IDC Whitepeper - Convergent Charging and Digital Transformation

Convergent Charging and
Digital Transformation:
A Fundamental Platform Serving New Ends
An IDC White Paper
Sponsored by Amdocs
January 2017
Author: Andy Hicks

Convergent Charging and Digital Transformation: A Fundamental Platform Serving New Ends
An IDC White Paper, Sponsored by Amdocs
How Do Service Providers Need Their

Classic Systems to Support Their
Transformation?
Digital transformation: Most people in the telecommunications industry
believe it is essential. The tricky part is that everyone has a different idea of
what it means. Some put the emphasis on upgrading their networks, some on
content and entertainment, some on decommissioning legacy and unifying
platforms, some on automation, and some on customer-facing functions. And
all of these efforts can be transformative, at least potentially.
IT transformation Digital transformation (DX) spans the whole organization; it can involve
— no matter how elements specific to the telecommunications business, as well as back-office
expensive — is not functions common to many industries. At IDC, we have an extensive
digital framework for digital transformation, but underlying all of it is a fundamental
transformation principle: The technology must serve the business. IT transformation — no
unless it makes matter how expensive — is not digital transformation unless it makes some
some aspect of the aspect of the business better.
business better.
The flip side is the real benefit: Since digital transformation is about how
carriers use tools both old and new, they do not need to focus all their energy
on brand-new architectures to realize DX benefits. Upgrading foundational
systems — or even making incremental changes — is every bit as valid an
approach to DX progress.
The only challenge with this approach is a practical one: If there are many
paths to the same goal, how can we tell which ones might be better? What
are the best practices? What are carriers around the world focusing on? How
are DX imperatives affecting core technology? To find out, we surveyed 80
large communications service providers in Europe, North America,
Central/Latin America, and Asia Pacific on their DX plans as they related to the
fundamental convergent charging function.
© 2017 IDC www.idc.com | Page 2

One Key to Revolutionizing Revenue:

Personalization
If you measure DX’s benefit by the effect it has on the top line, then one result
of the survey pops out immediately: Over half of the carriers we surveyed
believe that significantly improving personalization and customization could
boost revenue substantially over the next three years:
FIGURE 1
Carriers Expect Personalization to Substantially Boost Revenue
Q. How much would you expect your revenues to grow cumulatively over the next
three years if you could employ significantly more personalized
information and more customized offers?
Over half of the More than 15% 53

carriers believe that
personalization and 10-15% 23
customization can
boost revenue
5-10% 18
substantially.
0-5% 4
0 5 10 15 20 25 30 35 40 45 50 55
(%)
Note: N = 80
Source: IDC survey performed for Amdocs, 2016
Keen parsers of survey results will notice something about this graph: The
scale does not go high enough. When we designed the question, we did
anticipate that carriers would expect greater personalization and
customization to boost revenue, but we underestimated how strongly they
believed in it. The next time we ask this question, we will increase the scale. In
any case, it is clear that personalization of offers and services is one of carriers'
central transformative hopes.
Personalization and customization usually mean finer segmentation — down,

eventually, to the promised “segment of one.” Usually, in turn, this finer

segmentation requires a more robust technical environment. Based on the

carrier’s individual needs, this could include a faster database, a unified
product catalogue, or stronger analytics. It will certainly require a more robust
management capability and stronger assurance, especially as service-level
agreements (SLAs) build in more business-oriented key performance
indicators (KPIs) and quality-of-service levels.
Personalization and customization also require drastically reduced time to

market in order to serve these increased, more finely sliced segments. Greater
segmentation requires the carrier to produce and manage more offers and
products in the same period of time. Each individual offering, therefore, must
come to market more rapidly to support this increased volume, and all parts
of the chain must enable this speed. Increasingly, this will require real-time
functionality as adjustments are made on the fly. Convergent charging
systems can also provide a timely, rich set of usage data for segmentation and
analytics. As the real-time monetization engine, convergent charging will
become an essential part of this environment.
Carriers Expect More than Personalization

from Convergent Charging
Digital transformation has many aspects, and carriers expect convergent
charging to support many of them. When we asked carriers to choose the
capabilities of convergent charging that supported a digital strategy, not a
single choice ranked below 50%.

FIGURE 2
No Shortage of DX Requirements for Charging Systems
Q. What key capabilities of a charging system are required to support a digital
strategy?
The broad set of high Support for the selling of virtual and
85
scores reflects the physical goods
diversity of An easily integrated API 84

approaches to digital
Real-time plan updates 83
transformation.
An open and rich API 81
A flexible plan and offer definition with

73
adjustable parameters
A set of predefined widgets for billing- and
68
charging-related functions
Re-rating of events in real time 59
0 10 20 30 40 50 60 70 80 90
(%)
Note: N = 80
This broad set of high scores reflects the diversity of approaches to digital
transformation. Starting with the lowest score — which still rates a solid 59%
— real-time re-rating suggests that the mix of agility and personalization that
we saw in previous questions may be enough to trump the need for this
capability. These include the ability to create targeted offers and products for
every finely differentiated segment the marketing department may choose to
address. In other words, if you can target everyone separately, applying
immediate discounts may be a lower priority.
Moving up the scale, the more highly ranked choices attest to the priority that
carriers place on flexibility and speed in DX. Predefined widgets, adjustable
plan parameters, and flexible, open application programming interfaces (APIs)
all enable carriers to develop offers quickly, using an agile, fast-fail approach
to constructing new offers. At its core, agility depends on dramatically
reducing the time and cost — and thus the opportunity cost — of every
service, campaign, and tariff that the carrier produces.

The top-ranked choice provides another perspective. Support for the selling of
virtual and physical goods indicates that carriers would like to become more of
a retailer, not only for their traditional services and devices, but also acting as
the portal for partners. The importance placed on easy-to-use APIs could point
to convergent charging as the center of a largely self-service platform
capability, where the carrier acts as an economic enabler. This model is more
prevalent in some largely self-contained developing markets such as China;
nevertheless, even in more mature markets, selling virtual and physical goods
still has room to run.
Carriers Are Becoming More Open to

Alternate Delivery Models
Traditionally, billing and charging have lagged behind the network and other
parts of telecom infrastructure in outsourcing, but it looks like that may be
changing. We asked carriers how they would acquire their billing and charging,
and see a shift on the horizon:
FIGURE 3
Increased Flexibility in BSS Delivery Models
Q. Three years from now, which of the following delivery models will you probably
use to supply your billing and charging capabilities?
Moving to private
cloud allows carriers Operated in a private cloud that we
89
to realize benefits of administer
cloudification Provided in a managed-services
75
without surrendering relationship
the control that
comes from Provided as a cloud service 55
operating their own
Operated on our premises on dedicated
environment. hardware
40
0 10 20 30 40 50 60 70 80 90
(%)
Note: N = 80

There are two stories here. The first is the move to private cloud from
dedicated hardware, which allows carriers to realize the benefits of
cloudification without surrendering the control that comes from operating
their own environment. The second, more recent story is that the majority of
carriers are increasingly embracing multitenancy. In our conversations on
business support systems (BSS) over the years, we have consistently heard
that even carriers that outsource other parts of their infrastructure want to
retain internal control of their billing and charging. At IDC, we generally hear
two main reasons for this: First, many carriers want to retain control because
they see billing and charging as a source of competitive differentiation.
Second, an equal number have BSS environments so confusing that they do
not want to outsource them until they understand how they work and what
systems they tie into.
As the chart below shows, both of those objections seem to be diminishing as

carriers come to believe that engaging a partner can solve some of these
problems, or at least that the cost and agility benefits outweigh whatever
reservations they may have.
FIGURE 4
Strong Benefits for New Delivery Models
Q. How much do you expect to benefit from cloud-based or managed deployment
of charging in each of the following areas?
OPEX reduction by simplifying operations 83 9 9
Greater agility leading to lower time-to-

66 3 31
market for new offers
Increased flexible scalability 62 28 10
CAPEX reduction through the move to a

56 27 17
virtualized environment
Modernization and adherence to
38 45 17
corporate policy
0 10 20 30 40 50 60 70 80 90 100
(%)
High and Maximum Benefit Moderate Benefit No or Low Benefit
Note: n = 71

As usual, the top benefit of managed or as-a-service delivery is OPEX

reduction, but CAPEX reduction also scores well in this question. In between
are the DX benefits: agility, time to market, and scalability. Moving away from
an in-house model can be a major disruption, which may be why managed
delivery outranks as-a-service delivery in the previous graph: Carriers need
help with implementing and administering the change. Managed service
delivery can bring with it more business transformation assistance than pure
cloud delivery.
Consumer and Enterprise Priorities for

Convergent Charging
We asked carriers who had or were planning to implement convergent
charging to tell us what capabilities they expected to enjoy. It turned out that
they expected a lot.
FIGURE 5
Much Expected from Converged Charging in the Consumer Market
Q. For what new offers or capabilities are you planning to use your converged
charging?
To personalize offers to a greater extent 80
To create single-bill relationships with

79
customers
To create better bundled offers 78
To provide billing and charging capabilities

75
to partners
To launch sub-branded offerings for
53
targeted customer segments
To launch quality-of-service-based
39
offerings
0 10 20 30 40 50 60 70 80 90
(%)
Note: N = 80

Aside from personalization, three other goals have scores of 75% or more.
These are very strong scores for features in the consumer and business
markets: Single-bill relationships are typically demanded by enterprises, which
require transparency and ease of administration for their communications
services, but also have applications for family plans and multiplay bundles.
Bundling and partner billing have broad applications for both markets,
especially with the rise of hyperscale-style platforms that enable a whole
ecosystem of partners to collaborate to provide value to a given customer
base.
Given these high-level results, we drilled down further into consumer and
enterprise market preferences.
Consumer Market Preferences for

Convergent Charging
That consumer offerings are shifting can be seen from the top two priorities
among telcos that serve that market: Entertainment and mobile payments are
essential, high growth areas for telcos. Not coincidentally, neither priority is a
traditional telecom function.

FIGURE 6
Consumer Market Priorities: Entertainment, Payments, Self-
Service
Q. How much of a priority is each of the following convergent charging and billing
capability to your consumer customers?
Entertainment and Real-time charging for entertainment and

89 6 5
payments — the gaming
Mobile payments and other financial
most prioritized 84 6 10
services
offerings — place
eBill self-service and analysis 68 24 9
new demands on
convergent charging. Balance or allowance transfer or sale 64 10 26
Roaming self-administration 61 28 11
Bill shock prevention 55 34 11
Shared data plans/family plans 54 21 25
Bill on behalf/carrier billing 53 25 23

Quality of Service control such as 'Turbo
45 51 4
button'/bursting functionality
0 10 20 30 40 50 60 70 80 90 100
(%)
Very and extremely important
Moderately important
Not at all and slightly important
Note: N = 80
Entertainment and payments are exactly the types of digital services that
carriers are prioritizing, and ones that place new demands on convergent
charging systems. When we aggregate extremely, very, and moderately
important scores, self-service e-billing, roaming self-administration, and bill-
shock prevention emerge almost as important. Even turbo button
functionality, a traditional enhanced charging feature, looks to be somewhat
past its prime when extremely and very important scores are tallied, but
jumps near the top when we add those who ranked it moderately important.

Enterprise Market Preferences for

Convergent Charging
Though fragmented, the enterprise market presents more potential for
expansion into a market of converged ICT services than the consumer market,
where many of the high-value services have been captured by over-the-top
providers. We asked carriers what offerings were priorities in their enterprise
market strategy, and then what capabilities needed to improve in order to
best serve them.
FIGURE 7
The Enterprise Market Also Expects Much
Q. How much of a priority is each of the following offerings to your enterprise
customers?
Bring your own device support where the

enterprise would split usage and payments 74 10 16
with its employees
Media and content offerings 68 19 14
On-demand videoconferencing, collaboration,

etc.
66 10 24
White-labelled or pass-through services from

third parties, for example Microsoft Office 365 65 26 9
or SAP
Integration with enterprise mobility
management platforms
59 16 25
Bill on behalf/carrier billing 50 21 29
Multi-provider bundling where partner services

are being sold to customers along with your 41 39 20
own services
Multiuser data plans 36 40 24
0 10 20 30 40 50 60 70 80 90 100
(%)
Very and extremely important
Moderately important
Not at all and slightly important
Note: N = 80

The top scorer — split billing that would support personal and enterprise
usage on a single device — addresses a traditional enterprise mobility
management market that is receptive to carrier partners, as does the choice
for integration with enterprise mobility management platforms. The other top
offerings lie more outside the traditional telco realm: As with the consumer
market, media and content offerings are highly desired, followed immediately
by enterprise collaboration. The options for pass-through services and carrier
billing point to the need for the enterprise services telco to manage a much
more complex partner and customer ecosystem than it has to date, with
enablement of multi-provider service bundling, as well as revenue recognition,
for each partner in the ecosystem.
These and related requirements suggest that carriers will need to substantially
upgrade their charging environments for the enterprise market. In fact, we
see that the need for enterprise-related charging improvements is substantial:

FIGURE 8
Enterprise Systems: Much-Needed Improvement
Q. How much does each of the following systems need to improve in order to serve
enterprise markets better?
Integrating with enterprise-specific application

provisioning
76 13 11
eBill self-service and analysis 76 9 15
Single bill/unified visibility for all services 74 19 8
Exposing capabilities and microservices to

customers and third parties via APIs or SDKs
74 10 16
Real-time visibility into charges and usage 73 14 14
Offering split billing to differentiate personal and

business payments
69 20 11
The ability to handle billing settlements for

ecosystem partners
65 23 13
Enabling per-user control of quality of service 60 21 19
Support variable/peak pricing 59 28 14
Support for flexible and complex account

hierarchies
51 35 14
0 10 20 30 40 50 60 70 80 90 100
(%)
Quite a lot and significantly
Fairly
Not at all and very little
Note: N = 80
This graph shows a flat distribution of high priority responses — in other

words, every improvement is a priority. From self-service, real-time, and
single-bill capabilities, to capabilities that are essential to enabling ecosystem
models such as integration with application provisioning and microservice
exposure, it is clear that billing and charging environments need to
substantially change in order to support the enterprise market. This
environment of strong need argues for a large-scale transformation of the BSS
environment: If not rip-and-replace, then a concerted technical
transformation must be a priority, so that the technology can serve the goals
of digital transformation.

Conclusion: Convergent Charging as

Support for Digital Transformation
Our group of 80 carriers has spoken: personalization requires speed, and
speed requires real-time capabilities. A robust charging environment with the
right capabilities can not only save on OPEX and CAPEX, but can enable
significant increases in revenue as well. Convergent charging can serve the
consumer market by adding capabilities to accommodate new services, but
likely needs a dramatic refit to support services for the enterprise market. The
need for change is substantial.
The need for change That need cannot be met by technology alone. As we noted at the beginning
is substantial and of this paper, digital transformation requires not only technology, but also that
cannot be met by the technology be made to serve the business. In order to do that, carriers will
technology alone; need help with the business as well: They will need help on process reform,
digital transformation retraining or reducing staff, decomposing KPIs to make business change more
requires technology meaningful to all levels of the organization, assistance in managing a vastly
be made to serve the more complicated partner ecosystem, and more besides. Technology
business. selections are no longer only that, but also partner selections in an effort to
improve the whole business.
About Amdocs
Amdocs provides customer experience software solutions and services to
communications, entertainment, and media service providers. For more than
30 years, Amdocs has delivered its solutions, which include business support
systems, operations support systems, network control and optimization,
coupled with professional and managed services aimed at streamlining
complex operating environments, reducing costs, and expediting time to
market for new products and services.
Amdocs considers its experience in successfully delivering complex software

projects in the communications environment as its key capability. In
comparison to general IT vendors, Amdocs emphasizes its service-provider-
oriented mindset — the company has been focused exclusively on serving the
service provider industry throughout its existence, supporting that industry's
significant transformational processes.

In its approach to charging, Amdocs leverages its knowledge of the service

provider business environment, processes, and operational constraints, as
well as telecommunications industry regulatory issues. Amdocs views these
core capabilities as necessary to ensure a successful transition to a digital,
software-led telecom business, while at the same time maintaining existing
SLAs and customer satisfaction levels.
The Amdocs Convergent Charging and Billing solution:
» Supports digital transformation with a single, convergent charging

system for all lines of business, customer segments and payment types
» Utilizes a single real-time, 3GPP Rel-13 compliant OCS for online and
offline charging and integrated PCC solution with a single set of
integrated products
» Reduces total cost of ownership using NoSQL technology in event
processing while maintaining high benchmarked performance levels
» Is deployed in fully virtualized environments and private cloud,
enabling dynamic allocation of OCS resources and 24x7 charging
availability
» Increases revenues through innovative business and monetization
models with rapid time to market of new customer offerings.
» Network agnostic, supporting 3G, 4G and 5G networks as well as new
network services such as VoLTE and ViLTE
» Delivers real-time charging performance and scalability in a single
carrier-grade solution
Amdocs and its 25,000 employees serve customers in over 90 countries. Listed
on the NASDAQ Global Select Market, Amdocs had revenue of $3.7 billion in
fiscal 2016.

About IDC
International Data Corporation (IDC) is the premier global provider of market
intelligence, advisory services, and events for the information technology,
telecommunications, and consumer technology markets. IDC helps IT
professionals, business executives, and the investment community make fact-
based decisions on technology purchases and business strategy. More than
1,100 IDC analysts provide global, regional, and local expertise on technology
and industry opportunities and trends in over 110 countries worldwide. For 50
years, IDC has provided strategic insights to help our clients achieve their key
business objectives. IDC is a subsidiary of IDG, the world's leading technology
media, research, and events company.
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Convergent Charging and

Author: Andy Hicks

How Do Service Providers Need Their

© 2017 IDC www.idc.com | Page 2

One Key to Revolutionizing Revenue:

Over half of the More than 15% 53

Personalization and customization usually mean finer segmentation — down,

© 2017 IDC www.idc.com | Page 3

segmentation requires a more robust technical environment. Based on the

Personalization and customization also require drastically reduced time to

Carriers Expect More than Personalization

© 2017 IDC www.idc.com | Page 4

diversity of An easily integrated API 84

A flexible plan and offer definition with

Re-rating of events in real time 59

© 2017 IDC www.idc.com | Page 5

Carriers Are Becoming More Open to

© 2017 IDC www.idc.com | Page 6

As the chart below shows, both of those objections seem to be diminishing as

OPEX reduction by simplifying operations 83 9 9

Greater agility leading to lower time-to-

Increased flexible scalability 62 28 10

CAPEX reduction through the move to a

High and Maximum Benefit Moderate Benefit No or Low Benefit

© 2017 IDC www.idc.com | Page 7

As usual, the top benefit of managed or as-a-service delivery is OPEX

Consumer and Enterprise Priorities for

To personalize offers to a greater extent 80

To create single-bill relationships with

To create better bundled offers 78

To provide billing and charging capabilities

© 2017 IDC www.idc.com | Page 8

Consumer Market Preferences for

© 2017 IDC www.idc.com | Page 9

Entertainment and Real-time charging for entertainment and

Bill shock prevention 55 34 11

Shared data plans/family plans 54 21 25

Bill on behalf/carrier billing 53 25 23

© 2017 IDC www.idc.com | Page 10

Enterprise Market Preferences for

Bring your own device support where the

Media and content offerings 68 19 14

On-demand videoconferencing, collaboration,

White-labelled or pass-through services from

Bill on behalf/carrier billing 50 21 29

Multi-provider bundling where partner services

Multiuser data plans 36 40 24

© 2017 IDC www.idc.com | Page 11

© 2017 IDC www.idc.com | Page 12

Integrating with enterprise-specific application

eBill self-service and analysis 76 9 15

Single bill/unified visibility for all services 74 19 8

Exposing capabilities and microservices to

Real-time visibility into charges and usage 73 14 14

Offering split billing to differentiate personal and

The ability to handle billing settlements for

Enabling per-user control of quality of service 60 21 19

Support variable/peak pricing 59 28 14

Support for flexible and complex account

This graph shows a flat distribution of high priority responses — in other

© 2017 IDC www.idc.com | Page 13

Conclusion: Convergent Charging as

Amdocs considers its experience in successfully delivering complex software