.gif)
The strategic solution
Service providers are transitioning from billing as a tactical back-office application to a strategic solution for maximising customer profitability, says Bhaskar Gorti
Years of upheaval in the global communications markets have led to new challenges and mandated new strategies for today's service providers. Over-capacity in the network and excessive carrier spending have resulted in an industry shake-up characterised by consolidations, downsizings, and bankruptcies. Service providers that survived are facing intensified competition, the commoditisation of products and services, erosion of customer loyalty, decreasing margins, and an intense pressure to differentiate.
In response, service providers are searching for business processes and technologies that will enable them to focus on retaining profitable customers by improving the customers' experience. With innovative new services-such as mobile gaming, customised ring-tones, e-mail and web-surfing capabilities-they hope to reduce churn and improve customer satisfaction. Many are also branching out from their home countries to establish global brands to compete on a worldwide basis, or considering Mobile Virtual Network Operator (MVNO) relationships.
Driving value to the bottom line
During the boom years, operators spent billions of dollars focusing on customer acquisition and network build out. Today, an objective of communication companies is to drive value to the bottom line and time to market is the key to their success. Service providers must evolve their business systems so they can enter new markets quickly and effectively to respond to competitive threats and take advantage of market opportunities. Differentiation creating true brand value elevates a service provider out of the morass of cut-throat price competition and costly churn. With rapidly changing technology and shifts in consumer trends, smart service providers are also looking for ways to quickly bring high-margin products and services to market.
Services are now driven by the customer not the technology. Not only do today's customers have a variety of service options to choose from, they also expect a variety of payment options including prepaid, postpaid, and nowpaid. Many customers, especially those with multiple service plans at the home or the office, are demanding convergent service pricing, discounting, and multiple payment options. This presents a major challenge for service providers who are dependent upon legacy billing and customer management systems that were built specifically to manage revenues for individual services or individual payment options.
The resulting proliferation of multiple, fragmented billing systems, coupled with highly customised applications built for 'point-in-time' purposes limits a service provider's ability to quickly respond to new opportunities and roll out new services. The inability to tie-in multiple billing applications for different services or cost-effectively modify an existing billing application, can lead to excessive expense, wasted time, and customer attrition.
Managing revenue streams
Enterprise applications are converging around three areas of information management: customer, financial, and revenue. With an increased focus on revenue, billing has emerged as a true competitive differentiator and a key asset of the company. Savvy service providers are transitioning from billing as a tactical back-office application to a strategic solution for maximising customer profitability in a complex service and payment environment. In much the same way that CRM evolved from sales force management to the unification of relationships between the customer and the enterprise, billing has evolved to become revenue management the unified management of all of the service provider's different revenue streams. This approach optimises the value of customers by enabling service providers to develop, introduce, and sell the right products to the customer while minimising revenue leakage and the total cost of billing operations. Finally, a revenue management approach provides the business with the agility essential to rapidly launch profitable products and services and quickly respond to competitive pressures.
Optimally, revenue management solutions are also 'future proof', providing the foundation for supporting new products, services, and technologies. A true revenue management solution isn't just another silo in the enterprise, but an integration and unification of revenue processes across the business. With the broad business processes it encompasses, revenue management impacts the way providers introduce new products and services, manage customer accounts, and track revenues across the business.
Revenue management is a lifecycle of unified processes to generate, capture, and collect revenue for each customer. The lifecycle also includes an ongoing process of analysing, evaluating, and optimising each phase to maximise performance and deliver comprehensive insight and intelligence into the customer revenue relationships.
Revenue generation
Revenue generation enables services to be delivered to customers that are optimally priced for the user, service provider and any partners. With real-time access to customer data, the business processes associated with this phase maximise customer and partner value through a single view of the customer, combined with complex account management and agile service delivery.
Revenue capture
Revenue capture maximises market share using competitive pricing models and flexible balance and credit control to enable any service for any subscriber. As services are authorised and consumed, transactions are captured, rated, discounted, and charged while balances are managed. Real-time interactions help reduce the risk of revenue leakage, improve customer satisfaction, and encourage usage.
Revenue collection
Revenue collection ensures all invoices are generated and appropriate monies are collected from the correct debtors. Postings are made to accounts receivable and general ledger accounts, while handling all payments terms, settlements and disputes to ensure an accurate accounting of all revenue. A real-time, accurate view of revenue provides insight to customer profitability as well as the health of the business, while enabling the provider to respond quickly to changing market dynamics.
Revenue analysis
Revenue analysis spans the entire revenue management lifecycle. Understanding the revenue relationships with customers and partners improves their satisfaction. It provides real-time verification, reporting and analysis of all events and actions, which maximises revenue and minimises losses associated with fraud and revenue leakage.
Value chain
In today's complex environment, service providers cannot address these challenges and deliver exciting new services on their own. They must work with the best partners and content providers for their markets. Because revenue management provides the ability to view all of the revenue touch points between the customer and the service provider, it facilitates the creation of an efficient value chain. The value chain is the sum of all processes in a product''s creation including design, pricing, procurement, and fulfilment. The value chain enables the service provider to capture points of value and reward innovation throughout the chain.
To make these value chains successful, service providers must develop relationships with their partners that create differentiated value, increase customer profitability and reward partner innovation. At the heart of an efficient value chain is a business system that tracks and charges for events; manages customer profiles, accounts, and subscriptions; collects revenues; and manages settlements with the value chain partners.
Business partners, content providers and enabling networks, therefore, help service providers build an efficient value chain and pricing models. A value-add pricing model, for example, tracks both a variety of packaging types (such as subscriptions, pay-per-use, volume discounts, device specific and loyalty points) and a host of different payment methods.
Several leading service providers have already embarked along this path. Vodafone live!, Vodafone's easy-to-use consumer service that offers customers a wide variety of colour, sound and pictures, is an excellent example. Vodafone live! sought to increase subscriber revenues by establishing a global brand and consistent user experience while leveraging the various Vodafone operating companies' customer billing relationships. It was important that all of Vodafone's operating companies could quickly launch this service into their markets. The results have been excellent. Vodafone live! is driving higher than average usage and ARPU and reached its target of eight million subscribers by June of 2004. And, for the period from October 2002 to July 2003, Vodafone live!'s customers downloaded over three million games and ten million ring tones.
To accomplish this, Vodafone live! utilises a model whereby the content that is in highest demand can be quickly and efficiently offered to the Vodafone community. Vodafone established a value chain that is driven by customer demand rather than by technological advancements. Vodafone's recipe for success? Find out what the customer wants, build an interface to the content partner, and offer simplified pricing that encourages near and long-term adoption. Vodafone is able to quickly 'plug in' partners without costly or time-consuming integration, while allowing the pricing to be more intuitive to the end user. End-users are offered multiple pricing options, including a 'pay as you go' model, thus attracting more people to try the services without making major commitments. Once a Vodafone live! end-user understands the value, they can move to different levels of commitment in the form of subscriptions and bundles.
Another exciting success story is Orange, the leading wireless provider in the UK. Orange wanted the ability to launch new data and content services quickly and offer next generation multi-media services. Their legacy system wouldn't support this capability. By utilising a revenue management approach, they were able to launch a new system that enabled them to quickly take new prepaid and postpaid GPRS services to market. At the same time, they maximised their network investment by integrating their new system with their legacy billing infrastructure while future-proofing their platform so that it could support any future product offering.
The right steps forward
Moving to a revenue management approach for doing business can be done in phases. As such, a model of 'co-existence' between legacy billing systems and more modern revenue management platforms that can handle the breadth of new service offerings is essential. As appropriate, revenue management platforms can transitionally replace legacy voice systems while continuing to enable new service deployments. The revenue management approach completes the value chain by linking the third party content providers to the end users and supporting real-time authorisation, authentication and accounting, real time advice of charge, and automated remittances and settlements.
For service providers competing in a saturated market within an increasingly global economy, a revenue management approach offers a compelling strategy for creating new customer opportunities and dramatically reducing legacy billing costs. Industry pioneers, including Vodafone live! and Orange, are implementing revenue management strategies to develop a complete picture of their customer touch points in order to maximise revenue and optimize profitability.
With the global communications and media markets evolving, business solutions are consolidating to manage the entire revenue lifecycle. Billing has evolved from a single service, single payment model to the strategic solution for maximising customer profitability in a complex service and payment environment. Using the revenue management lifecycle approach to business, service providers can optimise customer value by unifying revenue relationships. This allows them to focus on their most profitable customers and maximise profitability through the consolidation and rationalisation of multiple, fragmented legacy billing applications. As a result, service providers can rapidly bring new products and services to market, demonstrating true business agility in a highly competitive industry.
Bhaskar Gorti is Senior Vice President of Marketing, Alliances and Global Accounts, Portal Software
[l=www.portal.com/]http://www.portal.com/[/l]
Share this article with others
Post to del.icio.us
Printed from http://www.eurocomms.com/features/11354/The_strategic_solution.html
Comment on this article
Skip to comments
We encourage users to analyse, comment on and even challenge European Communications's articles, including the one above - 'The strategic solution'
User reviews and comments that include profanity or personal attacks or other inappropriate comments or material will be removed from the site.
Additionally, entries that are unsigned or contain "signatures" by someone other than the actual author will be removed. We will take steps to block users who violate any of our posting standards, terms of use or privacy policies or any other policies governing this site.