Transcription

1 Convergent Charging and Digital Transformation: A Fundamental Platform Serving New Ends An IDC White Paper Sponsored by Amdocs January 2017 Author: Andy Hicks

2 How Do Service Providers Need Their Classic Systems to Support Their Transformation? Digital transformation: Most people in the telecommunications industry believe it is essential. The tricky part is that everyone has a different idea of what it means. Some put the emphasis on upgrading their networks, some on content and entertainment, some on decommissioning legacy and unifying platforms, some on automation, and some on customer-facing functions. And all of these efforts can be transformative, at least potentially. IT transformation no matter how expensive is not digital transformation unless it makes some aspect of the business better. Digital transformation (DX) spans the whole organization; it can involve elements specific to the telecommunications business, as well as back-office functions common to many industries. At IDC, we have an extensive framework for digital transformation, but underlying all of it is a fundamental principle: The technology must serve the business. IT transformation no matter how expensive is not digital transformation unless it makes some aspect of the business better. The flip side is the real benefit: Since digital transformation is about how carriers use tools both old and new, they do not need to focus all their energy on brand-new architectures to realize DX benefits. Upgrading foundational systems or even making incremental changes is every bit as valid an approach to DX progress. The only challenge with this approach is a practical one: If there are many paths to the same goal, how can we tell which ones might be better? What are the best practices? What are carriers around the world focusing on? How are DX imperatives affecting core technology? To find out, we surveyed 80 large communications service providers in Europe, North America, Central/Latin America, and Asia Pacific on their DX plans as they related to the fundamental convergent charging function IDC Page 2

3 One Key to Revolutionizing Revenue: Personalization If you measure DX s benefit by the effect it has on the top line, then one result of the survey pops out immediately: Over half of the carriers we surveyed believe that significantly improving personalization and customization could boost revenue substantially over the next three years: FIGURE 1 Carriers Expect Personalization to Substantially Boost Revenue Q. How much would you expect your revenues to grow cumulatively over the next three years if you could employ significantly more personalized information and more customized offers? Over half of the carriers believe that personalization and customization can boost revenue substantially. More than 15% 10-15% 5-10% % (%) Note: N = 80 Source: IDC survey performed for Amdocs, 2016 Keen parsers of survey results will notice something about this graph: The scale does not go high enough. When we designed the question, we did anticipate that carriers would expect greater personalization and customization to boost revenue, but we underestimated how strongly they believed in it. The next time we ask this question, we will increase the scale. In any case, it is clear that personalization of offers and services is one of carriers' central transformative hopes. Personalization and customization usually mean finer segmentation down, eventually, to the promised segment of one. Usually, in turn, this finer 2017 IDC Page 3

4 segmentation requires a more robust technical environment. Based on the carrier s individual needs, this could include a faster database, a unified product catalogue, or stronger analytics. It will certainly require a more robust management capability and stronger assurance, especially as service-level agreements (SLAs) build in more business-oriented key performance indicators (KPIs) and quality-of-service levels. Personalization and customization also require drastically reduced time to market in order to serve these increased, more finely sliced segments. Greater segmentation requires the carrier to produce and manage more offers and products in the same period of time. Each individual offering, therefore, must come to market more rapidly to support this increased volume, and all parts of the chain must enable this speed. Increasingly, this will require real-time functionality as adjustments are made on the fly. Convergent charging systems can also provide a timely, rich set of usage data for segmentation and analytics. As the real-time monetization engine, convergent charging will become an essential part of this environment. Carriers Expect More than Personalization from Convergent Charging Digital transformation has many aspects, and carriers expect convergent charging to support many of them. When we asked carriers to choose the capabilities of convergent charging that supported a digital strategy, not a single choice ranked below 50% IDC Page 4

5 FIGURE 2 No Shortage of DX Requirements for Charging Systems Q. What key capabilities of a charging system are required to support a digital strategy? The broad set of high scores reflects the diversity of approaches to digital transformation. Support for the selling of virtual and physical goods An easily integrated API Real-time plan updates An open and rich API A flexible plan and offer definition with adjustable parameters A set of predefined widgets for billing- and charging-related functions Re-rating of events in real time (%) Note: N = 80 Source: IDC survey performed for Amdocs, 2016 This broad set of high scores reflects the diversity of approaches to digital transformation. Starting with the lowest score which still rates a solid 59% real-time re-rating suggests that the mix of agility and personalization that we saw in previous questions may be enough to trump the need for this capability. These include the ability to create targeted offers and products for every finely differentiated segment the marketing department may choose to address. In other words, if you can target everyone separately, applying immediate discounts may be a lower priority. Moving up the scale, the more highly ranked choices attest to the priority that carriers place on flexibility and speed in DX. Predefined widgets, adjustable plan parameters, and flexible, open application programming interfaces (APIs) all enable carriers to develop offers quickly, using an agile, fast-fail approach to constructing new offers. At its core, agility depends on dramatically reducing the time and cost and thus the opportunity cost of every service, campaign, and tariff that the carrier produces IDC Page 5

6 The top-ranked choice provides another perspective. Support for the selling of virtual and physical goods indicates that carriers would like to become more of a retailer, not only for their traditional services and devices, but also acting as the portal for partners. The importance placed on easy-to-use APIs could point to convergent charging as the center of a largely self-service platform capability, where the carrier acts as an economic enabler. This model is more prevalent in some largely self-contained developing markets such as China; nevertheless, even in more mature markets, selling virtual and physical goods still has room to run. Carriers Are Becoming More Open to Alternate Delivery Models Traditionally, billing and charging have lagged behind the network and other parts of telecom infrastructure in outsourcing, but it looks like that may be changing. We asked carriers how they would acquire their billing and charging, and see a shift on the horizon: FIGURE 3 Increased Flexibility in BSS Delivery Models Moving to private cloud allows carriers to realize benefits of cloudification without surrendering the control that comes from operating their own environment. Q. Three years from now, which of the following delivery models will you probably use to supply your billing and charging capabilities? Operated in a private cloud that we administer Provided in a managed-services relationship Provided as a cloud service Operated on our premises on dedicated hardware (%) Note: N = 80 Source: IDC survey performed for Amdocs, IDC Page 6

7 There are two stories here. The first is the move to private cloud from dedicated hardware, which allows carriers to realize the benefits of cloudification without surrendering the control that comes from operating their own environment. The second, more recent story is that the majority of carriers are increasingly embracing multitenancy. In our conversations on business support systems (BSS) over the years, we have consistently heard that even carriers that outsource other parts of their infrastructure want to retain internal control of their billing and charging. At IDC, we generally hear two main reasons for this: First, many carriers want to retain control because they see billing and charging as a source of competitive differentiation. Second, an equal number have BSS environments so confusing that they do not want to outsource them until they understand how they work and what systems they tie into. As the chart below shows, both of those objections seem to be diminishing as carriers come to believe that engaging a partner can solve some of these problems, or at least that the cost and agility benefits outweigh whatever reservations they may have. FIGURE 4 Strong Benefits for New Delivery Models Q. How much do you expect to benefit from cloud-based or managed deployment of charging in each of the following areas? OPEX reduction by simplifying operations Greater agility leading to lower time-tomarket for new offers Increased flexible scalability CAPEX reduction through the move to a virtualized environment Modernization and adherence to corporate policy High and Maximum Benefit Moderate Benefit No or Low Benefit (%) Note: n = 71 Source: IDC survey performed for Amdocs, IDC Page 7

8 As usual, the top benefit of managed or as-a-service delivery is OPEX reduction, but CAPEX reduction also scores well in this question. In between are the DX benefits: agility, time to market, and scalability. Moving away from an in-house model can be a major disruption, which may be why managed delivery outranks as-a-service delivery in the previous graph: Carriers need help with implementing and administering the change. Managed service delivery can bring with it more business transformation assistance than pure cloud delivery. Consumer and Enterprise Priorities for Convergent Charging We asked carriers who had or were planning to implement convergent charging to tell us what capabilities they expected to enjoy. It turned out that they expected a lot. FIGURE 5 Much Expected from Converged Charging in the Consumer Market Q. For what new offers or capabilities are you planning to use your converged charging? To personalize offers to a greater extent To create single-bill relationships with customers To create better bundled offers To provide billing and charging capabilities to partners To launch sub-branded offerings for targeted customer segments To launch quality-of-service-based offerings (%) Note: N = 80 Source: IDC survey performed for Amdocs, IDC Page 8

9 Aside from personalization, three other goals have scores of 75% or more. These are very strong scores for features in the consumer and business markets: Single-bill relationships are typically demanded by enterprises, which require transparency and ease of administration for their communications services, but also have applications for family plans and multiplay bundles. Bundling and partner billing have broad applications for both markets, especially with the rise of hyperscale-style platforms that enable a whole ecosystem of partners to collaborate to provide value to a given customer base. Given these high-level results, we drilled down further into consumer and enterprise market preferences. Consumer Market Preferences for Convergent Charging That consumer offerings are shifting can be seen from the top two priorities among telcos that serve that market: Entertainment and mobile payments are essential, high growth areas for telcos. Not coincidentally, neither priority is a traditional telecom function IDC Page 9

10 FIGURE 6 Consumer Market Priorities: Entertainment, Payments, Self- Service Q. How much of a priority is each of the following convergent charging and billing capability to your consumer customers? Entertainment and payments the most prioritized offerings place new demands on convergent charging. Real-time charging for entertainment and gaming Mobile payments and other financial services ebill self-service and analysis Balance or allowance transfer or sale Roaming self-administration Bill shock prevention Shared data plans/family plans Bill on behalf/carrier billing Quality of Service control such as 'Turbo button'/bursting functionality (%) Very and extremely important Moderately important Not at all and slightly important Note: N = 80 Source: IDC survey performed for Amdocs, 2016 Entertainment and payments are exactly the types of digital services that carriers are prioritizing, and ones that place new demands on convergent charging systems. When we aggregate extremely, very, and moderately important scores, self-service e-billing, roaming self-administration, and billshock prevention emerge almost as important. Even turbo button functionality, a traditional enhanced charging feature, looks to be somewhat past its prime when extremely and very important scores are tallied, but jumps near the top when we add those who ranked it moderately important IDC Page 10

11 Enterprise Market Preferences for Convergent Charging Though fragmented, the enterprise market presents more potential for expansion into a market of converged ICT services than the consumer market, where many of the high-value services have been captured by over-the-top providers. We asked carriers what offerings were priorities in their enterprise market strategy, and then what capabilities needed to improve in order to best serve them. FIGURE 7 The Enterprise Market Also Expects Much Q. How much of a priority is each of the following offerings to your enterprise customers? Bring your own device support where the enterprise would split usage and payments with its employees Media and content offerings On-demand videoconferencing, collaboration, etc White-labelled or pass-through services from third parties, for example Microsoft Office 365 or SAP Integration with enterprise mobility management platforms Bill on behalf/carrier billing Multi-provider bundling where partner services are being sold to customers along with your own services Multiuser data plans (%) Very and extremely important Moderately important Not at all and slightly important Note: N = 80 Source: IDC survey performed for Amdocs, IDC Page 11

12 The top scorer split billing that would support personal and enterprise usage on a single device addresses a traditional enterprise mobility management market that is receptive to carrier partners, as does the choice for integration with enterprise mobility management platforms. The other top offerings lie more outside the traditional telco realm: As with the consumer market, media and content offerings are highly desired, followed immediately by enterprise collaboration. The options for pass-through services and carrier billing point to the need for the enterprise services telco to manage a much more complex partner and customer ecosystem than it has to date, with enablement of multi-provider service bundling, as well as revenue recognition, for each partner in the ecosystem. These and related requirements suggest that carriers will need to substantially upgrade their charging environments for the enterprise market. In fact, we see that the need for enterprise-related charging improvements is substantial: 2017 IDC Page 12

13 FIGURE 8 Enterprise Systems: Much-Needed Improvement Q. How much does each of the following systems need to improve in order to serve enterprise markets better? Integrating with enterprise-specific application provisioning ebill self-service and analysis Single bill/unified visibility for all services Exposing capabilities and microservices to customers and third parties via APIs or SDKs Real-time visibility into charges and usage Offering split billing to differentiate personal and business payments The ability to handle billing settlements for ecosystem partners Enabling per-user control of quality of service Support variable/peak pricing Support for flexible and complex account hierarchies (%) Quite a lot and significantly Fairly Not at all and very little Note: N = 80 Source: IDC survey performed for Amdocs, 2016 This graph shows a flat distribution of high priority responses in other words, every improvement is a priority. From self-service, real-time, and single-bill capabilities, to capabilities that are essential to enabling ecosystem models such as integration with application provisioning and microservice exposure, it is clear that billing and charging environments need to substantially change in order to support the enterprise market. This environment of strong need argues for a large-scale transformation of the BSS environment: If not rip-and-replace, then a concerted technical transformation must be a priority, so that the technology can serve the goals of digital transformation IDC Page 13

14 Conclusion: Convergent Charging as Support for Digital Transformation Our group of 80 carriers has spoken: personalization requires speed, and speed requires real-time capabilities. A robust charging environment with the right capabilities can not only save on OPEX and CAPEX, but can enable significant increases in revenue as well. Convergent charging can serve the consumer market by adding capabilities to accommodate new services, but likely needs a dramatic refit to support services for the enterprise market. The need for change is substantial. The need for change is substantial and cannot be met by technology alone; digital transformation requires technology be made to serve the business. That need cannot be met by technology alone. As we noted at the beginning of this paper, digital transformation requires not only technology, but also that the technology be made to serve the business. In order to do that, carriers will need help with the business as well: They will need help on process reform, retraining or reducing staff, decomposing KPIs to make business change more meaningful to all levels of the organization, assistance in managing a vastly more complicated partner ecosystem, and more besides. Technology selections are no longer only that, but also partner selections in an effort to improve the whole business. About Amdocs Amdocs provides customer experience software solutions and services to communications, entertainment, and media service providers. For more than 30 years, Amdocs has delivered its solutions, which include business support systems, operations support systems, network control and optimization, coupled with professional and managed services aimed at streamlining complex operating environments, reducing costs, and expediting time to market for new products and services. Amdocs considers its experience in successfully delivering complex software projects in the communications environment as its key capability. In comparison to general IT vendors, Amdocs emphasizes its service-provideroriented mindset the company has been focused exclusively on serving the service provider industry throughout its existence, supporting that industry's significant transformational processes IDC Page 14

15 In its approach to charging, Amdocs leverages its knowledge of the service provider business environment, processes, and operational constraints, as well as telecommunications industry regulatory issues. Amdocs views these core capabilities as necessary to ensure a successful transition to a digital, software-led telecom business, while at the same time maintaining existing SLAs and customer satisfaction levels. The Amdocs Convergent Charging and Billing solution:» Supports digital transformation with a single, convergent charging system for all lines of business, customer segments and payment types» Utilizes a single real-time, 3GPP Rel-13 compliant OCS for online and offline charging and integrated PCC solution with a single set of integrated products» Reduces total cost of ownership using NoSQL technology in event processing while maintaining high benchmarked performance levels» Is deployed in fully virtualized environments and private cloud, enabling dynamic allocation of OCS resources and 24x7 charging availability» Increases revenues through innovative business and monetization models with rapid time to market of new customer offerings.» Network agnostic, supporting 3G, 4G and 5G networks as well as new network services such as VoLTE and ViLTE» Delivers real-time charging performance and scalability in a single carrier-grade solution Amdocs and its 25,000 employees serve customers in over 90 countries. Listed on the NASDAQ Global Select Market, Amdocs had revenue of $3.7 billion in fiscal IDC Page 15

16 About IDC International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make factbased decisions on technology purchases and business strategy. More than 1,100 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries worldwide. For 50 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. IDC CEMA Male namesti Praha 1 Czech Republic Copyright Notice: External Publication of IDC Information and Data Any IDC information that is to be used in advertising, press releases, or promotional materials requires prior written approval from the appropriate IDC vice president or country manager. A draft of the proposed document should accompany any such request. IDC reserves the right to deny approval of external usage for any reason. Copyright 2017 IDC. Reproduction without written permission is completely forbidden IDC. Page 16