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Building a New BSS Stack to Support Digital-First Offerings a Heavy Reading White Paper Produced for Vlocity, Salesforce, and MATRIXX Software

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Building a New BSS Stack to Support Digital-First Offerings a Heavy Reading White Paper Produced for Vlocity, Salesforce, and MATRIXX Software Independent market research and competitive analysis of next-generation business and technology solutions for service providers and vendors Building a New BSS Stack to Support Digital-First Offerings A Heavy Reading white paper produced for Vlocity, Salesforce, and MATRIXX Software AUTHOR: JAMES CRAWSHAW, SENIOR ANALYST, HEAVY READING EXECUTIVE SUMMARY Faced with saturated markets, a rising number of mobile operators are launching new digital-first offerings in order to differentiate and win market share. For some, it is about empowering customers with digital-first experiences. For others, it is about counteracting the threat of new entrants (e.g., Rakuten in Japan). In almost all cases, operators find they need new business support system (BSS) capabilities to support the new digital proposition, as their legacy systems lack flexibility or simply take too long and cost too much to change. All communications service providers realize they must raise their game when it comes to customer service. Today’s millennial and Generation Z customers demand fast, reliable mobile services and a fully digital customer experience (on web, in app, or by chat). Legacy BSS do not support multichannel very well, let alone a seamless omnichannel experience. A digital-first approach enables the provider to digitally attract, acquire, service, and retain customers, allowing effortless engagement via their channel of choice. It also leverages artificial intelligence (AI) to anticipate customer needs and behavior while proactively driving loyalty. This approach enables a level of automation that dramatically reduces the operator’s cost to serve (call centers, retail stores, etc.). Customers get greater visibility of the services they are consuming, which eliminates bill shock and the associated negative sentiment. By giving customers more control over their spending, operators may find they consume more than when operating under the fog of legacy billing. Whether operators are looking to build fresh brands, enable a digital-first approach, or simply monetize new digital services (e.g., music passes/4K virtual reality [VR] gaming) as part of a 5G launch, legacy BSS is often the Achilles’ heel of the project. A modern IT stack can give the operator greater business agility to test new tariffs, products, and strategies. Iterate and fail fast is the mantra in 21st century consumer services. Adapting a legacy BSS to support a digital-first proposition is risky and expensive. The strategy that successful operators typically adopt is to build a new subset of BSS capabilities exclusively for their new digital service offering. Over time, as the new digital IT stack matures and demonstrates its ability to scale, operators can gradually migrate their existing customers onto the new IT stack and retire the legacy systems. Rather than attempt a “Big Bang” transformation, the operator restricts its IT risk to the new, digital-first offering. Once that risk has been controlled, the full IT transformation can take place in stages. CIOs can effectively bypass the blocked arteries of their legacy BSS and begin focusing on innovation, rather than risk mitigation. © HEAVY READING | VLOCITY, SALESFORCE, & MATRIXX | DIGITAL-FIRST BSS | DECEMBER 2019 2 THE DIGITAL-FIRST APPROACH The concept of digital-first propositions in the mobile market is not new. In 2009, Telefónica launched its no-frills, pay-as-you-go brand, giffgaff, in the U.K. That was likely not the first offer, but it has proven to be popular with consumers, as Figure 1 shows. Giffgaff has no stores and no customer contact center. All transactions take place via its website, and if customers have queries, they are initially directed to an online community of users who can resolve many of their issues. In 2017, Vodafone UK tried to replicate this digital-first approach with the launch of Voxi, and Three UK followed with SMARTY in 2018. To some extent, creating all-digital propositions, often with sub-brands, is an extension of a well-established mobile virtual network operator (MVNO) strategy. Mobile network operators (MNOs) often sweat their assets by opening them up to other companies that want to leverage an existing brand (e.g., Tesco, Asda, Sky, or Virgin in the U.K.) or see a mobile service as synergistic with their core business (e.g., consumer electronics retailer Dixons Carphone’s iD Mobile). As Figure 1 shows, MVNO brands are often more highly rated than the underlying MNO on whose network they run. This result may reflect different pricing and customer expectations. It might also reflect a superior, non-network-related customer service or a superlative digital-first experience. A digital-first offering allows operators to target new segments with a proposition and experience that better fit that niche. The niche could be digitally savvy consumers that prefer to engage via an app. The all-digital proposition might be wrapped in a new brand (e.g., iD) or a sub-brand of an existing operator (e.g., giffgaff) – or it might simply be a new product line under an existing brand. Figure 1: U.K. Mobile Brand Consumer Preferences Brand Type Owned by Customer Score Rank Network giffgaff Sub-brand Telefónica 1 Telefónica O2 Utility Warehouse MVNO Telecom Plus plc 2 BT/EE Plusnet Sub-brand BT 3 BT/EE Tesco Mobile MVNO Tesco 4 Telefónica O2 Asda Mobile MVNO Walmart 5 BT/EE Sky Mobile MVNO Comcast 6 Telefónica O2 iD MVNO Dixons Carphone 7 Three UK Three MNO CK Hutchison 8 Three UK BT Mobile Sub-brand BT 9 BT/EE Virgin Mobile MVNO Liberty Media 10 BT/EE O2 MNO Telefónica 11 Telefónica O2 EE MNO BT 12 BT/EE Vodafone MNO Vodafone Group 13 Vodafone UK Source: Heavy Reading; customer score rank based on Which survey, February 2019 © HEAVY READING | VLOCITY, SALESFORCE, & MATRIXX | DIGITAL-FIRST BSS | DECEMBER 2019 3 New digital propositions can be successful because they allow operators to segment the market and target particular niches: • Discount/no-frills • Cultural and language-specific • Nostalgia/silver generation • Digital natives By using multiple sub-brands or distinct service categories in a market, an operator can test different strategies, channels, and levels: • Pricing strategies (e.g., discount, premium, speed-dependent, sponsored tariffs, data/voice/text bundles) • Product strategies (e.g., subscriber identity module [SIM]-only, unlimited or zero- rated data, content subscription bundles) • Distribution channels (e.g., online only, retail partner, etc.) • Customer care levels (e.g., self-serve and community care, niche language support) To maximize the chances of success for the all-digital offering, operators should do the following: • Ensure they have an operations support system (OSS)/BSS platform that can enable rapid service innovation and experimentation • Partner with segment experts (e.g., ethnic groups) or form joint ventures with other brands (e.g., sports or music related) • Empower the all-digital offering’s management to run the business autonomously Of course, the operator must accomplish all these objectives without unduly disrupting its existing business. This is the reason why creating a new, parallel IT stack is so important. © HEAVY READING | VLOCITY, SALESFORCE, & MATRIXX | DIGITAL-FIRST BSS | DECEMBER 2019 4 KEY FACTORS FOR THE NEW BSS STACK As stated earlier, legacy BSS do not generally support a digital-first experience very well. Many traditional BSS were developed before there was an internet, smartphones, and social media. Legacy BSS stacks often involve a tangled, spaghetti-like mess of systems. This legacy makes them inflexible and ill-equipped to handle rapid change. Every time a new product or service is introduced, IT architects need to go through an exhausting process of updating systems and interfaces. Legacy BSS solutions often require custom development (as opposed to simple reconfiguration) before new use cases can go into production. Even with long test cycles, changing these systems poses operational and business risks. Often, the documentation for legacy systems is lacking and the institutional knowledge for how to maintain them may have left the organization through retirement or redundancy. Inevitably, mistakes are made, and they may prove hard to pinpoint and resolve. When evaluating BSS solutions for a digital-first offering, operators should consider the following: 1. Time-to-market: Can the solution be deployed in a reasonable timeframe (i.e., a minimum viable product in 3-6 months)? How long will depend on the size and complexity of the business. Ask for a breakdown of the implementation into multiple stages such as requirements capture; high level design; low level design; functional, system, and user testing; production deployment; go live; etc. 2. Business agility: Does the solution allow the business to rapidly respond to new market dynamics (e.g., merger and acquisition activity, new entrants, disruptive regulation) by rapidly launching new products, tariffs, and offers? How easy is this objective to do (configure, not code) – and how long does it take? 3. Omnichannel: Does the solution deliver a consistent and seamless customer experience across the entire customer life cycle (from sales to ongoing service) across every digital touchpoint? Does it enable a self-care experience that meets consumers’ needs, rather than just frustrating them before they search for the contact number? 4. Catalog-driven: Is the solution based on a flexible enterprise product catalog that supports rapid offer design and accurate order capture and integrates easily with real-time monetization and fulfillment systems? 5. Open application programming interfaces (APIs): Can the solution easily integrate with other vendors’ OSS/BSS solutions and can they easily integrate with it via well-documented, TM Forum-compliant open APIs and web services? 6. High performance, real-time rating, charging, and policy control: Can the solution scale to meet the rating, charging, and policy needs, not just of the digital- first offering, but potentially of your entire business in the future? 7. Webscale resilience and elasticity: Solution should be cloud native to deliver scalability and high availability under load.
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