BSS/OSS Managed Services A key differentiator for telcos in today s market

Transcription

1 BSS/OSS Managed Services A key differentiator for telcos in today s market Issue 1 Managed Services in the Telecom Industry Choosing the Right Sourcing Model: Outsourcing, Staff Augmentation or Managed Services? About Subex Managed Services Case Studies BSS/OSS Managed Services - The Future A Note from Vinod Kumar, COO, Subex From the Gartner Files : Discover New Opportunities for Differentiated Business Value from Three Emerging IT Service Offerings 27 About Subex Featuring research from

2 2 Managed Services in the Telecom Industry Communication service providers are faced with a conundrum of managing costs and margins while trying to grow their revenues. Can Managed Services engagements provide them with the means to manage their As is business effectively and free up critical bandwidth to focus on the To Be business? Telecom operators are at the cross roads today on one side they are pushing boundaries in a saturated and commoditized market to garner revenues and improve margins, whilst on the other they are pressurized to innovate and cater to the demands of the ubiquitous connectivity and data enabled services. Operators do not have a choice, but to act in order to remain relevant in the market place with the changing landscape, new challenges and competition. While pressures on cost and margins with traditional services remain, fast emerging services are bringing in new risks and demands for new skills to manage them. Communication Services Providers (CSP) are now looking for Managed Services engagements as a key differentiator in the emerging world. Key Business Optimisation Opportunities for Operators & the Impact of Managed Services Opportunities to remain relevant and successful in the new world order are plenty. Some of the initiatives are fairly quick to implement, while others require long term dedication and focus. It is important to understand the key areas of opportunities in the BSS and how engaging with the right Managed Services partner provides an excellent opportunity for operators to leverage on these opportunities OpEx control Improving margins: The immediate and short-term opportunity for operators is to control OpEx and improve margins. This can be achieved through automating repeatable tasks, improving productivity & efficiency, managing risks and adapting to industry best practices. Operators are facing issues at two different levels (a) skills upgrade has not happened at the pace in which technology has evolved (b) shortage of talented resources internally to run as-is business; therefore it has impacted providing growth opportunities to internal resources as a retention strategy and exposed them to newer initiatives ( to-be ) realizing the resources available in-house are limited and their career aspirations are also higher. Managed Services partners (MSP), with key focus and investment in domains and resources, have the unique advantage of bringing in global expertise and skills into a CSP environment. Thus, increasingly operators are looking to MS options for redirecting their critical resources towards core business focus areas like margin management, revenue enhancement and customer experience management. Well structured SLAs/ KPIs coupled with clear roles & responsibilities have helped CSPs achieve 15-20% productivity improvements and >20% higher ROI. CapEx control Improving RoI: In the medium term, operators are going to invest heavily in new and emerging technologies. The common conundrum corporate heads face are related to (a) successfully managing risks that comes with anything new (b) utilizing the available critical capacity of technology & resources (c) responding timely & appropriately to competition and consumer expectations. New services & technology areas require specific knowledge of compliance, operations, statutory and regulations. Operators are favoring Managed Services based engagement models with BSS vendors over the traditional license based model. Managed Services based models not only help address cash flows with CapEx management, but also help in acquiring & managing knowledge, accelerating and sustaining RoI. In the years that had passed by, when there was less competition and complexity, CSPs had the choice of building the capacity ground up and experimenting with it. However, in current context, business leaders are turning to MSP who have global experience to come and co-create solutions. The increase in demand for innovative and participative contracts with vendors, like revenue/gain share, outcome based engagements, pay per use, is a testimony to a new model of partnership that is emerging. Economy of scale Fuel growth: In the medium-longer term, CSPs are going to look beyond their operating boundaries ; Industry consolidation, overseas M&A, new sources of revenue like PaaS/IaaS/SaaS for MVNOs or group op-co s will be a key ingredient to the revenue growth.

3 3 Economy of Scale Fuel Growth Consolidation & shared services PaaS/SaaS/Cloud offerings for operators, consumers & group companies CapEx Control Improve RoIC Reduce time to market Utilise available capacity effectively Structure innovative contracts OpEX Control Improve Margins Reduce operational costs Reduce leakages/losses Manage risks effectively Reuse to drive effeciency Business optimisation and risk management are 2 key elements to focus as CSPs extend into unknown territories. CSPs are drawing boundaries around their core competency and partnering with vendors to build the necessary capabilities co-create capabilities in areas such as strategizing, enterprise risk management, managing platforms, developing technologies and operating them. Partnering, not only promotes innovation to drive business optimisation, but also helps in sharing risks. When operators go beyond their boundaries, they need to be strongly supported on the aspects of strategic & compliance risks and operating paradigms. Engaging with an able Managed Servicecs partner will take such operators in the right direction. However, bringing a partner into the ecosystem requires, in certain cases, a complete change in mindset within a telco. The interesting thing with Managed services is that there are plenty of models to choose from ranging from simple resource augmentation, consultancy to full business transformation services - based on the budget, capacity to experiment and willingness to take risks. Source: Vijay Raghunathan, Director Managed Services, Subex

4 4 Choosing the Right Sourcing Model: Outsourcing, Staff Augmentation or Managed Services? The terms managed services and outsourcing are often used interchangeably in the telecom industry. The most commonly understood distinction of these two terms is that outsourcing encompasses any and all types of services provided by third parties. In a managed services engagement, the risk and responsibility of delivering the initiative on time, on budget and on scope rests with the vendor and this is one of the biggest differentiators that often drives operators to choose Managed Services over traditional outsourcing. With the industrialization of IT services, the newer terminology that has emerged is outcome-based managed services. Gartner states that outcome-based managed services involves the delegation of one or more IT services or IT-intensive business processes to an external provider. 1 The IT services or IT-intensive business processes must have clearly defined scope, where the commercial terms are directly tethered to distinctive outcomes and where payment is triggered upon delivery of the service (rather than ongoing effort often referred to as inputs such as work hours or full-time equivalents). It is imperative that the external provider has industrialized the offering through the R&D investment to achieve an aggregated solution that ensures a predictable, reliable outcome. This industrialization often results in a relatively larger portion of value being derived from intellectual property, accelerators and verticalization versus pure labor. This relative portion is the key shift away from labor-driven offerings and results in different commercial terms. Additionally, the extensive zeal of operators to pay for results (outcomes) versus effort, and tying these results to specific business metrics (key performance indicators) rather than technical measures are the primary drivers for outcome-based managed services. Figure 1 shows that engagements focused on higher business value are influenced by relationship management rather than contract management; therefore requiring strong behavior competencies in delivery teams. FIGURE 1 Value-Focused Deals Require Higher Relationship Management Source: Gartner (August 2013) 2

5 5 The first and most critical step to analyzing any type of service offering effectively is to dissect the components of what is being purchased. Essentially, it s important to understand the composition of any service offering in terms of what drives the value and how the vendor is earning its margin. To build the muscle needed to analyze services effectively, we provide an overview to the components of any service offering. Figure 1 shows the components. A service offering typically includes five components: 1. Labor 2. Methods, tools or accelerators 3. Intellectual property (IP) 4. Verticalization 5. Role-based option or relationship model (such as prime contractor, aggregator or broker) These five components are layered on top of the purchases of software, middleware and infrastructure. It is important to note that not all service offerings available in the market have the five items listed above. For example, staff augmentation is literally just the labor (people) component depicted in the base of the pyramid. In addition, not all service offerings contain each of the five items in equal parts. For example, an outsourcing contract to provide testing services or to perform data-cleansing services often do not require verticalization components that appear closer to the top of the pyramid. To help guide your analysis, the right-hand side of Figure 2 depicts examples or qualitative characteristics to further build the muscles to analyze the service offerings effectively. For example, the labor component may include highly skilled labor in a knowledge-process-outsourcing deal or relatively lower-skilled labor in the form of software developers. One common mistake organizations make is that they operate on assumptions that various types of services (that is, consulting, system integration or outsourcing) are synonymous with labor only. Most service offerings are far more than labor, and this is critical to understand because the depth, breadth, scale, scarcity, geography and R&D investment FIGURE 2 Composition of Service Offering FIGURE 3 Composition of Outcome- Based Managed Services Offerings Source: Gartner (August 2013) Source: Gartner (August 2013)

6 6 As software, services and infrastructure continue to converge, adoption of outcome-based managed services grows and evolves. Sourcing executives must understand this evolution, along with the risks and benefits, to evaluate adoption diligently. Challenges Managed services are on the rise: 65% of commercial enterprises indicated that they have at least one managed service deal, and more than 55% indicated that they plan to increase their use of managed services. A service offering typically includes five components: labor, methods (or tools or accelerators), intellectual property, verticalization and a role-based option or relationship model. Clarity and value derived from each component is critical for evaluating sourcing options. Managed services are represented by the shift of delivery models from capacity on demand to capability on demand. Capability on demand is the tight bundling of software, services and infrastructure to fit together and function seamlessly as a cohesive solution that is outcome based. Recommendations Build the muscle to analyze outcome-based managed services effectively and the discipline to add them into the sourcing portfolio appropriately with a manageable amount of risk. Embrace the strategic imperative that some portion of the sourcing portfolio needs to leverage managed services. The alternative will surely lead to the organization falling behind its peers. Shifting from staff augmentation to managed services is not the goal the focus is on ensuring that specific business outcomes are achieved. of the components are the key variables that determine price. Also, the evolutionary shift for the composition of these services offerings how they are being bundled together with applications and infrastructure (depicted as the underlying bedrock of the pyramid) demands sourcing executives to build new muscles for analysis and discipline for adoption. To help sourcing executives better understand this shift, Figure 3 illustrates the changes described above by redrawing the composition of a service offering that was originally depicted in Figure 1 as a pyramid showcasing how services will morph. The pyramid will become a diamond shape. The primary reason for redrawing the pyramid to a diamond is to represent the core element of managed services namely, that the value is no longer defined and primarily priced on labor but rather by IP. This IP is what drives the outcomebased pricing structure. In fact, what is critical to understand about managed services (depicted in Figure 3) is that the proportional amount (within the overall offering) of IP is the single largest growth area relative to the old outsourcing model (see Figure 2). The IP component is at the heart of outcome-based managed services offerings and constitutes the most significant part of the differentiating value proposition. Intellectual property will include one or more of the following: automation, knowledge capital, metadata, analytics, software (either exclusive or commercial off-the-shelf [COTs]) and availability to infrastructure (that is, servers, storage, telecom and connectivity). The diamond shape also showcases a lower labor ratio (percentage of labor resources as a function of the overall offering). 3 Source: Subex 1,3 Gartner Inc., Diligently Evaluate Outcome-Based Managed Services Versus Capacity-Driven Staff Augmentation, G , 11 April Gartner Inc., Unlock Value From Outsourcing With Relationship KPIs to Improve Service Provider Performance, G , 21 August 2013

7 7 About Subex Managed Services Overview Recognizing the strategic imperative of outsourcing in today s environment, Subex offers a flexible and scalable Managed Services program that enables communication service providers to successfully meet the everchanging business, technology and customer requirements. Subex Managed Services program is designed to add both strategic and tactical value to CSP s operations and enable better customer experience while also enhancing their operational efficiency, service agility and profitability. With Subex at the helm of its operations, CSPs can redirect critical resources at core business functions generating more revenue and saving costs. Engagement Models Subex understands that no two operators requirements are similar and hence offers the flexibility to pick and choose services based on scope of operations, BSS domains and on-site support type. Traditional License Model Typically, this is the model with highest level of CSP involvement. Here, the CSP hosts the application, owns the hardware and operates the software while Subex takes onus of the development, deployment, support and maintenance of the product. Service Bureau/Hosted Model In this model, Subex takes responsibility of hosting the application, and hardware along with the development, deployment support and maintenance. End-to-End Managed Services This model is a perfect fit for most operators in today s market as it results in the highest performance with the lowest Opex and Capex. Managed Services Offering for Revenue Assurance and Fraud Management Subex s Managed Services offering in the Revenue Assurance & Fraud Management domains are centered around their deep experience and expertise across - Products, People and Processes. Driven by highly experienced and knowledgeable Revenue Assurance and Fraud Management FIGURE 4 Comparison between various engagement models Legend : Vendor Scope Traditional License Model Implementation / Professional Services (Product Vendor) Subex ROC Product Infrastructure (Telco) Telco Scope Operations (Telco) Support (Product Vendor) Service Bureau Hosted Model Implementation / Professional Services (Subex) Subex ROC Product Infrastructure (Subex) Ovperations (Telco) Support (Subex) Managed Services Implementation / Professional Services (Subex) Subex ROC Product Infrastructure (Subex) Operations (Subex) Support (Subex) Cost / Performance Cost / Performance Cost / Performance License / MS Cost Telco Costs Typical Performance Time Low License RTU costs Moderated ongoing Operational costs for operator Initial moderate performance slowly decreasing over time Operational Changes Lack of product expertise Time High Initial License Purchase costs High ongoing Operational costs for operator IT infrastructure costs IT support costs Operational costs Initial moderate Performance which dwindles over time Operational changes Lack of product expertise Low License RTU costs Low ongoing Operational costs for operator Operational Costs Initial High performance stabilising over time Limited operational Changes Enhanced product knowledge Time Source: Subex

8 8 experts, Subex Managed Services enables operators to realize the full potential of Subex s ROC enabled products which are used by over 200 operators globally. With Operators making headway into newer areas like asset assurance, big data and analytics, functions like Revenue Assurance and Fraud Management often fall outside their core competency areas. In order to remain competitive in the market, it is essential for them to maintain undiluted focus on their core business areas and leave the other operations to be managed by experts. Subex s Managed Services program delivers a clear advantage to such operators in terms of a pro-active, agile and result oriented offering. It helps them free up valuable bandwidth, get more productive and efficient and most importantly enables them to focus on their strategic business needs to stay ahead of their competition. The approach and practices followed by Subex for Revenue Assurance and Fraud Management are strongly focused on elevating the maturity level of the operator. The below diagram shows various stages of engagement and the relativity of their outcomes to TM Forum s operational maturity model. FIGURE 4 Managed Services Engagement from Subex Strategic Roadmap Operational Support Analysis, Consulting & Training Asset/Resource Transfer SLA Monitoring Business Continuity and Security Performance Monitoring & Tuning 3rd party Vendor Management Infrastructure Management Managed Hosting Standard 1st-3rd Line Support Application Engineering Revenue Assurance Fraud Management Environments Environments Mobile voice, Fixed voice, circuit switched data GPRS, UMTS, EDGE and value added services (SMS, MMS) Analogue data networks, Digital data services: ADSL, IP, ATM Triple play: cable telephony, IPTV and data services Wireline (PSTN, ISP, IP) Wireless (2G, 2.5G, 3G) Postpaid, Prepaid, VAS, MMS and m-commerce Areas Addressed Fraud Types Addressed Postpaid Usage Wholesale Assurance Internal Fraud IP Fraud Postpaid Subscription Rating Assurance Roaming Fraud Card Fraud Prepaid Usage Correction Prepaid Fraud Premium Rate Services Prepaid Subscription Test Call Generator Bypass Fraud SMS/MMS Fraud Roaming Usage Content Assurance Subscription Fraud Identity Theft Interconnect Assurance Cost Control Dealer Fraud PBX Hacking Source: Subex FIGURE 5 Alignment with TM Forum Maturity Model Typical Roadmap Uncover actionable intelligence & act on it in near-real-time Enterprise Risk & objective driven management Focus on Prediction & prevention Subex approach 3Optimization Standard TM Forum Maturity Levels 4 5 Expand coverage and usage to make stack future-proof Focus on preventing increase in Capex & Opex Introduce predictability through past learning and risk analysis Focus on Reduction Initial org structure, roles & responsibilities and basic operations Setup basic supporting tools to target existing services Focus on Detection 2Enhancement 1Consolidation 1 Control Costs 2 Operational Efficiencies 3 Repeatable and Optimized Processes Business Agility Operational and Business Transformation Initial Repeatable Defined Managed Optimized Source: Subex

9 9 Business Drivers and Influencing Metrics for Revenue Assurance & Fraud Management Business Drivers Time to market Cost Optmization Customer experience Key operational and business metrics for Fraud Management New product or service fraud risk assurance New product or service fraud controls & process availability Team work rate vs. Case generation rate Case generation accuracy Fraud Loss Averted Fraud Loss Recovered Customer churn due to fraud or service quality impact Fraud suspect notification time Key operational and business metrics for Revenue Assurance New product or service revenue risk assurance New product or service RA controls & process availability Team work rate vs. Case generation rate Case generation accuracy Revenue Leakage Averted Revenue Leakage Recovered Customer churn rate due to billing or service quality inconsistencies Leakage notification time Risk Mitigation Application & Service availability Application & Service availability Future Proofing Fraud Coverage Fraud loss & Fraud run time Issue response (MTTR) & service restoration Fraud incident missed against coverage Fraud loss against Never Pay vs. Bad Debt Reactive against proactive fraud coverage Industry intelligence adoption Processes & procedures coverage Revenue assurance activities coverage Revenue leakage/opportunity loss & run time Issue response (MTTR) & service restoration Leakage incident missed against coverage Revenue Leakage against Bad Debt Reactive against proactive RA coverage Processes & procedures coverage FIGURE 5 Lifecycle Approach to Data Integrity Management & Asset Assurance Discrepancy Identification Network Discovery Investigation and Resolution OE/OM Enrichment Workforce Management Billing Data to Align Network OSS Data Filtering Create Cases Investigate & Determine Actions Take Actions (Automation) Data Errors Prevention Processes Prevent New Errors Analytics Enabled Engage Business, Change Behaviors Review Ops Data, Identify Root Causes Source: Subex

10 10 Lifecycle Approach to Data Integrity Management & Asset Assurance Phase Function Business Value Discrepancy Identification Investigation and Resolution Prevention Identification of mismatch between two data sources Use of rigorous methodology & repeatable process to resolve discrepancies Data Governance process to harness what is learned and prevent creation of future data errors Discrepancies have limited inherent value. The real value is realized when discrepancies are investigated and resolved. Optimizes value creation from discrepancies and accelerates ROI from a DIM program. Provides highest return over long term by avoiding data integrity issues that would otherwise drive up costs. Operators increasingly understand that poor data quality in Operational Support Systems, can drive-up operational costs (Opex) and lead to unnecessary capital expenditures (Capex).. The question then becomes, how can an operator structure a program to: Quickly resolve embedded data quality issues that negatively impact Opex and Capex? Influence people, processes and systems to prevent the ongoing introduction of new data quality issues? Maximize Return-on-Investment (ROI) from data quality initiatives? A critical insight is that the most successful programs do not approach DIM as the mere application of technology to solve a business problem. While powerful tools are important enablers, a full lifecycle approach that blends technology, process and people is critical for success. The DIM Lifecycle approach stands in stark contrast to the traditional focus on discrepancy creation alone. The traditional approach, often leads to a discrepancy tsunami that is, more discrepancies (many of them invalid!) than an operator can process and from which value can be obtained. What is required is a holistic approach to solving Data Integrity challenges. The DIM Lifecycle Subex s Approach to DIM Industry leading tool ROC Data Integrity Management is the industry s first Data Integrity Management solution for improving the quality of data that drives key service provider processes, resulting in lower costs and higher service profitability. It combines three powerful data integrity functions: multi-layer network and service discovery; data reconciliation; and discrepancy analytics. Leveraging inherent cross-domain intelligence and extensive offthe-shelf network equipment support, ROC Data Integrity Management discovers devices and logical services in diverse network environments and reconciles this data with the OSS/BSS on a continuous, controlled basis. Value Based Prioritization Application of best-in-class tools to the DIM Lifecycle is not sufficient. Experience and thought-leadership are essential ingredients for a successful DIM program. Subex with decades of experience supporting DIM programs globally brings accumulated wisdom from previous engagements to the table. When it comes to generating discrepancies for further analysis and resolution, the primary objectives are eliminating false positives and prioritizing by value to the business. With methods like Data Profiling, Language/Phonetic Analysis and Data Normalization, Subex helps in eliminating a vast majority of false positives and hence keeping your focus only on relevant issues. Subex s process also helps you make specific associations between measurable data quality improvement and their direct influence on KPIs. This in-turn helps in achieving operational objectives of a DIM program. Case Management Approach In a mature DIM program, the focus is much less upon discrepancy creation, and more upon enabling fix actions. While advanced Discrepancy Identification techniques are essential parts of the DIM program, Case Management and Workflow are equally critical. A discrepancy is simply the raw result of a comparison between two data sources and having discrepancy identification as the main objective of a DIM

11 11 program often leaves an operator struggling. Instead, Subex follows a Case Management approach. A case is a unit of work; it tightly defines, guides and adds structure to the work. The practices and processes followed by Subex are continually refined and enhanced to reduce costs of running a DIM program and to accelerate the value returned. Subex has the knowledge and experience to establish and operate a full DIM program. Whether as a full outsourced provider or as a collaborative partner, Subex can help operators achieve and exceed their goals from a DIM program. Subex Managed Services for Data Integrity Management Business Drivers and Influencing Metrics for DIM Tier 1: IT Operations Tier 2: Application Management Tier 3: Business Operations L1 Support SA Support DBA Support Monitor and correct: Delays in data feeds File processing failures Discovery issues Etc Provide performance and volume reports Ops Reviews Modifications to existing Network Discovery NEMs to keep pace with updates to NE software Updates to discrepancy rules Addition of new data sources, or modifications to existing ones New cases types and workflows New reports and KPIs, or updates to existing ones Solution Architect Business Analyst Data Cleanse Agent Source: Andrew Jacobs, Director Managed Services, Subex FIGURE 6 Roaming Areas covered under Wholesale Interconnect Content Wholesale BPO Services for Wholesale Operators Wholesale is an area that needs both flexibility and maximum efficiency. Choosing and negotiating with partners is the first step and in itself one of the riskiest fraud areas. Audits and checks are crucial to the on-boarding process. From this first step, once the business decision has been made to partner, Subex s experience in automating the checking process has been proven time and again. MVNO Leased Line Source: Subex

12 12 FIGURE 7 Tasks across the Wholesale business sector Partner Management Contract Management Tariffs & Rating Invoice & Statement Disputes & Settlement Payment & Collections Order to Cash Source: Subex Business Drivers Asset Optimization Operational Efficiency Network Optimization Customer Experience OSS/BSS Key Operational & Business Metrics Capex Avoided Unused Assets Under-utilized Assets Lost or Stranded Assets Re-deployable Assets Time from Purchase-to-Deployment Time from Deployment-to-First Service Time from Decommission-to-Redeployment/ Disposal Cycle Time per Design Cycle Time for Service Fulfillment Designs per Designer per Day Designs Requiring Rework Services Activation Failures Field Service Truck Rolls per Month Network Utilization (by region, layer, technology) Network Resource Utilization (by resource type) Network Capacity vs. Policy Active Leased Lines vs. Invoices Capacity Augments within Target Timeframe Customer Commit Dates Met MTTR Service Availability Outages per Month New Service Failure Rate Service Degradation due to Capacity Constraint Service Outages due to Capacity Constraint Inventory Accuracy vs. Network ERP Accuracy vs. Network Alignment of Inventory vs. ERP Active Services in Inventory vs. Billing

13 13 Choosing a solutions partner to manage the wholesale business is, of course, as great a decision as choosing an interconnect or other wholesale partner. We understand that this decision must, ultimately, be based on trust and must be a true partnership, not simply an outsourcing contract. Our existing customers have gone through this process, and as Harry Moen, Manager Operations Interconnect, Billing at Telenor says, the final decision was based on Subex s experience in the interconnect area and Telenor s belief in Subex s ability to deliver on time and within budget. That, and on the fullness of ROC Partner Settlement s functionality. Common Goals, Common Challenges Although many business operations within operators are still managed within silos, there are many common goals as well as common challenges that can be identified and therefore be managed more effectively. Apart from the contract and pricing processes there are significant similarities. The selection and configuration of a partner through the contract lifecycle, pricing, invoicing, disputes to collection process are the stages followed by every wholesale process. These common stages are the ideal environment for implementing a converged solution to automate and therefore bring efficiencies to the common processes. The aim, then, must be to find a solution and a partner that can deliver automation and at the same time the flexibility to support the individual and tailored nature of the wholesale business. For example, such a solution must have the capability to support the negotiation of contract terms within agreed limits - and to adjust pricing (or to re-price). At the same time it must ensure profitable operation and process improvement. And this goal must be measurable and visible to the business. The Subex Service Subex has been working with Tier 1 operators for many years. As such we are a trusted partner of many operators. We have also invested heavily in developing a world-class set of solutions the well known ROC solutions. With an operator pedigree, it is not surprising that our customers trust us to run their wholesale operations. As Paul Fedarb, Head of Global services Wholesale Billing at BT says, Subex s Partner Settlement solution is robust and provides flexibility that allows BT to grow with new products and add them to the billing stack naturally. The solution has not only reduces our maintenance and support costs but also improves our customer relationships as disputes can be cleared easily. FIGURE 8 ROC Partner Settlement Coverage Data Collection Content Voice Data Rating, Billing & Invoicing Automatic Financials Accruals Pre-Payment Credit Management Order to Cash ROC partner settlement Voice Services Content Services Revenue Share Data Services Non Usage Standard voice telephony ISDN PSTN Mobile inbound/outbound roaming IP exchange Broadband Services Multi-Party Billing Content Provider Revenue Share Service Provider Revenue Share Advertisers Resellers IP Video conferencing, VoIP Mobile SMS/MMS Virtual Private Network Leased lines/circuit ADSL DSL IPL Source: Subex

14 14 Our customers also include smaller, dynamic operators. As a fast growing company, we were in search of a flexible, end-to-end interconnect and partner settlement solution to fulfill our business requirements, according to Deniz Calendar, Wholesale Business Solutions Manager at Avea Technology TIB, The remarkable features such as automated invoicing mechanism and accurate and informative reports have not only rationalized our business but also led to satisfied customers. Business Drivers Time to market Cost Optmization Customer experience Risk Mitigation Future Proofing Key operational and business metrics New partner contractual & revenue risk assurance New partner configuration & process availability Partner invoice & payment processing & reconciliation time Invoice receipt to clearance rate & accuracy Dispute resolution time & avoided cost Partner release time Partner satisfaction level Discrepancy notification time Application & Service availability Claims & disputes exposure level Working capital against total average AR balance Average Days Sales Outstanding (DSO) Dispute identification time & partner notification RCA time over suspense traffic Partner terms and contract & audit compliance Processes & procedures coverage Source: Alan Forbes, Senior Director - Business & Solutions Consulting, Subex

15 15 Case Studies Given below is the success story of a middle east operator faced with the challenges like increasing complexity and limited coverage. The diagram describes their engagement with Subex and the benefits thereof. FIGURE 9 Ooredoo Fraud Management Success Story Ooredoo Fraud Management Success Story Challenges Increasing complexity due to technological advancements Limited fraud coverage- high risk Engagement with Subex 24x7 coverage Performance guided & SLA driven Business process services and SME Support High fraud run time High expenditure on non-core activities Successful mixed shore engagement Proactive industry insights Technology assessments and fine tuning Benefits to the customer increase in the Fraud coverage Areas covered Pre-MS Newer areas covered Post-MS Areas with Augmented coverage Post-MS Reduction in Fraud run-time 100% Pre-MS 20% Post-MS 80% reduction Increased organization-wide influence of Fraud Management team Better Fraud prediction and prevention Timely recommendations and proactive assessments Enhanced reporting and documentation procedures Support for strategic decision making Source: Subex The next success story is that of a North American operator using Subex's Revenue Assurance solution in a Managed Services model. FIGURE 10 Tier 1 Norrth American operator Success Story Challenges Limitations to perform regular Revenue Assurance analysis Lower efficiency resulting in higher OPEX Talent management issues resulting in resource & skills constraints Fewer automated processes Engagement with Subex Industry leading Revenue Assurance tool Product & domain expertise Detailed daily Revenue Assurance audits Results validated by MS experts Robust case management Stringent SLAs Benefits to the customer 100% Automated operations Before 7 1 Now 5 Revenue Assurance function maturing & turning into a pro-active one Enhanced RA coverage across revenue all streams Additional Audits configured ROI in the first 6 months Manual Data Manual Audits Data Load Collection Days/Week Automated Reports 15% reduction in Opex Source: Abhijeet Singh, Senior Consultant, Subex

16 16 Outlook for the future As the adoption of Nexus-driven offerings continues where a combination of value propositions is justifying purchases, so too will new business models and terminology emerge that could displace outsourcing. In fact, in many ways, they are already here where the underlying engine of a Nexus-driven service will be contracted in a managed service approach. In that regard, here we provide an outlook for 2013 along with recommendations. These impacts and recommendations represent the early days of all of these significant shifts that require CIOs and sourcing managers to plan accordingly. 1 Figure 1. Interlocked Gears of IT Services Sourcing Cycle and the Nexus of Forces Figure 4. Impacts and Top Recommendations for Sourcing Managers 1 Gartner Inc., Outsourcing Trends 2013: The Nexus of Forces Will Accelerate Managed Services Sourcing Adoption, G , 31 January 2013 Source: Subex

17 17 BSS/OSS Managed Services - The Future A Note from Vinod Kumar, COO, Subex In most markets, there is a constant downward pressure on price along with intense competition to launch new services to win market share. The price ceiling has always been coming down on operators and the challenge has been to dig out the cost floor to make a margin. But what happens after you have made all the tactical cost savings? Where do you go then? When it comes to the networks, operators have started outsourcing or network sharing and have realized the ensuring benefits. The next frontier to rationalize costs is BSS/OSS, where there is a growing trend for operators to turn to managed services. However, it is not just cost rationalization alone that is driving this trend. Rather, a managed service engagement for BSS/ OSS serves a larger objective of optimizing the business and improves customer experience, while freeing significant management bandwidth to focus on core priorities. A managed service provider (MSP) can be engaged in most areas of a telco s BSS/OSS. The most popular area so far has been retail billing, but there is an increasing inclination to expand its spread to Business Optimisation and Service Fulfillment. The MSPs expertise in sweating the BSS/OSS asset to its maximum, having developed the software itself: An understanding of the specific BSS/ OSS domain having spent significant time operating in the same; A one-stop shop (single contract with a single interface) A stringent service level agreement for performance; A clear roadmap for the BSS/OSS software to account for new services and scalability for subscriber growth. There are 3 types of operators who want expert MSPs to come in and generate more value for their business. The first type of operators are those who realize they have squeezed enough from their BSS/OSS products already and there is limited incremental benefit by doing any more through in-house teams. In such cases, they turn to managed services to take their functional maturity to the next level. The second type of operators moving to managed services are those who experience a shortage of skills these could be related to operating the BSS/OSS product, the domain or even operations. Growing markets in Europe, Middle East and Africa are all experiencing a shortage of such experienced and skilled staff which can result in poorly architected, implemented or operated BSS/ OSS that decreases efficiency and increases error. These operators are taking the managed services route for certain parts of their BSS/OSS and concentrating their skilled in-house staff on others. The third type of operators moving to managed services are Greenfield operators starting new operations in new countries or regions. This group does not have any legacy systems, and are keen to launch operations as soon as possible. These Greenfield operators have the advantage of seeing what has gone before, benchmarking other operators and then simply picking the best and most cost effective solution. This group invariably takes a right-first-time managed service route which helps them ramp up their operations faster and concentrate on launching their services than having to bother about BSS/OSS.

18 18 While engaging an MSP, operators need to decide early on the engagement model and its scope. Operators can choose from a range of services from having on-site MSP support staff to completely outsourcing their BSS/OSS (including IT infrastructure, application management and business operations.) Within that range, MSPs can offer a fixed price model or a shared rewards model. Despite having seen the revenue from managed services in the industry, some operators are still skeptical about making the move. Understandably there are cultural issues, especially those related to staff re-deployment. What is to be emphasized here is that face that not all managed services are transformational; in fact they can complement existing operations. It is extremely important that the MSP adapts its team s behavior and processes to suit the operator s business culture. There could be concerns over the lack of industry standards too, and this can be addressed through SLAs specific to the operator and benchmarks from the industry. With more and more operators looking at managed service engagements, the best BSS/ OSS product vendors are investing in their managed service capabilities. The resultant financial benefits, expertise and skills, service levels and efficient contract management are all critical decision factors. Operators want to hear about case studies, talk to other customers about their experiences and be comfortable with the MSP s process. Managed services in the network have been around for a long time, but managed services for BSS/OSS is the rising star. Source: Subex

19 19 Research from Gartner Discover New Opportunities for Differentiated Business Value from Three Emerging IT Service Offerings Significant investments continue to drive the industrialization and consumerization of IT services offerings for both efficiency and differentiation. We provide three examples to showcase the imperative that sourcing executives must stay abreast of emerging offerings by seizing opportunities. Impacts Outcome-based industrialized offerings have moved from R&D to be commercially available for sourcing executives to drive both savings and differentiation. Industrialized offerings combining business process services with software allow sourcing executives to accelerate time to market and burst up scalability in a standardized, predictable sourcing delivery model. Business process as a service (BPaaS) offerings are now available that address areas such as direct customer care, enabling sourcing executives to increase customer loyalty through efficiency. Recommendations Sourcing executives should: Update sourcing strategies to recommend the timing for adoption of consumerized and industrialized offerings. This involves a thorough understanding of benefits, risks and cash flow analysis. Make a clear distinction as to whether the new industrialized service options are focused on run the business functions (delivering efficiency in the back office) or grow or transform functions (addressing business process through a differentiating value proposition). Educate business unit leaders about the compromises in flexibility (for the benefits of speed, scale and standardization) that the convergence of software and services provided in a tightly coupled solution demands. Position themselves as key enablers for the enterprise to shift from a B2B to a business- to-consumer (B2C) mentality and execution by identifying, piloting and executing BPaaS offerings that directly allow the differentiation of customer care processes. Strategic Planning Assumption(s) By 2015, 40% of the most successful CIOs will use cloud sourcing to cut costs and generate new revenue in order to outperform competitors. Analysis Sourcing executives are challenged to implement a sourcing strategy that is driven by two main business priorities: 1 The first component is aimed at cost reduction or optimization in the run-the-business part of the IT budget. 2 These are business functions that provide competitive parity and are required by all players in an industry. Within the IT service portfolio, this is primarily focused on infrastructure cost, application maintenance and application operation cost (see Outsourcing Trends 2013: Service Industrialization Enables a New Balance Between Value, Cost and Risk ). Gartner refers to service provider offerings in this area as industrialized low-cost services (ILCS) see Note 1 for more information. The second component of the sourcing strategy is aimed at growing or transforming the business to make it more competitive via differentiation. This is often done through the adoption of new or improved service offerings that allow for increased speed, quality and scalability with new types of commercial terms, such as gain sharing or outcome based (see Outsourcing Trends 2013: The Nexus of Forces Will Accelerate Managed Services Sourcing Adoption ). Gartner refers to service provider offerings in this area as differentiated business value services (DBVS) see Note 2 for more information. Both types of IT service offerings may increase the risk profile of the IT services delivery: Drastic cost optimization in business-critical IT spending raises the operational risk.

20 20 Investment on new and differentiating programs is naturally associated with increased risk of failures on both IT projects and change management programs (45% of development projects are not completed on time, and 34% are not completed on budget). 3 Successful projects, in many cases, add applications and infrastructure assets instead of replacing old ones, thereby increasing the cost of IT. To help sourcing executives determine the most opportune time for enterprises to adopt industrialized and consumerized offerings into their sourcing strategy while appropriately managing risks, we researched examples of DBVS service offerings. More specifically, we interviewed both service providers and buyers of these offerings to understand the benefits, risks and commercial terms of these deals. In this research, we provide three different examples in different industries in order to showcase the opportunities available, as well as offering clear evidence that the market has moved from R&D labs to the commercially available solution for sourcing executives to drive both savings and differentiation. Impacts and Recommendations Outcome-based industrialized offerings have moved from R&D to be commercially available for sourcing executives to drive both savings and differentiation In this first case study example, we showcase a consumerized outcome-based offering that allowed the sourcing team to enable business unit leaders to drive both savings and differentiation of the brand. Going green and better energy management is on the radar of almost every enterprise across the globe. Every enterprise must focus on environmental issues, driving global low carbon economy, rising energy costs and increased regulatory issues. The question is how to harness technology and inject changes in business processes in order to better manage energy consumption in a more proactive, rather than a reactive, approach. Driving this type of change in energy consumption is a complex problem requiring changes in business processes, people, as well as dealing with a diverse set of technologies and a large array of energy consuming equipment (servers, lights, air conditioners, refrigerators and so on). FIGURE 1 Impacts and Top Recommendations for Sourcing Executives Impacts Outcome-based offerings have moved from R&D to be commercially available for sourcing executives. Top Recommendations Update sourcing strategies to recommend the timing for adoption of consumerized and industrialized offerings. Make a clear distinction as to whether the new service options are run the business or grow or transform functions. Industrialized offerings combining business process services with software allow sourcing executives to accelerate time to market. Educate business unit leaders about the compromises in flexibility that the convergence of software and services demands. Business process as a service (BPaaS) offerings are now available that address areas such as direct customer care. Position themselves as key enablers for the enterprise to shift from a B2B to a business-to-consumer mentality. Source: Gartner (July 2013)

21 21 Wipro, which is well known for its technology capabilities (see Note 3), brought together a number of cross-functional skill sets and technology, and created an outcome managed service offering called Managed Energy Services. One example of a client that has purchased this offering is a large U.S. retailer with more than 1,100 stores. Savings in the first 12 months were reported to be $15 million. Wipro EcoEnergy division, which is responsible for this offering, targets savings of up to 20% of normalized energy costs by reducing consumption, optimizing procurement and leveraging regulatory incentives. The managed service is outcome-based because the client does not pay for any of the startup costs, implementation or deployment of the solution. In fact, the client does not pay even $1 until the outcome is achieved namely, the service is delivered, the actual savings are calculated and then Wipro receives payment premised on the level of savings achieved. Hence, the outcome determines the payment structure. In the example of this retailer, the Wipro EcoEnergy team started in the first few months by deploying teams to every retail store in the U.S. (1,100 in total) and placing technology (sensors on the devices) and then all the analytics dashboards for measurement and analytics processing. The analytics dashboards were then dynamically utilized to drive changes in business process, technology corrections and personnel tasks in order to drive changes in the overall energy management process. During this time, the client s payment of fee was directly linked to the achievement of the outcomes. The offering continuously measures, and then allows for energy optimization based on energy performance reporting. The analytics dashboard drives data-driven decision making into the business processes focused on energy performance. 4 Wipro s offering utilizes its analytics engine to derive insights from real-time energy data from all the technology in the field. The offering uses its Energy Operations Centre to act on the insights and fix the issues. This also helps in designing long-term energy and operational strategies, as well as producing key reporting for regulatory compliance in order to avoid penalties. Most of the organizations that are using these solutions leverage them for brand differentiation by showcasing analytical data on their progress in reducing carbon footprint. Recommendations: IT sourcing executives should: Increase awareness with business users and IT organizations about industrialized, outcomebased services available in the energy management space. One of the best ways to increase awareness is through regularly scheduled strategy reviews with existing and emerging vendors regarding their investments in various offerings. Regular inquiries with industry analysts are another great resource. Sponsor a test-and-pilot approach to these services. Help the business by evaluating these services potential for both efficiency increase and brand differentiation. Industrialized offerings combining business process services with software allow sourcing executives to accelerate time to market and burst up scalability in a standardized, predictable sourcing delivery model In this second case study example, we showcase an offering where the provider combined both software and services in a software as a service (SaaS)-based structure to significantly increase the speed of capturing while also allowing clients to burst up scalability during peak requirements. The sourcing team s ability to identify these types of opportunities and navigate the risk is the critical role that is required. The insurance industry specifically property and casualty (P&C) is under constant pressure to improve its core business processes at every level of customer interaction. Due to the evolution of the industry, there has been a great deal of consolidation that has led to a significant number of disconnected and legacy applications to process claims, as well as a number of disparate siloed systems. This has resulted in a redundancy in systems, difficulty in managing and integrating various customer engagement channels (agents, Web and call centers) where customers expect to interact with their insurance company and lots of manual processes. One key process in the insurance industry specifically, claims processing acts as the first place for an insurance company to reinforce its brand promise. The customer has purchased insurance and is now contacting the insurance company to execute on its value proposition. As