2015 Global Stratecast CSP Billing – Rating …...Ericsson Charging System and BSCS iX billing...

2015

2015 Global Stratecast CSP Billing – Rating Charging Market Leadership Award

BEST PRACTICES RESEARCH

© Stratecast | Frost & Sullivan 2015 2 “We Accelerate Growth”

Contents

Background and Company Performance ..................................................................... 3

Introduction .................................................................................................... 3

Industry Challenges .......................................................................................... 4

Ericsson .......................................................................................................... 5

Market Leadership of Ericsson ............................................................................ 7

Conclusion ..................................................................................................... 11

Significance of Market Leadership ........................................................................... 12

Key Performance Criteria ....................................................................................... 13

The Intersection between 360-Degree Research and Best Practices Awards .................. 14

About Stratecast .................................................................................................. 14

About Frost & Sullivan .......................................................................................... 14



Background and Company Performance

Introduction

The Frost & Sullivan Stratecast Operations, Data Analysis & Monetization (ODAM) Global

Competitive Strategies team is preparing a major update for its report series covering the

communications service provider (CSP) end-to-end monetization solution market as shown

in the figure below.

Suppliers that deliver monetization functionality in one or more of the following categories

are included in this report series based on the following functionality sectors:

• Billing Mediation

o On-line and Off-line Mediation (in support of monetization)

• Rating & Charging and Other Core Billing

o Rating & Charging, Balance Management, and Customer Notification

o Invoicing, Receivables, and Other Core “Back Office” Billing Functions

• Policy Management

o Policy Rules Function



o Policy Enforcement Function

• Interconnect & Settlement and Partner Management

o Wholesale Interconnect & Financial Settlement (CSP to CSP)

o Partner Relationship Management (CSP to Other Partners)

Frost & Sullivan Stratecast will release five reports over 2Q and 3Q 2015 that address a

market share analysis and long-term forecast for each of the functional portions of end-to-

end CSP billing. Already published, the first assessment report in this series is a market

share analysis of the overall billing market.1 In addition, two more reports, to be released

in the second half of 2015, will provide an in-depth strategic analysis of the drivers and

business trends affecting each component of end-to-end CSP billing along with a detailed

assessment of the more than 100 suppliers that provide some level of billing functionality.

Industry Challenges

The Frost & Sullivan Stratecast global CSP billing market share report series provides a

five-year revenue forecast and a base year market share analysis for the end-to-end

billing market. It also provides the same analysis for each of the major functional

components that define this market. All are expressed in US dollars. The billing report

series covers the period from 2015–2019, utilizing a base year of 2014. As in previous

Frost & Sullivan Stratecast forecasts, each market share and forecast report in this series

is based on the revenue generated by supplier offerings in one or more of the six related

global billing segments including:

• Part 2 – Billing Mediation

• Part 3 – Rating & Charging

• Part 3 – Other Core Billing (invoicing, collections, payments, accounts receivable,

promotions management, loyalty management, and journaling)

• Part 4 – Policy Management (rules function only)

• Part 5 – Interconnect & Settlement

• Part 5 – Partner Management

In the soon to be released Frost & Sullivan Stratecast report, Global CSP Billing 2015

Edition Part 3: Rating & Charging and Other Core Billing Market Forecast and Market

Share Analysis, Frost & Sullivan Stratecast analysts examine the rating & charging market

in greater detail.

Ericsson leads in market share for the global CSP rating & charging market, with

1 See recently released Frost & Sullivan Stratecast report OSSCS 16-04, Global CSP Billing 2015 Edition Part 1: End-to-End CSP Billing Market Forecast and Market Share Analysis, May 2015.



approximately 16% of this market. The next 4 competitors control approximately 15%,

13%, 10%, and 8% of the market respectively. In addition, Ericsson is among the leaders

in all six segments of the end-to-end billing process.

For the 2015 edition of the billing report series, Frost & Sullivan Stratecast interviewed

more than 100 billing suppliers that address one or more of the above mentioned market

segments. Frost & Sullivan Stratecast revenue estimates include vendors with software

solution offerings that obtain revenues from license fees, maintenance fees, services

associated with the initial installation and configuration of a solution, service bureau fees,

cloud services fees, and installed solutions managed by a supplier. Internal CSP spending

on business support and billing processes that are attributed to internal work teams or

assistance from professional services consulting resources is not included. In addition,

hardware-related revenue and revenue generated by systems integrators or companies

without their own billing solutions is not included. The professional services fees for

integration of new solutions with existing systems and updates to CSP business processes

are also not included in the forecast.

All revenue forecasts are developed by analyzing multiple sources including information

supplied to Frost & Sullivan Stratecast through a direct market questionnaire, information

from public sources, direct interviews, and raw market data. The analysis is developed

from 2014 company-level revenues, projections of future earnings, global financial market

insights, as available, and our strategic acumen concerning the billing functions.

To obtain estimated revenues for this five-year market forecast, Frost & Sullivan

Stratecast uses a modified Delphi method for revenue analysis. Factors such as known

deployments, publicly and privately reported revenue, customers served, press releases,

financial reports, estimated cost of deployments, and related information are analyzed by

a multi-person analyst team, each working independently, to estimate each vendor’s 2014

revenues, where such was not specifically provided. Final estimates are iterated to reach a

consensus using a 90 percent confidence interval. From the base year level, the five-year

forecast is established using insights about specific company directions, events, customer

comments, general business insight, global economic indicators, and our strategic insight

concerning each billing sub-sector.

Ericsson

Ericsson is a provider of communications infrastructure, services and multimedia solutions,

based in Stockholm, Sweden. It is traded publicly on the Stockholm Stock Exchange and

on the NASDAQ under the symbol of ERIC. The company employs over 118 thousand

people worldwide. Ericsson reported 2014 revenue of approximately 228 billion SEK (U.S.

$33.2 billion.) The company traces its origins to 1876, and today continues to offer its

network equipment, services, and software solutions to service providers around the

world.



The company features two integrated business support solutions—which can be

combined—that cover all segments of billing and policy management:

• Ericsson Charging and Billing in One – Incorporates functionality from the

Ericsson Charging System and BSCS iX billing products into a fully integrated end-

to-end convergent solution. It is a single solution for all types of subscribers and

services, both retail and wholesale, covering customer, product and order

management, discount and promotion handling, balance management, invoicing,

finance, collections, partner settlement, and real-time rating.

• Ericsson Integrated Policy and Charging – Brings together the 3GPP OCS, with

the Ericsson Charging System solution, along with the PCRF (Ericsson Service

Aware Policy Control).

Charging and Billing in One’s real-time rating and charging capabilities are based on the

Ericsson Charging System product. The company explained to Frost & SullivanStratecast

that the Ericsson Charging System is a scalable, flexible solution that delivers decoupling,

configurability, convergent real-time charging , and a strong user-experience focus. The

Ericsson Charging System supports configurable tariffs, personalized service bundles that

combine data and voice and fixedmobile telephony, along with targeted data offerings

based on multiple parameters.. The account types are configurable and include single-

user, multi-user, shared, dedicated, and composite dedicated accounts.

The flexibility of the Ericsson Charging System allows individual subscribers to choose not

only which services they need, but also how they wish to pay for them. As an example,

Ericsson reports to Frost & Sullivan Stratecast that a subscriber can pick voice,

messaging, and data services, and use a postpaid plan for voice and messaging while

opting for a prepaid plan for data. The Ericsson Charging System allows CSPs to stimulate

service usage by adjusting tariffs or offering discounts in real time, based on accumulated

usage. CSPs can also base personalized promotions on refill channels, amounts, account

status, subscriber profile, voucher type, or location.

The company also explains that the Ericsson Charging System is based on a modular

architecture with scalability in all parts of the system. Open, published interfaces, and

compliance with the latest technology standards mean that it can support long-term

convergent business strategies while adapting to emerging technologies and business

models.

Real-time mediation, policy-enabled rating & charging, and even partner management,

are all central to the new customer services environment that technology advances, user

device evolution, regulatory demands, and the capabilities from other industries bring

today to the communications marketplace. Tightly integrated solutions covering the full

end-to-end billing domain are fast becoming a preferred method of implementation, as in-

house CSP expertise continues to dwindle. More challenging, however, is the ability for a



CSP to work with installed systems, and seamlessly evolve from one generation of billing

solution to the next; not a trivial matter.

A clear migration strategy and implementation approach for moving from installed

systems to the more capable billing solution offerings that meet today’s changing business

needs is sorely needed. Such transition projects are time consuming, full of challenges,

often go over budget and under-deliver. Still, transitioning from the large numbers of

installed systems that many CSPs now have is essential for on-going business success, as

change continues and operational costs escalate.

Frost & Sullivan Stratecast firmly believes that Ericsson has the proper capabilities, in

both software and knowledgeable resources, to make the transition from currently

installed systems to new solutions and business processes that are essential for

addressing the needs of the evolving communications marketplace.

The Ericsson charging and billing and policy solution solutions offer much in the way of

business support capability; while Ericsson’s managed solutions offerings can be an

effective alternative to continued license ownership of a CSP’s billing functions. Ericsson

also offers a strong services organization to support implementation and integration

efforts. Frost & Sullivan Stratecast expects Ericsson to continue to grow its customer base

and revenues in the coming months. Ericsson will likely remain a leader in nearly every

segment of the end-to-end billing space. This is especially important as the next stage of

technology evolution advances with the business and operations management

requirements associated with virtualized networking.

Market Leadership of Ericsson

The 2015 Frost & Sullivan Stratecast Global Market Leadership Award in CSP Billing for the

Rating & Charging Market is judged based on ten criteria described later in this report.

Ericsson was directly compared against two other leading suppliers in the rating &

charging space. They are referred to as Competitor 2 and Competitor 3 through the

remainder of this document.

The following is a selection of the comparisons from these ten criteria. The data behind

the comparisons comes from the upcoming Frost & Sullivan Stratecast report on the global

CSP rating & charging market share and forecast assessment report.

Growth Strategy Excellence

Frost & Sullivan Stratecast examines the end-to-end CSP billing market and the

components that define this market, every year. End-to-end CSP billing and most of the

parts that make up this market have grown over the last six years. One of these growth

segments is rating & charging. Rating & charging is also the largest CSP billing segment

by revenue by a considerable margin. Frost & Sullivan Stratecast forecasts the five-year



compound annual growth rate (CAGR) for the rating & charging segment to continue to

climb at a mid-single-digit rate from 2015-2020, slightly below the rate for the overall CSP

billing market.

Frost & Sullivan Stratecast has identified 11 revenue leaders that address the needs of

more than 80% of the global CSP billing market by revenue. Of these 11, six grew at or

above the growth rate for the overall CSP billing market and maintained or increased

market share as a result. Ericsson, tied for second place as identified in the Frost &

Sullivan Stratecast end-to-end billing market share analysis, grew by two percentage

points. In the rating & charging segment, Ericsson maintained its market share leadership,

with 16% of the market.

Competitor 2 and Competitor 3 offer very similar solution profiles to Ericsson in the rating

& charging market and both are among the revenue leaders in this billing function domain.

Both have exhibited strong market growth.

Competitor 2 has narrowed the revenue gap with Ericsson, but remains one percentage

point behind Ericsson at 15% of the global rating & charging market. Competitor 3 also

narrowed the revenue gap with Ericsson, but remains three percentage points behind

Ericsson with 13% of the rating & charging market.

Implementation Excellence

To be a leader in CSP billing, in an individual segment of CSP billing, or in any of the areas

of CSP Operations, Data Analysis & Monetization, a supplier must be able to implement

the solutions they have sold; each and every time. An implementation that goes less

smoothly than planned, can cause a CSP to lose trust in a supplier; an implementation

that fails can have reverberations far beyond the individual CSP customer. The CSP

community (and analyst community) is relatively small and less than expected results are

noted throughout the industry, sometimes for an extended time.

Frost & Sullivan Stratecast's knowledge of the excellence in implementation with regard to

Ericsson is well founded based on several customer testimonials, continued press from the

company that identifies CSPs by name, and the ongoing discussions Frost & Sullivan

Stratecast has with both Ericsson and its competitors. Together, these factors indicate

that Ericsson is keeping its existing customers happy as it continues to gain new ones.

Competitor 2 and Competitor 3 each have experienced revenue growth.

Brand Strength

Brand is often of great importance to a customer when choosing a product for purchase.

This is true of consumer goods and it holds for CSPs when they choose their Operations,

Data Analysis & Monetization systems with price tags that usually reach into the millions



of dollars. In the area of CSP end-to-end billing, CSPs are trusting their ability to generate

revenue, and even in their ability to stay in business, on a vendor — trust in a company

and a brand is of utmost importance.

Brand strength is not something Frost & Sullivan Stratecast measures directly, but

increasing revenues correlate strongly with CSP trust in a brand. Ericsson increased its

revenues and CSP customer base over the past year. This indicates through example that

Ericsson's brand strength is significant and has increased since Frost & Sullivan

Stratecast’s previous examination of the CSP Billing market and associated market

segments in 2012.

Competitor 2 and Competitor 3 have also increased revenues and by correlation, brand

strength.

Product Quality

Similar to the previous two criteria, product quality is very important to CSPs, who expect

any solution they purchase to work as advertised. Poor quality solutions immediately

cause issues with the CSP customer and, as mentioned under the implementation section

of this report, bad news travels fast, which is hard to overcome.

Ericsson’s continued growth over the last few years, one of the highest rates amongst the

revenue leaders, is a strong indicator that its CSP customers find the company's products

and solution delivery capabilities to either meet or exceed expectations.

Competitor 2 and Competitor 3 have also increased revenues, indicating that both of these

organizations are experiencing positive market perceptions with regard to product quality.

Customer Ownership Experience

While Ericsson and its two competitors share many similarities, they also present different

business models in how they interact with their customers. Frost & Sullivan Stratecast

examines the delivery model of each supplier, including determining the percentage of

revenues that come from licensing a product versus the percentage of revenues that come

from services. Many companies are proud that they generate most of their revenue from

license sales and maintenance fees, positing that fact reflects positively on the quality of

their software. But it also assumes that their customers, the CSPs, want to operate the

software without help from the supplier.

Ericsson offers its customers a choice; license the software and run it internally, or license

the software and Ericsson will operate it for them. Ericsson realizes that some of its

customers want the company to deliver the software and take ownership of the entire

billing process. Ericsson has a very strong services organization that runs the

monetization process as well as many telecom networks at some of the largest CSPs in the



world. A customer that pays Ericsson to deal with the day-to-day operations — and

continues to pay Ericsson year after year for this service — is a customer whose

ownership experience is excellent. Ericsson takes care of all the details and continues to

do it at or above its customer’s satisfaction.

Competitor 2 has learned this lesson and also sports a very strong services organization.

Competitor 2 also uses its service organization to operate the monetization processes for

some of its customers, much the same way as Ericsson does today.

Competitor 3 generates a large percentage of its revenues from services, but much less

from the running of its customers’ monetization process and much more from the

installation and integration of its software. Again, as above, this is not an indictment of

the license model, but the customer ownership experience of a CSP that runs its own

monetization process tends to be “harder” than one that pays a vendor to do it, assuming

that the vendor does a good job.

Customer Service Experience

Customer service is very important to CSPs, who expect any solution they purchase to

work as advertised and their suppliers to always put their experience as the top of the list.

Poor quality solutions immediately cause issues with the CSP customer and degrade their

service experience.

Ericsson’s continued growth over the last few years, one of the highest rates amongst the

revenue leaders, is a strong indicator that its CSP customers find Ericsson's customer

service experience to meet or exceed expectations. Ericsson has had a solid "can do"

attitude for several years, in delivering solutions that meet all customer expectations.

With this approach to business, CSP customers are finding that Ericsson solutions can and

do meet expectations.



Conclusion

Frost & Sullivan Stratecast has taken a deep dive into the changing communications

marketplace, and evaluated the role of billing and policy management within the

communications service provider (CSP) business support system and monetization

functions. Frost & Sullivan Stratecast analysts interviewed and analyzed over 100

suppliers, covering various aspects of the end-to-end CSP billing marketplace. CSP billing

is defined as including six related segments: Billing Mediation; Rating & Charging; Other

Core Billing functionality; Policy Management (rules function); Interconnect & Settlement;

and Partner Management capabilities.

Ericsson leads in market share for the base year of 2014 for CSP rating & charging. Frost

& Sullivan Stratecast estimates that Ericsson controls approximately 16% of the rating &

charging market. In addition, Ericsson is among the leaders in the overall CSP billing

market and in all six billing sectors. Therefore, Frost & Sullivan Stratecast presents the

2015 Global Market Leadership Award in CSP Billing for the Rating & Charging Market to

Ericsson, with a 16% share of this market.



Significance of Market Leadership

Ultimately, growth in any organization depends upon customers purchasing from a

company, and then making the decision to return time and again. Loyal customers

become brand advocates; brand advocates recruit new customers; the company grows;

and then it attains market leadership. To achieve and maintain market leadership, an

organization must strive to be best-in-class in three key areas: understanding demand,

nurturing the brand, and differentiating from the competition.



Key Performance Criteria

For the Global Market Leadership Award, Frost & Sullivan Stratecast analysts focused on

specific criteria to determine the areas of performance excellence that led to the

company’s leadership position.

Criterion Requirement

Growth Strategy Excellence

Demonstrated ability to consistently identify,

prioritize, and pursue emerging growth

opportunities

Implementation Excellence

Processes support the efficient and consistent

implementation of tactics designed to support the

strategy

Brand Strength The possession of a brand that is respected,

recognized, and remembered

Product Quality

The product or service receives high marks for

performance, functionality and reliability at every

stage of the life cycle

Product Differentiation

The product or service has carved out a market

niche, whether based on price, quality, uniqueness

of offering (or some combination of the three) that

another company cannot easily duplicate

Technology Leverage

Demonstrated commitment to incorporating leading

edge technologies into product offerings, for

greater product performance and value

Price/Performance Value Products or services offer the best value for the

price, compared to similar offerings in the market

Customer Purchase Experience

Customers feel like they are buying the most

optimal solution that addresses both their unique

needs and their unique constraints

Customer Ownership Experience

Customers are proud to own the company’s product

or service, and have a positive experience

throughout the life of the product or service

Customer Service Experience Customer service is accessible, fast, stress-free,

and of high quality



The Intersection between 360-Degree Research and Best Practices Awards

Frost & Sullivan's 360-degree research methodology represents the analytical rigor of our

research process. It offers a 360-degree-view of industry challenges, trends, and issues

by integrating all 7 of Frost &

Sullivan's research methodologies. Too

often, companies make important

growth decisions based on a narrow

understanding of their environment,

leading to errors of both omission and

commission. Successful growth

strategies are founded on a thorough

understanding of market, technical,

economic, financial, customer, best

practices, and demographic analyses.

The integration of these research

disciplines into the 360-degree

research methodology provides an

evaluation platform for benchmarking

industry players and for identifying

those performing at best-in-class

levels.

About Stratecast

Stratecast collaborates with clients to reach smart business decisions in the rapidly

evolving and hyper-competitive Information and Communications Technology markets.

Leveraging a mix of action-oriented subscription research and customized consulting

engagements, Stratecast delivers knowledge and perspective that is only attainable

through years of real-world experience in an industry where customers are collaborators;

today’s partners are tomorrow’s competitors; and agility and innovation are essential

elements for success.

About Frost & Sullivan

Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth

and achieve best in class positions in growth, innovation and leadership. The company's

Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined

research and best practice models to drive the generation, evaluation and implementation

of powerful growth strategies. Frost & Sullivan leverages almost 50 years of experience in

partnering with Global 1000 companies, emerging businesses and the investment

community from 31 offices on six continents. To join our Growth Partnership, please visit

http://www.frost.com.

360-DEGREE RESEARCH: SEEING ORDER IN THE CHAOS

Technology

Obsolescence

Disruptive

Technologies

New

Applications

CEO

Demographics

Needs

and

PerceptionsSegmentation

Buying

Behavior

Branding

and

Positioning

Competitive

Benchmarking

Emerging

Competition

Competitive

Strategy

Capital

Investments

Availability

of

Capital

Country

Risk

Economic

Trends

Crowd

Sourcing

Growth

Strategies

Career

Development

Growth

Implementation

Industry

Evolution

New Vertical

Markets

Industry

Expansion

Industry

Convergence

Emerging

Technologies

Smart Cities

Sustainability

New Business

Cultures

GeoPolitical

Stability

2015 Global Stratecast CSP Billing – Rating …...Ericsson Charging System and BSCS iX billing...

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