Although moving business support systems into the cloud is not a strategic objective in itself for any communications service provider, it can certainly help them achieve many of their goals for digital transformation. Will they ever accomplish it? Mark Newman investigates.
The challenges of moving business support system (BSS) to the cloud is nicely summed up by a VP at one BSS supplier we interviewed for our latest research:
“If I go to an operator and offer them a BSS cloud service or capability, the customer says, ‘That’s lovely – I have 130 systems, some of which are mission critical, some need to respond within milliseconds and I have auditors breathing down my neck.’ It’s difficult then to make the case.”
But cloud BSS can, in fact, help operators achieve many of their objectives for digital transformation, and as communications service providers (CSPs) deliver more cloud-based products and services, enabling them with cloud-based support systems makes good business sense.
Starting out slowly
Most CSPs keep the vast majority of their BSS on-premise and in their own data centers. Seventy-four percent of operators we surveyed in our research have less than 10 percent of their BSS in a cloud. However, they recognize that, over time, most BSS applications will move into a public, private or (most often) hybrid cloud.
Many operators who question the benefits of moving BSS to the cloud simply have a different definition of cloud BSS. For example, they may use a BSS vendor’s hosted cloud service (BSS as a service) or put their BSS in the same cloud that they use to deliver services to their own enterprise customers.
“Many operators who question the benefits of moving BSS to the cloud simply have a different definition of cloud BSS.”
Cloud-ready vs. native
All BSS suppliers offer services that are cloud-ready. Effectively this means products that can be (and in most cases are) deployed on-premise can also be deployed within a private or public cloud. However, such solutions lack many of the benefits associated with cloud services.
How to get there
Most CSPs do not have a roadmap for migrating BSS to the cloud, and as we’ve noted, in most cases the migration results from other strategic and commercial objectives rather than being the end goal.
Furthermore, issues around data privacy and latency mean that there is no medium-term prospect for migrating functions such as policy and charging into the cloud.
But despite the unanswered questions, operators are beginning to move some product, customer, order and revenue management functions into the cloud.
We surveyed 50 executives at 49 unique CSPs about their progress.The results show that we are very early in the migration but that operators are optimistic about making progress.
Tier 1 CSPs are highly unlikely to rip out their BSS because of their size and complexity, but their familiarity and confidence with cloud is growing rapidly. Many have clear visions about the future of their networks migrating to the cloud in the next five years.
Tier 2 and 3 operators have less cloud experience than Tier 1s. If they offer cloud services to B2B customers, they are likely to be third-party, such as Microsoft 365, which they bundle with their core propositions. Only executives who have been given a strong mandate to transform and adopt customer-centric decision-making, are able to consider the merits of and deploy new cloud-based systems.
Tier 4 and 5 operators, mobile virtual network operators (MVNOs), and niche CSPs are the most likely to adopt cloud BSS. Software-as-a-service (SaaS) models are attractive because they require little up-front investment.
Here are some key strategic and commercial drivers that we believe will accelerate adoption:
- Shifting to new commercial models with BSS vendors – the traditional approach to procuring BSS solutions is costly and disruptive for the buyer and seller, so most CSPs are looking to adopt a SaaS approach. Although this is associated with cloud, vendors could offer it with traditional on-premise models.As CSPs move to SaaS pricing for services such as Salesforce and platforms for new digital services, they will put pressure on their vendors to migrate to a similar pricing paradigm for their core BSS.
- Faster time to market capabilities – reacting to competitors is difficult for most CSPs because of the time it takes to put in place the required support systems. A cloud-based BSS solution can be up and running within 30-60 months compared with an on-premise approach.
- Setting up new lines of business with a dedicated BSS – CSPs are setting up new lines of business for internet of things (IoT), primarily for enterprises; others are moving into TV or are moving into the broader B2B market. Many of them are deploying dedicated cloud-based BSS/OSS systems, often from a new breed of specialized suppliers, which help them scale fast.
- Moving to NPS as a driver of BSS strategy – with a growing focus on improving Net Promoter Score (NPS), BSS is moving into the domain of the chief marketing officer (CMO). Customer management is clearly the BSS category that can be most clearly tied to an impact on NPS, but it is not the only one. For example, product management and the creation of a single product catalog can have a huge impact customer experience when a potential customer first signs up for a new product.
- Introducing personalized and context-aware offers – delivering personalized, context-aware services is an aspiration for every mobile operator. But until now, they have failed to exploit presence, location or previous usage or buying trends to achieve this. With growing investment in data analytics and the transition to IP-based services like messaging, this is a big focus for the next two to three years.
- Launching ‘skinny’ services to cut IT costs – introducing attractively priced, stripped-down services for specific market segments – for example, younger people who tend to have less disposable income and are happier to make do with online-only support – is a growing trend. These services often have a separate independent brand from the parent company; they belong in a standalone business and are free to choose their own, ‘digital’ BSS.
This article appears in Perspectives 2017: Digital transformation opens new markets. Download the full report free here.