Transcript Service Provider Strategies Telecoms Software

Webinar
Balancing service demand with resource capacity: migrating
software systems to build profitable business models
Patrick Kelly and Jessica Figueras
15 September 2011
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Service Provider Strategies and Telecoms Software
Strategies client briefing
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Introducing our new Service Provider Strategies research programme – presented by
Jessica Figueras:
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Built on our existing research, adding new value.
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Key strategic concepts focused on service provider business problems.
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Important datasets of value to service providers.
Telecoms software strategies programme – presented by Patrick Kelly:
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Key strategic software concepts.
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Examples from our research applying these concepts.
Q&A
Telecoms Software research
Telecoms Software research from Analysys Mason
• Two strategic overview programmes:
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Service Provider
Strategies
Operational and IT metrics
Business-driven analysis
Service Provider Strategies
Telecoms Software Strategies
• Six application-specific programmes
Telecom Software
Strategies
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Analysis of software
technology issues and
innovations that cut across
all areas
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Billing
Customer Care
Service Assurance
Service Fulfillment
Service Delivery Platforms
Infrastructure Solutions
• Two data overview programmes
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Telecoms Software Forecasts
Telecoms Software Market Shares
Telecoms Software Forecasts
Telecoms Software Market Share
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Telecoms software for network operators
Service Provider Strategies
Drive in-depth analysis of
telecoms software deployment
Digital
consumer
Enterprise
cloud
services
Drive
for scale
Strategic
drivers for
telecoms
software
Evolving
telecoms
value chain
Machineto-machine
/ Internet
of things
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Service Provider Strategies
Service Provider Strategies
Operational datasets:
• Operating data for service providers
globally – revenue, opex, capex,
subscribers.
• IT spend metrics – commercial software,
internal IT, professional services.
• Updated historic data and forecasts.
Mobile
non-messaging
Mobile
4%
messaging
8%
Video
9%
Drive in-depth analysis of
telecoms software deployment
Strategic analysis:
• Key business drivers that require new
telecom software.
• Analysis of the impact of operator business
issues on major software systems.
• Case studies from operators around the
world.
• Linkage of strategic business drivers to other
operational systems research.
Mobile voice
36%
Broadband
9%
Business
services
15%
PSTN
20%
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Total revenue: USD1767 billion
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Service Provider Strategies
SPS – IT spend metrics
CSP IT Spend 2010 - $133B
TSW products
9%
Product-rel svsc
7%
Internal
31%
Prof svc
28%
Enterprise
5%
Service Provider Strategies evaluates a
range of IT spend metrics to help CSPs
evaluate budgets and plans
• Globally, CSPs spent over USD130 billion
for IT systems in 2010.
• Spending for internal IT staff continues to
be the largest component of IT spending.
• Spending for commercial telecomsspecific software and related services
totalled over USD20 billion.
• IT spending takes about 7% of total CSP
revenue globally.
• IT spending in emerging markets tends to
be a lower percentage of revenue than for
developed markets.
IT systems
20%
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Service Provider Strategies
Service Provider Strategies evaluates
basic CSP metrics
SPS – service provider
metrics
Telecoms service revenue, worldwide,
2009–2014
2.5
2.4
2.2
2.1
2.0
2.0
Revenue (USD trillion)
1.8
1.9
• Service Provider Strategies evaluates
basic industry metrics for all Tier 1 and
Tier 2 operators globally:
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revenue
capex
opex
EBITDA.
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North America
EMEA
CALA
Asia–Pacific.
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mobile
residential broadband
enterprise / wholesale
PSTN.
• Industry metrics are aggregated and
evaluated by region:
1.5
1.0
• Industry metrics are aggregated and
evaluated by service type:
0.5
0.0
2009
2010
2011
2012
2013
2014
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Service Provider Strategies
Five business demands for telecoms software evolution
The digital
consumer
Cloud
computing
• Keep up with
rapidly evolving
behaviours and
raised
expectations
• Exploiting new
opportunities in
the enterprise
• PaaS, SaaS or
Iaas?
M2M
• Dealing with
high volumes of
low-value traffic
• Reaching new
verticals and
building scale
Evolving value
chains
• Competition
from OTTP
• Partnering to
reach new
markets
Drive to Scale
• Business
transformation
• OPEX reduction
• Speed time to
delivery
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The digital consumer
• Consumer behaviour and usage of TMT services are evolving
rapidly, but many telcos are not keeping pace.
• Telcos must understand, and rapidly respond to, fast-changing
consumer preferences and patterns of behaviour while still
keeping services profitable.
• Telcos could reduce churn or generate additional revenue by
increasing consumer engagement with their services:
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Innovative use of analytics to support more intelligent
targeting and personalised services
Customer experience management
Enabling innovative partner applications that can engage
customers in new ways.
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Internet of things/M2M
• There is growing interest in the opportunities afforded by the
‘Internet of things’ – especially machine-to-machine (M2M)
communication over the mobile network – driven by promising
new applications in the smart metering, automotive and security
fields.
• There are many uncertainties over the best approach, given that
the business case is not yet clear.
• Key issues include:
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What is the most-effective architecture to support high-volume,
low-value communications?
Do current systems provide the required high levels of
automation across the full process spectrum?
How can CSPs build scale into this extremely fragmented
market (e.g. dealing with roaming, reaching new verticals)?
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Cloud computing
• In the 1990s, the pendulum swung from mainframe computing to
distributed personal computing. Now it is swinging back to a
model in which data and applications are stored remotely and
can be accessed anywhere that a broadband connection is
available.
• This paradigm shift is creating new opportunities for telcos to
offer cloud services, particularly to business customers.
• The challenge for those telcos is twofold:
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Adopt a market position that is appropriate to current areas of
strength and weakness.
Enable a true elastic compute model and provision complex
service bundles – but using existing systems, which are poorly
suited to the challenge.
• Billing, care and fulfilment all need to be addressed.
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Evolving value chains
• Telcos who want to make the most of out the opportunities
presented by the digital economy can no longer operate in
isolation. The modern telco should be capable of working in
partnership across the value chain, and tapping into innovation
wherever it originates.
• Many telcos are interested in monetising their existing network
assets by exposing functions (e.g. location, payment,
messaging) to third-party application developers.
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Payment (ie carrier billing) is a particularly hot area at present.
• But what is the business case for building full web services
ecosystems – and can telcos really hope to compete with the
OTTP giants by doing this?
• We look at the API sets that telcos are offering to developers.
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The drive to scale
• Large network operators often have many disparate operations
that operate like very small-scale businesses.
• Saturated subscriber bases leave little opportunity for revenue
growth, forcing operators to improve profitability by gaining
economies of scale.
• Practices which can increase economies of scale have a major
impact on IT and Networks (the largest cost centres).
• Operators in fast-growing economies must increase their scale
simply to keep up with rapid demand.
• In evaluating the drive to scale, we look at:
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IT systems transformation
Next-generation IP
Mobile backhaul: balancing capacity and cost
The effective multivendor infrastructure.
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Telecoms Software Strategies
Telecoms Software Strategies research programme:
five focal points for service provider strategists
1. Using policy management to exploit new capabilities in the service layer to
monitor, direct and shape customer behaviour.
2. Analytics and business intelligence.
3. Working within evolving value chains in the digital economy (cloud, M2M).
4. Improving the customer experience in a more complex service ecosystem.
5. Systems transformation to support new business models.
www.analysymason.com
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Telecoms Software Strategies
Policy management: why is it
important?
• What does policy management do?
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It enables a CSP to control the individual customer experience for data services.
When coupled with a charging platform, it enables the CSP to bill the customer for a particular
customer experience.
• Why is it important to CSPs?
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Flat-rate tariffs disconnect mobile data revenue from the cost of delivering it. Policy management
enables the operator to connect revenue to cost and make mobile data profitable.
Policy management enables CSPs to offer differentiated services and maximise the revenue they
take from each market segment.
• Why is it important for vendors?
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Policy management is critical to CSPs' long-term strategies, and the market for policy management
solutions is growing rapidly. Large software vendors that lack an offering in this area can still
participate if they make an appropriate acquisition. Smaller, specialised vendors that have an
established record in policy management have an opportunity to grow.
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Telecoms Software Strategies
Controlling the customer experience
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Policy enforcement (PCEF) implemented in GGSN, gateway, router or standalone.
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Usage measurement – only need to identify individual IP flows – for charging purposes.
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DPI can identify individual user flows – for example, surfing the YouTube website or using Skype.
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Gateway or IP router – can treat traffic in different ways (drop packets, block packets, expedite packets)
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Enables control of the customer experience and control of access to resources.
Gateway
PCEF
User IP data flow
End
user
Radio access
network
Packet core
Internet
Server
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Telecoms Software Strategies
Managing and charging for the
customer experience
Billing and customer care
Online charging
system (OCS)
PCRF
Sy
Gy
Offline charging
system (OFCS)
Gz
Gateway
Gx
PCEF
User IP data flow
End
user
Radio access
network
Packet core
Internet
Server
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Business analytics is evolving from internal business
objectives towards outbound activities
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Fraud management
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Cost and expense management
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Revenue assurance
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Regulatory
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Churn and retention management
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Market segmentation
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Customer retention
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Credit risk management
Process flow of business optimization tools
Recommended advanced analytics targets
New segments
Developing segments
Mature market
segments
1. Customer analysis
 Segmentation/ Insight/ Intelligence
 Churn analysis
 Retention and Acquisition analysis
 Cross-sell and upsell analysis
2. Campaign analysis
3. Financial analytics – ARPU and AMPR
4. Supply chain analysis
5. Pricing modelling
 Planning (what if scenarios)
 Cannibalisation analysis
6. Order fulfilment analysis
1. Social networking
analysis – sentiment
2. Network optimisation
3. Service and product
fulfilment
performance
4. Product and service
performance – margin
contribution
5. Customer service –
MTTR, response
times, call centre
metrics
6. Financial analytics –
customer lifetime
value
1. Real-time promotional
offers and management
2. Customer loyalty programs
3. Supplier quality control
4. Customer experience
metrics
5. Partner analysis for cloud
and value-added services.
Cloud computing offers compelling business benefits but current
OSS/BSS systems are not designed to meet end-user demand
• Cloud is driven by scale and elastic computing.
Data centre computing cost analysis , 2000–2015 [Source:
Analysys Mason, 2011]
• Workflow processes must be standardised to control
IT management costs.
• 10 million virtualised machines operated in the data
centre in 2010. More than 90% of servers will be
virtualised by 2015 in data centres.
• Virtualised services yield benefits of scale only if
highly utilised and managed effectively.
• Standardisation of workloads reduce opex.
• Automation of order management, provisioning, and
service management are required to effectively
deliver cloud services.
• Self-service portals provide ease of access,
accelerate order to cash cycle, and lower labour cost.
Virtualisation in the data centre
The adoption of cloud computing by enterprises will require
the co-ordination of life-cycle management of both network
and IT system
Functions
Scope of solution
• Service Portal
• Self service and SLA reporting
• Service Activation
• Provisioning complex services
• Service Management
• Improving the customer experience by implementing
a software architecture that manages clusters of
resources instead of individual servers and network
• Security
• Change and configuration management
interfaces
• Securing data in a multi-tenant environment
• Releasing resources when the service is no longer
• Billing and Settlement
required
• Billing for the use of virtualised resources and partner
payment for SaaS and PaaS
Most access to services will be delivered to mobile users and
management systems must be capable of reporting on the
customer experience
Drivers in the mobile market [Source: Analysys Mason, 2011]
Mobile technologies
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In developed markets, early
deployments of LTE are
under way
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North American and Western
European CSPs are driving
femtocell offerings.
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CSPs will require more
flexible scalable software
systems capable of
managing more complex
technology and services that
span multiple domains.
Mobile services demand
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Mobile data services
generate significantly
higher ARPU rates for
CSPs, which encourages
them to invest in order to
attract (and retain) more
profitable users.
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CSPs have offered flatrate, unlimited data plans
in order to gain market
share, and these are
driving a rapid increase in
usage.
Customer experience
Flexible tariff and
rating price plans
Assure QoS
Order to activate
Telecoms Software Strategies
Customer experience management: four tenets of
integrated service management
• Providing a consistent
experience across business
units
• Threading together
incidents to avoid churn
• Web portal self care
• Finely tuned interactive voice
response
• Call centre contact
Consistency
Business analytics
• Marketing new services that
match users lifestyle
• Maintain subscriber profile
across access channels
Interaction
Positive
customer
experience
• Quality of service
• Reliability
• Identify configuration errors
www.analysymason.com
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System transformation can be a catalyst for change
to support new business models
Telecoms software evolution [Source: Analysys Mason, 2011]
Impediments of legacy
software
Next-generation software:
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Support double-sided business
models
Rigid and time to market cycles are
two years
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Agile and flexible – SOA
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Islands of data
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Faster time to market
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Systems duplicated across the
business
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Intelligence spans network, service,
and customer
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High integration tax
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High total cost of ownership
Interfaces with service and control
functions
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Open APIs support content and
third-party development
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Areas to focus on in transformation journey
• Biggest area of impact > Billing, order management, activation.
• Replace home-grown or highly customised software.
• Focus on software re-use in order to support the rapid deployment of
convergent IP services.
• Operator groups with multiple operating companies should look to
standardise systems across national boundaries and consider hosting
group-wide platforms to gain economies of scale.
• CSPs should not deploy point solutions to manage each single service.
They need to think more broadly about how software can have a greater
impact on multi-services.
www.analysymason.com
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Authors
Patrick Kelly (Research Director) leads Analysys Mason’s Telecoms Software research stream,
which focuses on identifying the rapidly growing segments in the telecoms software market and
providing forecast and market share data on each of the 26 segments by region and service
type. He has produced research on IP next-generation service assurance, the 3G mobile
software market and customer experience management. Patrick is a frequent speaker at
industry conferences. He holds a BSc from the University of Vermont, and an MBA from
Plymouth College.
Jessica Figueras (Senior Analyst) leads Analysys Mason’s new Service Provider Strategies
programme within the Telecoms Software team. She has 16 years of experience in the
technology and media sector as an analyst, strategy advisor, marketer and entrepreneur. She
has produced research on numerous telecoms technology topics including service delivery
platforms, mobile platforms, device management and enterprise mobility. Jessica holds an MA
from the University of Cambridge and a Diploma from the Open University.
© Analysys Mason Limited 2010
Telecoms Software research
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A market-leading team
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settings.
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