OUTSOURCING BILLING & CRM - Agile business
Opting for a managed services solution provides telcos with enhanced agility in a highly 
competitive marketplace claims Dominic Smith
Being able to adapt to market pressures and respond quickly is obviously key to success in today's highly competitive telecoms landscape. And yet many telcos are weighed down by the sheer weight and complexity of their technological and service infrastructures.
In the mobile domain, operators' portfolios typically include 2G GSM, SMS, MMS, GPRS, 3G and HSPA basic services, not to mention the range of value-added services, content and applications accessible on top. In addition, in all market sectors, operators have to maintain and bill for a broad array of legacy services. And they need to be able to tailor their offerings to meet the specific needs of a wide variety of market segments - from large enterprises to individual consumers.
Today, some operators are making the mistake of trying to be "all things to all people". They are looking to provide customers with a complete portfolio of converged services including broadband, mobile and fixed communications solutions. The problem is, that by so doing, it becomes increasingly difficult for these operators to meet the needs of all of their customers.
To compete effectively, they need to be agile, able to focus on customer requirements and efficiently deliver the solutions that their customers will actually benefit from. However, with the often onerous requirement to manage and maintain an intricate network of products, services and applications, agility can seem a highly elusive quality.
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 themselves up to focus on their core business.
Steady market growth
Cambridge-based research firm, Analysys expects the Western European market for outsourcing technology and customer services by telecoms operators to show six per cent annual growth between 2005 and 2010, rising from c5.9 billion to c8.0 billion. Our own experience at Cerillion indicates that the appetite of operators to outsource business support systems for customer management, order management and billing is on the increase.
Cerillion's on-the-show floor survey carried out at Barcelona's 3GSM World Congress in February 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.
To underline this positive mood, major new contracts are regularly reported in the media. In recent times, one of the most notable was the March 2007 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 most important advantages of the managed service approach for CRM and 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 itself 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 will ultimately have to pay to allow operators 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 customers.
When purchasing systems, operators typically incur significant upfront capital expenses before they begin to reap benefits. With a managed service model, the entry barrier is much lower. While the operator still has operational costs to take into account, those costs will usually be lower and 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 to focus more on system functionality than 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 have to foot the bill for 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 that the managed service model can offer.
One key benefit they could achieve by migrating to a 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, for example.
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 installations, 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 future for outsourcing of CRM and billing systems 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 their core business of delivering a high-quality service to their customers.
Dominic Smith, Marketing Director, Cerillion Technologies
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