Subscription Knowledge Series #11 – 5G Networks Make Billing System Upgrades a Necessity
Creating New Vertical Market Opportunities with Partners
Given the low latency and other capabilities associated with advanced versions of next-generation networks, 5G can help Communication Service Providers (CSPs) become purveyors of digital services. 5G networks can lead to more usage-based discrete interactions, in real time, based on autonomous, fully automated operational transactions residing in digital partner ecosystems.
5G networks offer telcos an opportunity to capture value in transactions by collaborating with partners that in turn play an integral role in the development of the next generation of services. CSPs can do so in a variety of ways as 5G makes use of cases across many industry verticals possible, whether it’s travel and transportation, as smart cities, smart homes, supply chain and manufacturing, or healthcare and wellness.
The digital ecosystem that creates the use cases could include software vendors, system integrators, hyperscalers, and network equipment producers if not other partner types to offer services that result in billable events.
CSPs, as part of a B2B2X model, can provide network slices to industry solution providers that can use 5G connectivity to deliver services to their customers. The industry solution providers may not have a billing relationship with consumers, creating for the telecom provider an opportunity to provide billing services on behalf of the partner.
The partners’ ecosystem can deliver specific services for reaching better quality, lower latency (or minimum video quality), and bandwidth requirements that advanced 5G networks make possible such as augmented reality, drone video, and network slicing.
5G networks can enable dynamic real-time operations and monetization functionalities that are critical for managing use cases delivered with the help of their networks and partners in a B2B2X model. Unfortunately, the billing systems employed by many CSPs today are designed to address a static service definition and delivery process, with results usually measured in hours or days.
So, a new breed of OSS/BSS solutions needs to be developed so that CSPs have the agility necessary to grow revenue, support service-level guarantees, and help them adapt more readily to changing business conditions.
B2B2X in a 5G context requires four key capabilities.
- Enterprise Billing to manage revenue from services delivered to industry solution providers. This includes the ability to bill for business solutions and business outcomes that are industry-tailored, potentially involving hardware, software, support, and services, and have value-based KPIs and metrics associated and involve providing service credits where service-level agreements are not met.
- Partner Revenue Share and Settlement. Ecosystems of partners collaborating to deliver services, where platform partners, content providers, app developers, advertisers, or even local authorities in the case of public services, all require revenue to be shared.
- Financial Convergence. Coexistence with legacy services and systems is needed to ensure feasibility and viability. Delivering capabilities with a short lead time and avoiding large-scale billing replacement can mean the difference between success and failure. Operators may converge on a single sub-ledger to manage receivables and payables, collections, and payments to give a complete view of customer and partner financials and ensure a single consolidated invoice with all charges. It may even be necessary to cater to multiple convergence strategies concurrently.
- Data Mediation is the foundational capability required as making business sense of data in the 5G context means picking needles out of haystacks by processing massive volumes of data from various sources in different formats and with complex dependencies. Data from different network slices, from the edge, transport and central data centers and from partner applications and APIs, can potentially form the parameters for billing and settlement in real time.
Decision makers within the ranks of CSPs do see the need to act. According to IDC’s Global Telco Survey conducted last year, 63% of respondents are planning or currently transforming their services portfolios and 58% are focusing on increasing operational agility or speed to market, which is fundamental to OSS/BSS transformation. In other words, operational automation and OSS/BSS transformation are typically believed to be primary elements of a CSP’s broader business transformation.
Emerging Monetization Models
New billing systems become necessary to properly monetize the new 5G services they want to provide in a B2B2X model. CSPs need to record and standardize disparate transactions that emanate from the services and transform them into comprehensible and payable invoices for customers to prevent potential problems such as revenue leakage.
Furthermore, CSPs need to be able to add and modify services as well as adjust pricing swiftly to demonstrate value to clients while also being able to scale effectively.
5G services have highly variable service attributes (e.g., bandwidth, latency, and service quality) that mandate a different approach to pricing based on the complexity and value of the interaction. Legacy billing systems employed by CSPs aren’t flexible or agile enough for them to properly monetize 5G services. Again, CSPs will need to support a range of use cases, such as smart small and large appliances and home security that emanate perhaps from IoT devices.
With such use cases in place, CSPs will need to support a broader range of service plans that better reflect consumption with the help of real-time network functions that allow them to scale usage up or down and provide preferential bandwidth.
The massive connection density of standalone 5G networks, for example, will mandate real-time usage measurement given the many devices in need of support. That’s unlike today, as CSPs bill based upon 4G data consumed to send and receive emails and browse the web on a monthly basis, for example.
To ensure 5G-enabled services can be properly monetized, a different approach to infrastructure operations is required. Swisscom, Telia, Telefónica, and Telecom Italia, are just a few examples that have embarked upon legacy technology and service phaseout initiatives with more agile service enablement and 5G-driven digital services in mind.
Three Reasons Why Quote-to-Cash Architecture is Key
Inflexible architectures, high maintenance costs, and new requirements mean that most CSPs will need to upgrade systems if they want to remain competitive in a rapidly evolving, 5G-driven, digital services environment.
Billing systems employed by CSPs simply weren’t built to address new requirements like dynamic network configuration, continuous quality of service monitoring, partner ecosystem management, and real-time multidimensional charging.
Yet, CSPs will have to provide customers with the ability to order services, provide dynamic quotes/pricing, and manage the processes with minimal effort. 5G will lead to a strong omni-channel ecosystem and drive lifetime value-oriented customer experiences. Furthermore, 5G networks will make for many touch-points, such as IoT devices and connected cars, that are maintained by customers in addition to traditional channels. Partner management and settlement of relationships will play a critical role in complex partner-enabled 5G business models as well.
Order management will therefore play a bigger role as it will have to enable the ordering of complex 5G services to support real-time delivery of these complex multi-component, on-demand services for business and mass-market consumers.
Unless CSPs rejuvenate their telecom operations and business system stacks, the maximization of 5G-related revenue becomes a more difficult prospect.
How to Succeed and Unlock Value
Telcos are increasingly turning to IT vendors and software companies for help as IT and software design principles are required for help with the operational transformation. As part of a Global Telco Survey last year conducted by IDC, CSP decision makers claimed that the implementation of DevOps/agile processes (68%) and the adoption of processes/practices from the IT or OTT world (63%) were the most important factors to ensure a successful digital transformation.
The time to act is sooner rather than later as CSPs need to update their operations, orchestration, and monetization systems/processes to better manage the demands 5G networks will place on them.
Dedicating the right resources to the development of digital business models is essential. CSPs should start to build agile, multidisciplinary teams that develop software-driven products in discrete areas, across product and system value chains. CSPs can also create digital business models by leveraging IT, software, and cloud vendors as well as digital platform suppliers and technology specialists while simultaneously managing legacy telecom equipment suppliers during the transition period.
To find out how SAP is helping CSPs with their billing challenges
- Come and listen to our session of the 1st of July at MWC and meet with SAP Telco experts and executives at SAP@MWC
- Read this additional blog to find out how SAP can be a partner in 5G Partner
Beyond the telecom industry, want to discover new trends, challenges, customer stories and order-to-cash key functionalities to adopt for your business model transformation?
- This blog, co-written with IDC to be based on their market insights, is part of a blogs series
- We do have also a set of webinars
Finally, if you want to learn more about SAP Billing and Revenue Innovation Management, visit us at https://www.sap.com/brim.