REVENUE MANAGEMENT SYSTEMS: WORLDWIDE FORECAST

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1 RESEARCH FORECAST REPORT REVENUE MANAGEMENT SYSTEMS: WORLDWIDE FORECAST John Abraham Analysys Mason Limited 2017 analysysmason.com

2 About this report This report provides forecasts for communications service provider (CSP) spending on telecoms-specific revenue management software systems. It provides details of how spending will vary by delivery type, service type and region across different sub-segments. The report also provides recommendations for how vendors and CSPs can approach the changing demands of telecoms customer care software. It is based on several sources, including: Analysys Mason s strategy reports and other analysis developed during the past year interviews with CSPs and vendors worldwide. GEOGRAPHICAL COVERAGE Worldwide Central and Eastern Europe Developed Asia Pacific Emerging Asia Pacific Latin America Middle East and North Africa North America Sub-Saharan Africa Western Europe SUB-SEGMENT COVERAGE Billing and charging Policy management Mediation Partner management KEY QUESTIONS ANSWERED IN THIS REPORT What is the overall size of the telecoms revenue management software market and what will be the key drivers of growth in the next 5 years? How will spending vary across different sub-segments of the revenue management market? How will spending vary across different regions and service type? What are the major drivers and inhibitors that will affect growth rates of CSP spending on revenue management systems? WHO NEEDS TO READ THIS REPORT Vendor strategy teams that need to understand where growth is slowing and where it is increasing according to different sub-segment categories. Product management teams responsible for feature functionality and geographical focus, and product marketing teams responsible for growth. Professional services vendors that want to understand the growth opportunities for the next 5 years. CSPs that are planning digital transformation journeys and want to understand key areas that they should focus on. 1 Revenue management professional services data has been restated this year. Refer to slide 40 for more information. Analysys Mason Limited

3 Three key trends expected during Microservices-based cloud-native architecture will become a key requirement for new deployments. CSPs are evaluating, and in the early stages of adopting, the microservicesbased architecture that Internet companies use. This architecture relies on a suite of multiple, independently deployable, light-weight self-contained services. CSP spending on SaaS systems will increase during the forecast period, albeit from a very small base. SaaS-based models offer CSPs many advantages such as scalable platforms, lower cost of ownership and flexible architecture. Smaller CSPs or niche use cases within large CSPs are the best candidates for SaaS-based revenue management platforms in the medium term. CSPs will favour large-footprint digital transformations with a single vendor offering products and services. CSPs are increasingly preferring product vendors that provide the professional services for new revenue management deployments or transformation projects. This is driven mainly by CSP concerns about cost, timeliness and product roadmap evolution. Analysys Mason Limited

4 Recommendations for CSPs 1 CSPs should ensure that their solutions architecture can support cloud-native deployments for new revenue management systems. CSP revenue management software architecture is monolithic and is considered to be too slow, complex and inefficient to support the rapid pace of change in the digital economy. In order to build infrastructure that is comparable to that of webscale digital service providers such as Netflix and Google, CSPs should prioritise investments in cloud-native support systems. 2 CSPs should address emerging revenue opportunities by providing support for new multi-step value chains involving different settlement models to reach new customers in new markets. In order for CSPs to capitalise on emerging revenue opportunities, they must secure new partnerships, and implement multi-step value chains and dynamic settlement models. CSPs should have the support systems necessary to leverage their infrastructure and connectivity to bring on board new partners and become a platform for enabling new types of partner-led services. 3 MVNOs and smaller CSPs that are considering upgrading or transforming their billing systems should consider SaaS-based billing system deployments. SaaS offers several benefits for smaller CSPs, even though widespread adoption of SaaS-based billing services is not expected in the near future. Smaller CSPs and MVNOs are most likely to want to transform their billing systems, primarily due to their simplified organisation structure, simplified requirements and their focus on cost control. Analysys Mason Limited

5 Recommendations for vendors 1 CSPs are increasingly demanding next-generation cloud-native architecture for new deployments of billing and charging systems. Vendors need to prioritise rearchitecting their solutions to address this opportunity. A large proportion of CSP revenue management deployments continue to be on-premises, but these solutions are too cumbersome and slow to support digital economy needs. Most CSPs are expected to adopt a mix of managed services and cloud-native approaches when transforming their support systems, with some of the larger Tier 1 CSPs expected to take the lead in extensive cloud-native deployments in the medium term. 2 CSPs increasingly favour large-footprint deployment with related services, and vendors should respond by focusing on developing a strong services story around their products, either through partnership or acquisition. Product vendors are increasingly finding favour within CSPs for providing the professional services around any new revenue management deployments or transformation, driven mainly by CSP concerns around cost and timeliness. Vendors should invest in developing their support service credentials and be prepared to work within a multivendor environment. 3 In the medium to long term, cloud-based deployment models will disrupt existing business models and go-to market strategies for large vendors and shift significant revenue to a more-predictable subscription model. Any widespread shift away from a capex-heavy model towards standardised, cloud-based platforms will lead to a substantial drop in revenue for leading vendors of revenue management solutions. This is only expected to happen in the long term, but vendors should take steps to prepare for an eventual paradigm shift in revenue models. Analysys Mason Limited

6 CONTENTS EXECUTIVE SUMMARY RECOMMENDATIONS FORECAST MARKET DRIVERS AND INHIBITORS BUSINESS ENVIRONMENT MARKET DEFINITION ABOUT THE AUTHOR AND ANALYSYS MASON Analysys Mason Limited

7 About the author John Abraham (Senior Analyst) is a senior analyst within Analysys Mason's Telecoms Software and Networks Research team. He leads our Revenue Management programme and our research into digital experience for monetisation platforms, as part of the Digital Experience programme. John also contributes to our research into cloud-native architecture models, which is covered as part of the Software-Controlled Networking programme. John has been part of the telecoms industry since 2006, and joined Analysys Mason in early He has worked on a range of telco projects for operators in Africa, Europe, India and the Middle East. Before joining Analysys Mason, he worked for several years for a BSS vendor and before that for Dell Inc in India. Analysys Mason Limited

8 Analysys Mason s consulting and research are uniquely positioned Analysys Mason s consulting services and research portfolio CONSULTING We deliver tangible benefits to clients across the telecoms industry: communications and digital service providers, vendors, financial and strategic investors, private equity and infrastructure funds, governments, regulators, broadcasters, and service and content providers Our sector specialists understand the distinct local challenges facing clients, in addition to the wider effects of global forces. We are future-focused and help clients understand the challenges and opportunities that new technology brings. RESEARCH Our dedicated team of analysts track and forecast the different services accessed by consumers and enterprises. We offer detailed insight into the software, infrastructure and technology delivering those services. Clients benefit from regular and timely intelligence, and direct access to analysts. Analysys Mason Limited

9 Research from Analysys Mason Analysys Mason Limited

10 Consulting from Analysys Mason Analysys Mason Limited

11 PUBLISHED BY ANALYSYS MASON LIMITED IN JULY 2017 Bush House North West Wing Aldwych London WC2B 4PJ UK Tel: +44 (0) Registered in England No Analysys Mason Limited All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means electronic, mechanical, photocopying, recording or otherwise without the prior written permission of the publisher. Figures and projections contained in this report are based on publicly available information only and are produced by the Research Division of Analysys Mason Limited independently of any client-specific work within Analysys Mason Limited. The opinions expressed are those of the stated authors only. Analysys Mason Limited recognises that many terms appearing in this report are proprietary; all such trademarks are acknowledged and every effort has been made to indicate them by the normal UK publishing practice of capitalisation. However, the presence of a term, in whatever form, does not affect its legal status as a trademark. Analysys Mason Limited maintains that all reasonable care and skill have been used in the compilation of this publication. However, Analysys Mason Limited shall not be under any liability for loss or damage (including consequential loss) whatsoever or howsoever arising as a result of the use of this publication by the customer, his servants, agents or any third party. Analysys Mason Limited 2017