Billing World 2003: Waiting for the Upturn

Transcription

1 Billing World 2003: Waiting for the Upturn Research Brief Abstract: The Billing World 2003 conference showed continued carrier interest in business support systems, but a turnaround is unlikely before By Norbert Scholz Recommendations Business support systems (BSS) vendors should: Focus on projects that help telecom providers achieve short-term cost savings. Demonstrate the value proposition of your consulting, integration and support services capabilities. Explore new fields of activity such as non-telco Fortune 500 companies, instead of retrenching and waiting for carriers to resume spending on BSS solutions. Publication Date:17 July 2003

2 2 Billing World 2003: Waiting for the Upturn Introduction BSS Trends The annual TeleStrategies Billing World conference and exhibition is the premier event for the North American BSS industry. This year's event was heldinmiamibeach,florida,on24through26june.gartnerconducted in-depth interviews with 23 BSS vendors to gauge the pulse of the industry. For a list of companies interviewed, see the last section of this Perspective. As is customary at such an event, vendors continued to talk up their latest features, such as real-time content billing, prepaid/postpaid convergence andsoon.beyondtheinevitablehypestemmingfromthedesiretobe perceived as technology leaders, many vendors appeared to have shifted into a reactive mode. Instead of pushing the industry toward adopting next-generation technology, many vendors now emphasize their in-depth understanding of their clients' and prospects' current business requirements and their ability to grow with telecom providers' changing business plans. This applies to both industry leaders and niche vendors. BSS Highlights Considering the depressed state of the telecom and BSS industries, conference attendance was encouraging. The total number of 1,100 registered attendees was the same as at last year's show. About 51 percent came from the telecom provider, end-user, investor, press and analyst camp more than in any previous year. Telecom provider interest in third-party BSS solutions appears to remain strong, although ongoing capital expenditure constraints have dragged the BSS industry into a twoyear decline since its peak in The number of exhibitors and sponsors declined from 95 to 80, but many vendors opted to arrange meetings without incurring expenses for their own booth. As in the past, independent software vendors (ISVs) dominated the show. With few exceptions (PricewaterhouseCoopers and Cap Gemini Ernst & Young [CGE&Y]), the leading systems integrators (SIs) and consulting firms were conspicuously absent. Major themes that permeated our discussion with BSS vendors follow. Financial Outlook At best, vendors can hope for a stabilization of revenue in the second half of As was the case last year, many vendors expressed hope that the decline has bottomed out, but concrete evidence in support of that hope remains scanty. While some vendors in specialized fields, such as revenue assurance, experience healthy growth, the overall trend is stabilization rather than growth. Most leading vendors emphasized that they realize that their best opportunities lie in helping existing customers improve their efficiency and future-proof them for the time when content becomes a major source of revenue Gartner, Inc. and/or its Affiliates. All Rights Reserved. 17 July 2003

3 3 BSS Growth Areas Among the few growth areas this year were revenue assurance and outsourcing. Among the vendors interviewed, these two themes permeated the discussions. Revenue Assurance Enabling companies to detect revenue for services they delivered but never charged for is a relatively low-cost, high return on investment (ROI) activity. Specialized vendors such as Connexn Technologies experience healthy growth, while leading ISVs, such as Amdocs, Convergys and CSG Systems have dedicated resources to help their clients find lost revenue. Outsourcing As revenue from software licenses has been cut in half since 2000, the leading BSS vendors have rediscovered their outsourcing capabilities. Convergys the granddaddy of BSS outsourcing has launched an aggressive campaign to increase its outsourcing footprint, while Amdocs a veteran in directory outsourcing is trying to capitalize on its billing outsourcing successes with Bell Canada and Nextel. Similarly, ALLTEL Telecom Services seeks to convince North American Tier 2 and Tier 3 carriers of its longstanding outsourcing expertise, and CSG Systems is ready to port its cable outsourcing experience to its ICMS and Kenan product lines. Emerging Opportunities In a declining-to-stagnant market, one would expect vendors to become creative in finding new outlets for their products and services, or take market share from their competitors. Instead, we failed to see many new developments at Billing World Vendors remain committed to the telecom market and try to grow with existing clients while waiting for the good times to return. BSS for Other Industries This is not to say that vendors are not exploring the applicability of their products and solutions to other industries, such as banking, the federal government and so on. For example, Narus recently launched a product designed for law enforcement, intelligence and counterterrorist agencies, and CTI Group provides bill analysis for midsize to large enterprises. Other vendors consider similar moves, but such activities appear random. BSS Expanding Upstream and Downstream BSS appears to remain a relatively close-knit club. There was little evidence of BSS expanding downstream toward the network or upstream toward customer relationship management (CRM). This could have to do with the setup of the conference, but more likely than that, most BSS vendors are reluctant to make any commitment to adjacent industries that are in a similarly depressed state as their own. Many BSS vendors continue to integrate selective CRM functions, such as churn management or collection management, but they fall short of developing full-fledged CRM capabilities Gartner, Inc. and/or its Affiliates. All Rights Reserved. 17 July 2003

4 4 Billing World 2003: Waiting for the Upturn The same holds true for CRM and operations support system (OSS) vendors. The degree of BSS-CRM-OSS convergence will become clearer next year, when TeleStrategies will combine its BSS and OSS events as "Billing and OSS World 2004," to be held in Washington, D.C., on 5 through 7 May Customer Loyalty Through Improved Bill Design Among the more interesting vendor offerings we observed are solutions that improve and personalize bill design as a means to increase customer loyalty, reduce churn and bolster brand awareness. Of course, such concepts are not entirely new, but many telecom providers have yet to tap their full potential. Similarly, the use of PLANET Codes can help with customer retention and cut administrative overhead. DST Output and Exstream are among the vendors interviewed that provide such solutions. Professional Services and Customer Service As in the past, BSS software features still dominate the rhetoric of BSS vendors, but among the leading BSS ISVs, there appears to be a gradual shift toward emphasis of consulting, integration and support services capabilities. We believe that such a shift is long overdue, considering that software licenses, alone, constitute only a fraction of BSS project costs, and that the success or failure of projects hardly ever depends on software features. A Dearth of New Announcements Vendors tend to use trade shows to trumpet their latest customer wins, their most prestigious partnerships or their most advanced products. With a few exceptions, Billing World 2003 experienced almost a complete drought of noteworthy announcements. New Customer Wins BSS vendors had a handful of new clients to report, an unmistakable reflection of the stagnant state of the industry. The following vendors surprised shareholders and investors: Connexn announced eight new undisclosed telecom providers in the United States and Europe for its Cost and Revenue Assurance solution. CSG Systems signed a five-year deal with rural local exchange carrier FairPoint Communications as its first Integrated Customer Management System (ICMS) service bureau client. Daleen scored two much-needed wins, one for its RevChain solution with Colombian incumbent Empresa de Telecomunicaciones de Bogota worth $10.5 million, and another one for its Asuriti product with integrated communications provider (ICP) Pac-West Telecomm. EUR Systems signed an outsourcing deal with ConEdison Communications for its Aptis product. Telution scored a win with ICP InfoHighway for its COMX solution Gartner, Inc. and/or its Affiliates. All Rights Reserved. 17 July 2003

5 New Products and Upgrades Only a few BBS vendors announced new products or major upgrades. The following were among the new product launches: Connexn launched its Usage Data and Rating revenue assurance software. CSG opened its ICMS service bureau. CVG introduced Infinys, a modular end-to-end solution for wireline providers. Intec launched its Dynamic Charging Platform that allows wireless carriers to charge for next-generation services in real time. In addition to new product launches, a number of vendors introduced upgrades to their existing platforms, including ADC (Singl.eView 5.01), Amdocs (PRM 5), Daleen (Asuriti) and Telution (COMX Collections Decision Manager and COMX Payment Arrangement Tool). Partnerships and Alliances Certainly the most noteworthy announcement was Portal's strategic alliance with Microsoft, which is intended to integrate Portal's billing system with Microsoft's.NET technology. With this alliance, Portal follows the.net initiatives of some of its smaller competitors, such as MetraTech, Info Directions or ComArch. Other new partnerships include Convergys' agreements with OSS vendors Cramer Systems, Granite Systems and Syndesis for its new Infinys product, as well as MetraTech's alliance with taxation specialist BillSoft. 5 Gartner Dataquest Perspective Despite the flashy product demonstrations and upbeat talk about the great future for the BSS industry, Billing World 2003 made it clear that the industry remains in a deep freeze. As has been pointed out repeatedly on gartner.com, BSS vendors have to account for the fact that carriers don't have the cash to spend large amounts on urgently needed systems upgrades and replacements. Instead, they focus on revenue savings measures that yield a fast ROI, such as systems consolidation, revenue assurance or outsourcing. Related solutions, such as churn management, fraud detection or business intelligence are likely to rise in prominence soon. Continued strong interest by telecom providers in BSS is an encouraging sign, but vendors should be careful not to delude themselves that spending will bounce back to 2000 and 2001 levels anytime soon. Gartner Dataquest predicts that the global BSS spending is likely to reach its bottom in 2003 with $8.2 billion, a 6.6 percent decline from It then should resume growth at annual rates of 3.7 percent and 4.9 percent in 2004 and 2005, respectively. For more information, see "Worldwide Business Support Systems Forecast, ," TCPN-WW-MS Gartner, Inc. and/or its Affiliates. All Rights Reserved. 17 July 2003

6 6 Billing World 2003: Waiting for the Upturn AsshowninFigure1,ascanofBSSopportunitiesannouncedbythe leading vendors shows that the industry still has a long way to go to return to its previous strength. Figure 1 New BSS Deals and Major Upgrades Announced, 1 January Through 30 June Number of Deals Note: Based on official and unofficial announcements by ADC, Amdocs, AMS, Convergys, CSG Systems, EDB Telesciences, Intec Telecom Systems, Portal Software and SchlumbergerSema Source: Gartner Dataquest (July 2003) In such an environment, vendors have two choices: They can either retrench and drive incremental revenue from their existing customers, or they can expand their market share by taking business from their competitors or from carriers' internal IT departments. Since there are no signs that the BSS industry is consolidating significantly, vendors must convince carriers' IT departments that they can do a better job at a lower cost than internal IT staff. In addition, they might also want to convince their clients to recycle some of the cost savings and "found money" into BSS and OSS improvements to drive their midterm profitability. BSS Vendors Interviewed Gartner conducted in-depth interviews with the following vendors at Billing World 2003: ADC ALLTEL Telecom Services Am-Beo Amdocs 2003 Gartner, Inc. and/or its Affiliates. All Rights Reserved. 17 July 2003

7 7 American Management Systems (AMS) CGE&Y Connexn Technologies Convergys Cramer Systems CSG Systems CTI Group DST Output Exstream Software Hewlett-Packard Intec Telecom Systems MetraTech Narus Portal Software QPass TimesTen Trivnet TSS Partners UshaComm Key Issue How will operations support systems facilitate the optimization of a public network infrastructure? 2003 Gartner, Inc. and/or its Affiliates. All Rights Reserved. 17 July 2003

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