Evolution or Revolution? Strategies for Telecom Billing Transformation

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As the telecom industry looks to improve the customer experience in all aspects of its business, the billing process is finally getting the attention it has long needed. Critical as it is to replace these old systems, the huge scale and daunting expense of such projects—easily approaching US$100 million and more—have made many operators reluctant to proceed. Operators must analyze their particu­lar needs and business models, and then choose one of an evolutionary or a revolutionary approach.

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Evolution or Revolution? Strategies for Telecom Billing Transformation

  1. 1. Perspective Jens Niebuhr Andreas Späne Dr. Germar Schröder Dr. Florian GröneEvolution or Revolution?Strategies for TelecomBilling Transformation
  2. 2. Contact InformationBerlin Houston New York Dr. Florian Gröne George Appling Jeff TuckerSenior Associate Partner Partner+49-30-88705-844 +1-713-650-4143 +1-212-551-6653florian.groene@booz.com george.appling@booz.com jeff.tucker@booz.comDubai London ParisKarim Sabbagh Michael Knott Pierre PeladeauPartner Partner Partner+971-4-390-0260 +44-20-7393-3527 +33-1-44-34-3074karim.sabbagh@booz.com michael.knott@booz.com pierre.peladeau@booz.comDüsseldorf Madrid Rio de JaneiroJens Niebuhr Jose Arias Paolo PigoriniPartner Partner Partner+49-211-3890-195 +34-91-411-5121 +55-21-2237-8409jens.niebuhr@booz.com jose.arias@booz.com paolo.pigorini@booz.comFrankfurt Milan SydneyAndreas Späne Pietro Candela Peter BurnsPartner Partner Partner+49-69-97167-408 +39-02-72-50-93-50 +61-2-9321-1974andreas.spaene@booz.com pietro.candela@booz.com peter.burns@booz.comDr. Germar Schröder MoscowPrincipal Dr. Steffen Leistner+49-69-97167-426 Partnergermar.schroeder@booz.com +7-985-368-7888 steffen.leistner@booz.comHong KongEdward Tse New DelhiSenior Partner Suvojoy Sengupta+852-3650-6100 Partneredward.tse@booz.com +91-124-499-8700 suvojoy.sengupta@booz.comAndy Lesser, Sebastian Jammer, and Dany Sammour also contributed to this Perspective. Booz & Company
  3. 3. EXECUTIVE As the telecom industry looks to improve the customer experience in all aspects of its business, the billing processSUMMARY is finally getting the attention it has long needed. Too many operators continue to struggle with billing systems that were developed a decade or more ago and have since been remodeled into makeshift solutions that are heavily siloed, are expensive to operate, and can’t cope with increasing product and pricing complexity or the need to bring new products and pricing strategies to market quickly. Critical as it is to replace these old systems, the huge scale and daunting expense of such projects—easily approaching US$100 million and more—have made many operators reluctant to proceed. Operators must analyze their particu- On the other hand, operators looking lar needs and business models, and to develop business strategies based then choose one of an evolutionary on sophisticated price differentiation, or a revolutionary approach. The rapid innovation, new business evolutionary approach works best models, and fully convergent for operators with relatively modest multiplay products will likely need business requirements, such as more to take the revolutionary approach, stable operations, a gradual reduction turning to best-of-breed systems to in process complexity, or improve- capture as much business value as ments in time-to-market performance. possible. Operators whose systems Typically, this option entails either lack fundamental health will also stabilizing their current systems, if likely take this path, turning to off- those systems are relatively healthy, the-shelf billing systems that can meet or taking a stepwise approach toward their modest business needs. enhancing their billing capabilities, starting with simple add-ons and This Perspective explores these overlays and potentially progressing two options and provides guidance toward a full migration to a to operators on how best to move new system. forward.Booz & Company 1
  4. 4. WHY BILLING In just the past few years, the global telecom industry has changed relationship management (CRM) capabilities, including customer dataMATTERS dramatically. Developed markets have integration, multi-channel customer become saturated, business models management, contact center auto- are converging and recombining, and mation, next-generation campaign product offerings have grown more management and customer insight, complex as operators compete to and online marketing.1 offer customers the most attractive bundles of services. So it is no surprise This urge to improve the customer that operators have focused their experience, however, has not yet been IT agendas on consolidating and extended to the process of billing upgrading their customer-facing customers for all these new products capabilities, both to attract new and services. The major billing customers and to better manage and upgrades of the 1990s, primarily leverage the ones they already have. in mature markets, left operators with no pressing technical reasons In some cases, operators are investing for additional major improvements, tens and even hundreds of millions other than selective add-ons such of dollars into boosting their trans- as the ability to bill for content. actional and analytical customer More recently, the anticipated move This urge among operators to improve the customer experience has not yet been extended to the billing process.2 Booz & Company
  5. 5. to flat-rate billing and uncertainty that billing is quickly moving back should take in upgrading their billingabout the convergence of fixed and onto IT’s front burner at many major capabilities, however, is less clear—mobile operations stalled the upgrade telecom operations, for a variety of cautious, incremental evolution orof billing technologies, thanks to a reasons (see Exhibit 1). Executives aggressive, greenfield revolution? Thatperceived lack of business need. are experiencing firsthand the will depend, in our experience, on critical role of the billing process in each operator’s business requirementsA recent series of interviews supporting new products and pricing and technology realities, and a realisticBooz & Company conducted with models, bringing them to market analysis of the economic benefits toIT leaders at telecom operators quickly, improving revenue capture, be reaped.around the world tells us, however, and reducing costs. The path theyExhibit 1Billing Rises to the Top of the Telecom IT Priorities List CTO/CIO BILLING TRANSFORMATION VS. OTHER IT PRIORITIES BILLING TRANSFORMATION STATUS (2010-2011) (2010-2011) No 82% priority 7% Lower priority 22% One of top three priorities 71% 18% Billing Strategy and Plan Billing Transformation under Revision Already under WayNote: Based on interviews with 55 CTOs/CIOs of fixed, mobile, and virtual operators in Europe, the U.S., Middle East/North Africa, and Asia/Pacific.Source: Booz & Company analysisBooz & Company 3
  6. 6. DRIVERS OF The competitive demands of the 21st-century telecom market reveal only further complicate the billing process. And as operators developCHANGE much about why billing has risen more sophisticated multibrand to the top of the IT agenda at many strategies that target specific telecom operators. customer segments, they will need to develop the ability to bill for • Increasing product complexity: multiple virtual network operators The rise of next-generation within a single network and system networks—everything from fiber to infrastructure.2 4G networks based on long-term evolution (LTE) technologies—is • Increasing pricing complexity: With driving the creation of a large the rise of ubiquitous high-speed number of new communications networks and product bundles, the product opportunities, including trend to flat-rate pricing appears increasingly complex bundles to be slowing. Creative, flexible of fixed and mobile offerings, pricing structures have become a entertainment, applications, and strategic differentiator, especially other value-added services. As in increasingly competitive mature these products enter the market, markets, where tariffs with “cost- the ability to bill efficiently for airbag” spend threshold features, both traditional and converged try-and-buy schemes, dynamic products will become a necessity. usage-based discounts, and social/ This capability will also need to be community-based pricing schemes extended to third-party partners have become popular. Even flat-rate that deliver apps, content, or value- plans are becoming more complex, added services through revenue- with monthly flat rates being joined sharing agreements. by flat fees per call, per day, for specific time windows, or as value- Product innovation is also blurring added services within a bundle. the line between traditional Most advanced operators run prepaid and postpaid billing dynamic discounting schemes as models as operators begin to a means to optimize network offer products such as hybrid load distribution and respective bundles that integrate prepaid capital expenditure requirements, and postpaid plans with the aim moving away from traditional of differentiating themselves in fixed-price plans. saturated markets. This trend will Creative, flexible pricing structures have become a strategic differentiator, especially in increasingly competitive mature markets.4 Booz & Company
  7. 7. Increased product and pricing only problem associated with legacy data privacy and consumer rights complexity is also making the task billing systems. Operators that protection. of billing for commercial accounts continue to depend on legacies face more onerous, especially given the higher costs and significant business In addition to the many reasons older many various account levels and risks, even as such systems reach billing systems may need upgrading, thousands of separate employee their operational limits. the technology itself has advanced account holders. significantly in the past five years. Planning for, building, and running Commercial off-the-shelf (COTS)• Time-to-market: Given the billing platforms has long been one systems have become more flexible rapidly multiplying number of of the biggest IT costs for telecom and more easily configured, greater products, services, and pricing operators, eating up 30 percent standardization of functional segments plans, and the shorter and shorter or more of IT budgets. Now, as (summarized, for example, in eTOM, product cycles, it is imperative margin pressure increases, the a framework defined by the industry for operators to be able to push need to leverage new technology to association TeleManagement Forum) products into the market and reduce this expense is clear. Indeed, offers increased flexibility, and service- implement pricing changes we have seen several operators that oriented architectures allow reuse of quickly. Over time, however, focus on prepaid offerings generate numerous components. As a result, the billing systems purchased significant cash savings by moving many customized systems have been by operators in the 1990s have their online billing to newer, rendered obsolete. And many of the been heavily customized, leaving more efficient systems outside the new COTS systems can support new them with diverse sets of virtually traditional intelligent network (IN) data and multimedia services and bespoke, often independent billing domain. complex products and product bundles platforms for fixed and mobile, (see “The State of the Billing Solution data and voice. Product features Moreover, legacy systems have Market,” page 6). are frequently hard-coded in shown themselves prone to flat-hierarchy product codes, for outages and other glitches, putting We see many operators already instance, making it very costly operators at risk for unhappy caught up in the billing dilemma: and time-consuming to change customers and real loss of Their current systems are no longer billing schemes to accommodate revenue—and very bad publicity. up to the task of billing flexibly and bundled products. Worse, some If operators can’t bill properly, efficiently for the many new complex operators continue to depend on they tarnish their reputations and products coming to market, while homegrown billing systems in a lose money. This extends to third- keeping customers happy. Yet the sheer “stovepiped” architecture with no party partners, with whom many cost—upward of $100 million—and connections between the types of operators have contractual revenue- scale of designing and implementing communications at all. sharing agreements. Poor billing a new system are making many practices can lead to compliance operators hesitate. The key question:• Cost and legacy risks: The lack of risk as well, given tightened legal What’s the right strategy for resolving flexibility and scalability isn’t the requirements surrounding customer this dilemma?Booz & Company 5
  8. 8. The State of the Billing Solution MarketEvery vendor wants to create some “buzz” in the marketplace. For some time now,providers of telecom billing technologies have been touting “convergent billing.” Nosurprise there, given the industry-wide importance of convergence and the immenseopportunity it gives vendors to push their new billing platforms.At the same time, the supplier space has seen lively consolidation activity, as playersreposition themselves to build more comprehensive convergent billing capabilities.Suppliers such as Amdocs, Comverse, and Convergys that in the past have had a clearoffline, postpaid billing focus are enhancing their product lines by offering compellingconvergent products that include online charging capabilities. Network equipmentsuppliers such as Ericsson, which recently acquired LHS, a leading postpaid solutionprovider, are complementing their IN/prepaid capabilities with offline charging. Andglobal IT software vendors are entering the market from their more familiar ERP CRM, ,and business intelligence territories, aiming to develop comprehensive business supportsystem (BSS) solution portfolios. To this end, SAP acquired Highdeal, and Oracle boughtPortal. Yet the market remains relatively fragmented—Amdocs is the only player with asizable market share.In essence, every vendor is focusing its innovation efforts on being able to offer a similarset of capabilities:• Unified product catalogs and convergent billing plans• Prepaid/postpaid functionality convergence• Rate plan flexibility (rule-based rating)• Horizontal and vertical scalability• Centralized subscriber management• Comprehensive and easy-to-use tool set to design tariffs/discounts• Application pre-integration with adjacent domains like CRM, ERP or data warehouses ,While vendors all pursue similar roadmaps, their stance towards exposing API within thebilling stack varies significantly. For example, several vendors do not provide access tothe interfaces among service control points, balance management, and rating, essentiallycreating a boxed solution. Others, in contrast, de-layer their solutions and allow moreflexibility to connect third party solutions.Buyers should remain cautious. In our experience, too many investment decisions aremade prematurely and ultimately have to be reversed at significant cost and pain. Modernbilling systems offer significantly greater product and pricing flexibility and functionality.Yet many vendors fail to live up to claims of being able to provide “pre-integratedconvergence.” Given the long histories of the development of these systems, includingfrequent acquisition of key components, sometimes the only aspect of the system that’struly integrated is the solution’s brand name.It is likely that a number of smaller, second-tier players will fall behind in the developmentof innovative product components. Still, they may offer a more economical solutionfor smaller, cost-conscious operators. Given the ongoing consolidation in this space,however, committing to a single vendor for an end-to-end billing solution may not bewise; operators that do so run the risk of depending on less innovative systems fromvendors that may disappear at any time.A final word of warning: Convergence is unquestionably a key trend in the telecommarket. By itself, however, convergent billing may not be a sufficient reason to jump intowhat, for many operators, would be the largest IT project they’ve attempted in a decade.For most near- and middle-term business requirements, reasonable “workarounds” mightstill do the job. 6 Booz & Company
  9. 9. EVOLUTION OR time-to-market performance, for instance. Billing for basic fixed/ • Revolution: Some operators have billing systems that are inflexible,REVOLUTION? mobile integration that supports slow to change, costly, and unsta- static product bundling or a single, ble, and yet they are planning to consolidated bill for all services can follow a business strategy that relies also be achieved by intelligently on sophisticated price differentia- overlaying an integrated system— tion, rapid innovation, and fullyUnfortunately, there is no easy “silver through a “rebiller” approach, convergent multiplay products. Asbullet” answer to that question. It is offline data synchronization, or such, they are likely looking for sig-tempting to see the options as black simply at the bill presentment layer, nificant increases in billing efficien-and white—either to choose a more for instance—which may be suf- cy—and the money to pay for it. Ifcautious, sensible, and adequate ficient for many operators, at least so, they may be good candidates forevolutionary approach, or to go for in the middle term. And it doesn’t an entirely new billing system.the revolutionary, top-to-bottom refit. require a hugely disruptive green-The right answer, however, is more field renewal exercise. Usually, however, billing transforma-complicated. tion plans aren’t so easily determined. However, an evolutionary strategy We believe that billing processes must• Evolution: As critical as conver- has its limits, especially for opera- be tailored to each operator’s prod- gence has become in the current tors that can make the business case uct and price differentiation strat- telecom market, not every opera- for a tightly integrated, converged, egy. There are many shades of gray tor is in need of an entirely new, or real-time billing system that between a sophisticated, full-service convergent billing system. This incorporates such features as strategy designed to prosper by driv- is especially true if the operator’s real-time thresholds, integrated ing innovation through service conver- billing system needs are relatively balance management across fixed gence and the integration of new modest: more stable operations, and mobile subscribers, or a com- business models, and a lean and mean, a gradual reduction in process bination of prepaid, postpaid, and “no-frills” strategy designed to benefit complexity, or improvements in event-based services. from simplicity and low costs.Booz & Company 7
  10. 10. STRATEGIC that are not pursuing radical, innovative business strategies may not find a big-bang migration to be the best strategy. CustomersDECISIONS should be looking to stabilize who remain content with “legacy” their platforms through a very products and prices are often the focused set of activities aimed at most profitable, and operators are extending the life cycle of existing rightly unwilling to sacrifice that platforms if business demand revenue by migrating these valuableOperators looking to devise the allows. This strategy avoids the customers into new, typically moremost suitable billing strategy must high investment cost and major economical price plans solely tofirst develop a clearly thought-out, disruptions of a greenfield system, simplify their billing technology.workable business differentiation but at the risk of falling behindstrategy, including strategies for the innovation curve. That may be Moreover, all-out billing transfor-growth, product differentiation, perfectly acceptable, especially in mation projects are notoriouslypricing, and the like. Is the goal to certain parts of the business, such difficult to complete successfully.be the “innovation leader” or the as PSTN, where innovation may The effort needed to complete the“no-frills player”? These strategies not be a necessity, or for operators migration, testing, and verificationmust then be matched with a realistic that must concentrate on bottom- is easily underestimated, and theseassessment of the operator’s current line efficiency (see Case Study 1: projects often lead to failure—notbilling environment—its “platform “Sweating the Assets”). only for technical reasons but alsohealth,” which includes architectural because of the people and changecomplexity, time-to-market of • Stepwise differentiation: Operators management challenges involved.changes, scalability, system stability, looking to pursue more ambitious Given these concerns, establishedand IT costs. Exhibit 2 offers an but still “mainstream” competitive operators should carefully con-assessment tool that operators strategies, or whose billing sider the effort, expense, and riskcan use to clarify their position platforms are less healthy, should required to shape the right “evolu-in their markets, depending on consider a phased approach. Here, tion paths” in their billing strategydifferentiation strategy and platform the process involves integrating (see Case Study 2: “Step-by-Stephealth. Operators can then position existing platforms more tightly, at Convergence”).themselves on the grid in Exhibit 3 the bill presentment and rebilling(page 10) to better understand which levels, for instance. The longer-term • Best-of-suite: This option is onlyone of four very different strategies goal: to move to more complete for operators willing to embark onthey should consider. platform convergence. a large-scale transformation to a Operators with complex product true greenfield billing system that• Stabilization: Operators with and pricing offerings, and with fully integrates billing for current generally healthy billing systems highly diverse subscriber bases, and potential convergent productsExhibit 2Billing Strategy Drivers DIFFERENTIATION STRATEGY PLATFORM HEALTH Innovation Strategic No-Frills Health Excellent Gridlock Leader Dimensions Player Dimensions Base & ARPU Base & ARPU In sync with Business demand growth Growth Strategy defense business needs Functional Fit backlog Product Portfolio Days to deploy Functional Months to deploy Multiplay Strategy Single play changes Flexibility changes Product Integration Operational Stability Outages, leaks Convergence Strategy Separation & focus Compliant & Security & errors Personalized Service & Support On-demand experience Strategy No frills flexibility Scalability No way to grow Investment Constrained funds Superior value Pricing Strategy Low cost priority Financial Base & cost cutsSource: Booz & Company analysis 8 Booz & Company
  11. 11. Case Study 1 Case Study 2Sweating the Assets Step-by-Step ConvergenceThe fixed-line billing system at a large integrated operator A medium-sized European operator had developed awas essentially unchanged for almost a decade, and while strategy to integrate its fixed and mobile businesses tothe operator had no business need to upgrade the system, cross-sell, bundle, and eventually converge its productthe mainframe-based platform was showing end-of-life- sets. The operator had first considered a completely newcycle symptoms that could not be ignored. Ongoing billing greenfield billing solution to support the strategy; it quicklyproblems for new products had become so frequent became clear, however, that this approach would entailthat subscribers were growing dissatisfied, and negative significant slowdowns in its efforts to maintain growth,stories had begun appearing in the media. Multiday not to mention the large cash investments required.system outages were occurring as often as once a quarter, So the operator devised an evolutionary, step-changecausing millions of dollars of lost revenue. Every pricing transformation strategy to support business and productchange had to be “hard-coded” into the legacy platform, road maps within a relatively tight funding envelope.increasing the possibility of human error and resulting in Clarifying the real business need for true convergenceyet more revenue loss. And the labor costs involved in played a major role in developing the actual step-changesynchronizing pricing changes across multiple platforms strategy. “Tightly coupled” fixed and mobile productswere rising rapidly. would require full transparency into call detail recordsThe operator’s product strategy called for the eventual across platforms to enable convergent discounts and pricephaseout of a number of legacy “copper services,” to plan options, while “loosely coupled” product bundlesbe replaced by fiber-based, next-generation access would have much less complex IT requirements. Andtechnology—and its own billing system. So rather than since the operator was planning to offer “loosely coupled”replace the fixed-line billing system, management decided products for the next three to five years, a greenfieldto stabilize it. To do so, the operator froze the “copper” converged system would have delivered much moreproduct mix, limited any further changes to the system, functionality than the business needed. At the same time,and outsourced maintenance of the system to a third- the operator assumed that the fixed-line business wouldparty provider. Subscribers were given incentives to switch remain static until the switch to NGN had been completed,to new next-generation networking (NGN) products, while the mobile business would remain more dynamicand when they did, they were migrated to a new billing and challenging.platform. And a new bill formatting system was introduced Given these parameters, the operator designed athat took the data from the legacy system, consolidated it billing transformation strategy that consisted of severalwith other product platforms such as media, and produced development phases. In the first phase, urgent operationala single statement for subscribers. issues would be stabilized by replacing mainly fixedStabilizing the system and letting it “die in a controlled business components of the billing environment nearingfashion” turned out to be far more economical than the end of their life cycles. This would be accompaniedreplacing it. by enabling basic billing for product bundles—in part by using the wholesale gateways on mobile and fixed billing platforms to bill product bundles on either platform while maintaining the current systems and investments. For the middle term, the operator planned to work to improve provisioning speed and time-to-market for more complex bundles through a newly converged enterprise product catalog and order management system, opening up a potential path to further billing stack consolidation at a later stage. Interestingly enough, this strategy proved to be much less costly on a five-year basis than any greenfield approach envisioned. This operator’s experience thus demonstrates that a creative, value-adding billing transformation strategy can be significantly less costly and disruptive than a radical migration to a new convergent system, especially if a middle-term need for complex convergent functionality does not exist.Booz & Company 9
  12. 12. and services, and even completely outdated billing capabilities. They the time required to reap an adequate new, multi-industry business models can cut costs significantly, increase return on investment in such projects such as energy or insurance bill- billing efficiency by requiring strict is simply uneconomical, leaving ing. Operators considering such a adherence to defined functional smaller operators in a “complexity sweeping change should carefully standards, and even provide func- trap”—any efforts to remedy their weigh the benefits of the new billing tional improvement. The downside: very complexity are not worth the capabilities they are looking for a lack of product and pricing flex- effort. against the enormous cost, busi- ibility (see Case Study 4: “Billing ness disruption, and risk involved Outsourced”). The alternative, to “lie down and die in such efforts. If the business slowly,” is equally unattractive, so cases exist, they should be vali- Choosing a billing transformation smaller operators often find them- dated with rock-solid analysis and strategy becomes significantly more selves forced to explore more radical include appropriate risk provisions difficult for smaller operators. These strategies to remain competitive with to avoid unpleasant surprises (see operators, especially those with fewer their larger rivals—such as entering Case Study 3: “A Real-Time Billing than 5 million customers, face levels into international partnerships to Revolution”). of business complexity—the variety share billing services or outsourcing of products and pricing schemes and their billing to service providers that• Lean COTS: A highly standard- the degree of fragmentation of the can operate at efficient scale levels. ized, streamlined off-the-shelf customer base, for instance—that are But without a clear and compelling package—perhaps even provisioned comparable, if not equal, to those of business-driven transformation case, via remote hosting or following their larger brethren. So the scope of no large-scale billing project makes a software as a service (SAAS) their transformation projects and the economic sense; only rarely have we scheme—can be an attractive solu- effort required are similar. Yet the seen a compelling case for transforma- tion, especially for operators work- top- and bottom-line benefits of such tion for purely IT reasons. ing at a smaller scale, with limited projects depends largely on the scale business complexity, or with very of the business. Below a certain scale,Exhibit 3Four Potential Telecom Billing Strategies Differentiation Strategy BILLING STRATEGY SPACE Innovation Leader: New Business Models & Service Convergence Best-of-Suite - Big-bang replacement & migration - State-of-the-art, feature-rich, convergent suite Innovation Follower: Loose Cross-Service Integration Stepwise Differentiation - Gradual capability enhancement against Cash Cow: phased road map Evolution Within-Service Differentiation - Integration & convergence Revolution around existing stack(s) Stabilization Cost Leadership: Lean COTS Service Streamlining - Sweating the assets - Standard - Extended life cycle with functionality limited new features - Efficient delivery (e.g., SaaS) Lean Telecom: Radical Simplification Excellent Acceptable Gridlock Platform HealthSource: Booz & Company analysis 10 Booz & Company
  13. 13. Case Study 3 Case Study 4A Real-Time Billing Revolution Billing OutsourcedA rapidly growing mobile operator in a large Asian market A major mobile phone operator was looking to increasewith a big proportion of prepaid subscribers was being market share by reselling network capacity through abeaten to market by competitors that could launch portfolio of branded mobile virtual network operators. Byinnovative pricing schemes much more quickly. Worse, devising a focused customer value proposition for eachthe operator had outgrown its existing IN-based prepaid targeted segment, the operator succeeded in limiting bothbilling architecture and had begun experiencing serious the scale and the complexity of its billing needs. As such,operational problems that were reducing service quality. the operator determined that integrating the new billingThe existing heavily customized system could not provide systems into the systems of its incumbent business, aeither the fast time-to-market or the flexibility required to highly complex process, made no economic sense.keep up with the competition. So despite its mature in-house billing capabilities, theResearch showed that state-of-the-art prepaid and operator decided to take a different, more radical route.postpaid converged billing systems were available that It outsourced all of its new BSS operations to a servicecould provide the desired flexibility and time-to-market provider on a platform hosted by a mobile virtual networkwhile offering both scalability and cost efficiency. So enabler, which offered a multi-instance billing stack withthe operator decided to scrap the current architecture state-of-the-art but non-customizable real-time billingand implement a complete greenfield system based on capabilities. In doing so, the operator knowingly tradedIT technology rather than the old network technology. limited flexibility constraints for faster implementation speedBy doing so, the operator succeeded in realizing cost and low ongoing operational costs.synergies as well as richer product propositions includinghybrid prepaid and postpaid plans and real-time billingfeatures such as spending limits.Without a clear and compellingbusiness-driven transformationcase, no large-scale billing projectmakes economic sense; only rarelyhave we seen a compelling casefor purely IT reasons.Booz & Company 11
  14. 14. CONCLUSION Telecom operators around the world are in a race to offer customers a any easier. Executives must balance hard-core business requirements, multiplicity of converging products technology realities, and economic and services, to be paid for by equally benefits, and distinguish careful analy- complex and various pricing plans. sis from market hype. The options: The result: greater and greater pressure Design an evolutionary road map that on often outmoded billing systems to is tailored to deliver business stability account for and collect payment for and capability improvements at the all these differentiated plans. Telecom right speed and cost, step-by-step. Or executives are becoming painfully make a well-grounded, deliberate deci- aware of the need to make sure their sion to engage in a complete billing billing systems can keep up with revolution. Either path will be daunt- the fast pace of product and pricing ing, but no operator can afford to put change. the decision off—and allow com- petitors to reap the benefits of better Unfortunately, finding the right billing revenue capture, faster time-to-market, transformation strategy hasn’t gotten and more satisfied subscribers.12 Booz & Company
  15. 15. Endnotes1 See “Multi-Channel Customer Management” (www.booz.com/media/uploads/Multi-Channel_Customer_Management.pdf),“Beyond the Mass Mailing” (www.booz.com/media/uploads/BeyondtheMassMailing.pdf), and “Online Customers, DigitalMarketing” (www.booz.com/media/uploads/Online_Customer_Digital_Marketing.pdf).2 See “The Rise of Mobile Marketing” (www.booz.com/media/uploads/Rise_Mobile_Marketing.pdf).About the AuthorsJens Niebuhr is a partner Dr. Germar Schröder is awith Booz & Company in principal with Booz & CompanyDüsseldorf. His primary focus in Frankfurt. His client focusis on the telecommunications is telecommunications andand utilities industries, where technology and IT servicehe concentrates on business providers. His expertiseand IT architecture, large-scale includes diagnostics, designprocess and IT transformation, of and migration to next-and IT governance and strategy. generation telecommunication architectures, large-scaleAndreas Späne is a partner IT transformations, andwith Booz & Company in IT governance, as well asFrankfurt. He focuses primar- business steering/finance IT.ily on telecommunicationscompanies and specializes in Dr. Florian Gröne isstrategic restructuring and effi- a senior associate withciency improvement programs, Booz & Company in Berlin.as well as in development He works with telecommunica-and implementation manage- tions companies on IT-enabledment of complex IT/technology transformation topics. Hisstrategies. areas of expertise include customer-facing business process improvement and next-generation BSS strategy, including CRM, billing, business intelligence, and customer channel technology.Booz & Company 13
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