2011-04-11 Heaving Reading e2e order management

TABLE OF CONTENTSLIST OF FIGURES (3)I. INTRODUCTION & KEY FINDINGS (4)1.1 Key Findings (4)1.2 Report Scope & Structure (5)II. MOBILE OPERATOR GROWTH STRATEGIES (6)2.1 ARPU Options (6)2.2 Disconnects Between Business Objectives and IT Processes (7)2.3 Understanding the Scope and Role of Order Management (9)III. ORDER MANAGEMENT SOLUTIONS FOR THE MOBILE SECTOR (10)3.1 State of Order Management in the Mobile Industry (10)3.2 Impact of Inefficient Ordering Systems (11)IV. BUILDING BLOCKS OF END-TO-END ORDER MANAGEMENT (14)V. CUSTOM-BUILT, BPM-BASED ORDER MANAGEMENT (16)5.1 BPM & OM: An Unfulfilled Promise (17)VI. STREAMLINING THE B2B & SUPPLY CHAIN (19)6.1 Role of Next-Gen OM in the Mobile Industry (20)6.2 Recommendations for Service Providers (20)VII. VENDOR PROFILES (22)7.1 Amdocs Ltd. (22)7.2 Cerillion Technologies Ltd. (22)7.3 CGI Group Inc. (23)7.4 Comptel Corp. (23)7.5 ConceptWave Software Inc. (23)7.6 Convergys Corp. (23)7.7 NetCracker Technology Corp. (24)7.8 Oracle Corp. (24)7.9 Pegasystems Inc. (25)7.10 Sigma Systems Canada Inc. (25)7.11 Sterling Commerce Inc. (25)7.12 Subex Ltd. (25)7.13 Telcordia Technologies Inc. (26)VIII. CONCLUSION (27)APPENDIX A: ABOUT THE AUTHOR (28)APPENDIX B: LEGAL DISCLAIMER (29)LIST OF FIGURES*SECTION ISECTION IIFigure 2.1: Mobile Operator Business Initiatives & Internal Objectives (7)Figure 2.2: Key Business Problems Resulting From IT Issues (8)SECTION IIIFigure 3.1: Important Objectives for Revamping Ordering Processes (11)SECTION IVFigure 4.1: Building Blocks of End-to-End Order Management (14)Figure 4.2: Global Order Management Market Forecast (15)SECTION VFigure 5.1: Impact of Order Management for Mobile Operators (18)SECTION VISECTION VIISECTION VIII* All charts and figures in this report are original to Heavy Reading, unless otherwise noted.I. Introduction & Key FindingsAnyone who thinks that successful IT transformation projects are just about IT systems revamp is badly missing the point. No matter how sophisticated IT systems are, they can't truly help a busi-ness unless transformation projects are orchestrated with an efficient process. In other words, successful IT transformation occurs when efficiency replaces inefficient, redundant processes.Many network operator C-level executives talk about an "IT black hole" – when IT programs do not provide operators with expected benefits and result in merely depleting company reserves. Heavy Reading's ongoing discussions with these executives point out that transforming internal and external processes to improve efficiency is the most important strategic objective. In a recent Heavy Reading survey, more than 70 percent of operators believe improving their internal and external business processes will help them deliver a better customer experience.Updating IT systems in a timely, efficient manner is a challenge for all communications service providers, especially those in the mobile industry. The dynamic and competitive nature of this segment has sparked innovation and swift evolution of mobile technologies and services. As the service provider's role shifts from network operator to retail outlet for an array of digital services, there is an urgent need for operators to effectively manage and handle relationships that involve myriad parties that will play a pivotal role in reshaping the service provider revenue ecosystem, including content aggregators, content providers and advertisers.There is no longer a linear relationship between carriers and customers; in today's complex communications ecosystem, service providers must manage many different evolving relation-ships. In this intricate tapestry of revenue relationships, it is obvious that operators must tightly link their business processes with media and content partners to gain competitive advantage and reduce opex costs. It is the only way for them to gain operational efficiency and exploit the full potential of investments they have made in their network infrastructure and back-office systems.In this context, an end-to-end order management (OM) system that touches all aspects of a ser-vice provider's operation – from order generation, to order capture, to fulfillment across different channels and customer touch points – will play a pivotal role in enabling mobile operators to tran-sition from today's bundled services to more personalized services. Mobile operators are under constant pressure to improve customer service levels and lower order processing costs and cycle times. These are among the key factors driving the need for service providers to invest in a streamlined end-to-end OM system with the expectation that such a solution will manage all as-pects of the order-to-cash cycle from order capture to fulfillment and settlement.End-to-End Order Management: The Mobile Operator Opportunity explores the critical role of OM solutions in the mobile industry. The report explains in depth how business process man-agement (BPM)-based, custom-built OM solutions cannot meet the changing needs of mobile operators, examines the views of operators regarding their existing OM solutions and their wish-lists for future solutions, and explores how the business-to-business (B2B) and supply-chain strategies of mobile operators can be streamlined with end-to-end OM solutions. The report also analyzes the products and strategies of 13 key OM vendors in the communications market.Findings1.1 KeyKey findings of End-to-End Order Management: The Mobile Operator Opportunity include the following:Next-gen OM will play a key role in the execution of network operator growth strategies. Efficient end-to-end OM solutions enable the rapid introduction of new offers and products, which enhances the customer ordering experience. Such solutions automate order-handling processes, so errors and time to order are reduced. They also boost provider profitability by eliminating redundant processes, thus increasing operational efficiency.Mobile operators have identified OM as a key area of investment over the next two to four years. Customer centricity is directly related to process efficiencies and, in that context, OM will play a pivotal role. Time to market and innovative offers will be crucial components of a mobile operator's competitive strategy, in which robust OM platforms will play a pivotal role.There will be significant spending in the OM space over the next few years. Our research shows that the majority of this growth is happening, and will continue to happen, in the mobile sector. Overall CAGR for the total OM market is 7.6 percent from 2009 to 2013, whereas CAGR for OM in the mobile sector is 21.5 percent over that same period.Mobile service providers are selecting and deploying next-gen COTS-based OM solutions. The out-of-the-box capabilities of these next-gen commercial off-the-shelf (COTS) OM solutions to deliver a complete end-to-end solution for mobile service providers is critical to remove barriers to growth.OM vendors should provide a TCO/ROI model that quantifies their solution's benefits to service providers. This is important for both smaller and larger vendors, especially in light of these difficult economic times. Software investment decisions will increasingly be made based on a diligent cost/benefit analysis, and these total cost of ownership (TCO)/return on investment (ROI) models will help influence service provider decision-making.Key BSS/OSS vendors are making major investments in their OM products. In the business support system (BSS)/operations support system (OSS) market, both established suppliers and relative newcomers are making substantial investments to improve their OM capabilities.Custom-built, proprietary OM solutions built on BPM technologies fail to deliver on the scalability and flexibility benefits expected by mobile network operators. In most instances, mature mobile operators are either replacing their older, custom-built OM solutions or evaluating ways to migrate from their legacy OM solutions.1.2 Report Scope & StructureEnd-to-End Order Management: The Mobile Operator Opportunity is based on primary inter-views and surveys conducted on global mobile operators. The report also includes market sizing information from Heavy Reading's BSS/OSS forecast. The report is structured as follows:Section II examines the growth strategies of mobile operators, including their business initiatives and internal objectives, and explores ways for mobile operators to compete in the hyper-competitive communications market.Section III analyzes the state of OM solutions in the mobile industry, and how end-to-end OM systems can help mobile operators address critical process inefficiencies.Section IV looks at the building blocks of the end-to-end OM solution, provides our forecast for the global OM market and explores the roadmap for future OM solutions.Section V examines custom-built, BPM-based proprietary OM solutions and explains why these solutions fail to deliver on the scalability and flexibility benefits service providers are seeking. Section VI shows how end-to-end OM can help streamline the B2B and supply-chain strategies of mobile operators and discusses the critical role of next-gen OM in the mobile industry.Section VII profiles 13 key vendors of OM solutions for the mobile industry, and analyzes their products and strategies.Section VIII presents the conclusions of this report.II. Mobile Operator Growth StrategiesThe primary revenue base for mobile operators today is still voice services. While data revenues are growing fast for many carriers, they represent only a fraction of the total mobile revenues. Newer services such as mobile video applications and advertising are still too small to register, but they have the potential to impact the market. Many mobile operators, particularly outside of the U.S., are facing a saturated market, some with more than 100 percent penetration.Saturation has led to a hyper-competitive market, where adding new subscribers has become a zero-sum game. This has led to intense price competition between mobile operators, forcing them to repeatedly cut prices to win new subscribers and reduce churn. This downward trend in prices has pushed carriers to rapidly deploy value-added services to raise average revenue per user (ARPU) and protect margins. However, no single service can drive profit margins and compen-sate for the flattening of voice revenues. Mobile operators will have to combine their efforts to support data offerings with the development of new content and interactive services.In addition to the heavy competition that already exists in the mobile sector, new entrants are challenging established mobile operators for market share. Many of these new entrants are now beginning to deploy networks, and it will be two to three years before these business models are able to attract a critical mass of users.To protect overall mobile operator revenue growth, data growth will continue to sustain ARPU. But the development of 3G and 4G technologies and the rollout of LTE and WiMax will allow these operators to compete directly with fixed service providers. Location-based services and advertising using a standardized GPS chip will become easier, cost-effective and a competitive differentiator for wireline and alternative providers. These location-based offerings become much more powerful when associated with an individual, allowing the content to be carefully tailored and updated on the fly, rather than tied to a single location with multiple users.Additional service opportunities will include mobile video, where it remains to be seen whether this content can jump to the third screen for a significant number of subscribers – making mobile video a long-term bet for most mobile operators. Interactive services, such as gaming and social networking, will also benefit from location-based applications. These will allow users to connect their games and social networks to other nearby users.Options2.1 ARPUWhile facing market saturation, mobile operators in many mature markets have a clear path to higher ARPU and additional services without major shifts in their business models. The addition of mobile data and the potential for fixed data and location-based services will propel the sector for at least the next several years. However, these carriers must work to transition their global networks and portfolio of services seamless to their customers.Like the airline industry, mobile operators can offer global coverage and expanded services through partnerships that are all but invisible to the customer. All the services and charges are funneled through their primary carrier, never knowing that they are tapping into several service providers in a given month. This resembles the airline industry, where no single company can get customers everywhere: End users purchase the ticket from one air carrier, which then books them end-to-end and arranges all of the supplier services, such as in-flight meals, along the way.Deploying and supporting a wide range of services will require seamless back-office operations, including billing and customer support, as well as a wide range of service and application provider partnerships to round out the portfolio. Their reliance on third-party networks will raise costs and provide competitors a conduit to exert competitive pressure on these carriers. In addition, carriers with little or no prior experience in delivering content face a network transformation that is just as significant as the one currently underway by fixed telcos. Mobile operators will also have to fightwith MSOs and telcos to become the end users' primary provider, requiring an upgrade in quality of service (QoS) and customer support that has been lacking to date. These changes will be time consuming but necessary to secure a dominate position within the market.Mobile operators have the potential to dominate the marketplace through their mobile connec-tions and rapid innovation. Mobile data will push a radical shift in the industry, upending telco and MSO dominance in access and content. The potential for revenues grows quickly once the mobile data pipe is large and robust enough to become an open-ended platform for new services. These services will be created and customized by the customers themselves and third-party providers, in addition to the mobile operators.Mobile operators will also have difficulty maintaining control over their customers and the services they use. Limiting off-deck services will help maintain ARPU in the short run, but this is becoming increasingly difficult as handheld devices continue to edge closer to PC-like capabilities.The iPhone, for example, will support a full version of Apple's operating system that offers the same level of online service innovation currently seen on the Internet. While AT&T has locked down off-deck services for now, a new business model will emerge that depends on open-source applications and content. This will end the carrier's control and reduce its share of revenues, but in the end carriers will see a net benefit as revenues grow rapidly across the sector.Figure 2.1 illustrates business objectives and internal initiatives of mobile operators.Figure 2.1: Mobile Operator Business Initiatives & Internal ObjectivesBUSINESS INITIATIVES INTERNAL OBJECTIVESExpand network coverage Increase business customers' market share bythree to four timesImprove customer experience Improve process efficiencyProvide personalized offers for profitable customers Increase sales channels Move beyond mobile into fixed broadband andconverged servicesReduce number of IT systems by 30%-40%Extend sales channels Move more customers to self-serviceCreate customer loyalty Increase online sales by 25%-40%Provide innovative offers Provide innovative offers2.2 Disconnects Between Business Objectives and IT ProcessesIn a hyper-competitive mobile market, operator's business objectives are focused on a few critical business priorities. They can be summarized as follows:•Increasing revenue and profitability; decreasing churn. Operators will look to launch new products and enable technologies for more revenue streams. Hence, personalization and rapid service delivery continues to be high on the priority list. Subscriber saturation is so high that every customer lost is a gain by a competitor.•Reducing opex and limiting system complexity. Operators want to consolidate dispa-rate BSS/OSS systems, automate processes and workflows in order to simplify opera-tions and increase efficiency.•Enhancing customer experience. Operators obviously want to keep customers happy, since customers are their most important asset, and retaining customers is always more profitable than gaining new ones. Personalized offers based on customer preferences,transaction volumes, social networks and preferences, etc., are forcing operators to be more imaginative about how they bundle their products and services and explore new areas for sales growth. Upselling to users based on a growing need for data or cross-subsidizing services (i.e., having a third party pay for some or all of the costs) can be an effective strategy. It creates opportunities for advertisers to reach a broader opt-in au-dience base, and it also provides subscribers with a mechanism to control costs. Customer service quality is directly related to customer experience, and mobile operators must exceed subscriber expectations to impress customers. A simple equation for measuring customer service quality can be represented as: Customer service quality = (What is expected + How the service is received)/(Subscriber expectations). Many of the criteria on which customers will judge services are intangible, hence managing customer perception is vital in service delivery.These demand that operators have a streamlined and flexible service delivery mechanism, have end-to-end view of subscribers and their services and have the ability to handle transactions in real time. Figure 2.2 illustrates the key business problems that result from IT issues and inhibit operators from differentiating and becoming competitive. This figure is based on a survey con-ducted by Heavy Reading of about 75 service providers worldwide.Figure 2.2: Key Business Problems Resulting From IT IssuesOur research has shown that the pivotal reasons why operators opt for transformation projects are to achieve process efficiency and enhance customer experience. Process efficiency en-hances workforce productivity, fosters partner and customer collaboration, improves customer centricity and overall QoS.Most of the business problems identified before can be traced back to fundamental process is-sues that mobile operators are facing today. These inefficient processes must be fixed if mobile operators want to meet their business objectives so they can differentiate, enhance customer ex-perience, reduce churn and remain profitable.Some of the critical process-related inefficiencies that mobile operators have pointed out during interviews include:•Improve time-to-market of products and services•Improve order delivery process•Improve order-to-cash process•Enabling service portability across multiple devices and networks•Increase business flexibility to respond to changes in the market•Optimizing and aligning the critical business processes that support customer experience •Improve service design process•Improve offer design and delivery processMany of these process inefficiencies can be traced to inefficient OM systems. OM touches all as-pects of a service providers' operation, from order generation to order capture, and fulfillment across different channels and customer touch points. Hence, inefficiency across one touch point incorporates significant ripple effect across the entire organization.2.3 Understanding the Scope and Role of Order ManagementMany of the process inefficiencies of OM systems were described above. OM encompasses new offer introduction, order capture and order delivery, and touches most aspects of a service pro-vider's BSS and OSS. From offer management (when an offer is launched and chosen via order capture by customer) to order validation, design, assignment of service resources and activation of chosen services, OM systems directly touch most of a service provider's back-office systems. This includes customer rights management (CRM), Web-based self-care, customer care, billing, the interconnection gateway, service activation and network provisioning systems.The role of the OM system is to act as the orchestrator and control point in a service provider's back- and front-office systems, enabling the myriad components in the service value chain to work in unison. The ability to decompose high volumes of commercial orders into specific compo-nents and send out network parameters at optimum speed in a specific sequence based on rules and policies is a critical scalability benchmark. Because of their central role in the service fulfill-ment process (combined with the increasing demand from customers, suppliers, partners and business operations), existing solutions have become a pain point for all providers.Mobile service providers have all experienced challenges integrating their order solutions with legacy systems and new best-of-breed software. As mobile service providers' revenue from their core service offerings declines because of substitution and commoditization, it is crucial that they create tighter synergies between the OM and sales processes. This will help better serve cus-tomers and improve their service delivery processes. Typically, providers' OM process encom-passes three different business functions: sales OM, service provisioning and the supply chain. All are served by different siloed OM applications – which are either niche COTS or custom-built. These solutions create inefficiency in the overall process, increase operational costs and are considered barriers to the growth of the mobile operators to compete effectively with the new de-mands of the industry.III. Order Management Solutions for the Mobile Sector3.1 State of Order Management in the Mobile IndustryOver time, OM requirements have become more challenging in the mobile industry. Most mobile operators did not understand the ramifications of having a robust end-to-end OM solution and they tried to save cost by launching requests for proposal (RFPs) of billing, CRM, etc., which asked vendors to provide OM as part of their core solution set.In the early days of the mobile industry, billing CRM vendors provided OM systems as an added component with their core offering. These solutions were static in nature, not scalable and inflexi-ble. In most cases, they also had network provisioning parameters hard coded in static OM tables that did not gracefully accommodate rapid change to services or network resources. These OM systems resulted in higher provisioning cost as new services demanded assignment of costly en-gineering and customer service resources to manage manual provisioning process.The absence of a robust OM system results in a dissatisfied customer and also introduces reve-nue assurance concerns in many cases, because of failed orders and manual handling of orders. Customers and services were "active" in the network but not in the billing system (or vice versa). Operators depend on OM systems to handle the added responsibility of providing assurance of service authorization within the network (Home Location Register for voice, voicemail system for voicemail services, etc.) and thus it is critical for them to be properly synched with the BSS and OSS that support the end user.Some critical bottlenecks that resulted from these immature OM solutions are:•Data entry errors on complex orders.•Inconsistent data definitions among different systems for identical pieces of information.•Outdated information in product catalogs – most recent product data is not automatically updated in all product catalogs, and these changes must often be made manually to each separate catalog.•Operator's self-service initiatives have suffered from a lack of integration of self-service portals with OM and other back-office systems; as a result, many self-service solutions act as standalone systems. This creates major operational inefficiencies, because it often forces operators to re-key customer information into back-office systems for provisioning.•Integration challenges with other OSSs, including OM systems and product catalogs.With the mobile sector becoming increasingly competitive, it is no surprise that mobile operators are looking to significantly improve their ordering key performance indicators and metrics to streamline their service delivery process and enable correct first-time provisioning of service or-ders. Because most mobile operators view OM as a strategic vehicle for differentiation, it also comes as no surprise that it is an area of significant investment for most operators.Most large business transformation projects involve streamlining OM processes as a significant task for the overall project. Typically, order failures can result in spiraling support costs. Let's look at a straightforward support cost impact scenario in the mobile industry that results in significant cost impacts for operators:•Support personnel handling a complex OM problem costs ~$30-$40 an hour•Ongoing support for smartphones resulting in customer calls costs ~$35 per incident•For 1 million orders, our research shows a rough estimate of 30 percent fallout rate for mobile operators using middleware-based custom-built OM solutions, or 300,000 orders•Of those fallout orders, 40 percent belong to customers with smartphones, costing opera-tors ~$30 per incident, which translates to: (120,000 x $30) = $3.6 million •Our research shows that complex OM-related problems take an average of two hours to resolve and involve more than one engineer. If 40 percent of failed orders require at least two employees working for 2 hours, then: (120,000 x 0.4 x 2 x 2 x $35) = $6.72 million However, the bigger cost impact for operators is their loss in opportunity cost, which can be di-rectly attributed to slow introduction of offers. This typically means losing millions of dollars to their nearest competitors that possess streamlined service delivery architecture and is in a posi-tion to launch services faster. Our research shows mobile operators that are first movers in terms of service launch and can provide optimal service quality typically enjoy very high customer loyal-ty and reduced customer churn.Figure 3.1 illustrates key reasons for mobile operators to invest and change their ordering processes. This result is based on a 2010 Heavy Reading survey of about 30 mobile operators that have invested in revamping their OM systems over the last three years.Figure 3.1: Important Objectives for Revamping Ordering Processes3.2 Impact of Inefficient Ordering SystemsAn end-to-end OM solution should be able to eliminate some of the most pressing business and financial problems in a service provider's fulfillment processes. These include process inefficien-cies that result in:•High operating costs: Inefficiencies in the overall sales and provisioning OM processes, such as manual processing, order fallout, etc., leading to higher operating costs.•Longer time to revenue: Manual processes that increase order fallout and delay provi-sioning resulting in lengthening the order-to-cash cycle, delaying revenue recognition.。