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Creating a New Type of Value for the CSP

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Ilkka AuraBy Ilkka Aura

Over the last few years, mobile Internet has been revolutionizing the way people communicate, consume content, enjoy entertainment and collaborate.

The likes of Facebook and Whatsapp are eroding traditional revenue streams and CSPs therefore need to prioritize, looking at alternative streams instead of relying on traditional revenue streams which offer legacy services like voice and SMS. This constant traffic erosion has put CSPs under constant pressure to find alternative ways of reducing operational costs and take complexity out of their Business Support Systems (BSS). At the same time, CSPs need to improve the end-user experience through self-service for the Facebook generation.

At the same juncture, BSS architectural complexity is increasing due to the rollout of new network elements such as LTE, while maintaining legacy fixed and mobile telephony networks (2G, 3G and 4G). This development forces CSPs to maintain multiple generations of BSS environments as well as competence, which is counterproductive to cutting costs and streamlining operations.

It is a situation that calls for new thinking and new modes of operations combined with new types of vendor relations.

An evolving competitive landscape calls for a completely new mindset and efficiency in the customer-vendor relationship. The focus for the vendor shifts from value added to genuine value creation. The customer-vendor relationship transforms into an integrated ecosystem or symbiosis whereby one cannot survive without the other.

This means that BSS vendors wanting to be true Value Partner have to address the business needs of their customers, not merely their technical requirements, and innovatively create genuine business success. This requires more emphasis on partnering up with Managed Service Providers (MSPs). Managed Services is a long-term partnership between the CSP as the success rate is measured based on the MSPs ability to ensure the realization of the business objectives of the CSP.

The tenets of a true partnership are reflected by the pay-as-you-go/pay-as-you grow revenue model. This means that the Value Partner is compensated mainly by the business success and value creation it is able to generate for its customer and measured in concrete, tangible indicators like number of subscribers or operational efficiency. Currently, Value Partners serving CSPs are usually compensated based on the volume of the subscriber base.

The other factor that reflects the true nature of the partnership is that the compensation is not only volume-based but also measured by the qualitative Key Performance Indicators (KPI) reflecting the true value creation.

Being a Value Partner requires a completely different mindset than being a solution provider. A genuine Value Partner values the business success of their customers first and foremost in its own priorities. This might seem counterintuitive, because in the traditional mindset you should always first secure your own success. But it is only a "putting-your-customer-first" mindset that qualifies you to become a true Value Partner.

As the competitive landscape evolves and is no longer about features and functionalities that can be easily commoditized, but about ecosystems, relationships and business integrity that cannot be copied or reengineered, it is vital that partnerships between CSPs and BSSs shift too. This means that they are based on jointly agreed business derivatives and the vendor shares the risks and rewards of its customer success through innovative performance-based, pay-as-you-go business models.

Ilkka Aura is chief commercial officer, Tecnotree Corporation.

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