Welcome to the first edition of Evolve of 2008. In this issue we examine the rise in popularity and benefits of outsourcing in today’s highly competitive telecoms environment.

These days, and increasingly, telecoms operators are either evaluating or actively embracing the possibilities of outsourcing their CRM and billing systems to third party solutions providers with proven expertise in the field. Here at Cerillion, we support and understand the notion that outsourced billing may not suit every business strategy, however there are clear signs that this approach can deliver many benefits over and above the obvious cost savings that can be achieved.

For those that opt not to take this increasingly common route, and decide to continue to manage their billing and CRM systems in-house, there is always an inherent risk that they end up concentrating rather more on the technology than they do on their customers. As many have discovered, bells, whistles and go-faster stripes do not necessarily a compelling business case make. In the competitive market that we all work in, operators should, and must, always put the customer first. And if you don't, someone else will.

Elsewhere in this edition of Evolve we reveal the results of our latest readership poll. In December we asked, “By which method do you receive your telecoms bill?”. The responses reveal an interesting split in those still dependent on the traditional paper bill versus an increasing number converting to electronic billing. In this issue’s survey we take a closer look at multi-play services, as we ask you, “How many services do you receive in your telecoms bundle?”. Don’t forget to cast your vote and look out for the results in our next edition!

And finally, it’s the time of year when the entire industry migrates en masse to Barcelona for the sector’s very own homage to Catalonia. Yes, THE telecoms event of the year has rolled on round again. 3GSM, now renamed as “Mobile World Congress” attracts thought leaders, key industry figures and some 50,000 participants, who network by day and by night jostle for places in overcrowded restaurants and bars. We love it!

Yup, Mobile World Congress is once again upon us. And whatever you do, don’t forget to stop by our booth where we will be exhibiting the latest generation of our innovative pre-integrated BSS/OSS solutions. And in the evenings after the show you are cordially invited to take the weight off your feet and unwind a while with the Cerillion team over some sangria and tapas – our treat!

We very much look forward to seeing you in Barcelona.

Visit Cerillion at the Mobile World Congress 2008

Cerillion will once again be taking part at the Mobile World Congress (the event formerly known as 3GSM) in Barcelona, 11th – 14th February. Visit us in Hall 2, Stand 2D65 to find out how our unique bundled component product suite can help your business to flourish. The Cerillion team will be present throughout the week, including CEO Louis Hall, providing an ideal opportunity for meetings and product demonstrations.

Book an Appointment

On our stand we’ll be exhibiting the latest generation of our innovative pre-integrated BSS/OSS solutions, including CRM Plus, Revenue Manager, Interconnect Manager and Mediator. Feel free to pop by our booth at your convenience or click here to pre-book an appointment for an in-depth demonstration.

Win an iPod Touch!

We will also be conducting our annual industry survey, allowing participants the opportunity to cast their opinions on the key trends in the telecoms business and enter our draw for a 16GB iPod Touch. Don’t miss out on the chance to win this latest must-have device from Apple!

The Cerillion Tapas Bar

After a long day at the conference and exhibition, what better way to relax than with some traditional food and drinks at our renowned Tapas bar? Situated in the heart of Barcelona, close to the famous Ramblas and near to the Picasso Museum, Txirimiri is the ideal spot to chill out in the evening. Why not join the Cerillion team for sangria and Tapas on Tuesday 12th and Wednesday 13th February, 19:00 until late. Don’t forget to pick up your ticket at our booth in Hall 2, Stand 2D65!

Click here to view our Barcelona invitation.

Outsourced Billing – A Key Tool to Enhance Operator Agility

Being able to respond quickly and positively to market pressures is critical in today’s competitive telecoms environment. Yet it remains an elusive goal for many telcos, who find themselves increasingly burdened by the weight and complexity of their service infrastructures and unable to differentiate their product offerings.

With multi-play services increasingly becoming the norm, operators are fighting a losing battle as they struggle to accelerate the launch of new services whilst being weighed down by the sheer volume of existing products and services they must maintain.

Today, some operators have succumbed to the inevitable temptation of trying to be “all things to all people”. They are looking to provide a full range of corporate and residential customers with a complete portfolio of converged services including broadband, mobile and fixed communications solutions.

Unfortunately, in so doing, it becomes increasingly difficult for them to meet the needs of all their customers. Every time they add a new service offering, they need to make costly modifications to their billing and CRM systems and to the way in which they resource and allocate staff. Over time, the need to invest continuously in systems, people and processes can seem like a never-ending drain on resources, and they put themselves at risk of losing out to better equipped competitors.

To compete effectively, operators need to be agile, able to focus on the customer and efficiently deliver the services from which their customers will actually benefit. However, with the often onerous requirement to manage and maintain a complex network of products, services and applications, such agility can be elusive.

In this context, it is hardly surprising that telecoms operators are increasingly interested in exploring the possibility of outsourcing their CRM and billing systems to third party solutions providers and, by so doing, freeing up time and money to focus on their core business.

Strong Market Growth

The outsourcing market as a whole continues to be successful. A recent study by consultants KPMG found that 89 per cent of respondents plan to maintain or increase their present level of outsourcing.

“Outsourcing is not slowing down, in fact it’s growing faster,” says Pradeep Udhas, global head, KPMG Advisory Services. “This industry is going to go much beyond where it is today.”

Europe is currently one of the hottest growth regions and more European firms are turning to outsourcing. In its latest quarterly index report, consultancy, TPI International reports a 78 per cent year-on-year increase in major new deals, worth more than €40 million in the first half of 2007. New European deals account for over half (54 per cent) of new outsourcing contracts signed worldwide.

In particular, outsourcing in the European telecoms sector is growing too. Cambridge-based research firm, Analysys, expects the Western European market for outsourcing technology and customer services by telecoms operators to show 6 per cent annual growth between 2005 and 2010, rising from €5.9 billion to €8.0 billion. Within telecoms, the billing sector is likely to be among the fast growing areas, with analyst Dittberner Associates forecasting that the market will grow at an expected 8.8% CAGR from $1.1 billion in 2005 to $1.6 billion in 2010.

Our own experience at Cerillion supports the view that the appetite of operators to outsource billing is on the increase. Our 2007 industry survey found that 50 per cent of respondents thought operators were more open-minded about outsourced billing than a year before. Just 15 per cent said they were less so.

The likelihood is that this positive trend will continue as the outsourcing model makes sense for telcos in an increasingly competitive market. As operators become more service focused, they will tend to be less interested in the technicalities of managing business support systems like billing, and in the associated investment burden.

To underline this growing focus on outsourcing, major new contracts are regularly reported in the media. One of the most notable in 2007 was the announcement by IBM Global Services that it had won a 10-year deal with Indian operator, Idea Cellular. Under the terms of the contract, IBM is helping to handle services like billing, revenue assurance, credit collection and subscriber management.

A Diverse Market

One of the key advantages of the managed service approach for billing systems is that it can benefit a wide range of operators, working on a broad array of projects. An operator undergoing a large-scale business transformation project, for example, may benefit from a managed service approach to ensure it remains competitive and retains sufficient agility to be able to launch new products and services for the project duration.

A telco looking to establish itself in an emerging market may seek to put a managed service into operation while it is focused on bringing new people on board and training them up, before ultimately transitioning to an in-house managed solution.

Alternatively, an operator may take a long-term strategic decision not to manage its own CRM and billing systems but to hand that role over to a provider with expertise in the field, leaving the operator free to focus on delivering a high quality customer experience. Again, the ultimate goal is enhanced business agility.

Putting the Customer First

This focus on the customer is important. After all, it is customers that are ultimately paying to allow IT departments the luxury of owning and managing their own business support systems. It is often overlooked, but perhaps the most important single benefit operators can achieve from outsourcing their systems is the cost saving that can be passed onto their customers.

When purchasing systems, operators typically incur significant upfront capital expenses before they begin to reap benefits. The managed service model, however, offers a much lower barrier to entry. While there are still operational costs to consider, those costs will usually be lower and importantly more predictable than with a traditional licensed implementation.

There is also a risk that telcos who manage their billing and CRM systems in-house end up concentrating more on the technology than on their customers. Although the situation has undoubtedly improved over recent years, the telecoms industry still has an unfortunate tendency of buying technology for technology’s sake, rather than looking at the real business drivers. Too many misguided decisions have been made by IT directors intent on purchasing the latest state-of-the-art systems rather than investing in a planned strategy of business improvement and enhanced customer service provision.

In a competitive market, operators looking to achieve enhanced agility should always put the customer first. While acknowledging that technology is important, Professor Robert East, expert in customer behaviour at Kingston Business School, comments; “Customer-facing technology needs to become more sophisticated to deal with recurrent issues more quickly and solve problems more efficiently. Businesses need to focus on technology that actually delivers satisfaction to people."

Reaping the Rewards

But it is not only customers who may pay the price of operators indulging in the luxury of managing their own systems. On top of the obvious capex and opex charges, operators may be missing out on a range of other business improvements which the managed service model can offer.

One key benefit they could achieve with the managed service model is the ability to commit their technology provider to a service level agreement (SLA) with agreed turnaround times for implementing new products and incident resolution.

Such contracts formalise the way that billing and CRM systems are run and, by so doing, enable operators to gauge how quickly system changes and additions can be implemented. Again, this provides them with enhanced control over their systems environment and the ability to react more quickly to external pressures. In contrast, the IT department within a large telco business will typically have no specific SLAs in place with any other part of the organisation and often no fixed review process either.

Another important advantage of the managed service approach is that it supports improved time to market for new services. This is because the managed service provider, typically with the benefit of extensive experience of a broad range of different customer operations, will usually understand the procedures and processes around those systems much more clearly than the operator does.

Operators working in emerging markets can also benefit by obtaining access to scarce skilled resource directly, rather than facing the headache of trying to recruit people locally with the requisite skills. Telco start-ups in all regions can often also benefit in a similar way.

Positive Prospects

The outsourced billing model may not suit everyone, however the future is looking increasingly positive. As Simon Sherrington, author of a recent Analysys report on outsourcing, points out: “Outsourcing has become an important weapon in a telecoms operator’s strategic arsenal. An effective and well-managed outsourcing scheme can deliver flexibility, reduce time to market for new services, and help to deliver profit growth for shareholders.”

There is also clear evidence that outsourcing can help operators to achieve significant cost savings. However, in today’s highly competitive telecoms environment the most important benefit of a managed service approach is the enhanced agility it brings telcos to focus on the core business of delivering a high-quality service to their customers.

Dominic Smith
Dominic.Smith@cerillion.com