Transformation Reality Check

Rapid ROI Key to Revenue Management Initiatives

Paul Hughes — Tue, 10 Feb 2009 16:05:00 GMT

The telecommunications industry is at an interesting crossroads, driven in part by the continued need for communications service providers to transform their operations in order to improve efficiency. At the same time, providers are facing a global economic slowdown that is forcing an intense review of many investment decisions.

TM Forum Insights has just completed a research study based on interviews with leading telecom carrier and vendor executives, discussing expectations for revenue management and related spending over the next 12 months. The report entitled “Revenue Management and Related Technology Trends for 2009 and Beyond” concludes that 2009 looks to be a year where investment in revenue management and related projects with rapid ROI will take precedence. We can expect to see increased focus on the key areas of assurance, real-time customer management, dynamic policy based billing, customer interaction and system performance. Since most revenue management spending is done either to capture greater amounts of revenue more quickly, or to reduce the amount of revenue lost through poorly functioning systems and processes, this technology area is one that providers cannot neglect. Three of the five key spending areas are discussed below.

Shifting to a Real-Time Architecture
Current market conditions will drive providers to evaluate best practices of a real-time service delivery environment and map them more closely with those in a more traditional postpaid, batch oriented environment. CSPs still need to tighten real-time linkages between OSS/BSS and CRM platforms to improve quality of service, offer better and faster customer care, and provide instant access to information about both successful and failed service consumption. Today’s high value customers have proven that they are willing to pay a premium for better service, but are also more willing to churn to get a higher quality experience.

Dynamic Policy Based Billing
In the wake of falling carrier profits and the disruption of traditional voice and data pricing models by new market entrants, restoring profitability will require creative service offerings that improve the CSP’s ability to engage different customer types. Prior to most carrier back office transformations, the back office has struggled with these new billing scenarios because it requires more than just the typical provisioning, delivery and billing of services. As a result, CSPs must evaluate a new service management layer that supports a dynamic policy-based billing layer. This real-time business layer links network elements to all elements of the OSS layer, including provisioning, mediation, and order management. This new business control layer will allow the CSP to better track service consumption on a usage basis and drive another layer of real-time capabilities into the OSS/BSS process layer, making it easier to manage the experience at an individual customer level.

Resurgence of Revenue Assurance
In the face of a global economic crisis that may loom for the next 12 to 18 months, CSPs have to refocus on the importance of revenue capture. Current market pressures are beginning to replicate what CSPs had to deal with after the Internet bubble burst in early 2001. While telecommunications has yet to see the same downturn seen in the financial industry, the current constraints are re-invigorating the importance of sophisticated revenue assurance solutions that can help them maximize revenue from new services and ensure revenue capture from existing services.

Service maturity in particular will begin to drive CSPs’ revenue assurance initiatives, particularly in Latin America and other emerging markets, where service growth has slowed considerably. In the past, government run PTTs were the sole players in highly regulated markets, and lack of competition created little to no demand for revenue assurance, particularly in the rate-of-return era, when incumbents were guaranteed

Content Management Can’t Work Without Collaboration: An Excerpt from a Recent TM Forum Insights Report

Paul Hughes — Thu, 18 Dec 2008 16:06:00 GMT

With revenue growth in traditional services lagging, content management is at the heart of any service provider and media/entertainment company revenue growth strategy, and any telecom operator that is in the midst of a technology transformation should have a robust content delivery and management strategy as part of the underlying planning.

Successful content delivery requires a multi-step ordering, delivery and revenue management strategy that integrates the carrier OSS/BSS with the content provider's and offers a quality of service and service assurance mechanism that minimizes delivery and customer care issues. While all the technology pieces must be in place in order to build a delivery strategy, business rules, standards and processes are equally important to assure the success of content delivery and its subsequent monetization.

Shifting Business Models
The impact of digital content is already having a profound effect on traditional delivery channels, creating both confusion and opportunity as traditional distribution points are closing their doors and forcing operators and content enablers to start getting creative.

As business models for music and video delivery shift, one would expect both the communications service provider and media/entertainment industries to move rapidly to support this new model. The technological impact of the shift to supporting a flexible content management delivery has hit numerous roadblocks due to previous business model attempts and failures, general inertia, longstanding legal guidelines that have been in place for physical content distribution, lack of OSS/BSS capabilities to support the order-to-cash-to-care process, and illegal distribution that creates a free method for receiving high-value content.

Yet recent panel discussions at TM Forum’s Management World Orlando highlighted one key area whose importance is above and beyond that of just technology. That area is of course, collaboration. Based on feedback from panels from both the CSP side and the media/entertainment side of the business, very little has been done up until this point to create a more unified vision for how content management should be supported.

Communications service providers and media/entertainment companies should be focusing on the creation of a collaborative content management strategy that links content creators, aggregators, value added players, carriers and consumers together seamlessly. This model will allow the end customer to gain access to content from any source at any time, and allow all network facing players to play both active and passive roles in the delivery. The active or passive nature of the players will vary based on the interworkings of the content delivery chain, the value of each player’s role in the delivery, and in many cases, the end customer’s entry point into the content value chain.

Content providers who deliver content directly to the customer will disintermediate the communications service provider and relegate them to the “pipe” provider. Service providers who wish to play a value-added role in content delivery must think about injecting value in the content delivery value chain and act either as an intermediary or as a value added partner to the content originator by offering cross promotions, cross advertising, or unique telco/content bundles.

Teaming Up During Tough Economic Times
Looking at the current state of back office investment across the media and entertainment space, it is evident that a standardized content management structure for CSPs and media providers cannot be found anywhere in the industry. Lack of spending on digital content (estimated as less than 10 percent of all carrier revenue to date) and past digital distribution model failures have made it difficult for these players to invest in a potentially risky service delivery strategy.

However, the rapid demise of traditional distribution models for content are forcing every player in the content delivery chain to start to evaluate a more long-term strategy around technology investment to support these services. Today’s generation of consumers are embracing the online channel for content acquisition thanks to the benefits of real-time access, easy search and a growing inventory of content. CSPs and media/entertainment organizations are leaving significant revenue on the table by not making content accessible and by not investing in the tools and wherewithal to support a digital distribution model.

Content revenue cannot be captured effectively without stronger collaboration between the communications service provider community and the media and entertainment community. The convergence of communications and media in this market segment creates an excellent opportunity for telecommunications providers to play a more important role in the distribution of content and demonstrate that closer collaboration will create revenue upsides for all parties in question. Effective content distribution cannot take place without intelligent delivery mechanisms in place, and content creators must embrace the open-ended distribution model driven by multi-party collaboration if they want to monetize all aspects of digital content. Subsequently, these creators should also build a robust inventory strategy that will allow real time access to all types of content, and real time revenue collection based on consumption.

We at TM Forum feel that better collaboration between all parties in the digital supply chain is now more essential than ever, considering the uncertain economic times ahead. Revenue growth can only come from a greater breadth of services on offer to the end user, and what better way to offer more services than to build strong collaborative partners that can help create a richer customer experience, and subsequently, a greater likelihood of the customer to spending more money with you.

If the Digital Locker is the Answer to Content Service Portability, Could the Communications Service Provider Community Monetize It?

Paul Hughes — Wed, 17 Dec 2008 21:32:00 GMT

The digital locker concept emerged recently as an Internet based storage method that allows consumers to move content services from one location or device to another. Considering the number of times that I've either lost digital photos , electronic documents, or music due to a computer hard drive glitch, file corruption, or simply forgetting to transfer the information to a new computer or device, use of a digital locker would make sense.

Like many new service offerings that become available to the consumer, these services only tend to be consumed if the new service provider is a trusted name with brand equity that is well recognized in the industry. Pricing for such services must be competitive with other similar offerings, and the end consumer must perceive a level of value for the price point. Apple and online music are without question the best example of product/service and brand pairing success.   In the digital locker space, Microsoft was one of the first large brand names to embrace the idea, integrating it as part of its Windows Marketplace service. This week however, Microsoft announced that it will be discontinuing the service in August of 2009. From my perspective, much of this is likely due to the product being part of Windows Marketplace that it recently decided to close, but also due to technology issues such as the service not working with 64 bit versions of Windows Vista.

With Microsoft out of the picture, it begs the question: Who's next to try this? Clearly, any player looking to launch a digital locker service will be aided by an existing customer base, a storage facility that offers terabytes of available storage space, and the ability to market, provision and bill for the service. Would a Tier 1 communications service provider potentially fit the bill here? Here are several reasons why they might.

1.   Any Tier 1 CSP has brand equity with millions of consumers and businesses. Most also have built customer retention through innovative service bundles that combine a wide variety of products and services.

2.   Fixed line Tier 1 CSPs own the pipe into their customers' homes and businesses.

3.   Many Tier 1 CSPs have undergone a data warehouse transformation that has consolidated distributed data marts across the organization into a single unified enterprise data warehouse. Many of the siloed data marts, now considered to be obsolete, now sit idle, and may currently be waiting for decommission or sale. This data mart infrastructure could represent ideal storage capacity for digital locker services.

4.   OSS/BSS infrastructure already exists to support the sale and revenue management for newly launched services. Digital locker services could either be positioned as a multi-tiered monthly subscription based on the size of the locker, or based on locker activity. It could also be offered as an add-on to any broadband service being offered to new or existing customers and billed for accordingly.

5.   Many media organization are realizing that with the current state of the digital content distribution, it's better to join them, rather than fight them. Many are even now willing to work to help support the distribution of content, regardless of where it originated. Companies like CatchMedia have helped to spearhead this initiative, and could become valuable partners to the CSPs in any digital locker initiative.

I consider myself a technologically advanced consumer, but I am the first to admit that trialing new services, especially something as significant as digital asset storage, has me looking for a reliable, well known partner. I'm willing to pay for guaranteed quality of service and security, and would love to see the service bundled on my bill as part of a larger communications multi-service offering. I would even be willing to pay extra to allow multiple designated users to have either one way or two way access to my account. Considering the number of times I've had files rejected by email servers because they are over a certain size threshold, being able to bypass the email channel would be an ideal way to share content with friends and family.   I think many heavy Internet users would probably agree with me.

Cautious Optimism – My View of the OSS/BSS industry in 2009

Paul Hughes — Wed, 17 Dec 2008 21:28:00 GMT

Recent conversations with OSS/BSS vendors and several Tier 1 communications service providers after TM Forum's Telemanagement World Americas conference in Orlando provided me with some positive news, this amongst the ongoing deluge of sour global economic news that we get bombarded with on a daily basis. The overall picture is that the current economic climate for the communications industry, while challenging, isn't showing signs of implosion like we saw during the 2001-2002 Internet bubble burst. Much of the discussions around the state of the OSS/BSS industry leave me cautiously optimistic, at a time when many other industries are suffering.

First, and most importantly, CSP back office transformation projects continue to progress steadily and the strategic nature of better back office efficiency is not something any of them can afford to put on hold. Most transformation projects within the Tier 1 operators are in the latter stages, and any investment stoppages would create long term headaches once the economic climate improves.   Most CSPs commented that these projects will progress regardless of economic climate, and the ongoing build out of video services as part of the overall service portfolio represents a critical component of current and future revenue growth. Most also commented that they will prioritize IT projects abased on the expected return on investment. While most multi-service operators expect to see ongoing declines in fixed line service revenues (even without the touch economic climate), wireless, broadband and video businesses still show a more positive outlook, recently seen in the financial results announced by AT&T and Verizon.

Secondly, discussions with OSS/BSS technology suppliers were consistently positive, particularly in regard to the next two upcoming quaters.   Sales pipelines remain strong, and there are few signs of any back office projects being put on hold. There has been, however, some pushback on spending related to projects that may have an unproven outcome or are more long term in nature. Billing, rating and charging market outlooks remain healthy, driven in part by the need for real-time back office support for NGN services. Policy management and better bandwidth usage tracking are increasing in importance driven by the ever increasing demands for bandwidth. This has driven the shift from legacy batch oriented processes to a real-time services oriented architecture that will empower the CSP to make smarter business decisions.

Thirdly, the ongoing convergence of communications and media continues to highlight the fact that there is much integration work that needs to be done here to provide the customer with a rich user experience on both fixed and wireless devices.   Follow up discussions with media-centric panelists from Telemanagement World Orlando's New Content Value Chain track sessions all highlighted the exact same issue: CSPs and media organizations are only JUST starting to begin more official conversations about how to work together, integrate service offerings, and create a robust customer experience that benefits both parties. Many media organization are only just now accepting the fact that digital content distribution will continue to replace traditional content distribution channels. From my perspective, the media and entertainment industry will need to rely on CSP's OSS/BSS business models and potentially even their infrastructure to help manage digital content delivery and revenue capture.   These requirements represent excellent opportunities for the technology community to help bring the CSP and media communities together from a service delivery perspective, demonstrate the needs for revenue management, partner management, and related delivery needs.   Let's just hope these companies can figure out the proper business structure and figure out how to work together effectively.

Signs like these demonstrate to me that the current communications market climate is showing resilience. Even in a weak economy, it's important for all of us to ask ourselves several key questions: Are we ready to give up the Internet and related connectivity? Can we live without our wireless device(s)? Are we going to forego video services?   The current answer to all these questions is exactly what the CSPs and the telecommunications software community wants to hear. That answer is "no" and I don't expect that answer to change any time soon.

Leveraging Your Early Adopters

Paul Hughes — Thu, 09 Oct 2008 23:12:00 GMT

Last week, my brand new car suffered a catastrophic transmission failure that required a flat bed to come and pick it up from the side of the road. It also left a mess on the road near my house that will remind me of the failure for many months to come. This car is no low-end econobox either; it’s an expensive new model from a manufacturer globally renowned for innovation, performance and build quality. As a consumer, seeing such a failure in a car with 600 miles on it makes me consider what my options are, no matter how extreme they may be. I either stick it out, wait for the fix and try again, or raise bloody hell at the dealer and get rid of it.

Thankfully for the manufacturer, I am one of those consumers willing to test new products and accept minor issues when they arise. My sentiments however, may not echo those of consumer and enterprise customers regarding the launch of new services. Most tend to be extremely fickle when it comes to trying new services, and one or two early failures can cause a significant amount of churn. However, it’s important to remember that early technology adopters tend to be more resilient, are happy to test out new services and become a core test bed for trying new service launches. Operators, in their quest to build ARPU should tap into this willing resource as a beta test group before they launch a new service to their entire customer base. With the right business intelligence tools, these operators can segment their customers based on characteristics that highlight their willingness to be a test bed for a new service.

These test bed customers could be extremely valuable in testing new content services, new payment mechanisms, service/content bundles and a variety of other potential offerings. The data gathered based on the test audience can be used to refine service offerings, insure technology assets in place are functioning as expected, and get hands on honest advice on what needs to be improved or changed. More importantly than that, the customer that acts as part of the testing program, if treated well, will likely feel an even greater sense of loyalty to the provider, and will be even easier to retain in the long term. And since they are often called upon for advice in their social circles, they can help boost early adoption. Software, video game, and web companies have recognized this for a few years, and have active early adopter programs. Shouldn’t service providers?

As for me, I consider myself an early technology adopter, willing to accept the odd problem here and there. As such, I will see how the next 600 miles progress…let’s hope for better luck this time!

Transformation or Convergence?

Paul Hughes — Thu, 09 Oct 2008 23:11:00 GMT

Transformation is probably the best word I’ve heard in a long time to describe the CSPs’ ongoing pursuit for operational excellence. For over 10 years, the industry has been bombarded with ever present description of technology, market and industry related “convergence,” but let’s face the facts. Convergence is defined by the MS Word 2007 dictionary as “a coming together from different directions, especially a uniting or merging of groups or tendencies that were originally opposed or very different.” Has the communications industry really been coming from together from different directions, or uniting different ideals?

If you look back over the past five to 10 years, virtually every CSP started a substantial back office technology rationalization project to eliminate out-of-date systems, facilitate the launch of new services, and attempt to future-proof newer technology investments through the use of more flexible architectures. Most of the rationalization projects have started at the BSS layer, driven by the fact that during times of rapid growth, it was easier and faster to add new BSS than it was to expand and upgrade the systems that were already in place.

Regardless of the project goal or its inception point, the ideals were the same...to bring new services to market quickly, simplify the infrastructure, and make it easier to do business with the customer. Every CSP OSS/BSS investment is made to transform the business to become more efficient and more customer-centric.

From this point on, I will try my hardest to eliminate the word "convergence" from any report I write or presentation I make.

Convergys IMG and CMG to become separate entities...at last?

Paul Hughes — Thu, 09 Oct 2008 23:11:00 GMT

For years there have been rumors that Convergys was looking to split its Information Management Group billing business from its Customer Management Group care, HR and call center businesses, and now it appears that those rumors may finally materialize The potential split of the two businesses has been an ongoing topic of conversation among carriers and Convergys’ competitors for several years now, driven in part by the different structures of the businesses: Convergys’ call center and HR businesses are a multi-vertical and globally oriented, whereas the IMG business has been predominantly communications industry focused. Over the years, Convergys has placed substantial effort and resources into creating a unified business structure that would allow for a more unified back office/front office technology and service offering, and developed/refined several solutions that were applicable across both business lines.

Needless to say, there are different target audiences for the two solution areas, and while traditional back office and front office solutions need to be better integrated, Convergys’ customer facing business is much broader than traditional telecommunications CRM. Secondly, the business models are different, when you consider a licensed based software or outsourced software model versus a seat based call center service. This creates a challenge in creating a unified pricing strategy for a combined solution, especially for CSPs that may have their own call center operation managed internally or are currently working with another outsourced call center provider.

Before any business split is final, it is our opinion that Convergys should review all standalone technology assets within CMG directly tied to the order-to-cash-to-care process to determine the benefit of aligning them more closely with IMG for communications-centric offers. The growing importance of business intelligence as a key piece of any carrier’s order-to-cash-to-care process should drive Convergys to look at customer acquisition and retention solutions as important components of any IMG solution sell. This would strengthen Convergys IMG’s position amongst its competitors, and help to create a unique telco-centric solution that can be offered as a license-based or outsourced solution, something that many of its competitors can’t offer without external third party support.