Tim Braulke: The death of billing for telcos?
Industry experts have talked about the death of billing for a few years, at least in the telco space. The telco world is moving more and more to pre-paid, online transactions and real-time fulfilment. So why should we bother with something as complicated and cumbersome as post-paid billing? At a first glance this argumentation seems to be perfectly true. Why all this effort? We are living in a ‘right here, right now’ world dominated by millennials going after digital services.
At Huawei we have a fundamentally different belief. Billing is an integral part of revenue management and monetisation. Topics which are more important than ever for telcos who are moving to digital and often struggle to monetise on the digital dividend. Indeed, talking about billing, only in its narrow sense, would be short-sighted. Huawei have extended the concept of convergent billing into a full end-toend revenue management.
End-to-end revenue management in this case consists of the entire process from event recognition, via rating, charging, invoicing to payment and settlement and finally the integration into the financial bookkeeping on the ERP systems. By doing so, Huawei’s end-to-end revenue management system Convergent Billing System (CBS) becomes the telcos’ digital service monetisation engine.
This is based on the key elements:
1. Agile business End-to-end configuration capabilities based on a perfectly layered architecture and a standards-based flexible data model combined with rich out of the box (OOTB) templates that enables digital services monetisation while at the same time reduce the total cost of ownership (TCO)
2. Customer-centricity Real-time, on demand, all online, DIY and social (ROADS) enablement across any customer segment, event, service, network, business model and payment mode to enhance customer experiences (CX) throughout all transactions
3. Digital ecosystem Billing as a service (BaaS) for internal and external partners including social media and the Internet of Things (IoT) and open APIs exposure to easily integrate with any partner And all this based on a cloud-native infrastructure as depicted in the diagram
HUAWEI CBS VALUE PROPOSITION
All this is logical and easy to understand as such, but how does this help with digital service monetisation and to improve customer experience in the digital age? Let us look at three distinct digital telco business scenarios:
1. Communication and media services – digital natives
2. Complex enterprise communication services
3. Internet of Things (IoT)
Digital natives are cruel to traditional telcos. They expect superior customer service for the lowest price in the market and have virtually no loyalty. As soon as a better offer in terms of price, quality and social status appears on the market or in their respective peer group they are gone. This ‘death of loyalty’ means that the telco has to apply the ‘real time paradigm’ throughout the entire customer interaction.
That translates into constant interaction through the ‘screen closest to you’ (e.g. smartphone or tablet) with real-time usage information. And quite obviously this has to be extended to the partners of the telco, since digital natives consume integrated media services based on communication. So an important part of the digital telco value chain, or rather value fabric, is provided by partners. Those partners need realtime usage, billing and settlement information as well, and will partner with those telcos that are able to expose these kind of services via APIs for ease of integration. In fact, the line between charging (and end customer) and settlement (with partners) become more and more blurred since the digital telco takes a different position in the digital services value fabric according to the business context and the customer.
Digital natives want not only usage information and service provisioning in real-time but also to become exposed to the latest offerings very fast. This means that the catalogue structure and rating capabilities of the revenue management solution have to support fast TTM. This becomes a matter of hours or even minutes instead of weeks or months as it is still very often the case in the traditional telco environments.
In order to do justice to the digital natives or millennials, we must notice that they are more loyal to their friends and their social network rather than service providers or product companies.
And that can be considered in the revenue management context as well as by using social network and status information as triggers for rating and charging. Telcos can and should build dedicated offerings based on social media that can lead the way into sustainable Consumer to Consumer business (C2C). In order to consider all the above aspects, Huawei has developed the ROADS paradigm that can be guiding principle for successful and lasting digital telco monetisation.
The enterprise business is a traditional stronghold of post-paid service and is therefore the headland of billing. That at least is true for large enterprises and multinational corporations. Here, complex customer hierarchies must be reflected in billing hierarchies. But bills or invoices, as such, have changed and we increasingly see the need to expose the billing data via an API to the customer, so that they can directly process the data in their ERP environment. On invoices, we see more and more IT services, often cloud-based, instead of traditional communication services. We also find voice minutes and data volumes besides numbers of CPUs, storage volumes besides access bandwidth and IP PBX ports on top of it combined with one-off Systems Integration (SI) services. All this on demand, of course. The new billing system’s data model, catalogue and rating logic must support all of this without manual intervention, which is still quite common in today’s ‘high end’ telco world.
The on-demand culture of the digital age impacts the business customer segment and not only in IT services. In many markets, we experience pre-paid services in the Business to Business (B2B) segment in addition to traditional post-paid services.
We could identify new potentials to redefine billing from a cost factor to a revenue generator in the B2B segment. Why not expose billing as a service via APIs to end customers? Providing that the integration is simple and an efficient and scalable solution that can handle the additional workload is implemented, then it is feasible.
INTERNET OF THINGS (IOT)
IoT and Machine to Machine (M2M) business are important topics in the IT and telco industry, and have been for many years. The majority of telcos are still not generating much profit with it either because they distribute value chains, have a very low revenue per connection or have a large amount of connections and devices. These reasons, all fundamental, need to be addressed and resolved before the companies enter the IoT market on larger scale.
IoT is not just one business scenario – it has thousands of scenarios and uses cases across a lot of different verticals with regional/local differences, most of them asking for dedicated solutions.
Large telcos are not well-suited to address all of them. They need to focus on some of them with their own sales and marketing and will have to partner with systems integrators, value-added resellers and vendors in many different scenarios. Partner management, revenue sharing and settlement are fundamental capabilities that a good IoT billing solution should cover. The billing solution has to be efficient as monthly recurring revenues for IoT connections are often only a couple of cents. Successful IoT applications have massive scale and extended contract durations which by far exceed the contract length of traditional mobile phone subscriptions.
We all agree that generating new revenues is key to Communication Service Providers (CSPs) but it has to be based on a very competitive cost basis. Telcos now set 1% of revenues as IT cost target, albeit their business and networks become more and more ‘IT-heavy’. On average, the BSS solutions account for around 50% of the overall IT cost. Such radical savings, which are needed in the digital age, can only be achieved based on Cloud-native infrastructures which make extensive use of standardisation and DataBase modernisation. This helps to drive down the initial investment (CAPEX) as well as the cost of operation (OPEX).
End-to-end revenue management and monetisation are key topics to CSPs of all sorts, regardless of whether they come from an incumbent fixed-line, MNO, MVNO, CATV, or OTT background. And it is a global trend. The Huawei solution has already attracted many leading CSPs across the globe. In more than 100 countries on all continents, 190 CSPs have chosen Huawei OCS & CBS as the basis for their revenue management and serve over 1.7 billion subscribers with it.
Last but not least, it is worthwhile to mention that Huawei’s industry leading revenue management solution was recognised by IT and telco industry associations as well as global research and analyst companies. Among several other industry awards, Huawei BSS solutions has won five TM Forum Excellence awards since 2010 and Gartner recognises Huawei CBS and BES solution as a leader in the Integrated Revenue and Customer Management Magic Quadrant.
So this is not at all the death of billing as we know it. You have to charge, bill and settle if you want to earn. That holds true even in the digital telco world. Therefore, this is the rise of end-to-end revenue management and monetisation.