BSS ON PUBLIC CLOUD

The Definitive Guide to Save Up to 80% on TCO

Public Cloud Gains Momentum in TelecomIncreasing numbers of telecom operators are taking an interest in the public cloud, and future-looking communication services providers (CSPs) are announcing public cloud strategies.

We are making the public cloud a core part of our digital transformation, upgrading our database management approach.

MAHMOUD EL-ASSIRSVP of Global Technology Services May 2018

It will become the brains of our business as we transform ourselves into a digital tech company.

SIMON HARRISGroup Head of Big Data DeliveryNovember 2019

AT&T has undergone its own significant cloud transformation … it will make AT&T more agile and allow the company to operate under better cost structures than ever before.

DAVID OHRN AVP Strategy, Planning & Analytics June 2018

CSPs are opting for public cloud to gain

game-changing benefits.

Migration is Mainly Driven by Cost Savings Traditionally, applications have been delivered and managed on premise. They involve expensive upfront investments in infrastructure, hardware, and data centers. They also include a heavy layer of customization. This delivery method requires close management of your hardware and software lifecycles, and these are not necessarily in sync.

With time, applications that are managed on the ground become a burden, especially in an era focused on agility and cost savings — two main reasons holding CSPs back.

In the digital world, increased demand for new services, customer experience expectations, and the explosion of data put greater pressure on IT to change.

Public cloud provides new technology and introduces a new commercial and operational model that enables CSPs to be agile, achieve faster time to market, and gain massive cost savings.

1st choice 2nd choice 3rd choice Total

COST SAVINGS IS THE TOP REASON ORGANIZATIONS WANT TO USE PUBLIC CLOUD

COST SAVINGS = 64%

= 48%

= 45%

= 42%

AGILITY

INNOVATION

IT MODERNIZATION

Top reasons in the telecom industry*:

Cost savings

Scalability

Time to market

* Public cloud report, TM Forum, Jan 2020 »

34% 19%

9%

17%

15%

9%

14%

18%

10%

30%

13%

9%

What can you expect?

If you remember only two numbers, remember these:

Percentage of annual revenue that telcos spend on BSS

SOURCE: “It’s time for BSS revolution” BCG, November 2017 and Optiva modeling

3-5%

However, Cost is Also an Unnecessary Concern ... When migrating an application from on premise to the cloud, executives are sometimes disappointed when they do not see immediate and substantial savings.

Typically, the reasons are due to the choice of application for cloud deployment (e.g., a minor or niche application) and the migration path (e.g., intermediate step to private cloud or only doing a “lift and shift”).

Massive Cost Savings Can Be Achieved Only When You:• Migrate to the public cloud

Private cloud is fake cloud! It’s on premise in disguise (and it’s even more expensive).

• Choose a meaningful “heavy load” application Migration of a non-core application will not yield substantial compute savings.

• Implement a cloud-native application “Lift and shift” will not cut costs – only a re-architected cloud-native application can leverage the cost savings of public cloud.

• Re-train personnel with new skills Organizational focus must change, and employees should be repurposed for new responsibilities.

SOURCE: Optiva analysis of >40 TCO exercises

Amount of TCO savings from cloud-native BSS on the public cloud.

80%UP TO

Total Cost of Ownership (TCO)

Introduction to TCOTCO includes all direct and indirect costs involved in acquiring and operating an application over its lifetime — usually 5-7 years.

Building a TCO model requires a complete and comprehensive view, which must be wider than the BSS vendor fee. It includes:

• Internal and external costs

• CapEx and OpEx

• Direct vendor’s costs and related non-vendor’s costs

Primary vendor’s fees Total cost of ownership

TCO can be used as a transparent tool to support and evaluate cost implications of migrating your

application to the public cloud.

Why is Analyzing TCO Necessary?• TCO is a much more comprehensive way to look at the cost of an application.

• Many cost streams are hidden, therefore a process and methodology are needed.

• The process provides initial view for planning budget distribution and commitments over time.

• Data center cost

• Labor cost

• Unplanned downtime

• Risk management and safety

• Warranty cost

• Training and education

• Cost of field failure

• Inspection cost

• Replacement cost

• Software upgrade costs

• Testing costs

• Customizations and change requests

• Hardware costs

• Product price

Hidden costs of on-prem and private cloud application management

Cost Streams for On-Premise BSS Don’t forget to include all direct and indirect cost streams:

•Consider a minimum 5-7 year TCO to expose all lifecycle management costs

•Number of subscribers and projected growth

•TPS requirements for all lines of business (e.g., prepaid, postpaid, broadband)

•Hardware and software end-of-life

•Overhead management, including security, training, and procurement

•Number of environments, including disaster recovery and testing

•Geography that influences real estate, salaries, etc.

Hardware and 3rd-party software Hardware installation, upgrades, and replacement, 3rd-party software licenses

Data center Real estate rent, cooling costs, power consumption, new infrastructure

Maintenance and support Hardware and infrastructure annual maintenance fees, 3rd-party software annual support

People/FTE All employees/contractors and overhead that manage the relevant BSS application, including infra ops, application ops, and business ops

BSS vendor fees Software licenses, annual support, and upgrades, change requests and customizations

ON-PREM CLOUD

Interesting On-Premise FactsMost on-premise cost streams have built-in inefficiencies. These are eradicated in the cloud model. The major inefficiencies of on prem are:

HARDWARE

• Procurement and installation lead time — as long as 6 months

• 30% additional hardware required to support seasonal traffic peaks

• Hardware replacement required every 5-7 years

• On average, low utilization of hardware, ranging between 40-45%

• Disaster recovery needed to replicate production environment, usually not used

• 24/7 test environment, which is used only part of the time

SOFTWARE

• Software lifecycle and end-of-life in 3 years

• High cost of change requests

• Customization resulting in “technical debt”

DATA CENTERS / SITES

• At least 2 sites — active, disaster recovery to ensure business continuity

• Self-owned or managed by a third party

• Pay for real estate, power, and cooling

• Disaster recovery site hardly used with test utilization at 20-25% annually

PEOPLE AND MANAGED SERVICES

• People resources to manage hardware, data centers, application, and business aspects

• Overhead, including security, training, audits

• Manual acceptance and backward compatibility tests

ON-PREM CLOUD

Cost Streams for TCO of BSS on Public Cloud In addition, cloud-native application on the public cloud allows you to enjoy potential revenue uptakes due to the following advantages:

• Improved time-to-market results in savings of human resources and increases in capture of market share

• Increased acquisition of customers through fast and personalized offering driven by flexible configuation rather than lengthy customizations

•Better system availability and business continuity

* Optiva BSS SaaS fees are based on consumption, allowing CSPs to pay-as-you-grow and take advantage of public cloud benefits.

Subscription fees* Optiva cloud-native BSS offered as SaaS includes:

• BSS cloud-native software prices including support

• Managed software operations

• Fully managed public cloud compute resources

• Constant and automated flow of new software updates

People/FTE Optimized number and focus of required personnel and FTE, with Optiva taking ownership of all aspects of hosting, hardware and application management, and business operations

Connectivity Interconnect cost between operator core network and public cloud point of presence

ON-PREM CLOUD

Optiva TCO Methodology and Best PracticesOptiva’s Business Value team offers a hand-in-hand, structured TCO evaluation process to help CSPs quantify expected cost savings. We work with you to:

• Consider all cost streams Hardware, software, maintenance and support, people, data center, BSS vendor fees

• Build costs bottom up Quantify actual expenses of each cost stream; if not, draw realistic estimates based on industry benchmarks

• Allow inclusive evaluation Involve all stakeholders in the process and follow iterative process of building it

• Adjust the cost streams Each TCO exercise is a unique business case, which may require additional considerations

• Choose optimized time horizon Consider a TCO duration of 5-7 years minimum to capture full hardware and software lifecycle

• Find hidden costs Often overlooked elements can add up — factor in change requests, software upgrades, and customizations

3-4 weeks Average TCO exercise duration

Customer survey, cost stream identification (questionnaire)

Result shared with customer

Cost stream analysis + benchmark comparison

FIN

E TU

NE

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2

3

Read more about the cost savings of moving to the public cloud here »

Optiva TCO Exercises to Date ...

~$430M Total potential savings by migrating

to Optiva on public cloud

62% Average TCO savings

40+ TCO exercises performed

in the last 18 months > 10 Tier 1 • > 15 Tier 2-3 • > 20 Tier 4

Case Studies

TCO Case Study #1

CONTEXT:

• 2 active sites, 2 disaster recovery sites, multiple test sites

• 10% YoY TPS growth projected

• Cost-related motivation to move to cloud:

- Intent to reduce hardware footprint

- Hardware reaching end-of-life soon

- Cut cost, especially on disaster recovery and test sites

TCO RESULTS:

• USD $60M savings over 5 years

• Eliminate capital investments (CapEx) on disaster recovery and test environments

• Allow operational savings (OpEx) while enhancing agility and business flexibility

TIER 1 OPERATOR: APAC region

SUBSCRIBERS: 25 million

PRODUCT: Optiva Charging Engine

BSS vendor feesBSS software upgrades & customizationsPeopleMaintenance & supportData center OpExHardware & 3rd party software

$99,394,542

$38,803,992

-61%

FIVE-YEAR TCO COMPARISON (IN USD)

ON-PREMISE PUBLIC CLOUD

TCO Case Study #2

CONTEXT:

• 1 active, 1 disaster recovery site in the same location, leading to increased risk in case of local outage

• Considering shifting disaster recovery to new location OR to public cloud

TCO RESULTS:

• USD $3M savings over 5 years

• Achieve business continuity with a public cloud-based disaster recovery

TIER 2 OPERATOR: Middle East region

SUBSCRIBERS: 6.5 million

PRODUCT: Optiva Charging Engine

BSS vendor feesBSS software installation

PeopleMaintenance & supportData center OpExHardware & 3rd party software

$3,876,770

$852,889

-78%

FIVE-YEAR TCO COMPARISON (IN USD)

ON-PREMISE PUBLIC CLOUD

TCO Case Study #3

CONTEXT:

• The industry is undergoing structural changes as a new regulation to increase competition is announced

• 1 active, 1 disaster recovery site

• CSP aims to go lean and reduce cost as much as possible

TCO DETAILS:

• USD $8M savings over 5 years

• Operator achieves business agility with faster introduction of new features and dynamic scalability upon demand

• Increased focus on the business and customer base, while BSS is being provided as-a-service

TIER 4 OPERATOR: APAC region

SUBSCRIBERS: 100 k

PRODUCT: Optiva BSS Platform

FIVE-YEAR TCO COMPARISON (IN USD)

Connectivity

BSS vendor fees

BSS software installationPeopleMaintenance & supportData centerHardware & software

$12,224,904

$4,280,707

-67%

ON-PREMISE PUBLIC CLOUD

TCO Case Study #4

BACKGROUND:

• Provides mobile services globally through own network infrastructure and partnerships

• Enables connectivity for subscribers, business, and IOT across the world

• Pioneers of connectivity and eSIM technology; early partner of Apple

OPTIVA DELIVERY SCOPE:

• Upgrade existing Optiva Charging Engine to a cloud-native architecture on Google Cloud

• Replace Oracle with Google Cloud Spanner database

• Enable CI/CD for automated delivery and testing

• Shut down on-premise environments

• Future-proofed operations, prepared for growth

PRODUCT: Optiva Charging Engine

SALES PROCESS Initial TCO savings was estimated as 40% by Truphone and 60% by Optiva

POST DELIVERY TCO was re-evaluated, yielding 58% savings

PROJECT DELIVERY Record time upgrade, 5-month delivery from kickoff to project launch

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2

3

Read more about how public cloud transformed Truphone’s business inside and out here »

Did you know?

•Savings in a 5-year period is not evenly distributed. Generally, one major investment peak is seen with a few minor peaks in a single lifecycle of 5-7 years.

•Pricing for public cloud SaaS offering is correlated to the increase in revenues, subscribers and traffic in a pay-as you-grow model.

•Removing initial investments allows CSPs to reduce risk in launching new services and gives room to testing and experimentation with a “test-fast, fail-fast” approach.

TCO Savings Over Time

CAPEX SAVINGS OPEX SAVINGS OPEX SAVINGS

> 60% Hardware

Save on hardware due to cloud elasticity,

better unit cost, and pay-what-you-use model

100% Data Center Save all current

data center operational expenses

> 80% People

Save on FTE for BSS (application, infrastructure,

business layers)

Traffic growth On-premise cost Public cloud cost

SAVINGS DISTRIBUTION IN A TYPICAL 5-YEAR BSS LIFECYCLE

Huge initial investment in hardware, software delivery and licenses

New hardware for growth, refresh hardware, software upgrades and installation charges

The cost of public cloud BSS offered as SaaS is

tied to subscriber growth

See How Much YOU Can Save!Based on accumulated knowledge, we created a TCO Estimator to help you calculate a high-level estimate of your savings potential.

CALCULATE SAVINGS »

GET A CUSTOMIZED ANALYSIS »

Leading the telecom industry in its journey to the cloud with cloud-native revenue management products on the public cloud.

80+ Countries globally

100+ CSP customers

3 Billion Transactions per hour

(peak)

“Optiva is named a MARKET DISRUPTOR with a clear vision on public cloud.”

NOVEMBER 2019