This document discusses monetizing machine-to-machine (M2M) communications and the billing requirements for M2M. Key points made in the document include: 1) M2M connectivity is growing rapidly due to falling technology costs and a maturing ecosystem of providers and applications. 2) M2M represents a massive scale business with huge transaction volumes but low average revenue per user (ARPU), requiring highly scalable and low-cost billing solutions. 3) Successful M2M business models require flexible billing to support new partnership models, vertical industry applications, and evolving combinations of services across the M2M value chain.

1. SAP Billing and Revenue
Innovation Management
Monetizing M2M
15 November 2012

2. Why now ?
• Falling costs, wider connectivity and maturing technologies
• Regulatory mandates
• A growing range of successful applications and business models
• A maturing provider ecosystem
• Rise of the cloud
Source: Economist Intelligence Unit, 1Q 2012
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3. Value to the end user
“ Successful technology has two great attributes:
They are invisible to the customer and
they solve a fundamental human need “
Martin Cooper, pioneer of cellular telephone
Connecting the physical world to the online;
your machines works for you
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4. M2M market forecast
Source: Economist Intelligence Unit
M2M will contribute to >5% of global operator revenue by 2015 ~ $65B
Source: Informa & SAP, 02/2012
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5. M2M = low ARPU?
Average monthly ARPU per SIM, US$, % of survey respondents
More than $9
Between $7 and $9
Between $5 and $7
Between $3 and $5
Less than $3
0 5 10 15 20 25 30 35
Source: Informa & SAP, 02/2012
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6. Secure M2M profitability #1
Business Challenges and Billing Requirements
LOW ARPU
! LOW VALUE CONNECTIONS
 Affordable and re-applicable low cost model
 Low ongoing cost of platform ownership
 Reduce operational cost
 Automation
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7. Connected devices and M2M
30.0
Billion devices
22.5
15.0
7.5
Sources: Machina Research,
2010 2012 2014 2016 2018 2020 GSM Association
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8. M2M connections and growth
16
14
12
10
Million Connections (end 2011)
YoY adds
8
6
4
2
0
Source: Berg Insight, April 2012
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9. Secure M2M profitability #2
Business Challenges and Billing Requirements
MASSIVE SCALE
HUGE REAL-TIME TRANSACTION VOLUMES
 Billing Platform to scale for high volume
 High performance and high availability architecture
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10. Future value shift in M2M communications
2015 Decision support, Reports and alerts,
Data collection storage and analytics,
Service Enablement Device monitoring and control,
Development toolkit and system
integration
Vertical Industry specific
Application Services solutions and managed
services
Communications services,
M2M
Connectivity & associated communications
hardware (modules, terminals, revenue
Hardware
devices) distribution
2012
Source: Informa/SAP (2012), Berg Insight (2012)
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11. Secure M2M success
Top 5 M2M operational Telecom Telecom Device, Cloud
focus areas CSP equipment Integrator software module, service
vendor vendor / ISV chipset maker provider
End-to-end service mgmt ▲ ▲ ▲ ▲ ▲ ▲
Partner mgmt ▲ ▲ ▲ ▲ ▲
Flexible billing ▲ ▲ ▲ ▲ ▲ ▲
Security & fraud ▲ ▲ ▲ ▲
Network traffic
& signalling loads ▲ ▲ ▲ ▲
Ordering & provisioning ▲
Cross-border roaming ▲
Business analytics ▲ ▲ ▲
Source: Informa & SAP, 02/2012
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12. Multi-sided Partner Revenue Sharing
Consumers
NW operators Module and Terminal
vendors
App developers
€ $
£ $
Specialized
communication providers ¥
App/Service
Store
£
Specialized solution Service €
providers ¥
Provider
€
Specialized service $
providers
Corporate
System integrators Clients
Resellers
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13. Secure M2M profitability #3
Business Challenges and Billing Requirements
CHANGING VALUE CHAIN/S
RAPID COMBINATIONS AND VERTICAL SPECIFICS
MANAGING AND MONETIZING COMPLEX PARTNER RELATIONSHIPS
!
 Enable and drive smart partnership value generation,
including Multi Industry Billing support
 Handle settlements & commission for global,
complex value chains
 Analytics for service differentiation, and additional
end-user value
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14. M2M focus and trends
CSPs’ target industries
Transport and… 51.8%
Utilities 46.4%
Automotive 27.3%
Financial services 20.0%
Health 20.0%
Operators / MVNOs 15.5%
Consumer… 14.5%
Public safety 11.8%
= = Integrators 11.8%
Manufacturing /… 10.9%
Oil and gas / mining 4.5%
Agriculture / food 2.7%
Military / defence 0.9%
Parcel Patient Felony Other 3.6%
tracking & alerts tracking & alerts tracking & alerts
Don't know /… 12.7%
% of CSPs
Opportunities:
 Seek horizontal scale of M2M services and apps
 Focus is shifting to specific apps versus specific industries
 Monetize the value that lays in the data
Source: Informa & SAP, 02/2012
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15. Revenue capture in the M2M value chain
CHANGE
Revenue share
AHEAD
App based
RUN IT BUILD IT USE IT
IaaS PaaS SaaS
Infrastructure as a Service Platform as a Service Software as a Service
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16. Secure M2M profitability #4
Business Challenges and Billing Requirements
NEW BUSINESS MODELS
!
LONG-TERM EVOLVING MULTI-SERVICE CONTRACTS
CAPTURE VERTICALLY SPECIFIC ROI
RAPID TTM
 Real-time and Convergent Charging & Billing; supporting a
mix of recurring and usage based micro payments
 Flexibility and Agility for Pricing Innovation and flexible
multi-sided business models
 Support retail and wholesale price models
 Fast TTM; configure not program
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17. Monetizing M2M - Billing requirements summary
LOW ARPU MASSIVE SCALE
 Low TCO;  Scalability
 Low cost footprint  Real-time
 Simplified operation  High performance
helps you to sustain the M2M is needed to cope with the high
low value transactions M2M transaction volumes
What is
needed ?
NEW BUSINESS MODELS CHANGING VALUE CHAIN/S
 Innovative pricing  Fast recombination of offers
 Fast TTM  Vertical specific or horizontal
 Complex partnerships
is key to support vertical differentiation ensures flexible partner management
and abstract value vertically – thus your success
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18. Thank You
To view the recorded webinar, please register here:
http://webexpo.computaris.com/webinars/sap
Contact information:
Name: Christina Giraud
Email: christina.giraud@sap.com

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