THE Bottom Line
Linx has undertaken multiple Competitive Intelligence (CI) projects in various sub-segments of the OSS/BSS space – customer management solutions, product catalogs, online charging systems, charging and billing systems; along with deployment, pricing, and purchasing trends in these domains. We have extensively interviewed key vendors who provide products and solutions in the OSS/BSS space, as well as CSPs on the demand side of this market, in order to understand the licensing criteria, solution preferences and key competitive factors in this market.
For all of our projects, Linx relies on in-depth, double-blinded interviews with key executives at leading and niche players in the industry including vendors, service providers, customers and systems integrators / channel partners. Every study we complete is based on specific and detailed interview protocols established together with our clients that drive toward producing actionable intelligence.
What does our research show?
CSPs that have low customer churn prefer per-usage based pricing, based on metrics such as Call Attempts Per Second (CAPS). However, in regions with low customer loyalty and frequent inter-operator switching (i.e., high churn), a per-active subscriber based pricing model is preferred by operators, as this would help reduce operator OPEX and CAPEX related to large databases and infrastructure due to lower usage.
Our analysis shows that all CSPs show a preference for a “per-active subscriber” licensing model. However, we see that key competitors like Vendor A and Vendor B are adopting a more nuanced pricing model. According to one of our key interviewees, an experienced sales executive at Vendor B, in its deals, Vendor B 's main option to customers was its per-active subscriber pricing. However, it would provide an optional per-usage pricing model for CSPs where customer loyalty was higher (i.e., where churn was low). When it comes to ARPU, however, none of our vendor or CSP interviewees stated that they implemented or preferred region-based customized pricing, dependant on local ARPUs. For low ARPU regions, vendors would reduce their overall service offerings and remove features such as Wi-Fi charging and VoLTE charging, as operators in these markets were likely to not require these features quite as much. This would bring down the overall solution price. However, the reduction would never exceed 10% - 15% of the global standard pricing, according to our interviewees.
From our analysis, we see that operators largely prefer pricing models that are based on the number of active subscribers, or the number of concurrent subscribers using a particular service.
From interviewees such as CSP A, we have seen that a key value-add from an operator’s perspective is vendors who allow time-period licenses, where the pricing would be based on a global time period annual license, which would allow them to expand or change a product or service without being restricted by the pricing. Ideally, after the evolution of the service, they would then transition to a per-active-subscriber or per-concurrent subscriber model. In our view, this example is indicative of a unanimous preference (amongst operators interviewed) for high levels of flexibility, particularly for distinctions between prepaid and postpaid pricing. All interviewed operators stated that they would expect licenses that allow the flexibility to let them choose their scalable subscriber base for prepaid versus postpaid subscribers with the same pricing for both.
Our analysis shows that while all vendors offer VoLTE charging in their online charging platforms, most operators leave this feature unused due to the lack of their VoLTE offerings. For operators who do have existing VoLTE-based services, their subscriber base is still in the growth stage, and they hence expect vendors to provide this service as an existing service within the base system at no additional charge. However, this differs for different operators: our interviewee from CSP X, a leading global Tier 1 operator, provided that CSP X pays an additional amount on top of the usual per active subscriber fee for VoLTE charging. This applies to all advanced features. This fee is structured as an add-on onto the price per active subscriber. Our interviewee stated that this factor would not be more than 20% of an increase over the standard price per active subscriber, based on the feature itself.
In terms of product catalogs, our analysis shows that a key consideration for vendor roadmaps for product catalog solutions is the migration from on-premises catalogs to cloud-based catalogs.
Our research shows that the use of web service APIs in OSS/BSS modules for every function is emerging as a common approach in this context; this approach enables easy integration to back office systems such as IDM/IAM, ERP, CRM, Support, BI, Finance, Accounting, and other OSS / BSS platforms.
Operators do not yet perceive product catalogs to have as efficient a service architecture as that of cloud-based models, indicating a growing demand for SaaS based, cloud catalog models.
Our multiple CSP interviewees indicated a unanimous belief that a cloud-based catalog approach would be more feasible in the near future (3 – 5 years), particularly from a cost perspective. Our analysis showed a common trend in this case: all of our interviewees indicated that they would, in the near future, prefer vendors who will have either of the following:
• A catalog integrated into their other key OSS/BSS components that are SaaS-based (for example: subscription billing)
• A catalogue designed for SaaS-based billing, ordering and CRM systems that can be accessed on-premises and via the cloud in a real-time manner
A majority of operators interviewed prefer not to have the software license component of catalog pricing restricted by the number of users, offers, or other growth factors such as interfaces. The ideally preferred vendor model would be an out-of-the-box catalog with standard, full-suite pricing for an unlimited number of users, after which operators would be required to pay for customizations which could then be factored based on the level of complexity.
Our analysis shows that due to the self-managed nature of catalogs for internal telco operations, using the number of offers or the number of internal users is perceived as too restrictive. Operators expect customized pricing structures where they are allowed flexibility on license pricing, and only have to scale up their costs depending on their required customizations (in the form of consulting and development service charges). Here, we see that the number of interfaces based is a commonly accepted growth factor for service fees.
In terms of customer management solutions, we find that CSPs are working in key areas including self-service options, online commerce, big data applications, social media integrations, omni-channel deployments, and sales supports for retail stores.
Through the results of our studies in this space, we have identified three key areas where most ongoing development initiatives were focussed, in the area of customer management solutions:
A. Advanced Self Service: This includes customer notification systems, self-service tools that enable customers to discover the CSP's services available in their area, and tracking tools for customers to schedule and manage service appointments.
B. Big Data Use Cases within Customer Management: This is a key focus area of CSPs, and projects in this area include functionalities that allow for the provider to determine how best to meet subscriber needs based on factors such as data usage history, current handset information, network usage, etc.
3. Social Media: Developing a more advanced social media strategy strongly factored into ongoing and future roadmap plans for the customer management solutions of various CSPs interviewed.
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