As budgets are reprioritised, initiatives that promise the most value should be given first priority, with service layer transformation somewhere near the top of the heap says Rick Mallon
Many service providers are in the midst of long-term IT transformation programs. Most often these aim to launch new services, improve speed to market, achieve customer-centricity, and simplify operations. In the current economic climate, however, resources for many CSPs are far more constrained than was anticipated when these programs were conceived. Consequently, many CSPs face tough decisions regarding their IT budgets. Those that reduce budgets sharply risk stranding previous investments made in ongoing programs. A newly established set of IT systems intended to enable a major migration could become yet another expensive operations silo, thus undermining the program's original goals.
Service layer vs BSS transformation
Transformation initiatives often start with BSS transformation. In post-merger environments where consolidation and customer-centricity are the business drivers, there's a definite logic to this. For one thing, service providers want the billing process to continue without a hitch. Trouble is, regardless of the technologies you use, the conversion of disparate billing and CRM environments to a centralised architecture will necessarily involve some risks and variable costs.
The biggest risk may be in putting the wrong foot forward. Some opt at the beginning for a traditional big-bang BSS transformation, because that path is a known route. Others may prefer to begin with a service layer transformation initiative, because it keeps future options open. Ultimately, the best- as well as least costly and most flexible - approach is to start with service layer transformation. Service layer transformation won't automatically save providers from recreating some of the mistakes of the past, but it will enable them to more easily add on new services in the future and create a common view of each subscriber.
BSS conversions are likely to affect a large number of business stakeholders, touch thousands of users, and impact millions of customers. As care channels change, or redesigned bills are introduced, there are always significant costs relating to possible customer disruptions during the transition period. Internally, new users need to be trained and established processes need to be re-engineered. The likelihood of battling organisational resistance is magnified.
Even if a CSP manages its way through the pitfalls, BSS transformations often struggle to deliver their intended value when they intersect still-fragmented service layers. Put simply, if the service layer continues to consist of distinct product-facing silos, it would be difficult to accelerate time to market, launch cross-domain services, and drive personalisation and customer intelligence.
Merging or federating these silos through service layer transformation has the potential to deliver significant benefits for less cost, effort and scope than BSS transformation. Fewer customer touch points are involved; fewer stakeholders are directly affected. Transformation of the service layer removes the silos, simplifies operations, and benefits marketing, service innovation, and opex and capex budgeting.
Because networks continue to experience significant advancement, vendor churn has become a consistent challenge for network organisations. Massive multi-vendor environments are also a common end result of large scale mergers and acquisitions. Service layer transformation is necessary to manage all of that kit under one layer and fulfil services in a technology-agnostic way. Even if a BSS transformation succeeds, time to market and operational-simplification goals can be derailed by overly complex networks broken out into distinct vendor domains.
While improving care, service personalisation, and customer intelligence is often at the core of BSS transformation's business case, it's difficult to achieve without a centralised view of a customer from a product and service perspective. Service layer transformation enables a single, correlated view of each customer and all their subscribed services. This view can, in turn, fuel more intelligent targeted marketing and personalised up-sales of value-added applications or additional services. Customers are tired of receiving promotional offers for services they already use at a higher price. If the service layer isn't transformed, this kind of churn-driving marketing continues while undermining revenue goals for new, add-on and niche-oriented offerings. CSPs have an opportunity to leverage significant standards work. Specs like SCTE 130 out of North America enable personalised services and advertising, while various efforts that leverage the TM Forum's business process framework and OSS/J teams provide models, process flows, and interface specifications for reducing the risk, time, and effort related to service layer transformations.
ZON Multimedia, based in Oeiras, Portugal, is a good example of a CSP that has drawn significant benefits from an effective service layer initiative. ZON announced that by the end of 2008 more than 53 per cent of its customers were subscribed to multiple services. The company added 144,000 net new \subscribers in 2008 and credits much of this success to a bundle of video, broadband and IP-based voice services it launched in May last year. ZON is also launching mobile services, using a MVNO model, which will soon give it a true quad-play offering.
One of the unique aspects of ZON's offerings is that they are delivered in a network technology-agnostic fashion. Due to its OSS service layer transformation, ZON can determine the best and most profitable way to re-use and deliver services to any customer location. For example, ZON offers TV through on-network cable and also a satellite resale model. It offers PacketCable-based VoIP services over its cable network and SIP VoIP over resold ADSL lines. ZON has the ability to plug any new service offerings into its common service layer platform and deliver them through any available and appropriate networks and CPE devices. In addition to its MVNO offering, ZON offers HSD services for cable and WiFi, and DSL (resold model) from its common, transformed service layer.
For business or commercial market offerings, service layer automation can be more challenging than in the consumer sector. Enterprises vary significantly in their particular requirements, making end-to-end automation challenging. However, mass-market offerings for small and medium businesses are well within reach for the same service layer transformation that empowers consumer offerings. Services that combine, for example, a metro-Ethernet pipe with SIP-based VoIP, video for board rooms or waiting rooms, and advantageous mobile packages are ideal for this marketplace. In particular, preparing for the wave of SIP devices and applications to come is an important part of any CSP's growth strategy.
The multi-screen opportunity
One concept that is central to SIP, and increasingly important in video and broadband offerings, is service portability. Put simply, consumers want access to their video content wherever and whenever they choose. Many CSPs have yet to embrace this concept, leaving the opportunity open to Internet-based players. Though IPTV has the potential to provide flexible access to more content, it's only a technology and is often applied in the same framework as traditional cable TV. Customers, however, have a concept of content ownership. If they've purchased movies or TV shows for their iPod, mobile phone, or PC, they'd like to be able to access them from any other device, including their TVs at home.
Service layer transformation allows a CSP to seize this trend as a growth opportunity. It can enable service providers to tie services to individual subscribers, rather than to locations or devices. An intelligent service layer will understand to what devices a user has access and deliver content and services as appropriate and seamlessly. With a service layer empowering that kind of portability, new options for promotions and offerings open up, including personalised bundles and targeted advertising.
In today's disparate service layer environments, CSPs are scrambling to some extent because their TV offerings are being bypassed thanks to Hulu, iTunes, YouTube and other outlets. Delivering content to the channel the consumer wants at any given time requires service layer transformation. It enables customer-centricity across all services and breaks down the barriers between technology domains. With these capabilities in place, marketers have a world of options open to them that they wish they had today. Too often they instead face IT and network organisations that have to say: "We can't do that yet."
From a return on investment perspective, service layer transformation is a winner. It can be a catalyst for moving service offerings and customer intelligence forward into entirely new areas of opportunity. It is simpler, less costly, and less risky than massive BSS conversions, yet sets the stage to make those inevitable BSS-layer transformations simpler and more beneficial. In a resource constrained world, where budgets are tightening and business cases are more scrutinised, service layer transformation is a priority that empowers both revenue growth and operational improvement.
Rick Mallon, Sigma Systems