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THE INTENTIONAL CUSTOMER EXPERIENCE ANNUAL REPORT 2007 Amdocs 2007 Annual Report 1 AS the DIGital marKetplace GroWS, serVice proVIDers must FinD WAYS to monetiZE neW IP-BaseD serVices anD to remain Vital to the DIGital Value chain. A neW approach is neeDED. AMDocs calls it “customer experience SYstems.” AND WE leaD the inDustrY in customer experience SYstems innoVation. Amdocs 2007 Annual Report 3 DEAR FELLOW SHAREHOLDERS: AS our 25th Year in Business, Fiscal 2007 marKED another soliD Year FOR AMDocs, DeliVerinG our 19th straiGht Quarter OF continuous reVenue GroWth. While WE experienceD A loWer GroWth rate than WE haD oriGinallY expecteD, 2007 Was A Year OF siGniFicant achieVements anD important milestones that Will proVIDE A stronG FounDation FOR GroWth in 2008 anD in the Years to come. Leadership Dov Baharav Bruce K. Anderson President and Chief Executive Officer, Chairman of the Board, Amdocs Management Limited; Amdocs Limited Director, Amdocs Limited Amdocs 2007 Annual Report 5 A DYNAMIC MARKET In 2007, we saw acceleration of the unprecedented change that has been shaping our industry. The ubiquity of and demand for communications, media and entertainment services drove significant technology and business model innovation from both well-established carriers and new and unexpected players. Internet giants grew stronger through consolidation and service innovation. Online advertising models began to leverage the personalized and compelling nature of mobile. The industry value chain witnessed another significant change as equipment and device providers began to develop direct relationships with consumers, and startups entered, offering service at low and even no cost. Compelling new consumer devices took center stage. Namely, the iPhone set a new, high bar for devices, the prices consumers Growth are willing to pay for them and the lifestyle they enable. AMDOCS SUPPORts OUR CUstOMERS THERE ARE COMMUNITIES OF NEW AS THEY SEEK TO DEFEND THEIR CONSUMERS COMING ONLINE IN PLACE IN THE DIGITAL VALUE CHAIN GEOGRAPHIES NEVER BEFORE AND MONETIZE DIGITAL CONTENT. CONNECTED BY SOPHIstICATED COMMUNICATIONS AND DATA SERVICES. Indeed, our market is changing in three fundamental ways: the emergence of this “digital lifestyle,” tremendous growth IN 2007, AMDOCS CONTINUED TO FOCUS in emerging markets, and development and transformation of mega-carriers through consolidation in developed markets. Each of these forces creates growth opportunities for Amdocs and demands a solid strategy. We believe that in 2007, we have ON THESE EMERGING MARKEts. built a solid foundation for growth, and the right products and organizational structure to leverage these industry changes. Amdocs 2007 Annual Report 7 Relevance FOUNDATIONS FOR GROWTH IN THE DEVELOPED WORLD, Meanwhile, there are communities of new consumers In the developed world, service providers seek to gain the In this new era of the digital lifestyle, content has immense value coming online in geographies never before connected by benefits of scale – efficiencies and cost-savings – required and digital services show promise. Consumers and businesses sophisticated communications and data services. These to do business in saturated, mature markets, and address are using an expanding array of services on more devices, in SERVICE PROVIDERS SEEK emerging markets – China, India, Africa, Southeast Asia, new markets with converged service offerings and digital more places and offered by more providers than ever before. Latin America and others – are expected to generate services. As these companies look to transform their TO GAIN THE BENEFITS OF the world’s largest subscriber growth. For example, business, combine their operations and consolidate In the first complete year following our acquisition ofQpass, the Pyramid Research estimates that 87% of the next billion their systems, many of them are turning to Amdocs for unit experienced significant growth. In order to further leverage subscribers will come from these markets. (Source: help. For example, in 2007, we continued our successful the expanding digital commerce and advertising market, we Scale – eFFICIENCIES AND Pyramid Research, “The Next Billion, How Emerging transformation of the operational support systems (OSS) created the Advertising, Commerce and Entertainment Markets are Shaping the Mobile Industry,” September of Australia’s largest media-communications company, (ACE) Business Unit. ACE combines our Qpass, Digital COST-SAVINGS – requireD TO 2007.) In 2007, Amdocs continued to focus on emerging Telstra. We deepened our engagement with AT&T with Commerce unit and, with it, our OpenMarket offerings; our markets. We gained success with new customers, enjoyed extended and new managed services agreements. And we Advertising and Media (A&M) unit; and a new Search and expansion of business in China, key wins in Latin America, earned the trust and continued partnership of customers Digital Advertising unit. Altogether, it positions Amdocs to DO BUSINESS IN SATURATED, and expanded the presence of our workforce in several of such as Sprint Nextel through strong project delivery. support our customers as they seek to defend their place in the these markets. We also acquired SigValue in February digital value chain and monetize digital content. With ACE, MATURE MARKETS, AND 2007, and subsequently created the Network Business Unit and the new applications that it will bring to market in fiscal (NBU), and a new offering of service delivery and low-cost 2008, we feel confident we have an offering that will support “compact” solutions. the success of carriers, content providers and Amdocs. ADDRESS NEW MARKETS WITH CONVERGED SERVICE OFFERINGS AND DIGITAL SERVICES. MANY OF THEM ARE TURNING TO AMDOCS FOR HELP. Amdocs 2007 Annual Report 9 Innovation CUSTOMER EXPERIENCE SYSTEMS TODAY’S CONVERGING COMMUNICATIONS, MEDIA AND ENTERTAINMENT Today’s converging communications, media and entertainment market is providing unprecedented choice to consumers and businesses. There is an authority shift in the value chain, MARKET IS PROVIDING UNPRECEDENTED CHOICE TO CONSUMERS AND from provider to consumer. At the same time that consumers’ expectations are on the rise, so too is the complexity of the BUSINEssES. SUCCEss LIES WITH THE PLAYERS THAT CAN PROVIDE service provider’s business – witness the explosion in the number of new services and devices, varied access technologies, an expanding partner ecosystem and new and dynamic business We believe that, in the consolidated world of converging A CONSIstENTLY SIMPLE AND UNIQUELY VALUABLE CUstOMER models. In such an environment, success lies with the players mega-carriers, creating this intentional customer experience that can provide a consistently simple and uniquely valuable requires a new approach to support systems. Customer EXPERIENCE. CREATING IT REQUIRES A NEW APPROACH. customer experience. experience systems incorporate pre-integrated, advanced applications that comply with service-oriented architecture (SOA) standards, in domains that Amdocs has traditionally addressed, such as revenue management and customer management, along with more recently addressed areas such as OSS and digital commerce management. Working in an orchestrated fashion, these systems combine leading software applications with embedded business process best practices in order to create short time to market for new converged services and digital content, operational agility, cost-effective operations, and ultimately a superior customer experience. Amdocs offers the systems that encompass these increasingly critical capabilities. More than just technology, the move to customer experience systems can require the guidance and support of a partner with deep industry expertise and comprehensive services. We believe Amdocs is well-suited to assist service providers in creating and delivering the superior customer experience that will help them win. Amdocs 2007 Annual Report 11 WE BELIEVE WE HAVE THE RIGHT stRATEGY, THE RIGHT OffERINGS, AND THE RIGHT ORGANIZATION AND LONG-TERM INVEstOR SUPPORT TO SUstAIN OUR SUCCEss AND REALIZE THE Vision PROMISE OF A RAPIDLY TRANsfORMING, GROWING MARKET. THE RIGHT OffERINGS THE RIGHT ORGANIZATION MOVING FORWARD In January 2007, we brought to market our Amdocs 7 portfolio, In July, we created the Product Business Group (PBG). When we look at the market today and project what we can with its integrated support for cable and satellite providers; Under the leadership of Guy Dubois, a talented software expect in 2008, we see promise. The competition between new Enterprise Product Catalog, recently selected by an industry executive who joined the senior management team service providers remains intense. More, and more complex international wireless provider; and numerous enhancements in 2007, the PBG comprises the functions of product sales, products and services will be introduced, at a faster pace and such as convergent billing and mediation, and multi-channel product development and management, product support and broader scale, to attract and retain customers. As we saw in 2007, Sincerely, (even IP-television-enabled) self service. Following the launch product marketing. leading service providers continue to spend on transformation of Amdocs 7, we amassed a long list of superlatives: “Product projects to upgrade their OSS and BSS to support the digital of the Year” (Call Center Magazine), “Best Converged Billing As the PBG prepares for an aggressive sales effort in 2008, our services that will promote their growth