CSPs Must Keep Up With the Changing Needs of Business Customers

White Paper CSPs Must Keep Up With the Changing Needs of Business Customers Prepared by Ari Banerjee Senior Analyst, Heavy Reading Sarah Wallace Analyst, Heavy Reading www.heavyreading.com on behalf of www.amdocs.com August 2012

Executive Summary As communications service providers (CSPs) face the challenge of continually increasing revenue streams, one customer segment they are trying to better serve is the enterprise/small-to-midsize business (SMB) segment. Heavy Reading recently conducted a survey of 56 unique CSPs worldwide, examining their attitudes, perceptions and plans regarding enterprises and SMBs. Respondents worldwide report a universal concern of increasing customer satisfaction for this segment. This means that CSPs must keep up with the demands of their business customers and their growing demand for the consumerization of IT, due to offerings such as bring your own device (BYOD). CSPs are aware of this demand, and now they must make sure their own systems and IT departments are able to provide and support such services. According to the survey, CSPs are definitely concentrating on the needs of business customers, as they want to offer services such as enable threshold alerts, customer set spending and rich customer care options and loyalty plans. Survey respondents also indicate that they would like to improve their business customer satisfaction by having a single view of the customer. Despite these desires and others, CSPs find that complex activities such as resource optimization, service qualification and design and discovery leave them with suboptimal service fulfillment and fallout rate. CSPs also feel that other factors, such as lack of business/operations support service (BSS/OSS) convergence, inhibit them from better serving their business customers. On top of their own operational issues, CSPs are also dealing with the demands of the business customers themselves. With the demand for the consumerization of IT, customers are asking CSPs to provide capabilities such as separate price plans for employees' personal use and business use and to disable certain services when a user switches from business to personal mode. And demand for such capabilities keep increasing as BYOD promises cost savings. Depending on their own BYOD policies, businesses may be thinking that they don't even have to purchase or support their employees' devices, saving them money. At the same time, businesses realize that BYOD does not translate to "bring your own support" for the device, so the burden of supporting the vast array of devices will fall on corporate IT, and business customers will be looking for solutions from CSPs as a result. Survey respondents from EMEA, CALA and North America say they look mostly to managed-services offerings to help business customers deal with BYOD initiatives. Asia/Pacific respondents say they will look to partners to provide business apps and a shared portal for business/residential users. Despite the growing demand for BYOD initiatives, the majority of Asia/Pacific, North America and EMEA respondents say their business customers do fear that BYOD initiatives will create network security and corporate data security risks. Bandwidth-hogging devices or apps that can impact corporate network performance and employees using devices for personal activities are other major concerns of business customers. To support BYOD initiatives, CSPs will have to make sure their own systems are upgraded and ready to provide such offerings. As smartphones become more ubiquitous and mobile apps become more popular, employees now expect to be able to use such tools for both personal and professional use, increasing momentum for BYOD. As enterprise and SMB customers ask CSPs for the consumerization of IT, CSPs will need a comprehensive solution set that allows them to service and support BYOD and ultimately better service their business customers. HEAVY READING AUGUST 2012 WHITE PAPER CSPS MUST KEEP UP WITH THE CHANGING NEEDS OF BUSINESS CUSTOMERS 2

CSP Perceptions & Plans for Business Customers As previously mentioned, CSPs are turning to their enterprise and SMB customers to find innovative ways to increase revenue. The Heavy Reading survey asked CSPs specific questions in regards to their current offerings, perceptions and plans for business services over the next year. When respondents were asked what business services they plan to launch in the next 6 to 12 months, the majority of global respondents say they plan to launch 4G service (20 out of 45 respondents), followed by VoLTE (17 out of 45 respondents) (Figure 1). Figure 1: Which of the following types of business services does your company currently provide, and which services are you planning to launch in the next 6 to 12 months? The largest groups of global respondents (35 percent) report they change their enterprise offerings every 6 to 12 months and their SMB offerings (23 percent) every 6 to 12 months or every 2 to 3 months. This indicates that CSPs are aware of and continually trying to keep up with their business customers' ever-changing needs. It also tells us that size impacts complexity, in that changing or creating new services for larger enterprises takes more effort in coding and testing (Figure 2). CSPs want to be able to increasingly satisfy their business customers by providing services that make the customer experience richer. When survey respondents were asked what they would like to be able to provide to their business customers, HEAVY READING AUGUST 2012 WHITE PAPER CSPS MUST KEEP UP WITH THE CHANGING NEEDS OF BUSINESS CUSTOMERS 3

the majority of global respondents answered that they would like to be able to provide real-time offer management (28 out of 30 respondents) followed by rich customer care options and loyalty plans (25 out of 30 respondents(figure 3). Figure 2: How frequently does your company change or launch new offerings, services or price plans for SMB and enterprise customers? Figure 3: What are some of the things you cannot do currently with your business customer systems that can be done on the residential side and some of the things you would potentially like to do? HEAVY READING AUGUST 2012 WHITE PAPER CSPS MUST KEEP UP WITH THE CHANGING NEEDS OF BUSINESS CUSTOMERS 4

Complexities in Delivering Business Services CSPs experience many complexities in delivering business services, especially in terms of the fulfillment of an enterprise network service such as IP virtual private network (VPN). The majority of global respondents report that resource optimization is its most complex fulfillment of an enterprise network service for IP VPN (Figure 4) indicating that CSPs mostly feel that the demands of their business customers may be exceeding the resources they have available. Figure 4: On a scale of 1 to 5, where 5 is "extremely complex" and 1 is "not complex at all," please rate the complexity of the following activities in the fulfillment of an enterprise network service like IP VPN. Another area of complexity for CSPs providing business services is that of high order fallout. Globally, 63 percent have more than 10 percent order fallout, and 32 percent indicate having more than 20 percent order fallout (Figure 5). Figure 5: What percentage of order fallouts meaning, orders that are submitted but not fulfilled on time does your company now experience? HEAVY READING AUGUST 2012 WHITE PAPER CSPS MUST KEEP UP WITH THE CHANGING NEEDS OF BUSINESS CUSTOMERS 5

What Business Customers Are Demanding We have assessed CSPs' current business offerings and what they would like to offer over the next year, but what their business customers demand from CSPs may be even more crucial. As mentioned above, offerings such as BYOD are increasing the demand for the consumerization of IT. When asked what kinds of requests CSPs are getting in this area, 52 percent of global respondents get requests from business customers to provide separate price plans for employees' personal use and business use and to disable selected enterprise-specific services when the user switches from business to personal mode (Figure 6). Figure 6: What kinds of requests does your company get from business customers regarding the consumerization of IT? When asked how much the demand for IT consumerization will grow in the next year, 44 percent of global respondents feel it will grow 10 percent to 25 percent, followed by 27 percent reporting that it will grow less than 10 percent (Figure 7). Figure 7: By how much do you expect demand for IT consumerization services to grow in the next year? HEAVY READING AUGUST 2012 WHITE PAPER CSPS MUST KEEP UP WITH THE CHANGING NEEDS OF BUSINESS CUSTOMERS 6

CSPs were then asked the potential benefits that their business customers believe BYOD will bring to their organization. The majority of global respondents (76 percent) report that cost savings is the biggest benefit for business customers bringing their own device to their own organization, followed by employee satisfaction (70 percent) (Figure 8). Figure 8: What potential benefits do your business customers believe that BYOD will bring to their organization? This leads to the more specific question regarding business customers' perceived cost reduction as a result of BYOD initiatives. The majority of global respondents (46 percent) feel that BYOD would create a reduction cost of 10 percent to 25 percent followed by 34 percent of respondents reporting that it would create a cost reduction of less than 10 percent (Figure 9). Figure 9: What percentage cost reduction in cost do your enterprise customers expect from BYOD initiatives? When asked what percentage increase in employee productivity does your enterprise customers expect from BYOD initiatives, 42 percent of global respond- HEAVY READING AUGUST 2012 WHITE PAPER CSPS MUST KEEP UP WITH THE CHANGING NEEDS OF BUSINESS CUSTOMERS 7

ents feel that BYOD initiatives would only increase activity 10 percent to 25 percent, while 36 percent of respondents report that it would increase activity less than 10 percent (Figure 10). Figure 10: What percentage increase in employee productivity do your enterprise customers expect from BYOD initiatives? The majority of global respondents (56 percent) look mostly to managed services offerings to help enterprise customers deal with BYOD initiatives followed by partnering to provide business apps at 46 percent (Figure 11). Figure 11: What offerings/preparations does your company now provide or plan to provide to help your business customers deal with BYOD initiatives? BYOD initiatives will spark the development of business apps as companies will have to create customized apps to their specific business needs. It will be up to the organization itself whether it will want to use internal resources for such development or partner such as some respondents have answered. HEAVY READING AUGUST 2012 WHITE PAPER CSPS MUST KEEP UP WITH THE CHANGING NEEDS OF BUSINESS CUSTOMERS 8

Business Customer Demands Put Pressure on IT As demands for services such as BYOD increase, CSPs are experiencing mounting pressure on their own IT departments as they try to provide and support these new services. CSPs were asked (from a system standpoint) what is inhibiting them from serving their business customers better. Slightly more than half (53 percent) of global respondents feel that the lack of BSS/OSS convergence is the biggest problem inhibiting their company from serving business customers better, while 51 percent report that it is the lack of a single view of the customer, followed by siloed BSS/OSS systems at 49 percent (Figure 12). Figure 12: From a system standpoint, what are the key problems that are inhibiting your company from serving its business customers better? Global respondents report that the most critical factor in supporting and improving service to business customers is the single view of the customer (4.23) followed by flexible and integrated policy and charging platform (3.96), followed by BSS/ OSS convergence (3.92) (Figure 13). As businesses' employees are driving demand for BYOD initiatives and there is a great deal of appeal in terms of cost savings, business customers still have many concerns in providing such services. The majority of global respondents in our survey feel that the biggest problems are the fact that BYOD initiatives would create network security risks, as well as corporate data security risks, followed by bandwidth-hog devices or apps impacting corporate network performance (Figure 14). HEAVY READING AUGUST 2012 WHITE PAPER CSPS MUST KEEP UP WITH THE CHANGING NEEDS OF BUSINESS CUSTOMERS 9

Figure 13: On a scale of 1 to 5, where 5 is "critical" and 1 is "not important at all," please rate the importance of the following factors in supporting and improving the service your company delivers to business customers. Figure 14: On a scale of 1 to 5, where 5 is "a major problem" and 1 is "not a problem at all," please rate the seriousness of the following issues for your business customers regarding BYOD initiatives. The majority of global respondents feel that the biggest problem supporting business customer's BYOD initiatives is security worries at 69 percent, followed by different payment channels/price plans and increased costs for supporting additional devices both at 51 percent (Figure 15). Regionally, the majority of North HEAVY READING AUGUST 2012 WHITE PAPER CSPS MUST KEEP UP WITH THE CHANGING NEEDS OF BUSINESS CUSTOMERS 10

American, EMEA and CALA respondents feel that security is the biggest problem in supporting BYOD initiatives for business customers as 73 percent of North American respondents, 75 percent of EMEA and 88 percent of CALA respondents reported being worried about BYOD security. Figure 15: What key problems do you envision in supporting your business customers' BYOD initiatives? (please choose all that apply) HEAVY READING AUGUST 2012 WHITE PAPER CSPS MUST KEEP UP WITH THE CHANGING NEEDS OF BUSINESS CUSTOMERS 11

What This Means for BSS/OSS Systems So what does this mean for CSPs' BSS/OSS systems? CSPs will have to make sure their systems are upgraded and ready to provide such offerings to their business customers and be able to implement such services quickly and provide services and support in real-time. But 53 percent of respondents feel that lack of BSS/OSS convergence is inhibiting them from serving business customers better. Another 51 percent report that the lack of a single view of the customer is their biggest problem, followed by siloed BSS/OSS systems at 49 percent (Figure 16). Figure 16: From a system standpoint, what are the key problems that are inhibiting your company from serving its business customers better? The majority of global respondents (77 percent) would like to integrate residential and business OSS/BSS systems for certain purposes (Figure 17). Figure 17: Would you like to integrate residential/business OSS/BSS systems for certain purposes? HEAVY READING AUGUST 2012 WHITE PAPER CSPS MUST KEEP UP WITH THE CHANGING NEEDS OF BUSINESS CUSTOMERS 12

Globally, CSP respondents also believe integrating residential/enterprise OSS/BSS systems will enable an end-to-end view of subscribers (71 percent) and improve the customer experience (67 percent) (Figure 18). Figure 18: What benefits would integration of residential/enterprise OSS/BSS systems bring to your company? CSPs must work on decreasing their order fall-out rate during the fulfillment process, but when asked what percentage of their enterprise network service orders have "in-flight" changes meaning orders that are changed during the fulfillment process more than 75 percent of respondents report 1 to 20 percent "in-flight" changes, and 53 percent report at least 10 percent, indicating that large businesses may have many "in-flight" changes to complex orders (Figure 19). Figure 19: What percentage of your company's enterprise network service orders have "in-flight" changes? HEAVY READING AUGUST 2012 WHITE PAPER CSPS MUST KEEP UP WITH THE CHANGING NEEDS OF BUSINESS CUSTOMERS 13

Along the lines of understanding the enterprise customer better, when CSPs were asked the potential benefits in linking/correlating between a private subscriber and his or her corporate account, the largest group of respondents (42 percent) feel that it will provide an end-to-end view of the customer's transaction patterns, followed by understanding the individual customer's non-business communications needs, with 37 percent (Figure 20). Figure 20: What potential benefits do you see in linking/correlating between a private subscriber and his or her corporate account? HEAVY READING AUGUST 2012 WHITE PAPER CSPS MUST KEEP UP WITH THE CHANGING NEEDS OF BUSINESS CUSTOMERS 14

Conclusion As CSPs continue to grapple with their own operational issues, they still must increase their revenue stream in order to compete in the competitive landscape. While CSPs look to enhance the customer experience with their business customers, they must at the same time meet their business customers' demands. The consumerizaton of IT is one of those increasing demands. One of the drivers behind this demand is the increased popularity of BYOD, which is only logical as smartphones have become commonplace, mobile apps become more popular and employees now expect to be able to use such tools for both personal and professional use. It is obvious that business customers will have to establish their unique BYOD polices and determine to what degree employees will handle their own devices and what type of support the business will provide. Of course BYOD comes with increased liability as outside apps may pose security risks. With thousands of new apps being released on a daily basis, devices are susceptible to viruses or even having data stolen. So BYOD offerings will have to incorporate very specific policies and include mobile management. IT departments will have to oversee and support various passwords to enterprisespecific apps. Employee usage will be another area to consider as data control may be a concern. And, though BYOD policies may be in place, there may be failure and CSPs will have to be ready to support such an event. Furthermore, CSPs must keep in mind that the wide variety of devices will also need to be supported in a cost effective manner. It is simply not possible to train the enterprise customer's corporate IT to support all types of employee owned devices. CSPs will need to offer tools that will allow corporate IT to gain visibility into employee devices in order to rapidly diagnose and troubleshoot devices. These factors must be considered not just by businesses, but also by the CSPs supporting them. This puts CSPs at a whole other level of management and responsibility, and their business customers are looking to them to be able to handle such requests right away. CSPs will have to get past their own operational hurdles to provide such services quickly and in real-time while congruently guaranteeing security for both the network and data. Consumerization of IT is definitely here and increasing in demand through the request of BYOD services. It is now up to the CSPs and their business customers to provide and serve it the best way they can. CSPs will have to choose a solution that can help them support all of the aforementioned while also integrating with their current BSS/OSS systems. HEAVY READING AUGUST 2012 WHITE PAPER CSPS MUST KEEP UP WITH THE CHANGING NEEDS OF BUSINESS CUSTOMERS 15