The Key Elements of a Digital Service Definition

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1 WHITE PAPER: The Key Elements of a Digital Definition What will you learn? What are the responsibilities and roles of each party involved in the digital service value chain? What can CSPs offer in addition to digital services to create more revenue opportunity? What are the four key elements of a digital service definition? Who should control the service? The Key Elements of a Digital Definition The Ecosystem The increasing amount of data traffic in telecom networks coupled with the strengthening presence of new players in the market (especially OTT) has caused many telecom operators to reassess their business strategies. This is how the subject of digital services finds its way into the top priorities that service providers need to address in the coming years. The area of digital services encompasses the complex revenue chains of multiple business partners. Making these partnerships valuable requires high innovation that can be achieved by enabling small companies and developers to connect to the service chain easily and to test ideas with low cost. Some companies, e.g. Deutsche Telekom, even create dedicated portals to provide better support for innovation ( and these initiatives are claimed to be very successful. Such activities stimulate the creation of an ecosystem that involves a large community of developers and other providers as partners. The specifics of digital services and the surrounding ecosystem allow creating many unpredictable services with various characteristics, and created from elements delivered by multiple parties. It will therefore not be true that for each digital service a telecom operator is responsible for the business relationship with customers and / or billing, one partner for the content and another one for support. For each service these roles may be different. Also, the flow of money between the involved partners may vary and include models such as revenue sharing, cost sharing, split revenues, invoicing and many others. 4 Elements of a Digital Definition Managing digital services includes elements such as: service models, product models, offerings and revenue sharing models. These are the quintessential components required to define a digital service. The defines which items are composing the service and which party is responsible for delivering each of its elements. The describes what the end customer purchases and the Offering describes how it will be sold. The Revenue Share model defines all elements related to the flow of money between partners. 1

2 WHITE PAPER: The Key Elements of a Digital Definition Offering Revenue Share Figure 1. Four elements of digital service definition. Presenting all these elements together represents the various layers of a digital service definition and each element can be managed by a different party or can even be virtual. Nevertheless, providing the capability to manage such services would help in the development of digital services by automatically adding the possibility to manage service assurance or fulfillment, all in a distributed, multi-party environment. Digital s require a high degree of flexibility, and thus it should be possible to allow partners to define s as a configuration. From a telecom operator s perspective it can be perceived as a kind of service catalog. The TM Forum CFS-RFS concept can be applied here. The is the most important part in defining a service chain. Its creation requires defining a Customer Facing (CFS) as a composition of Resource Facing s (RFS) or other CFSs. During the definition of the CFS, readily available service building blocks (Resource Facing Specifications) can be used. RFS Specifications can be provided by various involved parties. They may relate to functions such as billing, settlement handling or trouble management, together with an appropriate set of operational and management interfaces, as well as technical characteristics. While defining a it is necessary to decide on which party is to deliver each service building block and how they will all interact with other elements. Of course, this definition needs to be backed up with real work related to the development of those service building blocks and interfaces. Based on TMF s concept, the is built using existing service blocks (the aforementioned Resource Facing Specifications (RFSS), and then by creating instances of these RFSSs (which then become Resource Facing s (RFS)). 2

3 WHITE PAPER: The Key Elements of a Digital Definition So in this context Resource Facing s are instances of Resource Facing Specifications, or in other words RFS means using a service building block (RFSS) in one of the s (such as e.g. a Freemium offer involving partners or B2B + B2C offers involving partners). Finally, the created in the service catalog leads to creating a Customer Facing. It aggregates all Resource Facing s and represents a technical product, which is then used to define a commercial product in the product catalog. In the end the product specification in the product catalog will link directly to the CFSs defined in the service catalog. <<CFS>> Freemium bike rental service Delivery SHINE SHINE Bikes rental Bikes service SHINE* domain domain * SHINE - a mobile operator Figure 2. Sample service model definition. Once a is defined, all systems responsible for delivering service building blocks have to be configured to support the newly defined services. Each capability used in the requires that certain technical configuration has to be done in various systems (such as fulfillment, identity management, trouble management, and mediation or billing tools). To make it consistent and compliant in a multi-partner environment, the configuration of these elements should be controlled by a Lifecycle system, managing the workflow, as well as testing and acceptance of flows internally and between partners. In case some RFS in the are delivered by partners, the configuration on their side should be controlled by a Lifecycle system. The question remains as to where this system should reside, but the answer is not clear. Depending on the scenario, it can be delivered by the telecom operator, its partner or it can be an independent platform which all parties must use to manage the cooperation. 3

4 WHITE PAPER: The Key Elements of a Digital Definition <<CFS>> Freemium bike rental service Delivery CSP CSP Bikes rental Bikes service CSP* domain domain *CSP - a mobile operator Lifecycle Digital Convergent Billing Catalog Customer Information Offering Revenue Share Dashboard Digital Manager Catalog Revenue Share Reporting Monitoring Catalog Information Reseller Provider Fulfillment Level Agreement Figure 3. Lifecycle processes controlling the configuration of systems involved in the service model. 4

5 WHITE PAPER: The Key Elements of a Digital Definition The is a product specification related to the available s, enriched with all the characteristics needed to make it part of an operator s commercial offer, and defines a final product delivered to end customers. s (such as resellers) become part of the revenue share chain, but are not actual product users. Offering An Offering defines how to sell a product to the end customer (through which channels, in what locations, to whom, at what price etc.). Such a definition may be simple or may contain many different products packed into a bundle. offerings are managed and defined by the same party that sells the product to end customers. Revenue Share The Revenue Share defines the flow of money between partners involved in delivering a digital service. Examples include revenue sharing, split revenue, or cash out. It also specifies which parties are involved in the settlement process, which one manages business relationships with customers, who issues invoices for customers, provides a product/service to customers, manages revenue sharing (sending settlements or invoices to partners) etc. There is no universal response to which party should manage such settlements, however, based on the fact that CSPs have a lot of experience in settlement management, we can assume that they would be the ones managing it (and making a profit from such a service). As in the case of s, the configuration of all systems related to settlement management should be controlled by a Lifecycle system. capabilities As an addition to digital services, CSPs may offer ready-to-use service building blocks (RFSS) which can be used in some s the diagram below illustrates some examples e.g. in some s an existing (legacy) billing system of the operator can be used, while in other cases a partner may provide this capability (including billing of end customers or billing on the behalf of a partner). Billing Handing Convergent Billing Catalog Customer Information Figure 4. Sample set of service building blocks RFSS. 5

6 WHITE PAPER: The Key Elements of a Digital Definition In order to prepare for the digital services era, CSPs should not only think about transforming their IT environments. Because it is not certain whether or not the software they have will be used to control digital services. A set of well-defined capabilities to be used as elements of s, as depicted in the diagram above, may be one of the most important roles of CSPs in the digital service. E.g. the billing capability may represent not just the technical interface and billing system owned by the CSP, but also the services behind it, delivered by billing departments. The list of capabilities may differ, depending on the CSP s capabilities and strategy. In some cases it may contain only the connectivity with the guaranteed quality of service (which on the other hand could be a very valuable element of many digital services). Who should control the service? In order to prepare for the digital services era, CSPs should not only think about transforming their IT environments. Because it is not certain whether or not the software they have will even be used to control any digital services. In many cases this will be out of CSPs control, e.g. offered in an independent cloud or controlled by some OTT players, who will only be buying connectivity and some additional services from CSPs. In that case it would be better for CSPs to focus on preparing their IT systems for exposing their capabilities to partners. The second option is that CSPs will also provide platforms to manage the full chain of digital services, encompassing the,, Offerings and Revenue Share. This model is a bit more complicated as it may additionally require some organizational changes, such as creating special departments responsible for managing digital services for third parties (which in many cases will include direct competitors of the telecom operator). Independent departments of this kind have already been created in some telecom companies, acting on the telecom group level, and managing M2M business. These could potentially evolve into digital service organization units in the future. Summary Four elements define the digital service s, s, Offering s and Revenue Sharing s. However, it doesn t mean that all these definitions will always be configured in a specific place, as it has been proposed earlier in this article. In many cases the digital service definition will be distributed among partners involved in delivering the service, and there may even be no direct business relationship between these parties. This is the case of Skype calls - for the end user Skype and a CSP provide voice connectivity over IP as a consistent service, but they do not cooperate or have any direct interfaces between them. 6

7 WHITE PAPER: The Key Elements of a Digital Definition Usage of Lifecycle for managing the lifecycle and configuration of distributed services is important for future cooperation between partners in the digital service value chain. But for many other services such direct links between involved parties already exist e.g. some app stores use direct billing capabilities exposed by operators, so that end users are charged for applications in their phone bill. Usage of Lifecycle for managing the lifecycle and configuration of distributed services is important for future cooperation between partners in the digital service value chain. High automation is needed to efficiently integrate multiple systems engaged in building the final service and managing the changes throughout its lifecycle. Aside from the changes related to IT systems (such as BSS and OSS) and technologies (such as data centers), which are necessary to effectively support digital services, there are many other questions which remain unanswered. Should the entire service be managed somewhere comprehensively? Which party should be responsible? Is the platform for managing digital services a necessity or should the definition remain distributed without any platforms supporting it? Looking at how fast the digital service landscape is developing, I feel we will be able to obtain answers soon enough. 7

8 If you have any questions or comments regarding this white paper, please contact us using the button below. Send an Comarch Headquarters Al. Jana Pawla II 39 a Krakow Poland phone: fax: info@comarch.com Comarch Inc. 10 W 35th Street Chicago, IL United States phone: fax: info@comarch.com Comarch AG Chemnitzer Str Dresden Germany phone: fax: info@comarch.de Comarch UK Ltd One Kingdom Street Paddington Central London W2 6BD phone: +44 (0) fax: +44 (0) Poland Bielsko-Biala, Wroclaw, Gdansk, Katowice, Krakow, Lodz, Lublin, Poznan, Warsaw Austria Belgium China Finland France Germany Panama Russia Switzerland UAE UK Ukraine USA Vietnam Kirchbichl, Wien Brussels Shanghai Espoo Lille, Montbonnet-Saint Martin, Paris Dresden, Frankfurt/Main, Düsseldorf, München Panama City Moscow Buchs Dubai London Kiev, Lviv Chicago Ho Chi Minh City Comarch is a provider of complete IT solutions for telecoms. Since 1993 the company has helped CSPs on 4 continents optimize costs, increase business efficiency and transform BSS/OSS operations. Comarch solutions combine rich out-of-the-box functionalities with high configurability and are complemented with a range of services. The company s flexible project approach and a variety of deployment models help telecoms make networks smarter, improve customer experience and quickly launch digital services, such as cloud and M2M. This strategy has earned Comarch the trust and loyalty of its clients, including the world s leading CSPs: Vodafone, T-Mobile, Telefónica, E-Plus, KPN and MTS. Comarch Digital s site Learn more >> More information: telecoms.comarch.com. Comarch Spółka Akcyjna with its registered seat in Kraków at Aleja Jana Pawła II 39A, entered in the National Court Register kept by the District Court for Kraków-Śródmieście in Kraków, the 11th Commercial Division of the National Court Register under no. KRS The share capital amounts to 8,051, zł. The share capital was fully paid, NIP Copyright Comarch All Rights Reserved. No part of this document may be reproduced in any form without the prior written consent of Comarch. Comarch reserves the right to revise this document and to make changes in the content from time to time without notice. Comarch may make improvements and/or changes to the product(s) and/or programs described in this document any time. The trademarks and service marks of Comarch are the exclusive property of Comarch, and may not be used without permission. All other marks are the property of their respective owners. EN