What Will the Convergence of ERP, CIS Mean for You?

The battle lines are now being drawn in what is becoming the next desktop war in the telecommunications industry. Look around, and you will see customer care vendors trying to get into quasi-billing (with order management as the battleground); billing providers making a foray into customer care; and enterprise resource planning (ERP) giants wanting to own the desktop through interfaces to marketing, sales, provisioning, billing, servicing and credit management systems.

The one constant in this volatile market is that the customer is the focal point for all companies, whether a large RBOC with 30 million customers and legacy systems, or a start-up with 500,000 customers and a strict budget. Therefore, the front-office is the area from which all customer data is accessed, as telcos try to gain competitive advantage in a commodity market by rapidly integrating information and pushing it to the fingertips of customer care representatives, sales agents, or, in the case of self-service, straight to the customer.

However, with the entrance of new players and a changing regulatory climate, coupled with pressures to get product to market faster and more efficiently, telcos are wary of where to invest their IT dollars. Can the converging ERP and CIS (customer information systems) players successfully catch up to a moving target? “This is an industry where continual, dynamic change is at work, both in terms of changing business needs — such as deregulation, privatization, competitiveness, and the wholesale-retail split – and changing technologies, such as recent trends in IP telephony and xDSL,” notes Nehemia Lemelbaum, senior vice president at Amdocs. “This continual, rapid change characterizing the telecom industry creates another disadvantage for the CIS and ERP vendors, accustomed to other vertical markets which are much more static. Because new entrants need a very telecom-centric focus in order to keep abreast of the changes, and to keep your systems ahead of the market with all the new telecom-specific functionality required.” Andersen Consulting, for one, believes telecommunications is a logical next step for ERP. “When talking about internal business infrastructure, there is a lot of commonality, and I believe ERP vendors will do a good job of coming up with infrastructure to solve telco needs,” says John Morris, global managing partner of Andersen’s communications line of business. “ERP vendors are moving into industry-specific versions, but we see them moving toward interoperability with companies like the Siebels or Vantives, or Kenans and Savilles of the world.”

Yet despite the years of telco experience that specialized companies bring to the table, there is still concern and speculation these traditional players are not just looking to get in fast with companies that can “front-end” their systems. “There always is concern when large players begin to encroach on our core competencies,” says John Hart, vice president of marketing for Saville. “We’ve definitely taken notice that PeopleSoft, Baan and Oracle have been researching our website, but we don’t really think they will move into convergent customer care.” Rather, he believes, they will capture telco marketshare by going after work flow and network-centric systems. But Saville will not rest on its laurels, as it has forged a strategic partnership with Deloitte & Touche to improve its integration and consulting efforts in billing and customer care.

Other partnerships have already taken place, such as PeopleSoft’s relationship with Siebel and Vantive; Oracle’s with Versatility (in addition to building a sales force piece); and Baan’s acquisition of Aurum. So, are the billing gurus going to following suit, primping for the inevitable courthship by ERP vendors? Kenan, for instance, has added care and ordering functionality to deliver what it deems TERM (technology relationship management). “[The] front-end process and back-end process need to be smoothly integrated, in pieces, like accounts receivable with general ledger systems,” says Randy Fuller, Kenan’s wireline industry marketing manager. “We see ourselves as complementary to what ERP vendors do, so we are not afraid of them. You see, usage-based specialty software is a different enough animal that they, as database providers, know it’s complicated and realize we have a good head start.”

But there is still confusion about where billing, ERP and customer care will come together. “CIS, CRM (customer relationship management), or ERP, and what is necessary in terms of supporting functions, havn’t been clearly defined yet,” according to Tom Swithenbank, executive vice president with PegaSystems, a Boston-based developer of customer service management, (CSM) across transaction-intensive enterprises. Although common ground inevitably exists, it is currently very difficult to define. “There are very specialized needs in telecommunications in terms of linking real-time network events to rating and billing activities, as well as being able to look back into the network for OSS functions like fraud and provisioning,” says Bart Taylor, a senior analyst with Aberdeen Consulting Group. And while he agrees that ERP and CIS vendors, play an integral role, he, too, has trouble identifying how interconnections will work: “There is common, fertile ground, for instance, in that billing is like ERP in many ways, as with supply chain issues like carrier-to-carrier settlements and so forth.” Since this common ground is yet to be determined and proven, he believes initial efforts will be piecemeal and heavily focused on integration.

This confusion is due, in part, to all the marketing hype surrounding front-end products some ERP vendors have claimed to have. “All we can do is stand back and watch; they’ve been stalling. So far, their view is still limited to accounting and a financial viewpoint,” says Swithenbank who adds: “Telcos already are moving beyond management of interactions in an accounting or billing point-of-view. I guess if there are customers that already have an ERP installation completed — I haven’t heard of any — then they can wait for customer relationship management. But who has time for that?”

Because most telcos cannot and will not wait for an enterprise-wide CRM solution, it is expected they will go with a cheap, quick fix until SAP, or another ERP vendor has products available. SAP will have a front-end and combined invoicing capability by mid-1999. Oracle recently announced its Compass Solution, a pre-integration of Oracle, Vantive and Kenan on Sun equipment, and promises new announcements in upcoming months. Baan says that by second quarter 1999, it will enhance up-selling and cross-selling capabilities as well.

So ERP providers promise big news for telcos, yet a few large players are surprisingly reticent and haven’t announced specific solutions in these niches to the telco industry. Perhaps it’s because Baan is going through major lay-offs, and Oracle is expending a lot of energy in this space to create its own CIS/CRM solutions, which it says will be officially announced in upcoming months.

SAP and Baan were anxious to come forward, however, with indications of where they might be going in this market. “Customers will get performance and data integration benefits without the hassle of multiple databases,” says Clifford Guess, SAP telecommunications industry manager. In September SAP announced its ISC (industry specific components) effort, which has several components, including network elements, logistics, revenue management, contracts, accounting and trouble ticketing. “Our business framework is open so that third parties can bolt onto our system through business application programming interfaces. We give telcos tons of choices, because we provide more platforms and operating systems than any of our ERP competitors,” says Guess. “If a telco customer is happy with a Kenan or LHS or Saville, we will embrace building those interfaces; if they want us to do integration, we will take a look at that.”

One of the telco industry criticisms, however, is that SAP product maps are too large and comprehensive, seeming to promise solutions in all areas. “It’s confusing because it seems they want to produce every type of software known to mankind, which is a prescription for failure,” says PegaSystems’ Swithenbank, who believes SAP must maintain its focus, “nibbling at adjacent areas” without going into all at once, if it is to be trusted by telco organizations.

SAP, however, counter that it doesn’t intend to enter too many areas all at once. “Rumors sometimes get started because of our solution maps we present at Sapphire; they are communications vehicles to industry so customers can point to areas of functionality where they want our help,” says Guess.

Two areas that Baan believes it will enhance in the telco industry are up-selling and cross-selling, according to Art Swartz, director of telecommunications industry for Baan. “During customer calls, configuration and proposal generation (front office) products will be integrated to create quotes and proposals. This same information can then be transferred at a part-number level to both billing and provisioning systems.” He believes this will produce huge benefits to the telco industry: “The number one issue for sales and call center people is to produce a correct order the first time, bill it properly, and deliver a correct order.” This, he says, has become surprisingly difficult today, due to existing legacy systems and the need to re-key data several times. “Our customers estimate as much as 40 percent of a sales person's time is spent correcting incorrect pricing and incorrect orders, and tracking provisioning.”

In response, telco customers are initiating data warehousing projects to accumulate data, from disparate and antiquated legacy systems, for storage in relational databases to be used by front-office sales force automation, call center and configuration products. Integration products will be used to take data from the front office products and feed the back office applications (billing and provisioning). But, SAP, for one, realizes the magnitude of the task. “We know that telco billing and customer care are huge non-trivial undertakings; we will definitely take a close look before we jump in,” says SAP’s Guess.

Cost is a tremendous factor when considering a strategy with ERP vendors. “For how many years’ worth of consulting does a telco want to pay? How many customers are willing to put $300 million into a fully integrated system that crosses all of the barriers?” asks Donna Fluss, a senior research analyst with Stamford-based Gartner Group. “We tell our telco customers to put out RFPs for ERP applications, just so they can quickly see how impractical and functionally poor it is at this point. Some of these vendors think they can jump into customer service because they do some field service. The problem is, they haven’t yet integrated … with phone handling.”

Yet, despite cost and time factors, SAP and Oracle have a good chance, considering their strong presence within telcos, albeit in the form of accounting software and databases. This could play into decision making, since, in some organizations, CFOs work above CIOs in corporate hierarchy. And if that CFO has been satisfied with SAP financial software, that may play into enterprise-wide buying decisions.

For now, however, it seems the consensus in the industry is that integration will be paramount throughout the current telco customer management cycle, from managing the order of telecom services, through rating, billing and the handling of customer inquiries (see Viag sidebar). However, this is a daunting proposition for some telcos that have seen failed attempts in integrating non-integrated solutions, taking system components from two or more vendors and trying to integrate them. If not done carefully, integration efforts can prove to be very costly and ineffective for telco companies.

Others, mostly start-ups and smaller companies, are looking at “telco-in-a-box,” which offers the opportunity to avoid building from scratch. Such pre-integrated solutions are helping companies implement packaged software quickly. “Deregulation has spawned the creation of multitudes of smaller companies. They can’t get involved in a multi-year ERP project,” says Dave Valovcin, vice president of strategic business development for PegaSystems.

The Compass Solution from Oracle is one example of pre-integration efforts underway. Also, Daleen Technologies is actively working with mid-tier integrator Bellcore on its Jumpstart "box" solution, in addition to its project for creating an end-to-end solution (expected in the next quarter). Vantive also has joined forces with the up-and-coming, California-based integrator, SoftPlus.

These integration efforts will continue until the industry better understands the outcome of ERP’s foray into the telco front-end market.