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MONETIZING

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DIGITAL

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QUICK INSIGHTS

WHERES THE PROFIT?


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MONETIZING DIGITAL SERVICES:


WHERES THE PROFIT?
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Report author:
Nancee Ruzicka
President and Founder, ICT Intuition
nruzicka@ictintuition.com
Senior Director, Content:
Annie Turner
aturner@tmforum.org
Editors:
Dawn Bushaus
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Peter Dykes
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Manager, Digital Content:
Sarah Wray
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Manager, Content Production:
Paul Davis
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Business Development Director, Research & Publications:
Mark Bradbury
mbradbury@tmforum.org
Marketing Director:
Charlotte Lewis
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Advisors:
Nik Willetts, Chief Digital Officer, TM Forum
Craig Bachmann, Senior Director, Open Digital Program, TM Forum
Report Design:
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Page 4

Executive summary

Page 5

Section 1
Making the shift to a retail mindset

Page 8

Section 2
How to get there from here

Page 12

Section 3
Focus on the opportunities

Page 15

Section 4
Conclusions and recommendations

Page 18

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MONETIZING DIGITAL SERVICES:


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Executive summary
For customers of digital services there is no
longer fixed or wireless, voice, data or video
only devices and applications. Televisions,
tablets, phones, credit cards, meters, watches
and vehicles are devices and everything else is
an application.
Customers expect the applications they want
to work on any device at any time. Network
connectivity is now as ubiquitous as electricity
and transportation in many parts of the
world. The challenge then, for digital services
providers of any type, is that classifying
communications as critical infrastructure points
directly toward a regulated utility business
model.
To escape that trap, service providers require
a foundational makeover that alters business
attitudes and operational strategies to embrace
a retail identity and customer-driven mindset.
While the need for service providers to invest
in both network and IT infrastructure has not
diminished, what has changed is their need to
differentiate themselves as profitable retailers
of high quality, reliable and secure services that
are relentless about customer satisfaction.
In Section 1 we look at how, when the
network delivered the product, as long
as customers got an accurate bill, all was
well. The industry is long past those times
however and foundational business models
must undergo a transformation to a more
retail/supply chain approach that manages
partners as well as customers. Industrywide transformation is underway and the
fundamental identity of service providers is
changing with it.
Section 2 explores how to get there from
here: Service providers have endured for more
than a century without a significant business

QUICK INSIGHTS

transformation. The looming threat for digital


services providers is not over-the-top providers
or even regulators but commoditization.
Without a change in foundational
business models and innovative operational
strategies, todays services providers will
become tomorrows infrastructure suppliers.
Consolidation and consistency will be the keys
to monetizing the endless opportunities for
creating and delivering digital services.
The good news is that there are plenty of
opportunities, as we see in Section 3. The
most important aspects of digital services
delivery quality, performance, availability and
security must not be compromised as service
providers become retailers of digital services.
One big advantage is that customers,
especially business customers, value service
providers as trusted partners to deliver those
attributes. Exposing existing systems and data
can enable service providers to profit from
bundling readily available operational functions
like billing, inventory, customer analytics and
more, into services that they are uniquely
qualified to deliver.
Section 4 offers conclusions and recommendations: There are no templates for what the
service provider of the future should look like,
but service providers recognize that they need
to change.
By taking focused advantage of the data
available to them about customer preferences
and usage, service providers are in a unique
position. They can rapidly and accurately
understand customer needs and deliver the
desired digital services to the right customers,
in the right places, at the right times.
So whats the holdup?

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Service providers traditionally avoid disruptive technology


until it is proven to be threatening their market position

Section 1

Making the shift to a retail mindset


There is a distinction to be made between
modernization which is necessary for any
business to remain current, improve its
products, grow its brand and boost revenues;
and transformation which is a once-in-ageneration fundamental change to the identity
of the business.
Like most successful businesses, service
providers have done an excellent job of
sustaining their market, responding to
customer demands and delivering value. They
invest heavily in R&D and brand management
to maintain leadership positions in the market.
However, service providers traditionally
avoid disruptive technology until it is proven to
threaten their market position as was the case
with data, video and mobility services. When
forced, service providers profitably modernized
technology and bought and built their way
into the markets they wanted to enter.
However, all of this occurred without service
providers having to endure significant business
transformation. Why now?

Figure 1-1: Is your company using now, or considering using, connected


digital services?

Picking up the pace


Change is happening relatively rapidly. The
deployment of LTE and IP access networks
combined with virtualization and cloud
platforms dramatically alters our view of the
network. All traffic becomes data and all
services are, essentially, applications.
As the volume and variety of applications
increases, every consumer and business
customer becomes unique. That is a
fundamental change to the identity of service
providers which have traditionally been
network operators delivering connections, not
services.
At a time when customers, not service
providers, are dictating when, where and what
products are delivered, service providers that
want to compete in the digital services arena

are recognizing that the kind of fundamental


transformation underway in the network with
the deployment of LTE and virtualization must
be embraced by every aspect of the business.
The next instantiation of the communications
industry requires the transformation of
network operators into connected digital
solution providers. A recent survey of 1003
business executives by ICT Intuition reveals
that enterprise customers want to buy digital
services, but those offerings have to be just that
fully integrated, seamless services, as shown
in Figure 1-1.
The challenge for customers and service
providers alike is complexity. Service providers
are faced with trillions of transactions,
thousands of devices, hundreds of applications
and dozens of partners; and most customers

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Yes - We are currently using


digital services

19%

No - We are not currently


using digital services but
are considering it

0%

No - We are not currently


using digital services and
no plans are in place
81%

n=1003
Source: ICT Intuition, LLC

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MONETIZING DIGITAL SERVICES:


WHERES THE PROFIT?

arent willing to manage connections, security


and applications on their own. Providers of
digital services need to bundle in simplicity as
well as connectivity. Specifically,
right applications, features and functions
are not available as an integrated connected
service that can seamlessly support users
regardless of location or device.
n Services are too complex and require
substantial after-market integration or user
training to ensure interoperability, reliability
and performance.
n Services are difficult for consumers to buy
and configure. Likewise, the majority of
businesses do not have the staff or skills
required to integrate IT infrastructure,
network infrastructure, applications,
storage and data into a secure and reliable
operational system.

Figure 1-2: Which type of vendor are you most likely to buy connected digital
services from?

n The

Customers want an enabler, a genuine


service provider that removes the complexity,
bundles the necessary elements into a service
and bills accordingly. While many businesses
would prefer to buy from service providers, the
absence of integrated digital services offerings
leads customers to look for the desired services
elsewhere. Customers are drawn to the providers
that deliver the greatest level of integration and
seamless access. (see Figure 1-2)
Becoming a preferred digital services
provider, rather than a bit pipe plumber, needs
a business and cultural mindset change that
embraces innovation, manages productivity
and tolerates risk. When the economy
is booming and the business is growing,
profitability is easy. However, when faced
with a perfect storm of consolidation, overthe-top competitors, exploding demand and
a challenging economy leadership becomes
essential.
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Software vendor (e.g. Microsoft)

8%

15%

Computer hardware vendor (e.g. Dell)

1%

Communication service provider (AT&T)


17%

38%

System integrator/consulting firm


(e.g. Accenture)
IT services provider (e.g. IBM)

14%
7%

Network managed service provider


(e.g. Alcatel Lucent)
Other
n=1003
Source: ICT Intuition, LLC; What Do Enterprises Want? April 2015

Becoming a preferred digital services provider, rather than a bit


pipe plumber, needs a business and cultural mindset change that
embraces innovation, manages productivity and tolerates risk.
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Each digital services provider will navigate its own way through
transformation, but foundational efforts must originate in the executive suite

Transformation Starts at the Top


Many service provider executives recognize
that their current operational mindset is
closer to that of a utility than a retailer. Their
business is not built to compete, but rather to
deliver ubiquity, consistency and quality. Every
customer gets the same service delivered
the same way and quality is universally high
regardless of cost.
Changing that culture to one of individual
integrated service bundles, tiered quality,
service level agreements, service flexibility and
managing the customer experience in a hypercompetitive marketplace is a lot to overcome.
Some digital services providers are bringing
in new leadership from technology start-ups
that have been acquired, other industries
and even retail sectors. Although each digital
services provider will navigate its own way
through the transformation minefield, there
are long term foundational efforts that must
originate in the executive suite:
and Planning The clearest
indicator of commitment to transformation
is the allocation of budget and definition
of a strategic plan for change within every
part of the business. As executives develop
strategies and set investment priorities it
is critical to communicate that change is
coming and that everyone is obligated to
make it happen. Process optimization and
modernization that has occurred at the
tactical level is valuable, but the culture will
not change until visible efforts are underway
to achieve foundational change.

n Investment

the Plan Every individual, regardless


of level or function must be brought

n Share

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along. Communicating the intent, the plan,


successes, failures and progress is critical to
changing the culture. Training that reinforces
key strategies and intent is important as is
practicing what you preach. Any product
or service innovation that is offered to
customers should be deployed internally.
Partnerships will be critical to integration of
ready to wear digital services and partners
must be provided guidelines that make
inclusion easy and secure. Multi-tenant
operations and support systems must be
efficiently deployed and available via secure
cloud-based platforms.
Execution Leadership has a
tendency to lose focus once a major project
is underway. However, transformation is a
comprehensive effort and executives need to
remain engaged for the long haul. The CEO
of a large North American service provider
conducts monthly reviews of projects to
ensure that each stays on track and delivers
the intended customer and business
benefits. Transformation is a strategic effort
that requires coordinated tactical execution
and everyone needs to stay on-board and
on-track.

n Relentless

Understanding what products and services


will benefit customers and how those products
are built, delivered, supported and monetized
will ensure that digital services providers offer
the most desirable and convenient services.
Service providers have all the building
blocks required to bundle useful and profitable
connected digital services, but enabling those
services requires more than bandwidth and an
application platform; it requires a retail mindset.

QUICK INSIGHTS

MONETIZING DIGITAL SERVICES:


WHERES THE PROFIT?

Section 2

How to get there from here


The business and cultural transformations
occurring within service provider organizations
revolve around customers and products. When
the network delivered the product, as long as
customers got an accurate bill, all was well.
The industry is long past those times and
foundational business models must undergo
a transformation to an integrated retail/supply
chain approach that manages partners as
well as customers. Digital services providers
must take a century of experience, harvest
the important lessons and use that hard-won
knowledge to establish new business and
operating strategies.
The alternative is the utility model. That that
might work for some, but most will not survive.
Businesses and consumers alike buy
infrastructure services, but as the complexity
of those services increases, they have no
desire to manage and maintain the servers,
data bases, routers, switches, firewalls,
applications and management platforms that
each requires. This lack of integration limits the
variety of integrated digital services available
to customers. Bandwidth and computing
infrastructure are commodities like water or
power. So where are the digital services?
If it were easy wed have done it by now
Customers of all types have been underwhelmed by the applications coming to market
for connected devices. Tracking the date on
a milk bottle via the fridge is no better than
opening the door and looking at the lid. Being
able to look at that date on a smartphone while
at the market could be useful, though.
The connection of devices to applications
that can collect and analyze device data and
make it useful at the right time and place. The
device is not the user, the device collects data
and the data must then be correlated, analyzed
and presented to a user who will benefit from
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QUICK INSIGHTS

it or to an application that can act upon it. For


all the interest in digital services, uptake is
surprisingly limited.
If it was easy we would have done it
Digital services providers face numerous
challenges as they adjust their businesses
to this new customer reality. While service
quality, reliability and cost continue to be
important factors when deciding to purchase
digital services; there is a new concern that
outranks all others security.
When customers are asked about their top
concerns when procuring and using digital
services, security is always at the top of the
list. As business supply chains and more of
our identity and personal data reside online,
security becomes paramount.
The 2015 Verizon Data Breach Investigations
Report examined nearly 80,000 security
incidents across 61 countries and confirmed
more than 2000 data breaches. While no
industry was spared, the top three affected
by data breaches were the Public sector
(government), Financial Services and
Information industries.
Point-of-sale systems, physical and online
were popular targets. In 60 percent of cases
attackers were able to compromise a firm
within minutes. The report forecasts the
average loss for a breach of 1,000 records
to be between $52,000 and $87,000 without
including the damage to an organizations brand
or the impact on the individuals affected.
Other challenges faced by service providers
are less obvious to customers and revolve
around the backend systems and data
associated with every transaction, every
minute of every day. And it is precisely these
systems and data that make or break the
profitability of new digital service offerings.
One of the more difficult transitions for
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The challenges of moving from a technology-driven


operations to data-driven business are many

digital services providers as they reinvent their


business is the move from a technology-driven
business to a data-driven business. The set it
and forget it approach no longer applies.
Other hurdles include:
n Automation

There are many solutions


and platforms available, yet most are
still components of a larger operations
ecosystem. As OSS/BSS functionality
becomes standardized and commoditized,
service providers are looking for preintegrated solutions that eliminate boundaries between technology, process and
organization that prevent automation. Now
business requirements, not technology, must
drive system selection and automation.
development and
management This is supply chain
management and there are excellent
examples of it in other industries. There
are tools to create a marketplace of partner
applications and services that can readily
used by digital services providers to develop
new offerings, while ensuring that everyone
gets paid and problems are quickly resolved.

n Partner/ecosystem

definition and
management Product management for
service providers has typically revolved
around pricing plans. A new price equals a
new product. Now the number of products is
limited only by imagination and the speed of
application developers. Product development
needs its own set of tools and integration
with the OSS/BSS solutions to deliver and
support those products. Data from network
operations to CRM and online customer
actions is used to define new products,
while catalog components are used to
construct them.

n Product/service

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vendors and support


Digital services providers have major
concerns regarding the selection and
implementation of OSS/BSS solutions
that meet requirements for automation,
interoperability, data quality and
performance. The risk of getting it wrong
is serious and service providers will need
to rely on trusted OSS/BSS vendors and
integrators to ensure business needs are
met. Evaluations and trials must include
the validation of seamless integration with
existing and proposed solutions, open
interfaces and multi-tenancy, security and
data handling before a decision is made.

n Skilled/qualified

Service providers cannot anticipate every use


case and, as a result, execution of operational
processes must become flexible and data
driven. rather than procedural. This means data
from customers applications to the core of
the network must be federated, centralized,
integrated and reliable. The dynamic nature of
network and service components is making
end-to-end fulfillment from customer inquiry
through to activation so difficult that OSS/BSS
solutions must be able to continuously adjust
to ensure reliability and performance. Catalogbased network and service components, and
the policy information associated with each,
are needed to enable dynamic processes.
Start with the obvious
At some point, transformation strategy
and processes become tactical and must
be translated into programs, schedules,
requirements, solutions and success criteria.
While transformation strategy should be
the driving force behind any action, a project
roadmap is the way to achieve it. Digital
service providers that have implemented
strong program management and governance
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MONETIZING DIGITAL SERVICES:


WHERES THE PROFIT?

capabilities can use that expertise to manage


network, IT, OSS/BSS vendors and system
integrators in transformation projects.
That being said, digital services providers
must be careful not to get bogged down in
functional definitions of technology solutions,
but rather develop requirements that enable
consistent operations regardless of customer,
product or service. Every new service requires
fulfillment, assurance and billing and those
micro-processes must be built into the
component definitions included in the product,
service and resource catalogs such that each
can be automatically and reliably executed for
every product, every time.
Consistent definitions are essential
Consistent definitions of each of those
functional areas are essential for day-to-day
operations. When defining a retail strategy and
establishing a retail digital services business,
service providers need to evaluate existing
business processes and optimize operations to
suit this new strategy.
New processes and OSS/BSS solutions
designed to better manage, deliver and
support the volume and variety of products
that customers demand are needed to
meet business demands for profitability and
differentiation. Properly executed, OSS/BSS
solution strategies will enable digital services
providers to implement a single, horizontal
product-driven business that is network and
service agnostic.
No matter how trusted a vendor is, there
is still the need for project coordination,
requirements validation and testing. The
vendors and system integrators serving
digital services providers are also changing
and adjusting to a more commoditized OSS/
BSS market. However, the responsibility for
transformation ultimately rests with the service
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QUICK INSIGHTS

providers and there are several commitments


which will speed the transition.
providers must agree Where
vendors can claim some amount of
competitive advantage from proprietary
management systems and interfaces, there
is no benefit to digital services providers to
disagree on standards. To benefit from a
standard, service providers will have to spend
money to participate, evaluate and implement
the results. Vendors will deliver the standards
that service providers demand.

n Service

providers must stay involved


While vendors are the most technically
qualified to develop OSS/BSS architectures
and interface specifications, only service
providers can apply the pressure to ensure
that operational architectures match business
needs and process definitions, keep efforts
on track and ensure progress.

n Service

providers must insist on an


integrated approach The only way
to ensure that vendors will implement
an integrated solution is to make open
interface standards, data models, preintegration and interoperability requirements
a component of every procurement. All
too often, service providers include only
minimum requirements for integration and
interoperability in network and OSS/BSS
requests for proposals (RFPs). Not only must
these requirements be included in RFPs,
they must be selection criteria and vendors
that do not comply will lose.

n Service

providers must insist on openness


Whether insisting on a common data
model or standardized application and device
interfaces, openness must be mandated

n Service

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OSS/BSS solutions are becoming more automated, intergrated


and commoditized, and interfaces are opening up too

across operations and with all vendors and


partners. Data is collected and used by
multiple systems and commonality must
become a requirement.
providers must eliminate cultural
barriers Any divisions between IT and
the network have to be organizationally
eliminated. Network engineers cannot
blindly acquire network hardware and OSS
without considering the impact on the rest
of operations and the business. Likewise, IT
cannot continue to insist on developing and
maintaining multiple data models, interfaces
and endless OSS/BSS integration. Defining
business-wide standards for both network
and IT procurements and strictly enforcing
those standards creates a more consistent
and simplified approach.

n Service

Solving a fundamental problem


Digital services providers must solve the
fundamental problem of defining and
implementing common network and service
element interfaces, common data models and
operating procedures across the business.
A large part of becoming a retailer of digital
services is to automate and simplify operational
procedures. The treasure trove of data available
to service providers must be correlated and
validated to deliver answers, not just data
points, which are useful to customers and the
business.
Becoming a retail digital services provider
does not mean that customer experience and
profitability are mutually exclusive. Improving
quality, reducing redundancy and eliminating

complexity provides better support and delivers


more products to customers faster and more
cost effectively. Innovative OSS/BSS and IT
solutions will lead the way in enabling digital
services providers to compete in a productcentric marketplace and both service providers
and vendors must recognize the need to
embrace the new retail market realities.
OSS/BSS solutions are becoming more
automated, integrated and commoditized.
Interfaces are opening up and the number
of complex integrations are being minimized
or even eliminated by consistent delivery of
common development standards and APIs.
Dont jeopardize customers or services
Service-specific silos of functionality and
data can be federated into newer platforms
and eventually retired without jeopardizing
operations or customers. Common data models
and standardized interface definitions can be
mandated across the business and included as
requirements for procurement. Partners and
application developers can be given guidelines
and tools to establish a foundation for security
and interoperability.
Making the right strategic changes to
organizations, processes, IT and OSS/BSS
solutions is critical to competing as retailers.
Differentiation between digital service
providers will come from innovative processes
and strategies for providing products at
competitive prices, and creating value for
customers. Defining, delivering and supporting
unique, profitable products that satisfy
customers is key to competitive differentiation,
revenue generation and cost control.

Differentiation between digital service providers will come from


innovative processes and strategies for providing products at
competitive prices and creating value for customers.
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Section 3

Focus on the opportunities


For providers of digital services, it is now
necessary to go over-the-top. Service
providers dont need to build the devices or
the applications; they need to construct the
ecosystems, engage partners, bundle the
applications, protect the users and broker the
data.
Cloud services are the most cost-effective
strategy for delivering innovative, bundled,
non-commodity applications to customers of
all kinds. Users are comfortable with the cloud
and they trust service providers to ensure
security Win, Win!
What service providers do well should be
productized. For example, while security is a
major concern for customers, that demand
creates an advantage for digital service
providers. Customers know that service
providers spend a large percentage of research,
development and operational budgets on
security much more than most businesses
and infinitely more than the average household.
Security as a service
As service providers are diligent about security,
there is an opportunity to offer premium,
secure services or even security as a service.
Many systems that service providers use for
everything from order management to billing
assurance and customer care are more evolved
and sophisticated than systems that perform
similar functions in other industries. However,
exposing OSS/BSS functionality for use by
customers requires an adjustment to both
architecture and mindset.
OSS/BSS solutions are not enough to create
competitive differentiation. Differentiation will
come from the value, selection and support
of the services. The result of exposing those
systems in a multi-tenant cloud environment
for use by customers doesnt threaten
competitiveness but increases profitability.
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Transaction-based billing and partner


settlements are also an area where service
providers maintain an advantage. The ability to
monitor every transaction that occurs across
the network, bill the customer and settle with
partners in near real time does not exist in
many other industries. Exposing advanced
billing, rating, charging and settlement
capabilities delivers a valuable service to
customers and revenue to providers.
Business enablement
Connected digital services are valuable to
enterprises for two different reasons. One is
internal use for the business, its customers
and partners. The other is the ability to bundle
connectivity with existing or new products and
services for resale.
In addition to the productivity improvements
from automation, connected employees and
operations, there is a large untapped source
of revenue for businesses wanting to sell
connected products and services.
In a connected retail economy, ubiquitous
connectivity enables enterprises to track
shipments, monitor temperature and security,
or automate manual processes. Customers
are able to use any variety of devices
and applications to maintain continuous
connectivity.
Any business could sell communications
Given this definition, nearly any business
could potentially become a communications
retailer. Amazon includes connectivity with
Kindle, home security companies bundle
connectivity with remote monitoring and more.
Digital service providers will need to facilitate
open, readily integrated OSS/BSS solutions,
partnerships, settlement and supply chain
agreements to be profitable retailers.
To become an enabler of the Internet of
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Enterprises wanting to sell connected, digital services and products


need secure, multi-tenant access to cloud-based applications

Things (IoT), machine-to-machine (M2M)


communications and connected digital services
for businesses, digital services providers
have to do more than offer the necessary
network and IT components. They have to put
the pieces together. Customers want a fully
formed service that they use and pay for and
thats all.
Enterprises wanting to sell connected digital
services and products require secure, multitenant access to cloud-based applications
and infrastructure that is managed against
strict service level agreements. They require
simplified ordering, installation and billing
via self-care portals or direct integration into
existing systems. Most of all, they want
flexibility: No code development or updates,
minimal integration, easy changes and endto-end automation without complex operating
procedures or manual effort.
There is a fast-growing market for companies
wanting to bundle connectivity into product
offerings and businesses are anxious to start
delivering them (see Figure 3-1). Furthermore,
they are overwhelmingly open to partnering
with connectivity providers to succeed (as
shown in Figure 3-2), but you have to have the
right offers.
Dont forget the data
The data that makes digital services providers
more productive and efficient is the same
data that directs providers to new customers,
services and revenue opportunities. Digital
service providers must continuously collect,
correlate, analyze and distribute data from a
wide variety of sources from the application
in the customers hand to the core of the
network. No other business has access to the
volume and granularity of data that is available
to service providers.
The primary business motivations for
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Figure 3-1: Are you considering or have you already bundled connectivity
into products that you sell or resell?
Yes
No

29%

71%
n=1003
Source: ICT Intuition, LLC

Figure 3-2: For those who said Yes, would you consider partnering with a
communications service provider to develop such an offering?
Yes

5%

No

n=882

95%

Source: ICT Intuition, LLC

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MONETIZING DIGITAL SERVICES:


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capturing and using this mountain of data


are to rapidly deliver new products, reduce
costs and improve quality. Improving
quality has been shown by many service
providers to contribute to all three objectives.
Understanding performance problems and
failures leads to improved processes, more
reliable systems and fewer errors all of
which result in operational efficiencies, better
products and lower costs.
Using real-time traffic
Digital service providers can use real-time
traffic and transaction data to provide security
services, critical event monitoring (such as
healthcare), billing, settlements, content
management and assurance services to
enterprises, supply chains and governments
or create specific ecosystems for retailers.

While large players like Google and Amazon


collect that type of data from secondary
sources, digital services providers have it
readily available. They need to use it. Legally,
discreetly, securely and with all the necessary
assurances of privacy but they need to use it.
A wealth of data is available from digital
service providers infrastructure that, properly
analyzed, can deliver numerous measurements
of performance, quality and profitability while
providing actionable data to design new
services and improve customer experience
(see Figure 3-3). Capturing, analyzing and
understanding performance and quality metrics
across all levels of the business provides
insight into whats working and what isnt.
That data is indispensable for budgeting and
prioritizing technology projects and measuring
the value of transformation efforts.

Figure 3-1: Measuring quality from the bottom up


BUSINESS QUALITY MANAGEMENT

PRODUCT
QUALITY MANAGEMENT

CUSTOMER
QUALITY MANAGEMENT

SERVICE
QUALITY MANAGEMENT

INFRASTRUCTURE
QUALITY
MANAGEMENT

Source: ICT Intuition, LLC

14

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Acting like a retailer means havin g visibility of all the links in the supply
and distribution chains, supported by robust, integrated channels

Section 4

Conclusion and recommendations


Making the cultural transformation from
network operator to profitable digital services
retailer means thinking, operating and
measuring progress like a retailer, whose
end products are an amalgam of intermediate
goods and end products from other suppliers.
It means having visibility of all links in the
supply and distribution chains supported by a
robust and fully integrated set of distribution
channels to provide a consistent, high-quality
experience to the customer. It means capturing
and using the vast amount of data available to
better operate, maintain and sell products to
customers.
But its important to understand that the
transformation underway from network
operator to digital services provider cannot and
will not happen overnight. While that would be
the preference; customer, service provider and
investor expectations need to be more realistic.
will be delivered in pieces
Digital services providers that are defining
transformation strategies are examining all
functional areas to define new processes
and understand cultural, technological
and system changes that will be required.
Digital services providers are approaching
transformation incrementally and network
and OSS/BSS solution procurements to
support transformation will necessitate
integration of some existing systems and
data.

n Transformation

has access to the same


technology The primary challenges
associated with transformation are not
technical. Beyond the impact on individual
service providers, changing an industry that
has operated successfully for more than
100 years is an arduous task. Much like
turning an aircraft carrier, the road to digital
services profitability will take executive-level
commitment, careful planning, relentless
execution, adequate resources and time.

n Everybody

only goes so far While


specific OSS/BSS and network upgrades
may lead to efficiencies and cost savings,
only business transformation and process
optimization will create the kind of
service differentiation needed to establish
network operators as digital services
retailers. Capturing, connecting, serving
and supporting customers should not be
divided among independent organizations
or OSS and BSS solutions. While that
type of functional separation was once
a convenience, it is now a barrier to
automation, seamless process execution and
profitability.

n Modernization

of OSS/BSS projects will be


based on business needs Although some
functions (like customer care) pose more of
a challenge than others, spending priority will
be given to those projects that best advance

n Prioritization

The primary challenges associated with transformation are not


technicalit will take executive-led commitment, careful planning,
relentless execution, adequate resources and time.
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15

MONETIZING DIGITAL SERVICES:


WHERES THE PROFIT?

the move toward profitability while meeting


business and customer goals. Consolidating
existing systems and data while simplifying
operations and maintenance of OSS/BSS
solutions with consistent, standardized
deployments will come first.
matter Some efforts will be
delayed while digital services providers
identify industry and corporate standards
for virtualization, IT and OSS/BSS solutions.
Best-of-breed deployments are giving way
to open platform solutions that enable digital
services providers to specify infrastructure,
system and integration standards that ensure
consistency and interoperability both now
and in the future.

n Standards

Transformation is an expensive, painful and


time-consuming effort that ultimately results in

a new business culture. Cultural change takes


time and constant reinforcement of consistent
messages. The necessary changes will not
happen overnight, but service providers are
transforming into trusted providers of digital
services. The ability to monetize that trust and
profit from those services will be the key to
future success.
The fact is that even though service
providers are better equipped to offer and
deliver trusted digital services to consumers
and businesses, they are not well-equipped
to profit from them. That will require process
alignment, system-wide automation, open
interfaces, data-driven architectures.
It will also require the elimination of any
organizational or structural barriers that prevent
each operating group from seeing the larger
business strategy and behaving like a cohesive
whole.

The fact is that even though service providers are better equipped to
offer and deliver trusted digital services to businesses and consumers,
they are not well equipped to profit from them.
16

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Frameworx is adopted by 91 percent


of the worlds largest service providers

TM FORUMS FRAMEWORX
AND HOW IT CAN HELP YOU
TM Forums Frameworx is a suite of standards-based tools
and best practices used by 91 percent of the worlds service
providers as a blueprint for effective and efficient business
operations. It enables any business to assess and optimize
performance using a proven, service-oriented approach to
operations and integration.
Frameworx was developed and continues to evolve through
the efforts of TM Forums unique Collaboration Community to
address members business issues and provide an efficient,
external complement to their internal R&D efforts and
resources. Updates are published every six months.
The latest version, Frameworx 14.5, was released in
December 2014. In just four months, hundreds of individuals
from over 230 member companies used TM Forums proven
agile collaboration and development machine in 14 projects to
deliver new features, guided by the Forums Agile Business
and IT, Open Digital Ecosystem, and Customer Centricity
strategic programs. Key features in Frameworx 14.5 include:
A set of new Extra Insights eBooks based on the Forums
Zero-touch Operations, Orchestration and Management
(ZOOM) project.
n A comprehensive set of technical reports on a wide range
of topics, including a compendium of NFV user stories,
NFV MANO gap analysis, specifications and interface
requirements, exploratory reports on NFV security
fabric needs, NFV readiness, impact of end-to-end SLA
management, OSS/BSS futures and many more.
n The first version of the Digital Services Toolkit, which includes
the Digital Services Reference Architecture (DSRA), B2B2X
partnering initiative, REST-based management APIs and endto-end use cases, among numerous other components.
n An introduction to the DSRA, the Forums proposal to
enable richer and more open, distributed digital collaboration
with the essential tools to support increasingly demanding
technical and commercial models.
n An extension of the B2B2X Partnering Guide, providing the
basis for best practices for the identification of touchpoints
between partners in the digital ecosystem.
n Best practices for specifying REST-based Management APIs
and understanding common patterns across Open Digital
Ecosystem APIs. This release also includes additional Open
Digital APIs for customer management, party management,
management of service level agreements and more.
n

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Applied Frameworx for Smart Energy provides utilities with


examples of using Frameworx best practices, blueprints,
models, APIs and integration to create a scalable set of
digital services to address priority use cases.
n Additionally, Digital Services Toolkits will be available shortly,
providing business canvas templates that support vertical
industry user stories.
n A new Omnichannel Guidebook introduces the key
imperatives for omnichannel implementation, a definition
of the operational functions needed, and more than 30
requirements and mini use cases for evaluating omnichannel
project priorities.
n Updates to the Customer Experience Management Guidebook,
as well as a new user case template and further use cases.
n Enhancements to the Data Analytics Reference Model,
new big data analytics use cases and important privacy
risk scoring for user cases are all aimed at helping service
providers unleash the power of big data.
n Sixty-one new customer experience management metrics,
as well as many new dimensions, increasing the depth
of coverage of retail outlets, account activation, payment
and IVR performance. There are also many corrections and
consistency improvements, bringing the total number of
customer experience management metrics to 537.
n A new how-to guide, Becoming a Customer-Centric Business.
The importance of customer centricity is increasingly well
understood, but theres an acute shortage of insight into
how to do it. This guide sets out to do just that.
n

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17

Sponsored feature

The road less traveled:


the path to digital services profitability
By Monica Ricci, Executive Director, Global Marketing & Strategy, CSG International

Consumers, businesses and CSPs alike


are investing in the digital economy. In
developed markets, consumers have a
seemingly insatiable appetite for digital
content and devices, while developing
markets are banking on smartphones to
connect them to the worldwide web to
change the very nature of their societies
and economies. Businesses around the
world are becoming digital to foster
innovation and generate productivity gains.
And CSPs trying to stake their claim in this
realm should be asking themselves the
question: what is the return on my digital
investment going to be?
In the world of rapidly evolving
digital technology and services, CSPs
essentially have no choice but to
transform their business models.
Needing to change directions both
rapidly and significantly requires a clearly
defined objective, and the CSP who
attempts to go in multiple directions at
once risks diluting focus and slowing
its evolution. Different objectives will
facilitate different results, so careful
consideration is required to ensure that a
profitable operating model in any endstate is achieved and return on digital
business investment is maximized.
What might the CSP become?
The most likely end-states for todays
CSPs fall into four different categories,
each enabling its own value proposition
to customers and demanding a
distinctive transformative focus.
A CSP can become a Digital Lifestyle
Service Provider (DLSP). A DLSP
provides frictionless life cycle
18

QUICK INSIGHTS

management for the digital service offers


and bundles demanded by consumer or
business clients alike. Consumers want
entertainment, applications that enhance
their personal and work lives, and multimedia communications capabilities,
across multiple devices that they hang
on living room walls, carry in pockets
or wear on wrists. Businesses in every
industry are becoming digital denizens
in the quest to increase productivity
and innovate. They require applications,
communications and analytics capabilities
to enable their workforce, whether 5
or 50,000 employees, to perform any
business function on any device from
anywhere, to maximize their productivity
in a digital world.
DLSP business operations demand
agility; limitless abilities to create new
and personalized offers of individual
services, bundles of services and/
or reselling third party services; and
managing the customer interactions on
their terms, including self-care support
for all activities in the customer and
service life cycle.
There are macro trends in the market
today that indicate the purposeful
shifting of CSPs into DLSPs. There
are more partnerships being struck
between DLSPs and third party providers
of consumer services like Spotify
and business services like Microsoft
Office365. Beyond merely reselling,
DLSPs are packaging these services
with others in the digital basket, bringing
greater value to the customer. Examples
include CSPs partnering with the likes of
Netflix, as they expand around the world,
to offer free access or unmetered data

to use the service. Shared data plans


within a family or across a business unit
are growing in popularity to accompany
bandwidth-intensive content and
applications. And to attract customers
in those developing regions that are not
yet fully penetrated, time-of-day plans
with lower rates for off-peak digital
usage and QoS-based plans that offer
greater speeds at premium pricing where
regulation allows encourage new users
to participate at a lower price point.
A CSP might become a Utility. While
consumer and business digital services
and applications will evolve in countless
ways, there will always be a network.
A CSP may make the network its primary
focus, and to do so profitably will need to
run it like a Utility. This means managing
the complexity of operations, driving
out costs, increasing automation for
efficiency and accuracy, and monitoring
and controlling service levels in an
integrated fashion across the network
and business processes. And doing all
of this with robustness and reliability.
A recent announcement by Frances
Bouygues Telecom highlights a Utility
network example, with the forthcoming
launch of a LoRa network dedicated to
Internet of Things (IoT) use cases. The
LoRa low power features will facilitate
the widespread deployment of black
box connected devices that can operate
for up to 10 years on a single battery
charge, stripping away maintenance
costs and enabling utilitarian functions
(tracking people and devices, monitoring
the environment, controlling industrial
machines, etc.).
www.tmforum.org

A CSP can be an Enabler. An Enabler is


an intermediary who delivers a service
development platform bringing together
a marketplace of buyers and suppliers.
Aspects of an Enablers service
include exposing the network layer and
operations layer via configurable APIs,
and exposing customer and usage data
to third parties to better understand
consumer behavior and trends. In an
ideal Enabler environment, the CSP
will monetize those APIs and that
customer data to the extent allowable
by regulation. To manage enabling
operations, the CSP needs experience
management capabilities for both the
consumer and the partner relationships
in the extended value chain, including
support for self-care. Partners will join
these ecosystems in increasing numbers
and will need to establish and manage
their own accounts, while revenue
sharing models will become more
complex, including sponsored data, ad
funding and multi-party settlement from
complex bundles.

Critical attributes of a Utilitys


infrastructure include network and
business operations that scale, are
integrated and incorporate intelligence.
A smart Utility builds operational
intelligence for monitoring and
continuing improvement, as sustaining
profitability and cost leadership are
both dependent on driving ongoing
efficiencies. CSPs becoming smart
Utilities have many options today: 1)
Consolidate diverse operational systems
www.tmforum.org

sooner rather than later for simplicity


and efficiency; 2) Embed analytics
capabilities in operational systems
that drive improvement; 3) Consider
outsourcing systems and operations to
a managed service provider who will
partner with you not only to run your
mess for less but is jointly incented
with you to simplify your operations over
time, progressing towards that target
architecture that is consolidated and
automated.

Become an Enabler+. If the Enabler


was the middle man, the Enabler+ is the
middle man on steroids. Beyond creating
a marketplace, the Enabler+ extends
operational capabilities for lifecycle
management of digital consumers to
industries and enterprises that never
before have dealt with these capabilities
in their business processes. With
ubiquitous digital networks and the ability
to connect every Thing, every industry
is actively developing solutions and
offers to enhance traditional services
via the Internet of Things, for example,
QUICK INSIGHTS

19

Sponsored feature

The road less traveled:


the path to digital services profitability

and deliver greater value to their


customers. Health care, manufacturing,
transportation, financial services and
many other sectors are embedding
monitoring and control into old things to
increase their utility or efficiency or, in
combination, productivity.
With this explosion of new services
come requirements to manage
connectivity, devices and applications.
This need is reflected by a growing
market for IoT platforms, forecasted to
grow at a rate exceeding 30% CAGR
over the next five years. Most IoT
platforms today do one of those things
well: they manage devices, manage
connections, or manage applications.
These new purveyors of digital services
include the likes of pharmaceutical
companies providing connected pill
bottles and pills, and automobile
manufacturers providing connected cars
that enhance not only the drivers life
and safety but facilitate the operations of
the manufacturer, the dealer, the service
center and the insurance provider.

Managing Things on the move, managing


connections to Things, and managing a
growing number of applications for those
Things are not a competency.
Enter the Enabler+ CSP. The
opportunity for the Enabler+ is to
monetize its operations in the areas
of device, connection, application and
connected customer management. This
is more than selling customer data and
system APIs. This is enabling those
enterprises operations as a service,
by a provider who has had decades of
experience developing competency at
scale in those areas. There is immense
value to those enterprises in using the
CSPs platforms and services for IoT
operations, eliminating the need to reinvent them in-house.
One example of an Enabler+ CSP
is MTN in South Africa. MTN recently
launched a pan-African Internet of
Things platform combined with their
network, delivering greater control and
advanced management features for
connected devices, and facilitating home

pricing for devices that will roam across


all the countries that MTN serves. In
this instance, MTN is leading the IoT
market in Africa, ensuring the network
and platform are in place up front and
encouraging enterprise development of
use cases and applications through a
Mind-to-Machine Challenge.
Your Path, Your Profit
A CSP has a number of options for
investing in its digital future, each
offering opportunities for monetization
and profit by focusing on the services,
the network, the data and technology
or the operations. The successful digital
economy CSP should choose a path
to build upon its brands heritage and
minimize being all things to all potential
markets. Conduct a thorough assessment
of internal systems, operations and
network assets, the significance of your
brand affinity, and your tolerance for risk
vs reward. Keep your objective clearly
defined and understand that agility will be
paramount to success.

End-states for todays CSPs fall into four different categories, each enabling its own
value proposition to customers and demanding a distinctive transformative focus.
Careful consideration is required to ensure that a profitable operating model in any
end-state is achieved and return on digital business investment is maximized.
20

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Have you seen our other recent TM Forum publications?


TM Forums research reports are free for all employees of our member companies to download by
registering on our website. The reports are also available for non-members to purchase online.

2014 | www.tmforum.org

$245 USD / free to TM Forum members

SOCIAL

MEDIA

QUICK INSIGHTS

Social media: Strategies for maximizing revenue


Analyst Tim Kridel explores how, in a fast-paced digital economy, all companies are looking for
ways to attract new customers and prevent churn. Social media represents a huge opportunity
to do both. Communications service providers are leaders in using social media to interact with
customers, but they still havent figured out how to use all of the big data theyre gathering
or how to make it part of a more holistic view of the customers interaction with the company
across the entire lifecycle of the relationship.
This report includes a wealth of first-hand information from interviews with service providers
from the communications industry and other sectors whose social media strategies provide
food for thought. We look at how social media influences customers purchasing decisions,
the types of content customers find compelling, and how companies strategies vary, based on
factors such as target demographics. We examine how companies are calculating the reach,
effectiveness and return on investment of their social media campaigns. Finally, we offer
strategies for increasing their effectiveness and maximizing revenue.

STRATEGIES FOR
MAXIMIZING REVENUE
Sponsored by:

Anyone can download this Quick Insights research report from


www.tmforum.org/socialmediastrategies

Frameworx: Mastering the digital world


Keith Willetts grounding-breaking book, Unzipping the Digital World, described how businesses
can thrive and survive in the digital economy. Now guru John P. Reilly looks at the next steps in
his seventh book, Frameworx: Mastering the Digital World.

Frameworx:
Mastering the digital world

He explains how TM Forums Frameworx best practices and standards can support the delivery,
monitoring and monetization of digital services today by providing detailed examples. Beyond
this, Reilly has radical ideas about conducting business in the digital ecosystem and introduces a
concept called the value fabric, which replaces the traditional value chain, and shows how all the
players (engaged parties) collaborate within it.
Reillys value fabric concept provides a standard way to simply describe and visualize how
business is conducted. Plus his proposed enhancements to Frameworx could support many
different business models in which a variety of engaged parties are involved in providing value to
customers.
Mastering the digital world is available to download now for $29.99 from
www.tmforum.org/frameworxbook

John P. Reilly

2014 | www.tmforum.org

$245 USD / free to TM Forum members

PRODUCT

LIFECYCLE
MANAGEMENT

Product lifecycle management: Using virtualization to increase agility


That service providers need to be able to define products and services quickly to create new
services is well understood. Here author Carol Wilson, Editor-at-Large, Light Reading, argues it is
equally important that services can be retired rapidly and easily too something that has proven
to be a challenge in the past.

QUICK INSIGHTS

Properly implemented, virtualization enables the agile delivery of services to strengthen the
competitive position of network operators. The key is product lifecycle management (PLM)
processes and procedures. The report examines how PLM has been used so far and how its
features and implementation needs to change as network virtualization takes hold.
The shifting competitive environment, where services are typically delivered via partnerships,
has big implications for PLM, and how services and standards are developed. We consider
real-world efforts to transform the PLM process, including some of TM Forums latest Catalyst
projects. We conclude with specific recommendations for a better product-delivery strategy.

USING VIRTUALIZATION
TO INCREASE AGILITY
Sponsored by:

Anyone can download this Quick Insights research report from


www.tmforum.org/socialmediastrategies

Visit www.tmforum.org/researchpublications to find out more


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21

Are you ready to shape the future of digital business?


Collaborate with these leading companies on IoT.

Get engaged in the community at


www.tmforum.org/iot