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8/12/2019 Comverse Whitepaper Final

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Generating value and competitiveadvantage from BSS managed services

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2012 Informa UK Ltd. All rights reserved. www.informatandm.com

ABOUT INFORMA TELECOMS & MEDIA

Informa Telecoms & Media is the leading provider of business intelligence and strategic marketingsolutions to global telecoms and media markets.

Driven by constant first-hand contact with the industry, our 60 analysts and researchers produce arange of intelligence services including news and analytical products, in-depth market reports and

datasets focused on technology, strategy and content.

Informa Telecoms & Media Head OfficeMortimer House, 37-41 Mortimer StreetLondon W1T 3JH, UKwww. informatandm .com

ABOUT COMVERSE

Comverse is the worlds leading provider of software and systems enabling converged billing andactive customer management, mobile Internet, value-added and managed services. Comversesextensive customer base spans more than 125 countries and covers over 450 communicationservice providers serving more than two billion subscribers. The companys innovative productportfolio enables communication service providers to unleash the value of the network for theircustomers by making their networks smarter. Comverses solutions support flexible deploymentmodels, including in-network, cloud, hosted and managed services. Comverse, which rankednumber 55 in PwCs Global 100 Software Leaders based on research by Pierre Audoin Consultants,

is a subsidiary of Comverse Technology, Inc. (Nasdaq:CMVT).

For more information, visit www.comverse.com

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Introduction


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Changing telecoms market conditions are influencing more CSPs to consider the managed-services route as a way of ensuring continued growth.

Key drivers for managed services include the need for CSPs to seize new revenueopportunities, gain access to best practice and achieve a faster time to market.

CSPs need to align their technology with the requirement to improve overall customerexperience.

In turn this means there is a key requirement for an efficient interface between CSP businessprocesses and their applications development and operations.

There is a also need for greater connectivity between CSP existing services and the mobileInternet in order to allow better monetization.

Managed-services business models are also evolving in response to greater sophisticationamong CSPs and a trend towards longer-term engagements.

There are significant value-add benefits from working with a managed-services provider ona longer-term basis, in terms of independent consulting expertise, access to best of breedsupport, and monetization of CSP assets.


Key points

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Market evolutionThe telecoms market today is changing as a result of increased competition from new players andthe increasing complexity of service offerings. This is influencing more and more communicationsservices providers (CSPs) to consider the managed-service route as a way of ensuring theircontinued growth and focusing more on core competencies. The need to open up new sectors,gain access to best practice, and achieve a faster time to market with reduced risk and predictablecosts are all powerful drivers in the emerging managed-business-services arena, as distinct fromnetwork and technology-led approaches.

Keeping the customer satisfiedAs the consumer appetite for high-quality service grows, CSPs have another challenge: to align

their technology with a stronger focus on customer experience, bringing implications for legacysystems, front-line response and customer life-cycle management. This in turn has led to anincreasing emphasis on added value provided by the managed-services suppliers.

Managed services the trend towards value-addIn the managed BSS/OSS sector, even more than in network and IT managed services, there is arequirement to combine and simplify solutions while still maintaining the robustness of a provenplatform.

At a time when CSPs are looking to improve their product innovation, they can use managed-services providers to focus more on their core business imperatives of marketing, sales and

customer management, while at the same time being assured of best business process andapplications-development practice.


Overview

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Survival of the fittestThe telecoms market for CSPs today is highly competitive both in terms of ever more disruptionfrom competitors and the increasing complexity of service offerings. The need for CSPs to focus ontheir core competencies is now vital and it is this that is influencing the rise in the number of CSPsusing the managed-service route as a way of ensuring continued growth and staying ahead of theircompetition.

Faced with these challenges, CSPs are looking to achieve growth through a rigorous examinationof their core business processes, and even areas such as marketing and sales are no longer off-limits in the search for greater competitive effectiveness.

Data is at the heart of CSP strategyGrowth opportunities come from the ongoing rise in data consumption spurred on by demandfor access to the mobile Internet and the popularity of smartphones and media tablets. Over thenext five years, Informa Telecoms & Medias forecasts indicate that demand for data will increasesevenfold to reach 40,000 PB per year by 2016 (see fig. 1).

Smartphones have proved to be the single most successful and consistent device in driving growth,both in terms of volume (for example, from video) and of operator revenue. However, the abilityof smartphone users to access IP-based over the top (OTT) communication services as well asthose on a mobile network could ultimately erode operators core voice and messaging services,

so, in response, the operators business models will need to evolve in order to meet this potentialthreat. Without such an evolution, operators will lose business to these OTT players and theywill also fail to capture new revenue opportunities in areas such as cloud-based apps, video-on-demand or services targeted at enterprise verticals. At the same time, CSPs should develop newdomains and capabilities (like M2M) and position themselves as service enablers.

The issues are largely the same whether an operator is mobile, fixed or a converged playerpursuing a multiplay strategy. CSPs have evolved as stovepipe organizations with organizationalstructures, assets and processes that do not allow them to make best use of their strengths.

Market evolution

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20162011

Millions MB/year

2012 2013 2014 2015

5.8 mil. 9.1 mil.

13.9 mil.20.8 mil.

30.3 mil.

42.4 mil.

Fig. 1: Data traffic forecasts, 2011-2016

Source: Informa Telecoms & Media


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Keeping the customers satisfiedThe growth in competition and the importance of service quality (made more important by therise in data consumption) have created a more demanding customer base (see fig. 2). CSPsquite rightly are putting more emphasis on customer experience management (CEM) as a wayof earning the users loyalty and persuading them to stay on the network. Given the costs ofcustomer acquisition, this is a commercial imperative.

By drawing on a CSPs inherent knowledge of its customer base, and exploiting its network and ITassets, service packages can be designed that are relevant to each of the CSPs target audiences,and, by adopting a customer life-cycle strategy, CSP offerings can be matched to the needs of boththe existing and new customers.

The importance of CEM to CSPs was illustrated in a recent Informa industry survey, where almost40% of CSPs identified CEM as the single most important area of focus for 2012, exceeding bysome margin the importance of network deployment and developments (see fig. 3).

The changing market for managed

services

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Onlinegaming

Consumer

Video & audiostreaming

Consumer cloud

Video ondemand

Consumer M2M

Filetransfers

Business

CorporateVPN

Enterprisecloud

Real-time videocommunications

BusinessM2M

Fig. 2: The CSP challenge: meeting growing customer data needs


Partnership with other operators and Internet players8%

Efficiencies, cost control andbest practice

16%

New digital service developments(digital service)

10%

Network deployments and developments (NGN and LTE)29%

Customer experience management37%

Fig. 3: Informa Industry Outlook Survey, 2011 Q: What will be the single most important area tofocus for operators in 2012?



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CSPs fighting backWhile CSPs face a more competitive landscape and a more demanding customer base, there isbetter news: The CSP remains a powerful beast with some unrivalled strengths, which it can and

must harness.

What are these strengths? CSPs control the pipes that underpin the Internet. CSPs have unmatched capabilities in customer support. CSPs have made a huge investment in device subsidies and distribution networks.

These strengths are critical to the evolution of the CSP in an evolving marketplace. They arefundamental to the CSPs ability to build a lean and pragmatic business fully attuned to its existingstrengths and capable of exploiting them to become an enabling platform for an ever-expandingservices ecosystem.

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It is imperative that CSPs align their technology with the new focus on customer experience, which hasimplications for legacy systems, front-line response and customer life-cycle management. This trendin turn has led to an increasing emphasis on value-added services from managed-services suppliers.

Managed services the trend towards value-addChanging attitudes towards the range of functions that CSPs are prepared to outsource ismirrored by a desire on the part of major technology vendors and managed-services providers tohelp with the management of business operations and services. The results of a recent survey byInforma Telecoms & Media indicate that many CSPs are expecting to outsource considerably more

operations in three years time than they are currently (see fig. 4).

Until now, much of the focus of managed services in a network operations context has been

on radio-access outsourcing, but in future there will be greater willingness to make use ofoutsourcing in the service layer, in BSS/OSS systems and in business transformation. Forexample, just over 50% of the operators surveyed expected BSS/OSS to be one of the areas thatwould be outsourced in three years time.

Managed-services driversManaged-services drivers comprise: The need for CSPs to align complex existing systems with a new business focus The requirement for greater connectivity between CSPs existing services and the mobile

Internet in order to allow better monetization The ongoing shift from network-led services to apps/business support services

Managed-services business models are also evolving in response to greater sophisticationamong CSPs: there is a trend to extend build-operate-transfer (BOT) engagements towardslonger-term engagements.

Exploring BSS managed services as a

way to overcome market challenges

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0 10 20 30 40 50 60 70 80

NowIn three years*

Other Business planning

Partner managementTechnical/ operational planning

Core network operationsTechnical/ operational management

IP network operationsBSS/OSS

Supply chain/logisticsIntegration including consultancy and FMC support

Applications/content hosting Access network operations

Transmission network operationsCustomer servicing/support

Training/educationMaintenance, repair or construction

Respondents (%)

Fig. 4: The growing appetite for managed services Q: Areas of an operators business likely to beoutsourced in three years time compared with what is currently outsourced

*Respondents who replied "very likely" or "likely"Source: Informa Telecoms & Media


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The BSS managed-services lead-pointThe managed-services drivers have combined to create an opportunity for CSPs to generateefficiencies and create more value at the interface between their business processes and their

applications development and operations. We have identified this opportunity as the BSS lead-point (see fig. 5). In particular, there are opportunities to innovate in marketing and sales and incustomer management, both of which are critical to the longer-term development of both theconsumer and enterprise sectors.

In critical areas such as real-time billing and business information, service providers are

increasingly stressing the advantages of user-friendly on demand interfaces, which allowstakeholders within the CSP organization to access customer data in different formats accordingto whether they are viewing from a marketing customer care or network/IT managementperspective. There is also a new emphasis on a granular customer focus. Key performanceindicators (KPIs) and key quality indicators (KQIs) are increasingly being mapped to an individuallevel as well as being linked to other business indicators in order to generate actionable insightsrather than just generalized information.

Applications are starting to be built in the network, with IT helping to blur the dividing linesbetween those applications and the network infrastructure. The convergence of network,IT and apps platforms is also going to drive organizational and structural changes, with a

greater role likely to be played by dynamic service or experience packages that enhanceoperator platforms. In this scenario, the network itself becomes a platform, with a full rangeof functionalities offered as part of a service-delivery process. While infrastructure as a puretechnical enabler is reaching its limits, infrastructure as a service seems set to offer plenty ofnew opportunities.

In the managed BSS/OSS sector, even more than in network and IT managed services, thereis a requirement to combine and simplify solutions while still maintaining the robustness of aproven delivery platform. In these circumstances, the supplier can assist a CSP to meet clientexpectations by managing the complexity of multiple-point solutions.

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Business layer

Apps layer

Network/IT layer

Marketing/sales Customer experience management

Fig. 5: The BSS managed-services lead-point



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BSS managed services goes mainstreamBSS/OSS vendors are well positioned to act as managed-service providers, as there are clearsynergies between products and services in the support-systems space.

As Informas report on BSS/OSS trends at this years Mobile World Congress points out:

The overall message ... is that telecoms software support systems are nolonger back office. They are now mainstream so far as the industry is concernedand, while new handsets and operating systems may grab the headlines from timeto time, it is the means of supporting those devices and mitigating their effects onmobile broadband networks that is occupying the attention of the telecoms industryright now.


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2012 Informa UK Ltd. All rights reserved. www.informatandm.com 11

With the overall trend towards managed services, CSPs are focusing more on competitiveadvantage in terms of improved time to market and distinctive benefits for the consumer ratherthan solely concentrating on cost reduction through opex savings.

By working with a specialist managed-services provider that knows the business support systeminside out, the CSP can benefit from an informed second opinion, based on a wide experienceof successful solutions and innovations from a varied range of sources, whether from the samegeographic market or more widely around the world. The CSP can also benefit from the managed-service providers ability to fully utilize the BSS capabilities.

Closer integration creates leaner organizationAs noted in the previous section, the increasing interaction between business processes and theirunderlying applications now means that areas such as revenue management and service deliverymanagement are moving closer to an integrated platform approach, with the result that there aresignificant advantages of a model where point solutions are blended with the power of a platformsolution (see fig. 6). Equally, a carefully planned product life-cycle strategy can be combinedwith operational support for applications and infrastructure to ensure end-to-end delivery of anoptimum service for the end user.

Time-to-market savingsA key area of business focus is on time to market, as CSPs strive to bring new services on streamto meet the competitive challenges outlined earlier. One example of ensuring that applications andservices are designed right first time is the ability of the managed-services provider to roll out new

services or necessary changes to configuration faster. Fig. 7 illustrates the kind of time-to-marketsavings that can be achieved; for example, time savings of 20% across the overwhelming majorityof the products functionality, and higher savings of 30% in a narrower range of cases.

How CSPs can benefit from BSS

managed services

BSS management

Business analysis

Product life-cycle management

Revenue management

Apps management Apps operational services

Service deliverymanagement

SLAmanagement

Vendor management

Infrastructure/IT management

Assetmanagement

Systemadministration

Productionmanagement

Portfolio design

Configuration management

Legacy migration

Fig. 6: BSS managed services overview: new opportunities in BSS and apps management



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2012 Informa UK Ltd. All rights reserved. www.informatandm.com 12

Achieving maximum advantage from BSS managed servicesCSPs can take advantage of the services of the many larger managed-service providers thatare currently leveraging their global presence, whether in the form of network operationscenters, data centers or software development centers. Some of these services, such as new-service development, can be provided remotely on a regional or global basis while others, suchas consultancy, are located closer to or at the point of delivery. This ability to combine globalwith local services can be a key differentiator in areas such as customer support, where localknowledge and expertise are most valuable.

A larger BSS player may also be able to use the power and resilience of a platform solution, incombination with other more specialized solutions, to provide a fully customized product for agiven client. By drawing on the knowledge of its specialist professionals, the managed-serviceprovider is able to use its experience of operating across a wide range of engagements and is thusbetter equipped to address complex business and technical operational issues in a timely andfocused manner.

The benefits for a CSP of working with a BSS/OSS managed service provider can be summarizedas follows: Independent consulting expertise: this helps to add value across the CSP product range Access to best-of-breed support: access to this support allows CSPs to use their system

capabilities more effectively Reduced time to market: the solution configuration is designed right first time, so that

on-site implementation can be tuned optimally New CSP product development: new products can be developed by experienced technical staff

who have an intimate understanding of the limitations and the capabilities of the systems withwhich they are working

Improved monetization: assistance is provided with monetization of network, applications andsupport systems assets

Cost savings: advantage can be taken of the cost reduction expertise developed from workingclosely with CSPs across a wide range of markets

Provision of a single point of contact: where a service provider is able to co-ordinate a

number of third-party solutions in order to address business, technical and operationalissues in a concerted and effective manner.

Proportion of BSS servicedevelopments impacted

20%

80%

30% time-saving

20% time-saving

Fig. 7: 80-20 rule of time savings


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