Business_services.ppt

© Analysys Mason Limited 2012
Spending on business services-related OSS/BSS is growing as CSPs focus on the enterprise market
Viewpoint
Spending on business services-related OSS/BSS is
growing as CSPs focus on the enterprise market
November 2012
Mark H. Mortensen

Executive summary: CSPs are focusing more on business customers,
including small businesses – a previously underserved market
 The needs of large businesses have always been a primary
concern for communications service providers (CSPs)
because such businesses represent large revenue
opportunities.
 Smaller businesses have many of the same, complex needs
as larger businesses, but have been treated essentially the
same as retail consumers because of the limitations of CSP
operations budgets and inadequate automated BSS/OSS
functions.
 BSS/OSS spending has traditionally focused primarily on the
network and network services.
 There is a long-term shift of spending towards customer-
oriented systems in the business services segment, and this
trend will continue for the foreseeable future.
 This shift will support the enhancement of CSP operations to
support the specialised needs of businesses – both small and
large – in billing, customer care and service fulfilment.
2
Figure 1: Key facts about business services [Source: Analysys Mason, 2012]
Tier 1 CSPs get a
third of their revenue
from businesses
Large enterprises
account for only 0.3%
of businesses
in the USA
Business services
revenue for billing will
grow at almost twice
the rate of the billing
segment overall in the
next five years
Software spending
is shifting from
network-facing to
customer-facing
systems

Spending on business services-related OSS/BSS is growing as CSPs focus on the enterprise market 3
Executive summary
Recommendations
Business services revenue and demographics
Business services operations
Spending is shifting towards systems that support customers, and business services revenue is growing fast
New and enhanced systems functionality is targeted towards business services
About the author and Analysys Mason

Recommendations
 Operators in mature markets should investigate the revenue and revenue potential from small and medium-sized
enterprises (SMEs) – not only large enterprises – and establish marketing and operational support programmes tailored to this
currently underserved market.
 Operators should selectively implement new self-service functions that will make enhanced support for formerly mass-market
small office, home office (SOHO) and SME customers economically feasible. This is especially important in emerging markets.
 Operators should experiment to determine how to provide mass-customised, self-service operations for the SOHO and SME
segments.
 Vendors should implement business-focused features and functionality for this market – primarily in the BSS space, as
operator spending shifts inexorably in that direction, away from the traditional network areas.
4

Executive summary
Recommendations

8% 10%
16%
20%
25%
33%
40%
30%
11% 7%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
BT Verizon
Percentage
of
revenue
Small business
Medium-sized
and large business
Consumer
Wholesale
Other
Business services represent about a third of a Tier 1 CSP’s revenue
6
Figure 2: BT and Verizon’s revenue by customer type, 2010 [Source:
Analysys Mason, 2012]
 Most small CSPs get the majority of their revenue from
individual consumers – that is, business-to-consumer (B2C)
services.1
 Large CSPs, such as BT and Verizon, derive more of their
revenue from business services than from consumer services
(see Figure 2).
 Most of the customers of these large Tier 1 CSPs are
consumers, but they only account for 25–33% of their
revenue.
 Small, medium-sized and large businesses accounted for
37% of Verizon’s revenue and 51% for BT, which has a
significant IT outsourcing business.
Businesses accounted for 37% of Verizon’s
and more than half of BT’s revenue in 2010.
1 There are exceptions, such as small CSPs that cater only for business-to-business (B2B)
services, usually focusing on the SME segment.
2 The definitions of small, medium-sized and large businesses vary considerably between
operators. In the European Union, the definition of an SME varies from those with less than
100 employees to those with less than 255 employees. In the USA, it is typically capped at
500 employees. SOHOs are generally agreed to be businesses of less than ten employees.
Analysys Mason employs the following definitions: micro/SOHO = 1–9 employees;
small = 10–49 employees; medium = 50–249 employees; large = 250 and more employees.

The number of businesses decreases rapidly with size
7
Figure 4: Number of businesses by size, USA, 2008 [Source: United States
Census Bureau, Analysys Mason, 2012]
 Using the USA as an example (see Figures 3 and 4), the
number of potential SOHO customers is large, and there are
about a third as many SME customers. By contrast, the
number of large enterprises is much smaller.
 In the European Union, the breakdown is even more radical,
with 1% large, 9% SME and 90% SOHO (averaging only
2 employees), as reported by SME Performance Review
of the European Commission.
 Although little data are available, emerging markets are
believed to have an even smaller percentage of small and
medium-sized businesses.
Figure 3: Businesses by size, USA, 2008 [Source: United States Census
Bureau, Analysys Mason, 2012]
SOHO
79.1%
SME
20.6%
Large
0.3%
Total:
5.8 million
1
10
100
1 000
10 000
100 000
1 000 000
10 000 000
SOHO Small Medium Large
Number
of
businesses
(logarithmic
scale)

Executive summary
Recommendations

Service complexity, as well as the complexity of CSP operations, increases
quickly with the size of the business
 B2B operations differ from B2C operations in that there are
fewer customers, but the services are more complex (as
shown in Figure 5).
 However, the business segment can be divided into different
classifications according to size, and the complexity of the
services increases with the size of the business.
9
Figure 5: Customer classifications, with approximate relative revenue ,
according to scale and complexity [Source: Analysys Mason, 2012]
Complexity of the services
Consumer
SOHO
Small
business
Medium-sized
business
Large
business
(Major accounts)
Hundreds
Thousands
Tens of
thousands
Millions
Number
of
customers
Low Medium High

Most CSPs break the operations (and often supporting BSSs and OSSs)
into two major groups: custom and mass operations
 Custom operations support the major accounts – usually
the top 50 to several hundred accounts – and are provided
with specialised handling. These accounts are each given
their own CSP contact numbers, dedicated or semi-dedicated
operations personnel, and their own customised procedures.
A major account manager might meet the customer once
each month to go over the performance of the CSP with
regard to meeting the installation due dates and other
service-level agreements (SLAs).
 Mass operations are used for the rest of the accounts,
using extremely standardised procedures, backed up by
substantial automation to reduce costs. In many cases, the
CSPs establish a separate organisation and operations
support structure for the larger business (non-major) and
medium-sized business accounts – sometimes even the
small business accounts. However, the processes are much
the same as those supporting the consumer accounts, albeit
with different service bundles and costs. Operations efficacy
is measured in bulk, on the basis of key performance
indicators (KPIs). These are usually measured on weekly,
monthly and yearly bases.
 CSPs need to find an economic means of using mass-
customised operations to support business customers that
are currently served by mass operations. This will only be
possible through advanced automation and self-service
operations.
10
Mass operations Custom operations
Large scale Customised services per customer
Standard services Customised services per customer
Simple to moderately complex
services
Complex to very complex services
Transactions have a limited
number of steps, and are
completed in minutes to days
Transactions take a long time to
complete, with many steps, and are
completed in days to months
Few services per customer Many services per customer
Customised service bundles Unique service bundles
Standardised operations Customised operations
Overall KPIs, measured after the
fact
Per-customer SLAs, measured on an
ongoing basis
Figure 6: Operations groupings and differences [Source: Analysys Mason,
2012]

Executive summary
Recommendations
Spending is shifting towards systems that support customers, and business services
revenue is growing fast

CSP spending on network-related OSSs has traditionally outstripped that
on more customer-oriented systems …
 Traditionally, CSPs spend more on the OSS systems that
are network-oriented, including service assurance, network
management, and a portion of service fulfillment, as seen
in Figure 7.
 Customer-oriented systems, such as billing and customer
care and some of service fulfillment, account for a much
smaller fraction of the BSS/OSS spending by CSPs
worldwide.
12
Figure 7: Business services’ share of commercial software revenue, by
BSS/OSS segment, worldwide, 2011 [Source: Analysys Mason, 2012]
0%
5%
10%
15%
20%
25%
30%
35%
Billing
Customer
care
Service
fulfilment
Service
assurance
Network
management
systems
Percentage
of
revenue
Customer-oriented Network-oriented

… but spending on business-oriented systems is growing as CSPs focus
more on the previously under-served business market
 Overall, spending for BSS/OSS on business services will
grow by about 0.5% more per year than spending on
telecoms software overall.
 However, as seen in Figure 8, the forecasted growth in the
customer-oriented systems that support business services is
greater than that in the more network-oriented systems.
 For example, the business services part of billing is projected
to grow at almost twice the rate of the billing segment overall.
13
Figure 8: CAGRs for commercial software revenue overall and business
services revenue, by BSS/OSS segment, worldwide, 2010–2015 [Source:
Analysys Mason, 2012]
0%
2%
4%
6%
8%
10%
12%
14%
Billing
Customer
care
Service
fulfilment
Service
assurance
Network
management
systems
CAGR
Overall Business services
Customer-oriented Network-oriented

Executive summary
Recommendations

CSPs increase spending is adding specialised functionality to their
BSS/OSS systems to better serve the needs of enterprises
 CSPs are adding functionality to support their business services customers, either through evolutionary enhancements to their
established systems or through buying new, dedicated systems to perform specialised functions.
 The following are examples of the functionality in each customer-oriented BSS/OSS area.
 Billing:
 electronic presentment of bills
 electronic payments.
 Customer care:
 customer self-care for enterprises
 customer self-ordering for more-complex services
 billing analysis software, provided by the CSP, obviating the need for additional analysis software.
 Service fulfilment:
 automated network planning and implementation of wholesale backhaul services
 private network design, including quick-quoting features
 automated network implementation of business-oriented services.
15

Executive summary
Recommendations

About the author
Mark H. Mortensen (Principal Analyst) is the lead analyst for Analysys Mason’s Customer Care and Service
Fulfilment research programmes, which are part of the Telecoms Software research stream. His primary areas of
specialisation include customer self-care, automation of fulfilment processes, and data operations. The first 20
years of Mark’s career were spent at Bell Laboratories, where he specialised in creating software products for new
markets and network technologies and in the interaction of software with the underlying network hardware. Mark
was Chief Scientist of Management Systems at Bell Labs, and president of his own OSS strategy consulting
company, CMO at inventory specialist Granite Systems, VP of Product Strategy at Telcordia Technologies, and SVP
of Marketing at a network planning software vendor. Mark holds MPhil and a PhD degrees in physics from Yale
University and has received two AT&T Architecture awards for innovative software solutions. He is also an adjunct
faculty member at UMass Lowell in the Manning School of Business, specialising in Strategic Management.
17

About Analysys Mason
Knowing what’s going on is one thing. Understanding how to take advantage of events is quite another. Our ability to understand the
complex workings of telecoms, media and technology (TMT) industries and draw practical conclusions, based on the specialist
knowledge of our people, is what sets Analysys Mason apart. We deliver our key services via two channels: consulting and research.
18
Consulting
 Our focus is exclusively on TMT.
 We support multi-billion dollar investments, advise clients on
regulatory matters, provide spectrum valuation and auction support,
and advise on operational performance, business planning and strategy.
 We have developed rigorous methodologies that deliver tangible
results for clients around the world.
For more information, please visit www.analysysmason.com/consulting.
Research
 We analyse, track and forecast the different services accessed by
consumers and enterprises, as well as the software, infrastructure
and technology delivering those services.
 Research clients benefit from regular and timely intelligence in
addition to direct access to our team of expert analysts.
 Our dedicated Custom Research team undertakes specialised and
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For more information, please visit www.analysysmason.com/research.

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