Magic Quadrant for Integrated Revenue and Customer Management for CSPs

The integrated revenue and customer management (IRCM) market is composed of communications service providers (CSPs) looking for commercial off-the-shelf software packages that address business-critical revenue and customer management business processes. Increasingly, large companies from other vertical industries are evaluating solutions provided to CSPs for their revenue and customer management requirements.

IRCM meets all transaction-charging processing requirements, regardless of product, service, delivery network, customer type or payment method for a particular CSP. It includes a set of integrated customer and network-facing solutions, supporting customer acquisition, retention and monetization functions.

IRCM combines skill sets from multiple CSP departments. Owners of IRCM functions used to reside in different departments or business units. The networking department was in charge of prepaid; the IT department owned postpaid; and the customer care department owned CRM, self-service and campaign management. These divisions still exist, but IRCM unites them in a single solution and process that simplifies and expedites the order-to-cash process.

The IRCM functional footprint extends into two areas (detailed below). Core functionality is mainly related to traditional billing, charging and customer care features. They are a must-have for any IRCM suite and are usually provided in-house. Adjunct functionality comes from other CSPs' departments and is nice to have but not essential. These functions can be provided in-house or through partners.

Core functionality includes:

• Balance management
• Billing and account management
• Customer self-care
• Dynamic discounting
• Multichannel support
• Partner relationship management
• Policy management (policy and charging rules function [PCRF])
• Product catalog
• Real-time rating or charging

Adjunct functionality includes:

• Analytics and reporting
• Customer/service product life cycle management
• Electronic bill presentment and payment (EBPP)
• Interconnect billing
• Mediation

Source: Gartner (November 2012)

Vendor Strengths and Cautions

Amdocs

Amdocs is a large provider of communication operations and management solutions and services, with revenue of about $3.18 billion in 2011 — of which, Gartner estimates about $1.9 billion is related to IRCM. Amdocs acquired Bridgewater Systems in 2011 to strengthen its charging and policy management capabilities. Over the past 10 years, Amdocs has acquired other IRCM-related companies, such as Xacct Technologies, Clarify and Cramer Systems. Of Amdocs' total IRCM-related revenue, about 5% comes from licenses, 77% from professional services, and 18% from data processing and hosting activities, according to Gartner. Amdocs' IRCM solution portfolio consists mainly of components of the customer management and revenue management products — such as Customer Interaction Manager, Support, Policy, Billing Manager, Multichannel Selling Solution (including retail and e-commerce), Enterprise Product Catalog and CRM — and providing capabilities such as ordering, e-billing, converged charging, billing, PRM and mediation. Amdocs provides the full range of core and adjacent IRCM capabilities, with the exception of analytics and reporting, for which it partners with SAS, ClickFox and Information Builders.

Strengths

• Amdocs' product portfolio includes a comprehensive and extensive IRCM solution that is service-oriented architecture (SOA)-compliant, with an information model that follows TM Forum's Information Framework (SID) specifications.
• Because of its focus on the communication industry, Amdocs has built a workforce that is very knowledgeable of the industry. This specific and focused knowledge has been positively reflected in the IRCM set of components.
• Its marketing strategy is very comprehensive, and the IRCM solution is contextualized to address a broad range of CSP needs (such as the changing nature of prepaid, understanding the dynamics driving convergence, and understanding the retail customer experience and multichannel selling).
• Its ongoing IRCM-related innovation projects and initiatives enable Amdocs to understand what communication customers need today and what they may need in the future.

Cautions

• Amdocs has a limited number of official system integrator (SI) partnerships and mostly delivers solutions on its own. Lack of local expertise and SI partners makes it difficult to address nuances in local markets and specific geographies. As a result, most implementations are done by Amdocs, making many localizations more expensive than other vendors.
• Challenges exist with local project delivery because of the limited autonomy of the local resources from the global Amdocs resource pool. Amdocs has been expanding its limited local resources, especially for managed service customers and local solution delivery governance, to mitigate these challenges.
• It remains to be seen whether the Bridgewater Systems acquisition will provide additional value for CSPs through seamless integration of charging and policy management.

AsiaInfo-Linkage

AsiaInfo-Linkage, headquartered in Beijing, China, is a publicly listed company. The company's core offerings include billing, CRM and business intelligence (BI), in addition to operations support system (OSS) and value-added service technologies. Its IRCM-related revenue was nearly $470 million in 2011.

AsiaInfo-Linkage is a pure-play telecom vendor. It offers convergent billing and online charging capability as part of its Veris Billing solution. Veris BI and Veris CRM offer preintegrated BI and CRM modules. The company emphasizes its Monetization 2.0 program, which enables CSPs to leverage preintegrated, real-time and convergent capabilities of its solutions to enhance revenue and improve the customer experience.

Note: Veris Billing, Veris CRM and Veris BI were previously known as OpenBilling, OpenCRM and OpenBI, respectively.

Strengths

• AsiaInfo-Linkage has a strong Asia/Pacific lineage, with clients comprising large Tier 1 CSPs, such as China Mobile and China Telecom.
• It has a comprehensive product footprint in the IRCM area covering all major subcomponents.
• Its flexible commercial and delivery models aim to strike a balance between CSPs' business and technology requirements in different markets.

Cautions

• AsiaInfo-Linkage has few client references outside its home market (China), which may make it difficult to establish a presence and credibility in international markets.
• It is a relative latecomer in the crowded IRCM space in mature markets — especially Western Europe, where the company has recently established its European headquarters in the U.K.
• It has a lean marketing program compared with other vendors in this Magic Quadrant. Some components of its program that deal with an international focus are just taking shape, and results will be evident in the next two to three years.

Comarch

Comarch, headquartered in Krakow, Poland, is a publicly listed company. The company was founded in 1993 and has since followed an organic growth strategy. In addition to the telecom vertical, Comarch delivers solutions for financial services, government, large enterprises, and small or midsize businesses. The company had revenue of $264.4 million in 2011 — of which, IRCM solutions accounted for nearly $40 million.

The Comarch Convergent Billing system forms the cornerstone of its product and solution offerings in this space. The company has been making investments in an enterprise product catalog to cover most product life cycle management processes. In addition, other areas for investment include policy management, preintegrated BI and self-service capability, and machine-to-machine (M2M) connectivity platform and architecture improvements.

Strengths

• Despite its relatively small revenue base, Comarch has a strong product portfolio that covers most areas of IRCM.
• It focuses on customer centricity through modularity in component design and flexible delivery models. The subcomponents are standards-based and have common architectural constructs, such as data model and process workflows.
• Early traction in growth areas such as M2M connectivity platforms enables Comarch to leverage its IRCM offering and group-level multivertical focus.

Cautions

• Comarch has uneven revenue and client distribution in favor of Western Europe.
• Comarch lacks very large reference customers that can demonstrate the real-life scalability of its core charging platform.
• Lack of a formal partner program with SIs may limit scalability in case of large deployments and installations.

Comverse

Comverse was among the first vendors to offer a single-system approach to business support system (BSS) convergence. Its IRCM revenue, including policy management, amounted to about $390 million in 2011, according to Gartner estimates — of which, approximately one-half came from licenses and the other half from professional services.

To deliver convergence, Comverse completely redesigned its BSS offer after acquiring Kenan and Netonomy. The Comverse One Billing and Active Customer Management solution is built as a single code base around one data model and one product catalog, and handles all aspects of convergence — network, service and payment, as well as policy management, with social capabilities new in 2012.

Comverse One covers active customer management (including self-service, service fulfillment, customer management, and sales and marketing automation); real-time rating and promotions; billing and financials; mediation, roaming and settlements; and policy management and enforcement. Analytics is provided via partnerships with Aricent and IBM, interconnect is provided via Subex, and inbound marketing is provided via Infor.

The company offers various entry points to purchasing the Comverse One solution, depending on a CSP's needs, as well as a migration path toward adding additional modules should the CSP want to do so. Although Comverse aims to migrate all current clients to Comverse One over time, it continues to support Comverse Kenan FX and Comverse Real-Time Billing. Specifically, for Kenan customers, the broader Comverse portfolio has been leveraged to create three forward-path options: evolve to the most recent version of Comverse Kenan FX; add modular Comverse One capabilities, such as real-time for postpaid or marketing automation; or migrate to Comverse One for fully converged BSS.

Strengths

• Comverse has a comprehensive product portfolio that is built on SOA and TM Forum's SID principles.
• Its focused offering and road map support multiple paths to convergence, which provide for incremental expansion of the product portfolio, including additional CRM functions, policy management and enforcement.
• It has certified SI relationships with Accenture and IBM, and strong partnerships with Capgemini, Tech Mahindra and Tata Consultancy Services (TCS), with numerous joint implementations. Infosys and Wipro are also SI partners.

Cautions

• Ongoing product support could be improved. The company's new service organization has made progress in customer support compared with previous years.
• The company's vertical strategy beyond the CSP segment is in its early stages. It does have e-business customers, and its M2M offering might provide an entry point into other verticals. Comverse supports all CSP verticals, including cable, satellite, wireline, wireless and data.
• The three forward-path options for Comverse Kenan customers have not been communicated as clearly as necessary to many current Kenan users, but are starting to be adopted.

CSG International

CSG International is a provider of business support solutions and services, with revenue of about $734 million in 2011 — of which, Gartner estimates that about $391 million was IRCM-related. In December 2010, CSG International acquired Intec Telecom Systems, thus strengthening its billing and mediation capabilities, and also providing opportunities to serve telecom customers, in addition to satellite customers. Of the total IRCM-related revenue, 31% comes from professional services, 62% from data processing and outsourcing, and 7% from software licenses, according to Gartner.

CSG International's IRCM solution portfolio consists of the Advanced Convergent Platform (ACP) application suite (customer interaction and billing management); the Customer Interaction Solutions suite for its North American cable and direct broadcast satellite clients; and Singleview Convergent Billing, Charging and Customer Management; Total Service Mediation; and the Wholesale Business Management Solution. CSG International provides the core and adjacent IRCM capabilities, except for the PCRF capability, which is provided through partnership with Tango Telecom.

Strengths

• CSG International has a broad-based product portfolio that incorporates the IRCM components.
• It exhibits effective communication and commitment to the delivery process, and offers flexible pricing and implementation models.

Cautions

• Despite improvement in the past year, its IRCM product strategy lacks consistent adherence to TM Forum specifications — particularly regarding SID data specifications.
• The acquisition of Intec, its role and its value proposition with respect to the IRCM capabilities need to be described better. CSG International's product road map lacks clarity and transparency with respect to the integration of Intec's solutions.
• Although a partnership program is in place, CSG International does not go so far as to certify partner qualifications. It has a low number of SI partners that can deliver its IRCM solution and components.
• Its sales and marketing strategy has difficulties emphasizing the value of its IRCM solution via measurable elements.
• CSG International's strategic investments with respect to innovations, as well as the innovation process, are not very focused.

Ericsson

Ericsson is a network equipment provider with total revenue of more than $30 billion in 2011. IRCM revenue amounted to nearly $840 million in 2011, according to Gartner estimates — of which, more than 40% came from licenses, with the rest coming from professional services. With the acquisition of LHS in 2007, Telcordia in 2011 and ConceptWave in 2012, Ericsson supplemented its prepaid charging portfolio with postpaid billing and adjacent solutions, including order management and product catalog. The company's IRCM portfolio consists of the billing, real-time charging and mediation modules. Organizationally, the IRCM portfolio is housed in Ericsson's Business Unit Support Solutions.

Ericsson positions its IRCM portfolio as a one-stop shop that is flexible enough to address all CSPs' charging, billing and customer management requirements — regardless of what type of operator they are (mobile, fixed, ISP, TV and so on) or the type of business they need to support (retail or wholesale). It emphasizes a modular approach that enables CSPs to use end-to-end solutions and best-in-class modules, depending on their current IT environment or market position.

Strengths

• Ericsson has a comprehensive product portfolio built on SOA, TM Forum's SID principles, and other standards and protocols.
• It has a global presence, and its experienced staff can be leveraged from across various business units. This includes a strong professional services organization that is capable of priming large transformation projects.
• It has strong SI and partner relationships, as well as many joint implementations, including numerous ones with Atos, Alcatel-Lucent, Capgemini, Accenture and IBM.

Cautions

• Ericsson has relatively few IRCM reference implementations for fixed-line CSPs.
• The value proposition and road map of the combined Ericsson-LHS-Telcordia-ConceptWave portfolio have not been communicated adequately.
• The price point for the IRCM solutions tends to be at the high end.

Huawei

Huawei is a network equipment provider with total revenue of $32.4 billion in 2011. IRCM — part of the application and software portfolio under the larger telecom network line of business — accounted for revenue of slightly more than $1 billion in 2011, according to Gartner estimates. The company has followed an organic growth strategy and has steadily improved its share of the market for IRCM solutions, riding on new wins in emerging markets and in Western Europe.

In the past few years, Huawei has focused on integrating its portfolio of software solutions that comprise convergent billing, CRM, partner relationship management, BI, Web self-service, and revenue management functions such as fraud management and revenue assurance. Huawei positions its IRCM solution as an end-to-end offering that complies with industry standards. The company also offers supporting professional services in its software division and emphasizes quick turnaround for its software solutions.

Strengths

• Huawei's strong product portfolio based on industry standards, coupled with evidence of ongoing investment in supporting infrastructure, aids in localization and delivery.
• It has a strong footprint in emerging markets, with growing sales traction with CSPs in Western Europe.
• It emphasizes customer centricity through outreach programs and high-visibility campaigns. Clients often highlight Huawei's relative flexibility in project commercials and ongoing support activity.

Cautions

• Huawei's lack of consultative approach to selling limits its ability to connect technology solutions to business value.
• It has limited cross-vertical expertise outside telecom — especially in domains that offer new revenue opportunities for CSPs, such as retail, banking and financial services, and utilities.
• It has a strong propensity to position end-to-end offerings that are backed by its own services. As a result, professional services are not as strong for third-party solutions as for Huawei's own solutions.

NetCracker Technology

NetCracker is a global provider of telecommunications operations and management solutions. With the purchase of Convergys' Information Management (IM) division in May 2012, NetCracker strengthened its solutions with revenue management capabilities. NEC, NetCracker's parent company, together with Convergys' IM division, had revenue of $40.21 billion in 2011. NetCracker's and Convergys' combined IM revenue for 2011 was $2.4 billion — of which, Gartner estimates that about $947 million was IRCM-related.

About 69% of its IRCM revenue comes from professional services, 14% from managed services (including data processing and hosting), and about 17% from the sale of software licenses, according to Gartner. NetCracker's IRCM solution portfolio consists of its Customer Management and Revenue Management solution suite. It provides all of the core IRCM capabilities and many of the adjunct functionality, with the exception of interconnect (partial) and offline mediation (via its partnership with DigitalRoute). Additional modules include collection management, service fulfillment and activation, inventory management, a shopping and ordering solution, and dynamic decisioning.

Strengths

• Overall, NetCracker has a comprehensive IRCM solution and components, with an SOA-compliant architecture, based on the adoption and implementation of the SID model and other TM Forum specifications.
• With its acquisition of Convergys' IM business, NetCracker has broadened and further strengthened its expertise in the communications industry, reflecting positively on its IRCM solution.
• The combination of NetCracker's IRCM with NEC's global data center workforce and presence promises expanded geographic reach for the company's IRCM-related portfolio.

Cautions

• It remains to be seen whether the combined NetCracker and NEC resources will deliver positively on the sales, implementation and support of IRCM solutions.
• NetCracker has limited SI partnerships because of NetCracker's direct sales and delivery model and use of NEC as a channel and managed service partner.
• It remains to be seen whether the recent acquisition of Convergys' IM business and its ongoing integration and road map execution will provide additional value for CSPs through seamless delivery and technology integration.

Nokia Siemens Networks

Nokia Siemens Networks, a joint venture between Siemens and Nokia, is a telecom network equipment provider with revenue of more than 18 billion in 2011. According to Gartner estimates, IRCM-related solutions accounted for nearly $450 million in 2011.

Nokia Siemens Networks positions customer experience management (CEM) as the cornerstone of its strategy across products and services. Throughout the years, Nokia Siemens Networks has built or acquired important solution elements that contribute to the wider CSP business and IT transformation story. Given its portfolio of solutions that allow a cohesive view across subscriber, service and network assets, the company is now looking to target a new buying audience in CSP organizations — especially commercial teams that can use this view to enhance customer service and experience.

Strengths

• Nokia Siemens Networks has a solution-led approach to IRCM that is backed by effective marketing and value-based selling to address CSP business requirements.
• It has an effective incubation strategy to manage innovation (internal and external) and to translate it into solutions that impact CSP business objectives, such as reducing costs, managing experience and expanding into adjacent domains.
• It adheres to industry standards and guidelines (such as TM Forum specifications) and has a modular architecture for solution components based on SOA.
• Nokia Siemens Networks has a well-established global footprint and client spread for its core charging platform.

Cautions

• Uncertainty exists regarding the viability of, and its ongoing commitment toward, the BSS unit. Recent public announcements by senior company executives indicate that Nokia Siemens Networks is looking for potential buyers for this line of business.
• The CEM campaign, although promising, is fairly nascent and has yet to see widespread implementation, especially leveraging the end-to-end IRCM product portfolio.
• Nokia Siemens Networks lacks a formal program to engage with IT service vendor partners. Project-specific alliances may limit CSP choice in some cases.
• Nokia Siemens Networks needs to enhance its level of professional services by increasing competencies and expertise around core IRCM solutions.

Oracle

Oracle, as a global provider of hardware, software and services, also provides a comprehensive set of solutions that comprise the IRCM capabilities. It had total revenue of $37.1 billion in the fiscal year ending 31 May 2012 — of which, Gartner estimates about $384 million was IRCM-related. About 62% of its IRCM revenue comes from licenses, 36% comes from professional services, and about 2% comes from data processing and hosting, according to Gartner. Oracle provides the full range of core and adjacent IRCM capabilities. Oracle's IRCM capabilities are provided primarily through the following products: Oracle Siebel CRM, Oracle Commerce (ATG and Endeca), Oracle Communications Billing and Revenue Management, Oracle Communications Elastic Charging Engine, Oracle Communications Policy Controller, Oracle Self-Service E-Billing, Oracle Product Hub for Communications, Oracle Communications Order and Service Management, Oracle Communications Data Model, Oracle Business Intelligence Enterprise Edition, and Oracle Communications Network Charging and Control.

Oracle's solutions for IRCM cover a broad spectrum of high-level business processes that Oracle defines in specific solution sets (such as concept to cash). They are augmented through the following pillars: intelligence-driven IRCM through advanced communication-specific analytics; cross-channel customer experience; open Web 2.0 application development; convergent charging and policy management; and optimized software-hardware systems for application-specific performance (for example, Oracle Exalogic and Oracle Exadata).

Strengths

• Oracle has a comprehensive and broad set of modular and configurable components that cover every aspect of an IRCM solution and can run on a multitude of OS platforms. The underlying architecture is SOA-driven, open and based on industry specifications.
• Oracle has a large global presence with its own Oracle Communications Consulting delivery organization, and a comprehensive SI partner and developer ecosystem, supported by a well-established partner and certification program — the Oracle PartnerNetwork.
• Good balance of customers using IRCM components from outside the communications industry.
• Oracle is driving a number of innovation initiatives, enabling it to proactively respond to evolving market trends and CSPs' needs.

Cautions

• The broad spectrum of Oracle's solutions sometimes makes it difficult for customers to identify the solutions and components that make up the IRCM capabilities.
• Oracle provides product documentation support via its portal "My Oracle Support." However, it can be difficult to discover and locate relevant information.
• CSPs often find the license fees for Oracle's IRCM solutions costly compared with competitive alternatives.

Orga Systems

Orga Systems is a privately held company. As a former system development department of a global smart card manufacturer, it started with a prepaid GSM billing system in 1994. It now has a full suite of IRCM solutions. IRCM revenue amounted to around $100 million in 2011, according to Gartner estimates — of which, half was for licenses and half for professional services.

Its OS.Convergent product includes all core functionality modules, as outlined in the Market Definition/Description section. Adjunct functionality includes analytics and reporting, customer/service product life cycle management, interconnect, active mediation, service control, recharge (voucher management plus airtime selling), mobile finance/mobile money, TAP roaming, accounts receivable, order management, and inventory management. Some of these modules have been repackaged into other suites, including OS.Bandwidth for dynamic bandwidth management, OS.Prevent for bill shock prevention of data services, OS.Corporate for convergent billing and mobile VPN for corporate customers, and OS.Prepaid.

Orga Systems positions its portfolio as an enabler of real-time charging and billing. In particular, it emphasizes the solution's scalability and low latency, its ability to enable CSPs to roll out new price plans quickly, and the potential to reduce churns and retain customers.

Strengths

• Orga Systems offers a comprehensive solution suite. Some modules are provided through partnerships, including customer care (ConceptWave), order management (ConceptWave), EBPP (Doc1) and interconnect (Basset).
• Customer feedback is very positive regarding Orga Systems' market responsiveness and track record.
• The company has a clear method of communicating and measuring the products and solutions it sells by capturing and acting on multiple key performance indicators (KPIs), including time to market, churn, customer complaints, leakage reduction, ROI, deployment time, total cost of ownership and others.

Cautions

• Orga Systems has a limited geographic footprint, with only a few customers in North America and the Asia/Pacific region.
• SaaS and outsourcing are currently out of scope of Orga Systems' delivery model.
• With regard to marketing execution, Orga Systems' ability to communicate its capabilities needs improvement. The company remains relatively unknown in the industry.
• Its partner ecosystem is relatively limited to SIs, such as Accenture, Engineering (Italy), Capgemini, IBM and GE. Its SI/partner certification program is a work in progress.

Redknee

Redknee is a provider of revenue and customer management solutions and services, with revenue of about $61 million in fiscal-year 2011 — of which, Gartner estimates that about $54 million was IRCM-related. Of the total IRCM-related revenue, Gartner estimates that about 65% comes from professional services, and 35% is related to software licenses.

Redknee's IRCM solution portfolio consists of Turnkey Converged Billing (TCB), Next Generation Rating and Charging (NGRC), and InBill. Redknee provides the full set of core and adjacent IRCM capabilities.

Strengths

• Overall, Redknee has a broad-based product portfolio that incorporates all the IRCM components, with a focus on SOA integration and open APIs.
• Redknee delivers its solutions as on-premises or cloud-based. This includes a fully hosted and managed SaaS offering.

Cautions

• Although Redknee has an SI partnership program in place, it only has two certified partners. It delivers most of its solutions on its own.
• It has very limited presence outside the communications industry. Customers from industries outside communications may hesitate to adopt Redknee's IRCM solutions because of limited industry-specific expertise.
• Its solution delivery staff has a limited geographic footprint. Customer support is provided only from its offices in Canada, Spain and India.

SAP

SAP is a software publisher with total revenue of more than $18 billion in 2011. According to Gartner estimates, IRCM revenue amounted to around $110 million in 2011 in the CSP sector alone — of which, more than 50% came from licenses, with the rest coming from professional services. SAP also provides its IRCM portfolio to verticals outside the CSP sector. According to estimates based on SAP numbers, this strategy resulted in IRCM revenue of more than $600 million in 2011. SAP's IRCM portfolio is based on internal development, plus the 2009 acquisition of French rating and pricing vendor Highdeal, which is a spinoff from France Telecom.

The company's IRCM portfolio consists of six solutions: CRM Order Management and Customer Care, Convergent Mediation (via partnership with DigitalRoute), Convergent Charging, Convergent Invoicing, Customer Financials Management, and Customer Usage Analytics. These solutions are driven out of the SAP Billing and Revenue Innovation Management group.

SAP's IRCM portfolio is part of SAP's Offer to Cash portfolio, which also includes CRM Marketing and ERP Financials solutions. For policy management and mediation, the company partners with DigitalRoute. SAP positions its IRCM portfolio as industry-neutral and claims it can leverage it across its 24 named industry verticals.

Strengths

• SAP's well-defined vertical strategy enables it to leverage its technologies, position, resources and methodologies across 24 vertical market segments.
• It has a highly flexible rating and pricing engine.
• SAP's IRCM portfolio has a predictable road map and is financially stable as part of a large organization.

Cautions

• Getting access to IRCM experts can get mired in multiple layers of organizational red tape.
• SAP consultants often lack hands-on expertise with CSPs, because they are recruited from other industry verticals.
• CSPs' awareness of SAP's IRCM capabilities remains relatively low, although it has improved during the past year.

Sitronics

Sitronics is a Russian high-tech company, with total revenue of nearly $1.5 billion in 2011. IRCM revenue amounted to more than $180 million in 2011, according to Gartner estimates — of which, 25% came from licenses, 20% from outsourcing and the rest from professional services. Sitronics' IRCM portfolio comes from Strom Telecom, a Czech telecommunications equipment and software manufacturer, which merged with Russian microelectronics producer NIIME & Micron in 2002 to form Sitronics. The 2006 acquisition of the Greek service company Intracom extended Sitronics' reach into Europe, the Middle East and Africa.

The company's IRCM portfolio, Foris, includes all core functionality modules, as outlined in the Market Definition/Description section. Adjunct functionality includes analytics and reporting, provisioning, EBPP, collections, order management, value-added services, and others. Organizationally, the IRCM portfolio is housed in the Telecom Solutions business unit.

Sitronics positions its IRCM portfolio as a modular, configurable suite that enables CSPs to add new functionality and achieve convergence without the need of risky migrations.

Strengths

• Sitronics offers a comprehensive product portfolio designed to support more than 100 million subscribers.
• It has strong project management expertise and a clear feedback loop.
• Sitronics focuses on the requirements of CSPs in emerging markets, and has a solid road map and implementation strategy to address CSPs' product and service requirements.

Cautions

• Its customer base is still concentrated in Eastern Europe, with 67% of IRCM revenue (2011), although the company has notable revenue in Western Europe (17%) and the Asia/Pacific region (10%).
• Sitronics has low visibility outside of Eastern Europe.
• Its number of SI partners remains relatively limited, with Sitronics performing most of the services around its product suite.

Tecnotree

Tecnotree, headquartered in Espoo, Finland, is a publicly listed company. The company was formed following an acquisition of Lifetree Convergence by Tecnomen in 2008. Gartner estimates that revenue for IRCM solutions was slightly more than $50 million in 2011, with the majority attributed to professional services around Tecnotree's own products.

Tecnotree emphasizes a solution-led approach to critical business problems facing CSPs in the areas of revenue generation and customer experience. This is reflected in recent marketing initiatives by the company and new product launches, including a unified product catalog. As part of its product portfolio, Tecnotree offers convergent charging, billing, customer life cycle management, product life cycle management, value-added messaging and content delivery solutions.

Strengths

• Tecnotree's product portfolio is well-rounded. It is based on standards and guidelines, such as TM Forum specifications and flexible delivery models (including utility/cloud).
• It has a strong innovation funnel strategy. Tecnotree is placing bets on CSPs' business imperative to participate in digital commerce, to bundle and personalize services, and to improve customer lifetime value through the use of analytics and unified customer care.
• Its investment in technology and intellectual property development as a percentage of revenue is relatively high compared to larger IRCM vendors.

Cautions

• Tecnotree's lack of a partnership model for professional services may impact scalability in execution in the case of large deployments/installations.
• It relies on partner products for areas such as policy control and advanced analytics capability.
• Its client base is concentrated in Latin America, the Middle East and Africa, with a sales focus on existing key accounts to grow new business.
• Its marketing campaign "Powering the Digital Marketplace" is relatively new and yet to show evidence of CSP interest/uptake.

ZTE

ZTE, headquartered in Shenzhen, China, is a publicly listed company. The company's core business is telecom network equipment. It had revenue of nearly $14 billion in 2011 — of which, Gartner estimates that IRCM-related revenue was about $300 million. The company recently went through a reorganization to decentralize its sales and delivery capability into local, regional and global structures. As part of the structuring, marketing and R&D have been closely aligned to improve response times to requirements from key accounts. The company has been focusing on its globalization strategy and introducing more of its products and services to international markets.

ZTE positions its IRCM solution as a cost-effective, end-to-end offering with fast time to market. The solution is built around the ZSmart range of products, which include real-time rating and charging, product catalog, interconnect, customer care, and BI modules.

Note: ZTE did not respond to requests for supplemental information or for a review of the draft contents of this research. Therefore, Gartner analysis is based on other credible sources, including public information and discussions with Gartner clients that use ZTE products/solutions.

Strengths

• ZTE provides comprehensive coverage across all IRCM functions, with flexible delivery and pricing options and adherence to standards and guidelines, such as TM Forum specifications.
• Evidence exists of the high scalability of ZTE's charging platform based on the number of subscribers supported on a single instance.
• ZTE's new organizational structure with more autonomy for local and regional teams positions it to make inroads into new markets, especially in Western Europe. The Middle East and Africa, as well as Asia/Pacific, seem well-covered in terms of presence.

Cautions

• ZTE has a limited SI partner ecosystem, with Atos and Indra as the only two certified partners.
• Its product marketing is centered on technology and R&D capability, rather than emphasizing the effectiveness of its IRCM solution offerings to address CSPs' business concerns.
• ZTE lacks significant mind share outside its home country and region. It may face difficulty competing with stronger international players as it makes forays into new markets.

Vendors Added or Dropped

We review and adjust our inclusion criteria for Magic Quadrants and MarketScopes as markets change. As a result of these adjustments, the mix of vendors in any Magic Quadrant or MarketScope may change over time. A vendor appearing in a Magic Quadrant or MarketScope one year and not the next does not necessarily indicate that we have changed our opinion of that vendor. This may be a reflection of a change in the market and, therefore, changed evaluation criteria, or a change of focus by a vendor.

Added

The following vendors were added to the 2012 IRCM Magic Quadrant, because they met the minimum criteria for inclusion:

• Comarch
• NetCracker
• Redknee
• SAP
• Sitronics

NetCracker was added because of its acquisition of Convergys' Information Management business unit.

Dropped

The following vendors were dropped from the 2012 IRCM Magic Quadrant, because they did not meet the minimum requirements for inclusion:

• Alcatel-Lucent
• Convergys
• MetraTech

Convergys' Information Management business unit was acquired by NetCracker.

Worldwide, there are more than 200 vendors that address CSPs through a variety of products and solutions. Most of these vendors are small in terms of revenue, provide only point solutions, or have a small geographic footprint. For these reasons, we evaluated only vendors with a combined license and service revenue of more than $100 million in 2011, and we added a number of emerging companies — for which, we see high interest from CSPs.

Our criteria for inclusion and exclusion in this Magic Quadrant were as follows:

• Inclusion criteria:
  • Independent software vendors (ISVs) — Only software publishers are included. Network equipment providers (NEPs) that have their own BSS product portfolios are included in this category as well.
  • Functionality — The software suite has to provide the full range of core customer and revenue management functions, as shown above.
    • Real-time rating or charging, and billing and account management must be provided in-house.
    • Most of the remaining core functions should be provided in-house, but vendors that provide one or two functions through partners are also considered.
    • Adjunct functions can be provided in-house or through partners.
  • Solutions scope — The solution has to address prepaid and postpaid.
  • Geographic reach — Vendors must have customers in more than a single region. For a definition of the regions, see "Market Definitions and Methodology Guide: Telecom Operations Management Systems, Worldwide."
• Exclusion criteria:
  • SIs that do not have their own software suite are excluded.
  • Solution scope — Solutions that address only cable providers or ISPs are excluded.
  • Geographic reach — Vendors that are present in a single country only are excluded.

Evaluation Criteria

Ability to Execute

This axis evaluates IRCM vendors on the quality and efficiency of the processes, systems, methods or procedures that enable their performance to be competitive, efficient and effective, and to positively affect revenue, retention and reputation. For CSPs seeking IRCM solutions, a vendor's Ability to Execute is primarily a combination of factors driven by product functionality, architecture and performance, and by the ability to meet customer expectations during product delivery and operation. Solution providers are judged on their ability and success in capitalizing on their vision. Our evaluation of a vendor's Ability to Execute is based on the following criteria:

• Product/service: The breadth and availability of the vendor's products that compete in and serve the IRCM market. This includes platforms, scalability, specific functionality (as outlined above), product integration and delivery models.
• Overall viability: The overall organization's financial health, the financial and practical success of the business unit and the likelihood of the individual business unit to continue to invest in the product, continue offering the product and advancing the state of the art within the organization's portfolio of products.
• Sales execution/pricing: The number and quality of contract wins during the past two years, the availability of different pricing models, and the ability to provide presale supports, including proofs of concept.
• Market responsiveness and track record: The ability and responsiveness in meeting changing client demands.
• Marketing execution: The ability to capture mind share of clients and prospects through targeted activities.
• Customer experience: The ability to provide ongoing customer support to clients.
• Operations: The structure that is put in place to effectively meet organizational goals and commitments, including the ability to address emerging IT skills needed around the nontraditional services, such as data, digital, Internet and IT-centric services.

Table 1 lists the relative weighting of the various criteria in terms of a vendor's Ability to Execute in this market.

Source: Gartner (November 2012)

Completeness of Vision

This axis evaluates IRCM vendors on their ability to convincingly communicate their current and future market direction, innovation, customer needs, and competitive forces, and on how well those statements map to Gartner research positions. IRCM application providers are rated on their understanding of how they can address market forces to meet and anticipate customer demands. For CSPs seeking IRCM solutions, vendors' Completeness of Vision is primarily a combination of vendor domain expertise, an appropriate go-to-market strategy, and a focus on innovation in product functionality and enabling technology. Geographic footprint and the ability to cater to industries outside the CSP vertical also play a role.

• Marketing strategy: Ability to articulate market direction and aligned product and service offerings with market requirements internally and externally.
• Sales strategy: A vendor's ability to work with customers and prospects through its sales force and sales tools. This a vendor's ability to partner formally and informally with SIs.
• Offering (product) strategy: A vendor's ability to anticipate market and customer demand in their product road map, and the competitive differentiators related to it.
• Vertical/industry strategy: Ability to provide IRCM solutions to industries outside the CSP vertical, such as financial services, utilities and others.
• Innovation: Ability to discern and define emerging market needs and invest adequate resources to translate them into solution features and service capabilities.
• Geographic strategy: Ability to provide products and services globally through direct or indirect resources. The ability to localize the product is an important differentiator.

Table 2 lists the relative weighting of the various criteria with regard to a vendor's Completeness of Vision in this market.

Source: Gartner (November 2012)

Quadrant Descriptions

Leaders

Leaders are vendors that would normally be included in shortlists for IRCM solutions for large and midsize CSPs worldwide. They perform profitably, grow their revenue and have a presence in all major markets. Their functionality is above average, and their technology and scalability are leading edge.

Leaders also engage in innovative projects and activities, carefully listening to their customer base. They are also engaged in understanding the underlying and emerging patterns/trends in revenue and customer management activities, and direct their R&D resources and investments accordingly.

Challengers

Challengers perform well in their selected markets or industries. Although they have high capability and performance (in terms of sales and growth), they may not be targeting all segments or geographies of the IRCM market, or they may have a more limited vision of their functionality or technology. Clients with a conservative approach to business will find lower-risk options in this sector.

Challengers can invest in innovative projects driven by their R&D activities. A proactive approach to R&D and innovation in IRCM can move Challengers into the Leaders quadrant.

Visionaries

Visionaries have unique functional or technical IRCM-related capabilities and offerings, but also have constrained capabilities in geographic or financial terms. They are characterized by their ability to anticipate market transformation, such as increased analytical functionality or integration, and by their optimization of commodity and service management business processes. Clients that have a tolerance for risk and that are seeking a differentiating product should consider vendors in the Visionaries quadrant.

An increased focus on their IRCM technology and solution delivery can move Visionaries into the Challengers or Leaders quadrant, depending on how companies accept the new technology or if the Visionaries can also develop partnerships that complement their strengths.

Niche Players

Niche Players in this market are still worthy of consideration. Given the fragmentation of the market, potential buyers should consider that any listing on this Magic Quadrant is a good indication of vendor/product credibility. Nevertheless, vendors in the Niche Players quadrant are situated there because of a geographical shortfall; narrow or limited focus on marketing strategy, innovation, delivery models or limited partnerships; lack of financial strength (that is, they have not achieved financial viability compared with the Leaders); or they have not come as far as the Leaders in advancing their technologies or functionality. This prevents them from being universally suitable to all customers.

This Magic Quadrant updates "Magic Quadrant for Integrated Revenue and Customer Management for CSPs."

We adjusted the inclusion criteria, weight and evaluation criteria to account for changes in the market. Highlights are as follows:

• Inclusion criteria:
  • Annual revenue:
    • We lowered the bar for inclusion to $100 million from $300 million in combined IRCM-related license and services revenue.
  • Functionality:
    • We stipulated that vendors have to provide charging, billing and account management in-house. Previously, we also considered vendors with OEM and partner arrangements for these functions.
• Evaluation criteria:
  • Overall viability:
    • We added this criterion because the viability of some vendors or the business units of large vendors has become less stable than in the past.
    • We expect mergers and acquisitions (M&As) as well as spinoffs in the coming years. Technology buyers need to expect short-term disruptions in the case of such events.
• Weights:
  • Marketing strategy:We reduced this weight from "high" to "standard" because all vendors in the Magic Quadrant have a solid marketing strategy. This criterion no longer is a significant differentiator.
  • Vertical/industry strategy:We increased this weight from "low" to "standard" because companies outside the CSP vertical are increasingly interested in IRCM solutions.
  • Customer experience:We reduced this weight from "high" to "standard" because customer support is commoditized and in itself provides little differentiation. This criterion does not address the actual execution of support, which is covered in the Market Responsiveness and Track Record section.

Key Findings

• The IRCM solution portfolios across all vendors scored in this Magic Quadrant look relatively similar. This shows an increasing product commoditization.
• There are major differences when it comes to how vendors work with solutions and service partners, and how they measure and communicate the value of their solutions:
  • Some vendors prefer to provide the entire suite plus services on their own. Others have elaborate OEM and service partner ecosystems in place.
  • Some vendors communicate the value of their solutions mainly through case studies. Others produce elaborate models and processes that demonstrate the solutions' ROI, time to market, cost savings and other KPIs.
• There is more emphasis on standards-based architectures and the modularization of solution suites based on SOA principles. CSPs are increasingly demanding such architectures and are no longer willing to tolerate high customization costs.
• Some vendors continue to expand their client base beyond communications, such as in utilities, finance, content/media and other verticals.
• The survival of many IRCM vendors still looks doubtful. Many of the vendors featured in this Magic Quadrant show no or only modest organic growth. This leaves the door open to more M&As in the near future.
• The lack of Visionaries suggest that the market for IRCM solution has matured over time, and all vendors have a common understanding of the short-term market needs.

Recommendations

CSPs should:

• Demand proof that the software is truly productized and requires minimum customization.
• Request commitment to an open-standards-based architecture and support of flexible business processes and new service attributes.
• Evaluate software vendors on their ability to take ownership of a project, rather than just supplying the software.
• Request proof that the software vendor works well with the professional services firms of the CSP's choice, and that the vendor can transfer knowledge to the CSP's IT department as required.
• Consider alternative delivery models, such as SaaS and outsourcing.
• Ensure that the vendor has the staff required to implement the project on time.
• Request direct access to technology experts to avoid being mired in a vendor's institutional red tape.
• Verify that the solution is sufficiently localized.
• Ask vendors to specify their solutions' support for nontraditional services, such as data-centric and digital value-add services.

The IRCM market differs from other software markets. Its peculiarity accounts for the survival of many small and midsize suppliers. Software functionality is high on the priority list for vendor selection, but the software alone doesn't make or break projects. Equally important is a vendor's ability to take ownership of a project from initial consulting to integration, ongoing maintenance and upgrades.

In many cases, the price of the software amounts to only 20% or less of the overall cost of implementing, integrating and supporting a system. Thus, many large IRCM vendors have set up strong professional services divisions. In fact, software suites are often intended to drive the sale of services.

Most IRCM vendors offer comprehensive solution suites, and some have been branching out into CRM, analytics, reporting, OSSs and related functionality. Large CSPs still generally source their core IRCM solutions from a handful of ISVs, such as the ones featured in this Magic Quadrant. But for small and midsize CSPs, and for large ones looking for adjunct solutions, dozens of suppliers remain.

At the same time, CSPs are becoming increasingly uneasy about spending large sums on customization. Demand for genuine off-the-shelf solutions built on an SOA is increasing, as CSPs re-evaluate opportunities to monetize new services and reduce costs. CSPs no longer consider it acceptable practice to spend upward of 90% on customization and integration and less than 10% on software licenses.

During the past three years, a number of NEPs have expanded their footprint in this market. Starting with intelligent-network-based charging, they have expanded into postpaid billing and customer management through acquisitions (Ericsson, NEC and Sitronics), partnerships (Alcatel-Lucent and Nokia Siemens Networks) or software developed in-house (Huawei and ZTE).

Market Size and Share

Overall, we expect the worldwide IRCM market to grow from around $16.7 billion in 2011 to $18.7 billion in 2016. This number reflects external spending available to vendors such as those covered in this Magic Quadrant.

The market is concentrated at the top and fragmented at the bottom, with the top 10 vendors accounting for $9.0 billion of total software, services and outsourcing revenue in 2011, the next 10 accounting for $3.5 billion and the following 10 accounting for $1.6 billion. For details, see "Forecast: Telecom Operations Management Systems (BSS, OSS and SDP), 2009-2016, 3Q12 Update" and "Market Share: Telecom Operations Management Systems (BSS, OSS and SDP), Worldwide, 2010-2011." (Note: Gartner's statistics only include IRCM core functionality.)

The recent recession magnified the challenges facing the IRCM market. The survival of many BSS suppliers continues to look as doubtful as it did three years ago. Only a few vendors demonstrated high organic growth, which leaves the door open for more M&As in the near future. Unprofitable or slow-growing companies will face increasing pressure from investors to be sold to more established companies or to make acquisitions in order to turn their fortunes around.

Market Drivers

CSPs with multiple lines of business and payment models are likely to adopt IRCM when their existing prepaid and postpaid billing platforms reach their end of life. This could relate to the ability to bill and charge for content, scalability issues or high support and maintenance costs. Such transformation projects tend to be resource-intensive and risky. CSPs tend to drag their feet, but they will have to embark on such projects sooner or later.

Other market drivers include the following:

• Industry consolidation through M&As among CSPs and the convergence of fixed and mobile lines of business, which are likely to drive the consolidation of multiple billing and charging platforms.
• The increasing use of, and revenue from, new services and business models, which requires new and adaptable payment methods. This development includes, among other things, partner settlement, dynamic pricing, direct operator billing, new players (such as M2M and smart grid companies) and cloud services.
• The proliferation of devices, which requires a single representation and view of the customer.
• The saturation of the market for mobile voice telephony in some markets, which leads to increasing focus on customer retention. Policy management, analytics and BI will be important tools.
• The requirement for a more agile service delivery infrastructure, which allows for flexible charging for new content, often encompassing third-party collaboration.