netcracker technology award write up

2017 Global Stratecast CSP Monetization Growth Excellence Leadership Award

BEST PRACTICES RESEARCH

© Stratecast | Frost & Sullivan 2017 2 “We Accelerate Growth”

Contents

Background and Company Performance ..................................................................... 3

Introduction .................................................................................................... 3

Global End-to-End CSP Monetization Market Share Analysis .................................... 4

Netcracker Profile ............................................................................................. 6

Netcracker Growth Excellence Leadership ............................................................ 7

Conclusion ..................................................................................................... 11

Significance of Growth Excellence Leadership ........................................................... 12

Understanding Growth Excellence Leadership ..................................................... 12

Key Benchmarking Criteria .................................................................................... 13

Growth Performance ....................................................................................... 13

Customer Impact ........................................................................................... 13

Best Practices Recognition: 10 Steps to Researching, Identifying, and Recognizing Best Practices ............................................................................................................. 14

The Intersection between 360-Degree Research and Best Practices Awards .................. 15

Research Methodology .................................................................................... 15

About ODAM ........................................................................................................ 16

About Stratecast .................................................................................................. 16

About Frost & Sullivan .......................................................................................... 16



Background and Company Performance

Introduction

Netcracker has been among the leading suppliers of end-to-end monetization solutions for

the communications service provider (CSP) global market for several years. The top four

suppliers in this market have controlled a significant portion of this almost $13 billion

industry for quite some time, with control of almost 64% of the total market.

Stratecast regularly assesses this market and for most of the last decade, Netcracker has

been ranked fourth by revenue received. However, during that same period, the

company’s growth rate has been exceptional and has gained on the other

monetization market leaders. Based on Stratecast’s 2017 global CSP

monetization market assessment, Netcracker is now in a virtual tie for second

place.

The end-to-end monetization process consists of six primary segments including:

mediation, rating & charging, other core billing, policy management, and the wholesale

revenue management functions of interconnect & settlement and partner management.

These are shown in the figure below.

Source: Stratecast



The Stratecast ODAM analyst team has recently completed its annual assessment of the

CSP monetization solution supplier market. To publish the results of these findings,

Stratecast has combined the monetization functions shown above, into four related areas,

which are the delivery focus for the function-specific market share analysis reports that

will be delivered during third quarter 2017. These Stratecast reports form a market

research basis for this award and those provided for each of the functional areas below

including:

Combined End-to-End Monetization Market

o Global CSP Monetization 2017 Edition Part 1: End-to-End CSP Monetization

Market Drivers, Forecast, Market Share, Delivery Model, and Requirements

Analysis

Billing Mediation

o Global CSP Monetization 2017 Edition Part 2: Billing Mediation Market

Forecast and Market Share Analysis

Rating & Charging and Other Core Billing

o Global CSP Monetization 2017 Edition Part 3: Rating & Charging and Other

Core Billing Market Forecast and Market Share Analysis

Policy Management (Rules Function)

o Global CSP Monetization 2017 Edition Part 4: Policy Management Market


Interconnect & Settlement and Partner Management

o Global CSP Monetization 2017 Edition Part 5: Wholesale Revenue

Management (Interconnect & Settlement and Partner Management) Market


Global End-to-End CSP Monetization Market Share Analysis

The first report in the Stratecast global CSP monetization report series, as defined at the

beginning of this document, is also the source report for this award.1 It provides a market

share analysis for the end-to-end CSP monetization market, utilizing a base year of 2016.

As in previous Stratecast forecasts, this analysis is based on the sum of revenue

generated by supplier offerings in six related global monetization segments including:

Billing Mediation

Rating & Charging

1 See Stratecast report OSSCS 18-04, Global CSP Monetization 2017 Edition Part 1: End-to-End CSP

Monetization Market Drivers, Forecast, Market Share, Delivery Model, and Requirements Analysis, July 2017.



Other Core Billing functions

Policy Management (Rules Function)

Interconnect & Settlement

Partner Management

The findings, as published in this report, show that Netcracker is currently tied for second

place within the global CSP end-to-end monetization market. Stratecast believes that

Netcracker addresses 16% of this market based on revenue. The top five competitors

provide solutions to approximately 19%, 16%, 16%, 13%, and 5% of the market

respectively by revenue.

This award is about growth. To measure growth over time, Stratecast looked

back to previous global CSP monetization assessments. With that lens,

Netcracker stands out even more. The company continues its climb up the leader

board, which showed for many years Netcracker in fourth place. Based on 2015

annual revenue, the company moved into a tie for third place and based on 2016

annual revenue, the company moved into a tie for second place. In fact, from

2010 to 2016, Netcracker In fact, from 2010 to 2016, Netcracker has maintained

strong double digit revenue growth, achieving one of the highest CAGRs of the

revenue leaders in the global CSP monetization market for this period.

Stratecast interviewed more than 100 monetization suppliers that address one or more of

the above-mentioned market segments. Stratecast revenue estimates include vendors

with software solution offerings that obtain revenue from license fees, maintenance fees,

services associated with the initial installation and configuration of a solution, service

bureau fees, cloud services fees, and installed solutions managed by a supplier. Internal

CSP spending attributed to internal work teams or assistance from professional services

consulting resources is not included. In addition, hardware-related revenue and revenue

generated by systems integrators or companies without their own monetization solutions

is not included. The professional services fees for integration of new solutions with

existing systems and updates to CSP business processes are also not included in the

market share analysis.

All market share analysis is developed by analyzing multiple sources including:

information supplied to Stratecast through a market questionnaire, information from

public sources, direct interviews, and raw market data. The analysis is developed from

2016 company-level revenues, year-over-year growth, projections of future company

earnings, global financial market insights, and our strategic acumen concerning each

monetization segment.

To obtain estimated revenues and associated market share, Stratecast uses a modified

Delphi method for revenue analysis. Factors such as known deployments, publicly and

privately reported revenue, customers served, press releases, financial reports, and

related information are analyzed by a multi-person analyst team, working independently,

to estimate each vendor’s 2016 revenues, where such was not specifically provided. Final

estimates were iterated to reach a consensus using a 90% confidence interval.



Netcracker Profile

Netcracker Technology Corporation is a telecom software solutions and services provider

headquartered in Waltham, Massachusetts. The company enables CSPs to offer, manage,

and monetize convergent and content-rich service offerings. Founded in 1993, Netcracker

operated independently until 2008, when it was acquired by NEC Corporation. Following

the acquisition, Netcracker was named as a wholly owned subsidiary of NEC, dedicated to

addressing the operations, monetization, and enterprise management needs of the

communications industry. Netcracker continues to operate as an NEC-owned entity today.

The latest release of the company’s solution suite—Netcracker 12—is a unified platform

that brings together an extensive collection of operations and monetization functionality,

along with virtualization capabilities, embedded analytics across the product line, and

cloud-based delivery of these applications using a common framework and data structure.

One of the architectural benefits of Netcracker 12 is the breadth of capabilities that

enable CSP digital transformation. As Netcracker shared with Stratecast, the Netcracker

12 suite enables service providers to transform into DSPs by digitalizing their customer

engagement models, business enablement capabilities, operations, and infrastructure.

Netcracker 12 is shown in the figure.

Source: Netcracker



Netcracker 12 addresses all six segments of the end-to-end CSP monetization space. At

a high level, the Digital Business Enablement layer (shown in yellow in the figure

above) covers billing mediation, rating & charging, other core billing, policy management,

interconnect & settlement, and partner management. Additional policy management

capabilities are addressed in the Unified Platform Capabilities under Cloud

Administration. Netcracker 12 also offers vPCRF as a Core VNF. The figure illustrates

the breadth of the Netcracker 12 suite and also identifies high-level modules that map to

the Stratecast monetization segments.

Netcracker stated to Stratecast that: “As service providers become DSPs, they must

assess how well their existing IT infrastructure is prepared to enable digital evolution. A

streamlined business enablement layer helps service providers maximize their revenue

potential by providing exceptional customer experiences, managing digital transactions in

real time, and creating the right engagement model with partners.”

Stratecast Insights

Netcracker has become a major supplier in all monetization domains and across all areas

of ODAM. Netcracker ranks amongst the top four leaders by revenue in each of the six

monetization solution segments, and is currently tied for second in the end-to-end

monetization solution market.

Stratecast believes that Netcracker will continue to gain market share in the

months ahead, across all parts of the ODAM marketplace, with its Netcracker 12

cloud-based solution platform.

Netcracker Growth Excellence Leadership

The 2017 Stratecast Global Growth Excellence Leadership Award in CSP Monetization is

judged based on ten criteria described later in this document. The following details a

selection of the comparisons from the ten criteria. The data behind the comparisons

comes from Stratecast report: Global CSP Monetization 2017 Edition Part 1: End-to-End

CSP Monetization Market Drivers, Forecast, Market Share, Delivery Model, and

Requirements Analysis, July 2017.

Growth Strategy and Above-Market Growth

Stratecast assesses the end-to-end CSP monetization market every year, which involves a

review of over 100 suppliers of monetization solution functionality. This market has grown

over the last six years, with a CAGR from 2010-2016 in the low-to-mid single-digit range.

Such growth has moved this, the largest of the ODAM markets, from just under $10 billion

in annual solution supplier revenue to almost $13 billion.

With more than 100 global suppliers, the CSP monetization solution supplier market is

dominated by just a few. In fact, the top 18 suppliers address more than 87% of the



global market, with the top four suppliers accounting for approximately 64%. Netcracker

has been part of the top four CSP monetization suppliers since its acquisition of Convergys

in 2012. While an acquisition jumpstarted Netcracker into the CSP monetization market,

the majority of the company’s growth since that time has been organic.

In an expanding global marketplace, such as the end-to-end CSP monetization sector,

growth is essential to maintain market position. Netcracker has done more than maintain

over the last five years, moving from fifth to fourth, to a tie for third, now to a tie for

second place on the solution supplier leaderboard in overall CSP monetization. It should

be noted that each of the top four suppliers have six-year CAGRs that exceed the market

as a whole, so Netcracker’s rise against this strong group of competitors is even more

noteworthy.

Netcracker’s growth strategy is paying off, evidenced by double digit CAGR

growth that has reached approximately five times the rate of the market as a

whole. To achieve above-market growth for any period of time is impressive;

Netcracker has consistently exceeded the growth rate of the end-to-end CSP

monetization market for each of the last six years.

Share of Wallet and Growth Diversification

Stratecast has discussed the movement by global CSPs towards a single supplier model—a

best-of-suite or best-of-platform type offering—within the monetization domain. The

benefits are many, but perhaps the most significant advantages are a dramatic decrease

in integration costs, and a faster time to market with new solution offerings and product

changes. Stratecast also believes that a tightly integrated monetization solution allows

service providers to define pricing plans and service options around the level of capability

they would like to have for addressing customer needs, rather than the monetization

systems defining for these operators what level of support they can deliver to a customer

because of system limitations.

Netcracker takes this customer-centric need several steps further with a single supplier-

provided ODAM solution suite, which can deliver major business and operations support

capabilities far beyond just end-to-end monetization. Stratecast has also discussed the

move by global CSPs toward virtual networks and the rise in importance in cloud-based

monetization capabilities. Netcracker 12, available for deployment today, addresses both

of these CSP concern areas.

While some of its competitors offer operations support functionality in addition to

monetization functionality, very few offer the range of capabilities that Netcracker

presently provides. Netcracker started with operations/OSS functionality, and then moved

into monetization. Most of its competitors that provide operations functionality approached

the market the other way around. In addition, Stratecast believes Netcracker leads its

competitors in delivering CSPs the necessary operations and orchestration functions that

are essential for virtual network enablement and in providing CSPs cloud-based

monetization functions necessary for meeting the business management needs of such.



With a single supplier-provided ODAM solution suite, which the company offers with

Netcracker 12, the following criteria are addressed. Each of these lead to excellence in

market growth:

Share of Wallet – With Netcracker’s breadth of solution offerings across ODAM,

the company continues to expand its share of a CSPs’ wallet through the functions

that Netcracker 12 can address. For example, a provider may purchase

monetization capabilities from Netcracker, and within a short time, expand its use

to include operations functions, especially those involving a CSP's virtualized

network strategy, or vice versa.

Ease of Upgrade - When the Netcracker 12 platform is placed into service to

address a specific operations or monetization need, the rest of the functionality

that the platform offers is included. New functions are turned on through a lock key

encryption process whenever they are needed. This approach reduces installation

and testing time for new functionality, to just the CSP's data load process. Function

module compatibility and integration testing are a non-issue.

Growth Diversification – As Netcracker expands its solution coverage with each

of its customers, this action diversifies the growth potential from any given

customer. For example, while one customer may have focused on Netcracker’s

monetization offers, all of Netcracker 12’s operations and virtual networking

capabilities offer growth potential to that customer.

Growth Sustainability

Stratecast annually assesses the global end-to-end CSP monetization market, which has

helped us amass a large database of market insight that includes both company-level and

market level information. Based on our analysis:

Above-market growth for a single year is impressive, yet it provides no evidence

that growth is sustainable. The current report series, along with the previous four

Stratecast report series, each cover the global end-to-end CSP monetization

marketplace. They have provided Stratecast with company and market level data

from 2009 through 2016. With this data, we can assess growth sustainability.

In the Stratecast 2011 report series, which examined 2009 and 2010 revenue,

Netcracker was projected to address 7% of the 2010 marketplace and was ranked

fifth on the leaderboard.

In the 2013 report series assessing 2011 and 2012 revenue, Netcracker was shown

to have 11% of the 2012 CSP monetization market and had moved up to fourth on

the leaderboard. This was also the same timeframe for when Netcracker acquired

the monetization assets of Convergys. Stratecast believes Convergys addressed

approximately 3% of the 2010 marketplace; the last previous Stratecast market

assessment prior to the 2012 report. The 2012 report also marked the beginning of

the dominance of the top four suppliers, which accounted for approximately 53% of



the market.

In the 2015 report series, measuring 2013 and 2014 revenue, Netcracker

accounted for 13% of the 2014 monetization market and remained in fourth place.

In the 2016 report series, accessing 2015 revenue, Netcracker accounted for 14%

of the market; moving into a tie for third place. The top four suppliers composed

approximately 61% of the overall monetization market by revenue in 2015.

Finally, in the current report series which assesses 2016 revenue, Netcracker

addresses 16% of the end-to-end CSP monetization market by revenue and is now

tied for second place on the leaderboard. In 2016, the top four suppliers accounted

for approximately 64% of the market.

Each time Stratecast assessed this market over the last six years, Netcracker has

controlled a larger percentage of an expanding market. This is, by definition,

sustainable growth. To further quantify this point, the end-to-end CSP monetization

solution market has grown over the last six years, with a CAGR from 2010-2016 in the

low-to-mid single-digit range. Netcracker sustained double digit year over year

growth during this period, which is even more impressive in such a competitive

market.

Brand Equity

Brand is often of great importance to a customer when choosing a product for purchase.

This is true of consumer goods and it holds for CSPs when they choose their ODAM

systems with price tags that usually reach into the millions of dollars. In the area of CSP

end-to-end monetization, CSPs must trust their ability to generate revenue, and even in

their ability to stay in business, on a vendor—trust in a company and in a brand is of

utmost importance.

Stratecast views increasing revenues as direct correlation of CSP brand trust in a

particular technology supplier. Netcracker increased its revenue, and CSP customer base

over the past year, and as mentioned above, over the last six years. Therefore, its brand

equity has certainly increased during the last year, and over the last six years.

Netcracker brings an additional advantage through its tightly integrated Netcracker 12

cloud-enabled solution platform. Every major ODAM function works together with other

functions without the messy integration challenges that have so commonly dominated CSP

business and network operations in the past. Many new customers for Netcracker today

buy the Netcracker 12 platform to address a particular business or technology need, but

understand that when unforeseen challenges come up, which installed systems were not

meant to address especially in a real-time sense, the need can be "containerized" as a

microservice and accomplished through the Netcracker 12 cloud-enabled solution.

Stratecast suspects that several monetization surprises await CSPs as they embrace

virtual networks, digital transformation, and 5G-based customer services. While an

installed base of OSS and BSS solutions may offer some business management



capabilities, those systems cannot address all of the new business management needs

that will surely come. When this happens, companies such as Netcracker will be highly

considered; especially as the company's solution delivery experience expands and new

solution capabilities are made available.

Conclusion

Stratecast recently completed its annual assessment of the end-to-end global CSP

monetization market. We specifically evaluated the role of monetization within the CSP

business environs. In so doing, Stratecast reached out to and analyzed insights from over

100 suppliers, covering various aspects of the end-to-end CSP monetization marketplace.

Stratecast defines CSP monetization to include six related segments: billing mediation;

rating & charging; other core billing functionality; policy management (rules function);

interconnect & settlement; and partner management.

The current report series, along with the previous four Stratecast report series, each cover

the global end-to-end CSP monetization marketplace. They have provided Stratecast with

company and market level data from 2010 through 2016. With this data, we found that

Netcracker has experienced sustained, above-market growth over the last six years,

approaching approximately five times the average rate of the market as a whole.

In recognition of Netcracker's superior ability to grow much faster than the

market and its competitors, Stratecast awards the 2017 Stratecast Global Growth

Excellence Leadership Award in CSP Monetization to Netcracker.



Significance of Growth Excellence Leadership

Growth Excellence Leadership is about inspiring customers to purchase from your

company, and then to return time and again. In a sense, then, everything is truly about

the customer, and making those customers happy is the cornerstone of any long-term

successful growth strategy. Companies that excel in driving growth strive to be best-in-

class in three key areas: meeting customer demand, fostering brand loyalty, and carving

out a unique, sustainable market niche.

Understanding Growth Excellence Leadership

Companies that creatively and profitably deliver value to customers ultimately set up their

businesses for long-term, rapid growth. This is what Growth Excellence Leadership is all

about: growth through customer focus, fostering a virtuous cycle of improvement and

success.



Key Benchmarking Criteria

For the Growth Excellence Leadership Award, Stratecast | Frost & Sullivan analysts

independently evaluated two key factors—Growth Performance and Customer Impact—

according to the criteria identified below.

Growth Performance

Criterion 1: Growth Strategy

Requirement: Executive team has a shared vision for the organization’s future growth and

has created and implemented a strategy that is consistent with that vision.

Criterion 2: Above-market Growth

Requirement: Company’s growth rate exceeds the industry’s year-over-year growth rate.

Criterion 3: Share of Wallet

Requirement: Customers allocate a greater percentage of their total spend to purchasing

products or services produced by the company.

Criterion 4: Growth Diversification

Requirements: Company is equally able to pursue organic (e.g., distribution channel

optimization, new product innovation) or inorganic (e.g., acquisitions, partnerships)

growth opportunities consistent with the long-term objectives of the organization.

Criterion 5: Growth Sustainability

Requirement: Company has consistently sought out opportunities for new growth,

enabling the organization to build on its base and sustain growth over the long-term.

Customer Impact

Criterion 1: Price/Performance Value

Requirement: Products or services offer the best value for the price, compared to similar

offerings in the market.

Criterion 2: Customer Purchase Experience

Requirement: Customers feel they are buying the most optimal solution that addresses

both their unique needs and their unique constraints.

Criterion 3: Customer Ownership Experience

Requirement: Customers are proud to own the company’s product or service and have a

positive experience throughout the life of the product or service.

Criterion 4: Customer Service Experience

Requirement: Customer service is accessible, fast, stress-free, and of high quality.

Criterion 5: Brand Equity

Requirement: Customers have a positive view of the brand and exhibit high brand loyalty.



Best Practices Recognition: 10 Steps to Researching, Identifying, and Recognizing Best Practices

Stratecast | Frost & Sullivan Awards follow a 10-step process to evaluate award

candidates and assess their fit with select best practice criteria. The reputation and

integrity of the Awards are based on close adherence to this process.

STEP OBJECTIVE KEY ACTIVITIES OUTPUT

1 Monitor, target, and screen

Identify Award recipient candidates from around the globe

Conduct in-depth industry research

Identify emerging sectors Scan multiple geographies

Pipeline of candidates who potentially meet all best-practice criteria

2 Perform 360-degree research

Perform comprehensive, 360-degree research on all candidates in the pipeline

Interview thought leaders and industry practitioners

Assess candidates’ fit with best-practice criteria

Rank all candidates

Matrix positioning of all candidates’ performance relative to one another

3

Invite thought leadership in best practices

Perform in-depth examination of all candidates

Confirm best-practice criteria

Examine eligibility of all candidates

Identify any information gaps

Detailed profiles of all ranked candidates

4

Initiate research director review

Conduct an unbiased evaluation of all candidate profiles

Brainstorm ranking options Invite multiple perspectives

on candidates’ performance Update candidate profiles

Final prioritization of all eligible candidates and companion best-practice positioning paper

5

Assemble panel of industry experts

Present findings to an expert panel of industry thought leaders

Share findings Strengthen cases for

candidate eligibility Prioritize candidates

Refined list of prioritized Award candidates

6

Conduct global industry review

Build consensus on Award candidates’ eligibility

Hold global team meeting to review all candidates

Pressure-test fit with criteria Confirm inclusion of all

eligible candidates

Final list of eligible Award candidates, representing success stories worldwide

7 Perform quality check

Develop official Award consideration materials

Perform final performance benchmarking activities

Write nominations Perform quality review

High-quality, accurate, and creative presentation of nominees’ successes

8

Reconnect with panel of industry experts

Finalize the selection of the best-practice Award recipient

Review analysis with panel Build consensus Select recipient

Decision on which company performs best against all best-practice criteria

9 Communicate recognition

Inform Award recipient of Award recognition

Present Award to the CEO Inspire the organization for

continued success Celebrate the recipient’s

performance

Announcement of Award and plan for how recipient can use the Award to enhance the brand

10 Take strategic action

Upon licensing, company is able to share Award news with stakeholders and customers

Coordinate media outreach Design a marketing plan Assess Award’s role in future

strategic planning

Widespread awareness of recipient’s Award status among investors, media personnel, and employees



The Intersection between 360-Degree Research and Best Practices Awards

Research Methodology

Stratecast | Frost & Sullivan’s 360-degree

research methodology represents the

analytical rigor of our research process. It

offers a 360-degree-view of industry

challenges, trends, and issues by

integrating all 7 of Stratecast | Frost &

Sullivan's research methodologies. Too

often companies make important growth

decisions based on a narrow understanding

of their environment, leading to errors of

both omission and commission. Successful

growth strategies are founded on a

thorough understanding of market,

technical, economic, financial, customer,

best practices, and demographic analyses.

The integration of these research

disciplines into the 360-degree research

methodology provides an evaluation

platform for benchmarking industry participants and for identifying those performing at

best-in-class levels.

360-DEGREE RESEARCH: SEEING ORDER IN

THE CHAOS



About ODAM

The processes and tools that communications service providers (CSPs) have utilized to run

their businesses have changed over time. More than a half-century ago, CSP network and

business management processes were manual (OAM&P). As CSPs evolved over the years,

so did the operations support systems (OSS) and business support systems (BSS) that

address CSP business and network management needs. In recent years, the lines between

OSS and BSS have become less clear, with much overlap. In addition, the roles in which

OSS and BSS operate have expanded beyond traditional boundaries. As such, Stratecast

now uses the term Operations, Orchestration, Data Analytics & Monetization (ODAM) to

encompass both the traditional OSS and BSS functions and the new areas in which

business and operations management must now work together, including virtualized

networks and telecom data analysis.

About Stratecast

Stratecast collaborates with our clients to reach smart business decisions in the rapidly

evolving and hyper-competitive Information and Communications Technology markets.

Leveraging a mix of action-oriented subscription research and customized consulting

engagements, Stratecast delivers knowledge and perspective that is only attainable

through years of real-world experience in an industry where customers are collaborators;

today’s partners are tomorrow’s competitors; and agility and innovation are essential

elements for success. Contact your Stratecast Account Executive to engage our experience

to assist you in attaining your growth objectives.

About Frost & Sullivan

Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth

and achieve best-in-class positions in growth, innovation and leadership. The company's

Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined

research and best practice models to drive the generation, evaluation and implementation

of powerful growth strategies. Frost & Sullivan leverages more than 50 years of

experience in partnering with Global 1000 companies, emerging businesses, and the

investment community from 45 offices on six continents. To join our Growth Partnership,

please visit http://www.frost.com.