Business support system (BSS) solutions aren't just for telecom communications service providers (CSPs). Any company that has a high transaction volume and operates in a competitive market can use such solutions to manage their customers in terms of billing, rating, charging, pricing, settlement, and others. Companies in media and entertainment, on-demand services, and banking and insurance should consider BSS solutions. Multiple partners and complex pricing and revenue-sharing schemes lead to an increasing demand for sophisticated business management platforms. Potential prospect in other industries include utilities, transportation, remote monitoring and retail.

• The industry segments most receptive to BSS solutions are media and entertainment, on-demand service providers, and banking and insurance sectors.
• Many companies have industry-specific business logic embedded in their custom-built back-office systems. Such solutions won't be able to manage cost, risk and time-to-market.
• Companies will direct considerable parts of future investment in the modernization of their IT infrastructure toward achieving customer centricity. Charging and billing for services rendered and the ability to dynamically adopt new and complex pricing policies based on usage and consumption patterns will be key.

• Solutions should be commercial off-the-shelf (COTS) applications or provided as a software as a service (SaaS). There should be minimal coding, and mainly configuration. Solutions should be predominantly license-based.
• Vendors should offer an entry-level price that is significantly below that for CSPs.
• CSPs should offer BSS solutions to small and midsize companies in industries with high transaction requirements that on their own cannot, or are reluctant to, invest in carrier-grade BSSs.
• Users and vendors should move away from embedded business logic and use solutions that allow process modeling by non-programmers.

CSPs are the primary users of BSS solutions. A BSS includes software and services for billing, rating, charging, mediation, settlement, fraud management and ancillary solutions. Occasionally, companies in other industries show interest in such solutions to manage their customers. Usually, they require solutions that process high-volume, low-latency transactions.

So far, companies from outside the telecom sector have only infrequently purchased telco BSS solutions to manage their customers. The situation could change as the need to process an increasing number of transactions in real time increases in some industry sectors.

Companies in the industries under consideration can acquire licenses for BSS solutions; they can rely on third-party outsourcers or managed services providers; or they can use a SaaS model that allows them to pay only for the services they use.

CSPs can also perform these tasks for enterprise clients in other industries. CSPs already provide billing and related services for large enterprises in any industry segment. With the explosion of transaction volumes and real-time requirements, CSPs might be able to extend their services to managing the end users of companies in emerging industries that do not have the sufficient back-office infrastructure themselves, or that cannot afford carrier-grade BSSs on their own.

This report shows which industries are prime candidates for BSS solutions. It provides guidance to companies outside telecom on which solutions to choose and why, including recent references from the past four years. Suppliers of BSS solutions can use it to scope new markets.

Findings reflect formal and informal interviews with BSS suppliers and users in the first half of 2009. Many industries are going through rapid change. This means that sometimes the assessment of an industry segment's requirements can vary significantly. For each industry segment, we present the consensus of opinion of why this segment is a good or not so good candidate for BSS solutions. Whenever there is significant disagreement, we add a "contrarian view" section as a counterbalance to the consensus view.

The best opportunities for BSS solutions are in industries that have a high transaction volume and a high degree of competition, as shown in Table 1 and Figure 1. Media and entertainment and on-demand service providers are top candidates, while most governmental organizations are poor prospects. Some industries like medicine and law are already saturated with specialized billers and have no need for BSS solutions.

On-demand service providers do not constitute a separate industry sector in the traditional sense. Rather, they are a delivery model that cuts across industry sectors and include sub-components such as e-commerce, SaaS and utility computing. We included them here to point out opportunities across industries that choose this delivery model.

Excellent.

The media and entertainment industries, and the telecom industry increasingly resemble one another. Multiple partners and complex pricing and revenue-sharing schemes lead to an increasing demand for sophisticated business management platforms. Requirements include multi-services environment, real-time and high-volume transactions management, cross- and up-selling, partner relationship management (PRM), policy management and bandwidth management solutions. Media and entertainment companies often lack online charging for royalty payments, real-time user interaction and targeted advertising.

Revenue model remains unclear. Billing and charging can happen directly, via credit card companies or via aggregators. The conflict between "content for purchase" and "free content with advertising" remains unresolved. Hybrid models such as prepaid access to "all you can eat" premium content will continue to grow.

There is some potential for micro payments for the largest providers of digital entertainment. They need a dedicated solution for managing balances and aggregating multiple small-value transactions into larger transactions. This generates a return on investment by enabling them to lower the processing fees when connecting to external banking and payment networks. There will only be a relatively small number of large players for whom this investment will generate a positive return, limiting the overall opportunity.

• Advertising
• Application stores
• Broadcasting
• Cable TV
• Content distributors, such as legal content, medical content, magazines, newspapers, research, academic publications and e-books
• Digital entertainment
• Gaming
• IPTV
• Satellite
• Video-on-demand

• Billing
• Charging
• Customer self-care
• Mediation
• Policy management
• Pricing
• Promotion platform
• Rating
• Settlement

• EchoStar — EchoStar and its DISH Network deployed MetraTech's MetraNet for service activation, provisioning and subscriber management.
• MovieBeam — MovieBeam's video-on-demand service is powered by FTS.
• Hi-Rez Studios — An independent developer of online games, Hi-Rez Studios is using Aria Systems' A+ Billing Platform to monetize its new massive multiplayer online (MMO) game "Global Agenda."
• Music Mogul — Music Mogul, an online music virtual world provider, uses the Velocity platform developed by Aria Systems and Work at Play to enable virtual goods transactions within its online music community.
• Sylien Entertainment — Sylien deployed Aria Systems' billing and customer management software as key components of its new products and service offerings for "pay as you grow" subscription-based pricing.

Good to Excellent.

Like CSPs, banks, financial institutions, insurance companies and clearinghouses require high-volume, low latency data transactions. Like CSPs, these companies have issues with their legacy systems, integration and lack of a convergent customer view.

Like CSPs, banks and insurance companies operate legacy environments with separate, siloed systems managing customer data, accounts and transactions for each service individually. Many banks are beginning the transition to more agile architecture for back-office systems, such as core banking and payment hubs. Multichannel strategies to boost customer experience increasingly claim more IT investments, shifting from early technical efforts to achieve integration toward investments that are based more on business process models.

In addition, the current credit crisis has exposed major gaps in customer service processes in mortgage lending, with similar gaps at the brink of exposure due to increased fraud and defaults in the credit and/or debit markets. Despite stepped-up investment in retail banking customer loyalty is low.

Banks must improve their ability to provide bundled pricing and customer-specific rates and interest plans, based on loyalty and profitability. They require systems that can collect and re-process large volumes of transactions from multiple source systems, provide a consolidated customer and account view, and apply bundled or customer-specific prices.

Banks and Financial Institutions — They will offer an increasing array of services. Depending on the market — whether developed or emerging — banks will launch a range of services, such as person-to-person transfers, prepaid accounts top-ups, and payments or micro-credits that are linked to different accounts, such as:

• Accounts related to financial institutions, such as banks, or credit card and debit card companies. Access to these accounts will be made through payment gateways in charge of authenticating and authorizing the transactions with financial institutions.
• Mobile wallets hosted in CSPs' networks or in third-party companies' networks.

Insurance — Insurers indicate that billing and payments are a top priority for investment through 2010. Insurers seek to save costs through automation while improving their cash flow, given the challenges in their revenue-generating activities (sales and asset investment) during the financial downturn. Yet insurers also recognize the crisis as a window of opportunity to provide strong service to customers and possibly gain market share from banks as clients reassess banking relationships.

The industry remains heavily regulated. The situation could deteriorate further in the near term. Often, the IT environment of banks, financial institutions and clearinghouses is highly customized. Some banks lack clear corporate vision and leadership around payments, deferring to siloed operations staffs with limited tactical influence on IT investments. The change process might be very long. Many banks are too small to afford BSS solutions.

• Brokerage, trading
• Credit and debit card companies
  • Prepaid accounts top-ups
• Insurance
• Retail banking
  • International airtime transfers
  • International money transfers
  • Local peer-to-peer transfers
  • Micro credit
  • Proximity and remote payments (at a merchant store, at a machine or on a website)

• Billing
• Charging
• Mediation
• Mobile payments platforms
• Payment gateways
• Rating

• ABN AMRO — The Dutch bank is using Amdocs billing for its business and retail consumer lines of business to launch new bundled services and cross-product price plans and discounts.
• DTCC — The Depository Trust & Clearing Corporation deployed MetraTech's MetraNet platform for customer care and billing.
• LCH.Clearnet — A European central counterparty for international regulated exchange and over-the-counter transactions uses Highdeal Transactive to provide its Group Fee System.
• Norwich Union — U.K. insurer Norwich Union uses "Pay As You Drive Insurance" a charging and billing solution for detailed transactions showing where and when a customer drove a vehicle, and what rate — beyond the monthly premium — was charged. Intec supplied the solution.
• Smart.Net — Smart.Net, a Brazilian benefit card processing provider, is using the Comverse platform for customer care, ordering and billing.

Neutral to Good.

Utilities need to reduce operational costs, increase productivity and adapt to ongoing deregulation. Their legacy customer information systems (CIS) are asset centric instead of customer-centric.

Energy and water prices will likely increase, adding pressure from consumers and regulators to provide more incentives and disincentives as to when and how businesses and end users consume utilities. Existing CISs poorly serve such complexities. Policy management tools can support smart metering initiatives by helping to better manage the consumption and/or peak and off-peak usage. Many commercial and industrial customers already receive such services. End users might see similar services, often because of government policies. Such tools can also be useful in regions where supply does not meet demand requirements, such as the control of water supply in arid regions.

End users may use different types of account and any type of bearer. For example, before they pay a bill, it is entered into the mobile payment system by batch upload, application programming interface, or manually. Once a payment is complete, the bill state will be moved to "paid," the end user is notified and the company is informed.

In some countries, there is a convergence of providers of water, power, gas and waste management. Such convergent providers need to be able to offer plans that are more complex. This means they need advanced billing solutions, such as the ones offered to telecom providers.

Increased focus on smart grid and advanced metering infrastructure has made an impact on the CIS market. CIS has a major role in enabling those functions through its ability to deal with new billing requirements, such as decoupling of commodity and distribution charges, time of use, feed-in tariffs, critical peak pricing and interval billing for residential customers.

There are already many strong CIS players in the industry. In many parts of the world, the industry remains heavily regulated. Even in a deregulated environment, utilities have different billing requirements to CSPs. The utility billing model cannot be purely customer-centric, because utilities must maintain inventory and usage history on devices (meters) at a fixed location. Many utility companies are too small to afford BSS solutions.

• Alternative energy and alternative power supply
• Gas utilities
• Power utilities
• Smart metering
• Water utilities

• Bill payment
• Billing
• Charging
• Fraud management
• Mediation
• Policy management
• Rating

None.

Worth a Look to Neutral.

Similar to telecom, players in the transportation sector require high-volume transactions. This includes flexible charging and complex revenue sharing calculations for ticket purchases and models for toll system management and congestion charging. Such solutions are similar to telecom billing in terms of pricing models (event-based pricing and charging), violation enforcement (billing treatment and collection functionality), order management systems for equipment, and billing and customer care. The SaaS model could increase in popularity in the current economic downturn.

Often, supply chain management (SCM) handles such transactions. SCM is part of ERP and will not become part of BSS solutions. Onboard units usually do the rating in a decentralized fashion. The integration of transportation management systems into BSS will depend on mass deployment of radio frequency identification (RFID) technology.

Privacy issues are blocking the acceptance of solutions dealing with location-based services particularly in Western Europe.

Sub-segment opportunities include airports, mass transit; and shipping, cargo and freight.

Airports — They charge aircraft operators for a variety of services including landing, parking, maintenance, ramp and facilities use. Currently, airports struggle to accomplish accurate billing of user fees. In addition, airports are competing to attract traffic. Opportunities are limited to a relatively small transactions volume, and advanced telecom BSS solutions are too complex for their requirements.

Mass Transit — Companies in this sector require charging for smart cards and contactless solutions in sectors such as trains, trams and buses. They have old IT environment, but need to converge multiple lines of business. IT systems will require multiservices support, hence the need for settlements, billing and PRM solutions. Privacy issues and slow replacement of old IT systems limit opportunities. For example, current smart cards technology focuses on the cards, not on the user (who may wish to be anonymous) as opposed to traditional post-paid telecom subscription.

Shipping, Cargo and Freight — Companies in these industries are looking to improve their customer service, decrease costs, offer personalized marketing plans and create more complex pricing schemes.

With rising energy prices and the need for additional tax revenue there are increasing pressures to charge for access to the transport infrastructure. For example:

• Governments are modernizing widespread electronic toll collection systems to support open tolling and drive penetration of electronic toll collection technologies.
• "Green" initiatives and increasing traffic congestion in major cities call for solutions that manage traffic.
• Cities and local governments are currently considering the possibility for future congestion pricing models to support broader objectives with respect to revenue collection and environmental impact.
• Privatization initiatives and build-operate-transfer models open the sector for competition. This means local governments have to upgrade or install new and modern back-office systems.

• Airports and seaports
• Cargo
• Congestion charging including high-occupancy vehicle lanes
• Electronic ticketing and RFID
• Electronic toll systems
• Freight
• Logistics
• Mass transit
• Parking lots
• Shipping

• Billing
• Charging
• Customer self-care
• Invoicing and accounts receivable
• Mediation
• Pricing
• Rating
• PRM
• Settlement

• ARINC — ARINC supplies services to the commercial and private airline industries and, for the most part, uses FTS' Leap RevChain to manage the billing of these services.
• DHL — DHL is using Intec's convergent data mediation and Centralized Error Management System. The solution lets DHL gather, process and distribute its shipping records in real time, while also checking and identifying information errors that could potentially lead to significant revenue losses.
• Government of Israel — Together with Orad and Siemens, MaxBill (now part of LogNet Billing) is providing dynamic billing capabilities for a new governmental toll road project. The solution automatically accesses details of a vehicle's owner, provides the bill and supervises debt collection.
• Large Western European Railway Operator — This company uses Intec's Singl.eView for revenue share calculations for ticket purchases that are not made at a railway station, be they online, via affinity partners, via retailers, and so on.
• Numerex — Numerex, which enables real-time wireless data communications for remote monitoring and tracking of fixed and mobile assets, is using Highdeal Transactive for billing and pricing.
• Utah Transportation Authority (UTA) — The ERG Group and MetraTech developed and implemented an account-based fare collection system that includes acceptance of contactless credit cards.
• Wireless Matrix — Telematics and mobile resource management provider Wireless Matrix implemented Highdeal Transactive for the billing and partner settlement needs.

Security Alarms, Car Monitoring

Neutral.

Only largest providers are likely to provide sufficient transactions to make this segment interesting for BSS suppliers. Often, suppliers provide such services for a monthly or quarterly flat fee.

• Billing, mediation

• VIN IQ — Canadian VIN IQ, which provides VIN remote tracking, deployed Comverse for all billing, online ordering and invoice functions. TELUS acted as the implementation partner.

General Assessment

Worth a Look.

Store card and loyalty card systems require storage of account balances, credit and debit transactions, loyalty point management, special promotion and voucher redemption processing. Prerequisite for justifying the investment is a very large membership base. This excludes many medium to small chains that can use simpler tools.

Billing, mediation.

• ADP Dealer Services — ADP Dealer Services implemented Rodopi to provide provisioning, billing, and customer care for its new line of BroadSoft-based hosted telephony services targeted at more than 25,000 auto, truck, motorcycle, marine and recreational vehicle dealers.

Not Worth Considering.

This sector needs highly customized IT solutions for the specific need of specific governmental entities, which are the domain of large Federal System Integrators (FSIs) rather than of "productized" solutions available from the traditional BSS players. Government procurement rules may require specialized BSS providers to establish key channel relationships with these FSIs in order to drive new opportunities.

Federal government systems, such as healthcare, social security, HR systems and taxation systems have historically been large customized solutions. Increasingly, government agencies are turning to COTS-based products for newer modernization initiatives. Some large government entities such as army bases require BSS solutions to manage their users.

In general, citizen contact with government agencies becomes more frequent as the level of government decreases, with local government (city and/or county) having the most regular interaction. Local administrations will have to find new models to improve their revenue infrastructures and apply more targeted local taxation. With mounting private and public partnerships these revenue arrangements could require more sophisticated settlement procedures.

• Federal government
• Local and municipal governments
• Tax authorities

• Billing
• Charging
• Customer self-care
• Mediation
• Pricing
• Rating

• City of Chicago — The City of Chicago deployed MetraTech's MetraNet product as the billing and partner settlement solution for the Chicago Department of Aviation. This includes O'Hare Airport, the world's second busiest airport.
• Kativik Regional Government (KRG) — KRG in Quebec used Rodopi Software's business platform in the launch of wireless high-speed Internet service to 14 villages of Nunavik.
• The State of Washington — The Department of Information Services selected Comarch for customer billing, invoicing and operations support systems, including order management, inventory management and configuration management.
• United States Army — More than 100 U.S. Army bases and Air Force bases worldwide have installed the NetPlus solution form Ace*Comm (now part of Ariston Global). Among others, they use the solution for billing, order management and provisioning.

General Assessment

Excellent.

The operation of decentralized software and hardware services are inefficient for many businesses and consumers. They are unclear how these services are charged and billed centrally. These companies will need innovative billing and financial control to provide their services. This may include recurring charges, refunds, cancellation, collections, dunning, credit card management and service-level agreements.

Charging, billing, customer self-care, mediation, PRM.

• Microsoft — Microsoft is using MetraTech's MetraNet as the biller for settlement solution for its Microsoft Online Services to bill subscribers and compensate partners.
• Sabre — Sabre, an e-marketplace that connects suppliers, including hundreds of airlines and thousands of hotels with more than 50,000 travel agency locations, is using the Comverse mediation solution for collection, mediation and billing.
• Autotrader — Autotrader, an online automotive classified advertising company, is using Comverse's billing platform.
• PHASE 2 International — PHASE 2 uses Aria's billing and customer life cycle management solution to support their pay-as-you-go software applications. And it employs Aria Systems' business management tools and customer care suite to expand and enhance its reseller program.
• SlideRocket — SlideRocket, a SaaS-based provider of fully featured online presentation software, will use Aria Systems' billing and customer life cycle management platform to monetize subscriptions and manage a marketplace offering content and services for consumers and business accounts.

General Assessment

Not Worth Considering.

These industries are already well served by existing suppliers and don't need real-time solutions.

None.

None.

During the last economic crisis, suppliers of BSS solutions looked at different industries to escape the telecom slump, but they failed to succeed. The reasons included:

• High prices — An entry-level price of $300,000 or more for a BSS license is too steep for all but the largest users.
• Too many unnecessary features — Many users look for solid rating, billing and accounting, but not for dozens of features (for example roaming or interconnect billing management) they can't use for their line of business. They see no reason to pay for features they won't use or that they already have through their CRM and ERP solutions.
• Too much customization — Many BSS packages used to require a high degree of customization. On top of that, suppliers lacked knowledge in industries other than telecom.

The opportunities for BSS solutions in other industry segments correspond mainly to transaction volumes and the level of competition. High transaction volumes and high competition usually means strong demand, as is the case for media, entertainment, on-demand services, and banking and insurance. Providers of BSS solutions include independent software vendors (ISVs), outsourcers, managed services providers or CSPs.

This correlation doesn't work in all cases. There are other factors to consider, such as the availability of industry-specific solutions. For example, there are already multiple billing suppliers in the medical and legal industries, which makes these industry sectors poor candidates for BSS solutions that originate in the telecom industry.

If one adds up these factors, this time around could be more than just another failure to expand the reach of BSS for the following reasons.

• Increasing transaction volumes — In future, some industry segments will require BSS solutions, as transaction volumes increase, process automation requirements become more prominent, regulatory compliance becomes more pervasive and service environments become more complex.
• Receptivity to COTS solutions — Pressure on costs, risk and time to deployment can't be met with custom-built software. This approach will yield to more modular COTS, that reduces cost and commercial risk. The beginning of the market for COTS BSS solutions in the telecom industry coincided with the opening to competition of many national markets. Other industries are likely to go through similar deregulation.
• Shortcomings of existing enterprise infrastructure — Many companies in other industry segments use accounting systems that only provide the settlement of charges. Companies in these market segments also need dispute resolution and the ability to pay when a service is delivered.
• Dynamic business modeling — The embedded industry-specific business logic of billing systems in many industries has been a major impediment. The adoption of dynamic business modeling is critical for BSS solutions to succeed on other industries.
• The emergence of billing hubs — Centralized billing through SaaS or cloud computing could give rise to hubs that will serve multiple CSPs. Subsequently, centralized billing hubs could serve not only communication operators, but also users from other industries that require rating, pricing and billing services.
• Greater focus on customer loyalty and experience — Companies will direct considerable parts of future investment in the modernization of their IT infrastructure toward achieving customer centricity. Charging and billing for services rendered, and the ability to dynamically adopt new and complex pricing policies based on usage and consumption patterns will be key.

Recommendations:

• Solutions should be COTS-based or provided on a SaaS basis. There should be minimal coding, and mainly configuration. Solutions should be predominantly license-based.
• Users and vendors should move away from embedded business logic and use solutions that allow process modeling by non programmers.
• Users and vendors should reduce associated hardware costs and reuse existing hardware if possible. They should not use hardware that is specific for a BSS solution.
• BSS vendors should offer an entry-level price that is significantly below that for CSPs. For all but the largest users, it shouldn't exceed $50,000. Large BSS vendors might find this price too low to justify targeting such users.
• Vendors should offer per-transaction-based pricing models when they provide solutions on a SaaS or outsourced model.
• Vendors should offer only features relevant for the industry. Users shouldn't have to pay for features they don't need.
• Vendors should speak the respective industry's language, rather than using telecom-related jargon.
• Vendors should invest in R&D to unlink existing products from underlying telco processes and information models.
• CSPs should offer BSS solutions to small to midsize companies in industry with high transaction requirements that on their own cannot, or are reluctant to, invest in carrier-grade BSSs.

Some industries outside of the telecom sector should consider BSS solutions to manage their customers. The prime candidates are users with high transaction volumes that operate in a competitive environment. In particular it is media and entertainment, on-demand services, and banking and insurance that should look at BSS solutions. There is some demand among large users in other industries, such as transportation and utilities. Often, the barrier remains high due to highly customized solutions at such companies or the lack of meaningful competition because of a high degree of regulation.

Suppliers of BSS solutions must minimize the requirements for coding and provide highly configurable software-based solutions. They should move away from embedded business logic and use solutions that allow process modeling by non programmers.

For CSPs, there are new opportunities to extend BSS solutions to manage the end-users of companies in emerging industries that do not have the sufficient back-office infrastructures themselves, or that cannot afford carrier-grade BSSs on their own.