BSS

Operators today face the most challenging marketplace in memory: The global economy continues to struggle, the communications industry has been ravaged, technology is growing in complexity, and business and individual consumers are smarter and savvier.

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In the never-ending search for competitive advantage, operators introduced bundled service offerings. Wireline, wireless and cable operators eased into the convergence arena by initially bundling their traditional services with data services. Today, they are stepping up the pace to give customers the convenience and value of receiving next-generation voice, data, and video services (augmenting earlier bundles with options such as content, digital media and 3G wireless) from a single provider on one bill at a competitive price. Bundling has been a great success, with some operators recording a decrease in churn of up to 50 percent for bundled services customers versus those receiving a single-service offering.

While convergence has been a hit with customers, it also has resulted in competition among operators reaching a previously unforeseen level, pitting wireline, wireless and cable/broadband companies directly against one another as they offer similar service bundles.

The additional pressures placed on already-strained corporate financial statements couldn't come at a worse time for operators, who are looking to drive profitability by increasing revenues and controlling costs. Over the past 24 months, operators have cut capital expenditures to and through the bone.

Operators have turned their attention to significantly reducing operating expenditures in the coming years. This shift in focus moves BSS (business support systems) and OSS directly into the cost-cutting crosshairs at precisely the time those systems must be revamped to deliver the increased revenues that convergence promises.

The Status Quo Won't Work

Given the competitive and financial landscapes, operators are trying to minimize modifications to legacy systems as they move to offer convergent services, which encourages them to continue to pair dedicated BSS and OSS systems with the delivery of individual services. When operators introduce new service bundles, they patch new processes and systems into their existing operational architecture, relying heavily on manual intervention to accomplish convergence. As a result, they end up with multiple stovepiped BSS systems, creating an environment of disparate processes, user interfaces, systems interfaces and systems themselves (see Figure 1).

While at first blush the patchwork approach appears fiscally prudent, disparate processes and multiple BSS systems actually cause rework, drive up operating costs and delay time to market, for a number of reasons:

* Disparate processes often cannot be automated, increasing the need for manual intervention, the time required to provision service and the likelihood of error.

* Disparate systems interfaces lead to order fallout and mediation errors, accounting for 65 percent of an operator's revenue leakage, itself conservatively estimated at 5 percent of total revenues.

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* Multiple back-end systems require multiple front-end systems. It is not uncommon for customer service representatives to have more than 20 applications installed on their desktops, using 10 to 15 of them at any one time--driving the need for more highly-trained, highly-skilled labor subject to a higher rate of turnover.

* Multiple BSS systems raise risk, with more vendors to manage, more points of failure and longer down times, in an era when maintenance costs are high and associated labor costs are escalating.

Given the success of service bundles, the scale and complexity of convergent services is sure to grow, further exacerbating the situation. Operators saddled with legacy architectures will find the task of delivering a truly convergent experience to customers an increasingly time consuming and operationally costly proposition--one that inevitably will become untenable.

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To deliver convergent services in a timely, accurate and cost-effective way, operators ultimately must transform their legacy BSS environments into component-based architectures. A convergent component-based architecture replaces disparate and redundant processes and systems with a single platform footprint: one central system to enter, manage, sell and bill for all services and combinations of services. (see Figure 2)

Augmentation is Key

The operator's mandate to cut operational expenditures, when combined with industry analysts' estimates that R&D spending levels have fallen from 35 percent to 10-12 percent of revenues, means that a wholesale replacement of the legacy architecture with a component-based architecture simply is not feasible. The move to a component-based architecture must occur through a phased augmentation or evolution that leverages past software and hardware investments to the maximum possible extent, creating a continuum from legacy coexistence to redundant system consolidation.

On the surface, a component-based architecture appears to naturally support this approach. The key to a successful phased evolution, however, is that the architecture is not merely a group of components, but is anchored by an underlying framework, spanning communications, user interfaces and data models, that serves as the foundation for the architecture. Over time, modular elements that fit within and rest atop the framework can be added to the architecture, enhancing functionality and allowing the operator to effectively expand its portfolio of bundled products and services while minimizing investment at any point in time.

As the phased evolution progresses, the underlying framework and modular elements of the component-based architecture must work together to address the four key cornerstones of a convergent BSS:

1. Product management promotes a faster launch of convergent services by using a rules-based definition mechanism and synchronized product catalogs to create service bundles that are properly accounted for by all BSS systems;

2. Customer management provides a single view of the customer--and the partner, in cases of settlement--plus enhanced self-care capabilities, resulting in improved customer care and an order-of-magnitude drop in interaction costs per contact.

3. Fulfillment management shortens order-to-cash cycles by as much as 50 percent by tightly coupling workflow with order management, inventory management and service activation to eliminate order re-entry, optimize use of available assets and automate provisioning

4. Revenue management ensures service independence by using convergent mediation, rating and billing to capture revenue for all network events and all types of services and bundles.

Operators can trim opex while accelerating the launch and sale of new services and service bundles by ensuring the component-based architecture accounts for and incorporates each of these key cornerstones. Some areas where operators may realize significant improvements include reductions in service development lifecycles, customer deployment times and order fallout.

A phased evolution to a component-based architecture requires an investment, but in return, the operator will realize the following benefits:

* Reduced operating costs (in-year ROI and reduced total cost of ownership): Process automation and system consolidation result in the need for fewer, less expensive staff, drastically reduced systems integration expenses, elimination of training, maintenance and licensing costs across systems, and the alignment of billing cycles across services (reducing the number of bills sent, saving some operators close to $1/month/customer alone);

* Increased and accelerated revenues: A single platform shortens quote-to-cash cycles, promotes the introduction of new revenue-generating services, and improves the delivery of convergent bundles that enable the operator to upsell and cross-sell customers;

* Increased profitability: Processes and workflows are tightened, plugging the revenue leaks that eat directly at the bottom line.

Beyond these financial benefits, component-based architectures give operators optimum flexibility to market services and create competitive differentiation, which positively impacts the financial statements in the longer term. With the right component-based architecture solution and phased evolution plan, operators immediately can begin to evolve their legacy architectures to maximize the benefits that convergence promises--and stay a step ahead of their competition.

RELATED ARTICLE: Customized or Productized?

Once an operator has made the commitment to evolve to a component-based architecture, it must decide whether to build a custom solution or purchase a solution. Custom solutions have the benefit of being tailored precisely to an operator's specific needs. However, these solutions can be extremely expensive and time-consuming to implement, and the requirements are guaranteed to change over time, setting the stage for a maintenance nightmare. Productized solutions let the operator take advantage of the software vendor's investment in the development and maintenance of the solution, which can be customized to meet the operator's unique requirements at a fraction of the time and cost.

Characteristics of optimal solutions:

* Open interfaces that enable integration with legacy systems

* Peaceful coexistence with the legacy environment so the operator can conduct the phased evolution at its own pace

* Web-based user interfaces for rapid deployment and ease of use

* Network and service agnostic

* Scalable to deliver aggressive performance metrics

* Portable, standards-based software that is readily configurable

* Well-aligned product roadmap.

Michael J. Dimperio is vice president of product management at Convergys Corp.

COPYRIGHT 2004 Horizon House Publications, Inc.
COPYRIGHT 2004 Gale Group