As the world becomes increasingly dependent on wireless technology, telecommunication companies are pursuing new avenues to generate revenue and meet market demands. One of these avenues is through machine-to-machine (M2M) technology. M2M technology is communication between 2 devices or a device and a centralized data source.
Examples of M2M technology include:
Utility Smart Grids
There are two notable differences between M2M services and traditional mobile data services. With traditional mobile data services, there are millions of connected devices (phones, laptops, tablets). However, with M2M devices, there are HUNDREDS of millions of connected devices. As a result, the number of transactions, the quantity of data, and the varying complexity of usage requires a system that can turn large amounts of data into actionable reports that can lead to quick decision making. Additionally, an efficient, adaptable end-to-end billing system that can scale is mandatory. Enter SAP’s HANA and consume-to-cash billing. These technologies would facilitate the success of this business model.
The second notable difference is the average revenue per user. With traditional mobile service, the average revenue is $40-50 per device. With M2M, it is closer to $3 per device (with many being less than $1 per device). The net result is that this has become more of a volume business than ever. Customer retention is a key part of the growth strategy.
According to a survey performed by Informa Telecoms and Media, 65% of service providers do not initiate a customer retention strategy until the customer is in the process of leaving. Moving forward, service providers will need to be much more proactive than this to keep customer churn at a minimum. In addition to a user-friendly billing system, a loyalty program utilizing SAP’s CRM and Sybase’s text messaging technology would help ensure customer satisfaction in this new market.
To summarize, meeting the demands of the growing M2M market is part of the new growth strategy of many service providers (and an important one given the decline in fixed-line revenue). The use SAP’s HANA, billing, CRM, and Sybase technologies could support the demands of this new business model and facilitate the success of the service providers.