Enabling digital economy revenue streams: what software do service providers need?

Transcription

1 European Summit 2013: Enabling innovation, driving profitability Enabling digital economy revenue streams: what software do service providers need? 10 October 2013 Larry Goldman EVENT PARTNER:

2 2 Digital economy the new frontier Digital economy depends upon software The old business still matters for the digital economy How to put the right focus on software for the digital economy

3 CSP revenue (USD billions) Percentage of revenue Total revenue (USD billion) Percentage of revneue 3 Digital economy is important because of growth Telecoms financials, Digital economy financials, (five leading companies) 2,500 40% % 35% % 2,000 30% % 1,500 25% 80 25% 20% 20% 1,000 15% 60 15% % 40 10% 5% 20 5% % % Revenue EBITDA margin Capex Revenue EBITDA margin R&D+Capex

4 In the digital economy, new companies offer a range of goods and services enabled by broadband networks Digital-economy focused Old economy partners 4

5 5 This just in shop from your couch Automatic purchasing of goods advertised in electronic publications Eliminating extra steps in the shopping process One key player co-ordinating a number of related retail and media players There are plans to extend this to TV ads Announced by MasterCard in the USA on 8 October 2013 ShopThis! With MasterPass Source: MasterCard

6 6 Two key differences in the digital economy Telecoms industry Human support call centres, retail stores Telco directly supplies the consumer Digital economy All digital interfaces Two or more suppliers Consumer Supplier (telco) Consumer Supplier (telco) Supplier (digital economy focus) Supplier (old economy focus)

7 Network operators have key advantages in the digital economy, embodied in software systems 7 Established customer relationships Established, ongoing communications Offers accepted and rejected Where they live Established billing relationships Customers send money on a recurring basis No credit check necessary Applies to prepaid as well as postpaid Massive amounts of behavioural data Who they call and when When they access the internet and what they visit When sleeping and awake Naughty or nice

8 In the digital economy CSPs will have to open up OSS and BSS to co-operate with partners The digital interfaces of the digital economy make the software the primary means to enable the flow of commerce and payment. Goods and services provided by partners CSPmarketed CSP-billed 8 In some cases, the operator will have the end-customer relationship in other cases, a partner will have the endcustomer relationship. CSP-brokered CSP-enabled CSP-provided goods and services CSP-provided communications channel

9 9 The digital economy mindset The gateway to faster growth A shift to supporting customers in partnership with other companies A shift to all digital interfaces Key advantages embodied in software A big change in the way of doing business

10 Mobile voice Mobile data PSTN Broadband Business services Service revenue (USD billion) Digital economy is a big change, meanwhile operators need to protect the base Mobile voice is the dominant service Revenue by service type, Overall shift to data is slow Share of market for consumer voice and data, % 80% 70% 60% 50% 40% 30% 20% 10 10% 0% Voice Data

11 CSP revenue (USD billions) Percentage of revenue Current profit pressures force operators to get more efficient Declining profits force operators to focus on short-term issues, threating investments and attention given to digital economy initiatives As a result, CSPs are forced to improve the efficiency of their present operations Software systems are increasingly the basis for improved operational efficiency Telecoms financials, ,500 2,000 1,500 1,000 40% 35% 30% 25% 20% 15% % 5% Revenue EBITDA margin Capex 0%

12 12 Software is bizarrely complex needs to get simpler Telecoms software market taxonomy Professional services Business consulting Design consulting Product-related services Systems integration Custom development Outsourced operations Hosted managed services Revenue management Billing Service delivery platforms Mobile content management Customer care Customer interaction Service fulfillment Order management Service assurance Service management Prepaid Postpaid Convergent Partner and interconnect Telecoms application servers Policy management Subscriber data management Customer relationship management Subscriber management Device management Inventory management Activation Engineering tools Fault and event management Performance monitoring Workforce automation Probe systems Business optimisation Network management systems Mediation Mobile Residential broadband Business data services PSTN

13 Business focus on software drive cost out of existing operations, innovate for the digital economy Total IT spend for a USD10 billion revenue operator will be USD million Efficiency improvements come from increased used of commercial products and outsourcing Innovation comes from internal IT and custom projects Type of IT spend, 2012 Systems for telecom 15% Generic apps & systems 17% Products 11% Product rel services 9% Managed Services 14% 13 Simplify Innovate Internal IT staff 16% Custom Services 18%

14 Introduction: Market overview and key issues Focus on a small number of software issues to prepare for a successful move into the digital economy 14 Business focus 1. Protect the base 2. Get more efficient 3. Digital economy mindset 4. Focus on key enablers Approaches Improve customer experience Better understanding of customers Reduce opex protect margins Reduce network costs Consistent methods that can be automated B B C focus Build on established relationships Find partners Let IT take care of software efficiency Stay involved in the things with the most impact Software methods Customer experience management Analytics Simplify and drive out cost Software controlled networking Analytics Use your data analytics Digital economy software open interfaces Software innovation Customer experience mgt Analytics big data Software controlled networking Digital economy software

15 To prepare for a digital economy, focus on a small set of software strategies that make the most impact 15 Business drivers Driving subscriber and revenue growth Software strategies CEM Software systems Revenue management Customer care Innovation strategies: positioning for the digital economy Maximising financial performance Protecting core service revenue Improving the customer experience Analytics Software controlled networking Service assurance Service fulfillment SDP Digital economy NMS

16 A sign from above that customer experience is important 16

17 The customer lifecycle journey comprises five phases, but join, on-board and support are most important 17 Inquire and evaluate Online, window shop, talk to family/friends Join Technician visits home, go to store, self-serve On-board Set up services, payment, training Support Web chat, online communities, call centre Renew Proactive contact, confirm, promote relevant new offers Evaluate Renew Renew Evaluate Support Support Join Join On- On-board board

18 18 Key software components are used to improve the customer experience CEM touchpoints mapped to Analysys Mason s software market taxonomy Join On-board Support Customer interaction Order management Inventory management Activation Policy management Content management Billing Partner and interconnect Service management Customer interaction CRM Performance monitoring Fault/event management Probe systems Workforce automation Engineering tools Customer acquisition Customer retention

19 Big data and analytics improve the current business and provide a foundation for the digital economy Super-charge established operations by providing deeper insight into the current processes to make better decisions. Expand established revenue streams a sub-set of the above to provide more targeted, timely, context-aware offers to customers to encourage them to spend more. Create new revenue streams such as selling of customer insights, providing data analysis for M2M applications or offering targeted advertising. Create new revenue streams Business demands Data Analytics tools Expand established revenue streams Super-charge established operations 19

20 Software controlled networking the means to drive out cost and open the network Landscape of increasing software control in the network 20 Increasing software control in the network Legacy IN IMS architecture Telecoms application servers (TAS, NG-IN) Policy control Cloud computing (IaaS, PaaS and SaaS) SON NFV SDN Key drivers Prepaid services, GSM IP-NGN, EPC, OCS Data services, SOA, RCS-e Mobile data, diameter routing, cost Content (apps, video), OTT, virtualisation HetNets, FMC, network virtualisation, cost Circuit switching PSTN is a persistent legacy particularly in incumbents Packet switching

21 In the digital economy CSPs will have to open up OSS and BSS to co-operate with partners The digital interfaces of the digital economy make the software the primary means to enable the flow of commerce and payment. Goods and services provided by partners CSPmarketed CSP-billed 21 In some cases, the operator will have the end-customer relationship in other cases, a partner will have the endcustomer relationship. CSP-brokered CSP-enabled CSP-provided goods and services CSP-provided communications channel

22 Success in the digital economy depends upon the proper focus on software 22 Business focus 1. Protect the base Approaches Retain the customer base that funds the present and can be exploited for the future Software methods Customer experience Analytics 2. Get more efficient Ensure sufficient profits to invest in the digital economy Simplify the software Virtualise the network 3. Digital economy mindset 4. Focus on key enablers Fundamental shifts in the way the business operates Simplify the present Innovate in key areas Innovate with software Digital interfaces Leverage customer relations Customer experience mgt Analytics big data Software controlled networking Digital economy software

23 23 Contact details Larry Goldman Head of Telecoms Software Boston Tel: Fax: Cambridge Tel: +44 (0) Fax: +44 (0) Dubai Tel: +971 (0) Fax: +971 (0) Dublin Tel: +353 (0) Fax: +353 (0) Edinburgh Tel: +44 (0) Fax: +44 (0) London Tel: +44 (0) Fax: +44 (0) Madrid Tel: Fax: Manchester Tel: +44 (0) Fax: +44 (0) Milan Tel: Fax: New Delhi Tel: Paris Tel: +33 (0) Fax: +33 (0) Johannesburg Tel: Fax: Singapore Tel: Fax:

24 24 Second Breakout Stream 4:15-5:00 Breakout streams: choose one to attend The future of VoIP: VoLTE, RCS, Web RTC and why they matter Stephen Sale, Principal Analyst, Voice and Messaging Crystal Ballroom (this main room) Serving SMEs: how operators can move from being communications providers to being technology providers Steve Hilton, Principal Analyst, Enterprise and Patrick Rusby, Research Analyst, SME Strategies York Suite Multi-play bundling building successful offerings Martin Scott, Principal Analyst and Cesar Bachelet, Senior Analyst, Fixed Broadband and Media Windsor Suite