Digital Ecosystems for Telcos

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1 Digital Ecosystems for Telcos SAP TELCO DAY Vienna October 1, 2015

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12 Digital revolution is on its way 93% of executives believe digital technologies will disrupt their business over the next 12 months 74% of executives claim to have a digital strategy Source : Forrester/Russell Reynolds Digital Business executive survey, 2014 Source : Forrester/Russell Reynolds Digital Business executive survey, 2014 Digital s potential is enormous. It is changing how we conduct our business, tell our stories and engage consumers. It s a rapidly changing landscape and a big part of our future. Mark Parker, President and CEO of Nike Inc.,

13 Market context generating several significant evolutions Switch from products to services offerings Switch from traditional services to cloud services Switch from B2B to B2C relationships Switch from IT on premises to XaaS Switch from time cycles to real-time Switch from service providing to ecosystem service aggregating 90% of total turnover generated through APIs* 13 *Source : Forbes, July 2014

14 Services Products + Services DIGITAL ECO SYSTEM MANAGEMENT Bundles B2B2X DIGITAL TRANSFORMATION FIRST WAVE Products B2B B2B2X B2C 14

15 Digital breakthrough drives many use cases in various industries focused around cloud billing and third party service orchestration capabilities Consumer electronics Automotive Home Automation IoT devices and application bundling Implementation of third party applications in wearable devices Bundle services using smartwatches geolocation Connected in-car services billing (traffic app, music streaming ) Implementation, onboarding and management of third party connected services Manage multiple customers portfolio and subscriptions (water, electricity, digital services ) Connected home services billing (connected CCTV, home automation devices) Utilities Meter readings, invoicing, payment tracking, and money collection handling the interaction with IT business partners Healthcare Gather medical data, diagnosis and public health findings on one platform to leverage on digital to improve critical patient care and quality of life 15

16 Digital Ecosystem Management (DEM) platforms provide companies the possibility to transform their businesses by creating, orchestrating and monetizing new services through the cloud DEM Engine BILLING FINANCE Aggregat or SERVICE AGGREGATOR PRODUCTS B2B & B2C END-CUSTOMERS CUSTOMERS ORDERS Billing Convergent content, data and voice services billing Mediation, rating, invoicing and invoice formatting capabilities Interconnection with multiple real-time interfaces (credit cards, PayPal, bank transfer ) Financ e Reconciling payments to customer accounts and invoices Triggering collection process Products Products and services bundling Legacy and next generation services pricing Customers End-to-end customer view Customer information management Customer self-care Consolidated customer inventory Orders DEM Engine Functionality for each party Telco Automotive Content & Media Utilities Finance Retailers 16 Healthcare Order capture Order management Order placement and status check

17 This situation represents a huge market opportunity for DEM Key success factors of DEM platform to answer market needs Scalable A Pay-as-yougrow pricing scheme Ope n Collaboration with 3rd party service providers with wide range of available business models Auto-managed No need to dedicate people/time to operate the system. No more day-to-day operations or maintenance issues Flexible / Real-time Client can add services on the fly as billing system is always up to date. Cost efficient Relatively cheap solutions, mainly OPEX based : no more upfront investment for the client Fast time-to-market The client can deliver and monetize services quickly 17 A significant market growth in the coming years Value of Cloud Billing Market ($ Bn ) 4, % CAGR : 32% 9, Cloud Billing market is only a small part of overall DEM market which is expected to generate more than $100 Bn Source : Gartner, IDC, BearingPoint analysis, Q Source: Markets and Markets, August 2013

18 Market context Telecom operators have a high legitimacy to address this untapped market but their existing systems are not sufficient Telecom operators have a strong legitimacy both on billing capabilities and on cloud services Their existing systems do however not enable Digital Ecosystem Management currently Telco are part of the most legitimate players on billing services: Operating a business support system (product/customer/order management and billing) is part of the basics of a Telco business Billing is one of the biggest assets of telecom operators as they can charge clients on hundreds of different products and with complex operations (several plans, add-ons, itemized bill, etc.) With B2B customers, Telco's also have to deal with huge mobile fleet and layers of services. The ability to bill mass market with millions of clients is a great asset that can be leveraged to diversify revenues streams Telco have as well strong capabilities in terms of cloud services : IaaS PaaS Telco billing and IT systems are often complex and not agile enough to be opened to third parties. This capability to be opened to third parties is critical to enable B2B2X services in a repeatable economic approach Telco need to position themselves quickly on this untapped market An off the shelf solution in addition to existing systems is hence needed Existing operator IT system New Cloud platform (PaaS) Corporation Aggregator Startup Current customers Potential new customers 18

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20 CUSTOMERS CUSTOMERS Channel 1 Channel 2 CUSTOMERS Channel 1 Channel 2 CUSTOMERS Channel 1 Channel 2 CUSTOMERS Channel 1 Channel 2 CUSTOMERS Channel 1 Channel 2 CUSTOMERS Channel 1 Channel 2 CONSUMER BUSINESS LOW-COST xvno xvno xvno MERCHANT INSURANCE ehealth ECOSYSTEM ENABLEMENT PLATFORM Concept-to-Cash (C2C) Aggregation PRODUCTS CUSTOMERS ORDERS BILLING FINANCE Fixed Line Broadband Mobile Voice/Data IPTV Cloud Services CLEAN & IRON LOGISTICS Blue & White off&online

21 BT case BT may provide a wide range of OPEX based business models to its clients Usage-based Pricing based on dedicated metrics Number of requests on the platform Transaction fee Revenue sharing based on turnover Freemium Time based freemium : Free for a defined period and charged once the period is reached Volume based freemium : Free for a defined volume of requests and charged once the threshold is reached Flat rate Fixed amount for a given period of time License / maintenance model Yearly / monthly subscription model Hybrid model Minimum set up fee to access to the service Then, usage-based pricing is applied 21

22 What s next? What are then the technical needs to integrate a new partner in the ecosystem and what are the associated sources of revenues for you? 2 main actions technically required Platform configuration Integration with customer IT DEM 3 types of revenues both for you Customer usage based fees (that you define) Integration services Consulting services 22

23 What s next? 3 major steps to position your company on the market Core platform integration and configuration Integration and configuration of the core platform (VSP) and the first tenant VSO in agile mode in your cloud: Offer Time-To-Market Inclusion in the Time-To-Market process to launch the offer: Marketing offer definition Commercial processes definition Sales forces training Joined Go-To-Market & Partnerships Preparation of a joint Go-To-Market with a first few partners 3 months before launch: Partners identification Contract negotiation and signature Common launch preparation 23

24 You push the button, we do the rest. George Eastman

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