New Business Models Are Today s Reality: Flexible and Adaptable Business Solutions Are a Critical Necessity

Transcription

1 New Business Models Are Today s Reality: Flexible and Adaptable Business Solutions Are a Critical Necessity An Executive Brief

2 Stratecast Frost & Sullivan NEW BUSINESS MODELS ARE TODAY S REALITY: FLEXIBLE AND ADAPTABLE BUSINESS SOLUTIONS ARE A CRITICAL NECESSITY INTRODUCTION 1 While everyone knows the communications industry is changing, few realize the combined pressures communications service providers (CSPs) are experiencing today from the influences of external market drivers, customer wants and internal business requirements. Shown in Figure 1, these three categories of business needs create a tug-of -war from which there is no one solution or best business approach. Figure 1 Today s Inside Out and Outside In Tug-of-War External Market Drivers User Device Evolution Technology Infrastructure Industry Maturation Multi-Industry Convergence Regulatory Change Mobile Applications Enterprise Solutions Social Networking Cloud Services Machine-to-Machine (M2M) Mobile Payments Real-Time Decisioning External Market Drivers CSP Internal Business Challenges Reduce costs Increase revenue Innovate with partners Provide real time operability Fix the data explosion challenge Provide a good customer experience Support new business models Facilitate other industries business needs Customer Needs Affordable BBand Access Apps for Everything Video Communication Cool New Stuff Understandable Spending Levels Immediately After Usage Customer Needs Source: Stratecast Through the use of touch screen technology and faster network speeds, for example, business customers and consumers now have a keen awareness of just how much mobile voice and data, combined with interactive content, has changed their way of life. Dynamic control and manageability of service options, payment methods and transparency have become expected capabilities in the race to find the best ways to deliver a robust customer experience. 2 1 In preparing this report, Stratecast conducted interviews with representatives of the following companies: Microsoft Dmitri Lozdernik, Global Alliances Manager, Telecommunications Microsoft Johan Norvik, Worldwide Industry Managing Director, Telecommunications Please note that the insights and opinions expressed in this assessment are those of Stratecast and have been developed through the Stratecast research and analysis process. These expressed insights and opinions do not necessarily reflect the views of the company executives interviewed Stratecast. All Rights Reserved.

3 New Business Models and Adaptable Business Solutions BUSINESS EVOLUTION IS ABOUT MEETING CUSTOMER NEEDS Many factors now push life changing services to the forefront of customer consciousness. These are based on opportunities created by an advancing real-time consciousness, flexible network technology, improving regulations, downloadable apps, certain types of advertising, social media, Software as a Service (SaaS), and enterprise use of machine-to-machine (M2M). The push for advanced interactive services means that CSPs can implement business models directed at dynamic customer involvement, well beyond the traditional voice and data access service offers of the past. This breeds loyalty and increases customer confidence, but requires business support flexibility to manage both internal and external relationships. NEW BUSINESS MODELS MEAN FLEXIBILITY AND CONFIGURABILITY Collaboration and competitive cooperation now allow the delivery of service offers not thought feasible just a few years ago. Policy-enabled real-time rating & charging, real-time customer notifications, real-time decisioning, and advanced customer insight the core of any customer-centric strategy deliver flexibility and a toolset mentality to increase the creative introduction and monetization of advanced service offers. It also provides the capability for business analysts, rather than IT programmers, to make changes and/or create new service plans at market acceptance velocity. Customer services, when delivered in this environment must work right first time every time. In addition, all parts of the end-to-end service definition and supply chain need to be reconciled in shorter intervals. This applies to multi-sided business scenarios, crossindustry 2.0 opportunities, and content developer offerings. It implies that the flow of revenue must go between customers, the CSP and all suppliers in an increasingly continuous flow. It also means that CSPs engaging in this type of e-tail mindset can offer advanced services to different regions in unique ways for best meeting a growing list of customer needs. Most installed support systems and processes were not designed to handle the dynamic nature of the service offers that technology can now provide. To achieve future business success, it is imperative that new service offers and implementation of new business models not be saddled with the limitations of currently defined systems, especially BSSs that have limited flexibility and configurability options. This is really important when creating pricing plans and service offers at the speed of market change; generally measured in hours and days, not weeks or months. Services that allow more flexibility for customers to set consumption limits and financial controls not to mention the large number of apps that can be purchased for any mobile device, regardless of operating system, and the increasing number of business apps delivered by cloud-based providers result in no two customer accounts looking alike. For consumers, this environment has become the norm. For enterprise customers, a flexible services strategy takes on additional meaning as a mix of services from multiple sources now define the user profile of a device in changing environments, especially mobile devices that are either company or employee owned (BYOD) Stratecast. All Rights Reserved. 3

4 Stratecast Frost & Sullivan THE M2M PERSPECTIVE Regardless of how revenue is realized on the short-term or for the long haul, effective monetization of M2M solutions means billing for data access (at the wholesale level) will involve dynamic offers using different conditions; e.g., by reported event, by levels of aggregation, by subscription, or by the life of the machine. Such billing schemas cannot be compared with human-focused communications service plans with regard to customer support and expected revenue per customer. This is especially important since the customer for an M2M solution may now be the benefactor of a data summary and analysis report using data from possibly hundreds of devices, polled on pre-defined intervals that are based on time or event occurrences. From a non-traditional perspective, M2M is a growing part of the business improvement and expansion strategies of many enterprises, in a push to enhance their customer s experience, to increase global market presence and to reduce overall operating costs. M2M offerings now appear in multiple industries, from entertainment to consumer electronics to sports to financial services, and to manufacturing. For CSPs, there are increasing levels of innovative opportunity with M2M; however, it means positioning to do business differently than with traditional consumer services. In many cases it is much more than just device-to-device connectivity. An M2M enterprise solution most often involves data collection, aggregation, analysis, and report generation as the key deliverable to an enterprise customer, rather than subscriber data access or a voice connection. As such, it means that notifications or report summaries take the place of direct person-to-person interactions that are typical within the voice and data services business model. It also means that such solutions need to be managed differently and with very different levels of revenue expectation. ESSENTIAL BUSINESS SOLUTION NEEDS Differentiating through innovative new service offers has everything to do with a CSP s billing solutions and associated business processes. It requires support from new generation BSSs that are designed to simultaneously support business functions inside and outside the CSP organization. Other factors include: Integrated Billing and Customer Support Billing and customer support can no longer be viewed as standalone silos because customer solutions now involve information notifications to not only different levels of an organization but to different types of customers; e.g., an enterprise (small standalone or multi-region conglomerate) in some cases or a consumer in others, depending on the industry and the type of service. Solution Scalability Customer services complex offers involving partnerprovided content, cloud-based services or M2M data solutions will need to scale based on geographic coverage, devices monitored, or information accessed. Monetizing any combination of growth opportunity for a CSP delivering such solutions is essential for long-term service viability. Configurability Changing dynamics of business strategy, in solution focus and in how a service offer must adjust to evolving market demands, means the customer support and billing processes must be configurable by business analysts rather than IT specialists Stratecast. All Rights Reserved.

5 New Business Models and Adaptable Business Solutions Faster Time to Market for New Service Offers While faster time to market a few years ago meant getting out a few new service offers per year, today s complex consumer-focused environment and the needs of enterprise customers means something very different. Support for new market needs often requires changes to be ready in hours, rather than the weeks and months of the past. CRITICAL TECHNOLOGY DEVELOPMENT REQUIREMENTS Monetizing complex service offers carries several requirements that must be addressed by whatever solution a CSP uses. Such solutions must possess the flexibility to meet new challenges from a host of key business drivers already described. Other essential monetization requirements are: Integrated Solution Functionality Billing and customer care must be tightly integrated to reduce time to market when change occurs and to significantly reduce the total cost of ownership. Many new service offers of the future will see revenue pass through to external partners and suppliers, leaving less for CSPs as a whole. With eroding margins, it is imperative that business support systems and processes be optimized around the customer. System Availability As IT systems and network nodes combine to deliver advanced service offers, customers expect an always-on and always-available environment. IT systems must therefore deliver the same 5 9 s uptime availability that CSPs have grown to expect from network element manufactures for the routers, switches and nodes that define today s networks. Downtime from any one component now effects total service reliability a requirement not previously needed from many IT systems in the past. Transaction Processing Speed and Capacity Mobile network capacity needs are outstripping network implementation realities. However this challenge is remedied likely in different ways by different operators in different parts of the world increased transaction processing capacity is an understood reality for any billing and customer care solution. Near real-time processing of usage events, on the order of several billion per day, is an ultimate necessity to enable the advanced services that are a part of today s business reality. Data Security Security impacts so many different parts of any business. From a billing and customer care perspective, usage transactions must be securely accessed and stored, regardless of how the information is aggregated, correlated or augmented to meet other business needs. Transaction throughput capacity can be greatly affected by the type of data architecture, with essential security functions, that is implemented for a solution. Total Cost of Ownership As business change continues, flexible systems are a must. But flexibility and scalability come at a price. Business needs expand, 2012 Stratecast. All Rights Reserved. 5

6 Stratecast Frost & Sullivan transaction processing requirements increase, and new service or customer counts grow. It is essential that business solution expansion be implemented in a flexible manner that can include cloud-based options through: on-premise management, a hosted environment, or even the public cloud. SOLUTION ARCHITECTURE APPROACH Over the past few years, considerable improvements in software design, database structures and hardware configurations have helped to meet critical business needs at the most favorable cost points. However, continually shrinking business margins and rapidly changing business requirements are forcing IT groups to regularly re-evaluate their solution deployment approach. Recently developed OSS and BSS systems are built with the most reliable and demonstrable technology. For many, this means operating systems using flavors of UNIX and/or Linux, well-proven data architectures defined by Oracle or IBM, and application programming with Java or other object-oriented languages. Through such building blocks, the key technology requirements of reliability, scalability, security and processing speed for a particular set of business conditions are met. Balanced with such capabilities is a business solution s total cost of ownership (TCO), which includes not just solution development and implementation costs, but also the longer-term cost of operations and maintenance. For many years, an alternative technology stack involving the Microsoft Windows operating system and Microsoft SQL Server were rejected by network operations for reliability concerns. Significant inroads have been made since then with Microsoft-based solutions showing to be a much lower-cost, highly scalable, and equally reliable alternative to traditional solution architectures. While business support solutions based on the Microsoft alternative may not be the first option that comes to mind, Stratecast believes that IT and network operations teams should again consider Microsoft technology when looking to update existing BSS solutions with the real-time transaction processing and customer care functions that are required today. REDKNEE TURNKEY CONVERGED BILLING (TCB) SOLUTION The Redknee TCB, shown in Figure 2 below, is an end-to-end billing and customer care solution that delivers centralized business intelligence, a personalized subscriber experience, and a full suite of billing capabilities. It is built using Microsoft SQL Server 2012 for database management, and the Windows Server operating system. Rounding out the all Microsoft architecture, TCB uses the Microsoft Dynamics CRM application to address the customer care aspects of its functional design. The Redknee TCB has been shown to meet the business and technical requirements previously outlined. While a complete description of each functional module that defines TCB is beyond the scope of this report, it is well worth noting how this solution stacks up in terms of functionality provided, uptime availability, throughput capacity, data security, and cost of ownership Stratecast. All Rights Reserved.

7 New Business Models and Adaptable Business Solutions Figure 2 Redknee Turnkey Converged Billing (TCB) Functional Architecture Source: Redknee In benchmarking tests conducted in late 2011, the Redknee TCB solution, operating on Intel Xeon processors and X-IO Hyper ISE storage, was able to scale to 250 million simulated subscribers, generating 26 million invoices within a six-hour billing cycle and mediating 4.9 billion call detail records (CDRs) within 12 hours. 2 Redknee offers its TCB solution, in partnership with Microsoft, as a licensed software sale, or through a variety of managed services options including on-premise management, an off-site hosted environment or via a public cloud offer. This level of flexibility and measured processing capacity allows Redknee to execute a policy-enabled real-time billing strategy. As business needs continue to evolve, especially as new customer service options come forward based on device type, time of usage, type of content accessed and location, the need for flexible monetization solutions, such as the Microsoft-Redknee TCB solution, take on great significance. Stratecast expects that the flexibility of, for example the TCB solution offered through a public cloud offer, could reduce time to market for some CSPs to try out new business concepts with very minimal implementation times, associated costs, and disruption to existing business operations. For others, TCB will be the pathway for cost-effective support of the new business models that will propel business success in the months ahead. 2 Additional details are contained in the Microsoft Redknee report, Benchmark Testing Results: Redknee TCB Running on SQL Server 2012, April Stratecast. All Rights Reserved. 7

8 Stratecast Frost & Sullivan Stratecast The Last Word Managing the complex personalized life changing services that customers are growing to expect, means systems and internal processes must now give customers the flexibility to set usability controls, access limits, financial boundaries, and balance transfer mechanisms. To be most effective in addressing customer needs, systems and associated processes must also calculate and then notify customers of the financial impacts of an event as soon as it occurs. Such solutions must address all high-volume transactions from whatever source, regardless of how the final rating & charging strategy is defined to the end customer. This includes transactions from human-generated events such as text messages, data sessions, and voice calls, but also usage details from enterprise business solutions and those that involve M2M actions. So much of the customer relationship process today is oriented around the monetization and customer interaction functions. These areas must now provide the greatest level of flexibility to deliver a positive customer experience, to meet competitive pressures, and to keep the total cost of ownership at a minimized level. If the flexibility to support new business models and personalization options is limited, CSPs will have to forgo many of the opportunities that are now here, or create major workarounds using existing systems. This approach will lead to issues with accuracy, scalability, customer satisfaction and remaining current with key marketing needs. Today s changing business environment has produced a combination of new requirements defined by multiple business drivers, as technology evolves and customer appetite for new service options advances. Business support from solutions such as the Redknee TCB billing and customer care system running on the Microsoft SQL Server, Windows Server, and Microsoft Dynamics CRM stack are well suited to address these changing needs in many situations. As time evolves, Stratecast believes that additional change will come from business scenarios created by marketing-driven organizations that recognize how cloud-based services, cross-industry business models and advanced M2M customer solutions are tomorrow s business reality. It is therefore essential that the business support solutions installed now be able to meet the customer environment that continues to define our changing world. Karl Whitelock Director OSS/BSS Strategy Stratecast Frost & Sullivan kwhitelock@stratecast.com Stratecast. All Rights Reserved.

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