Magic Quadrant for Integrated Revenue and Customer Management for CSPs

17 October 2013 ID:G00248753
Analyst(s): Norbert J. Scholz, Kamlesh Bhatia, Jouni Forsman

VIEW SUMMARY

We rate solution suites that provide billing, customer care, rating, charging, pricing, partner relationship management, policy management, mediation, self-service, analytics and other functions. Target buyers are communications service providers.

Market Definition/Description

This document was revised on 30 October 2013. The document you are viewing is the corrected version. For more information, see the Corrections page on gartner.com.

Market Definition

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.

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 that support customer acquisition, retention and monetization functions.

Functional Footprint

The IRCM functional footprint extends into two areas:

  • Core functionality includes mainly traditional billing, charging and customer care features. Usually, CSPs' billing and customer care divisions manage these functions.
  • Adjunct functionality often resides in other CSP departments.

Suppliers should address most core functionality through their own suites. They can work with partners for adjunct functionality.

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

IRCM unites these functions in a single solution and process that simplifies and expedites the order-to-cash process.

Market Size

Gartner predicts the worldwide IRCM market to grow from around $18 billion in 2013 to more than $20 billion in 2017. This number reflects external spending on most core IRCM functionality available to vendors, such as those covered in this Magic Quadrant. It includes license sales, consulting, integration and maintenance, and outsourcing.

For details, see "Forecast: Telecom Operations Management Systems (BSS, OSS and SDP), 2010-2017, 3Q13 Update." (Note: Gartner's statistics include only IRCM core functionality.)

Market Share

The market is concentrated at the top and fragmented at the bottom. In 2012:

  • The top 10 vendors accounted for $9.9 billion of total software, services and outsourcing revenue (61%).
  • The next 10 accounted for $3.4 billion (21%).
  • The next 10 accounted for $1.4 billion (8%).

For details, see "Market Share: Telecom Operations Management Systems (BSS, OSS and SDP), Worldwide, 2011-2012." (Note: Gartner's statistics include only IRCM core functionality.)

Magic Quadrant

Magic Quadrants provide a snapshot in time based on a specific set of evaluation criteria and weights.

Gartner advises readers not to compare this year's placement of vendors with those of previous years because:

  • The market is changing, and the criteria for selecting and ranking vendors continue to evolve.
  • Scores are relative, rather than absolute, reflecting the advancement of all vendor solutions' Completeness of Vision and Ability to Execute.

Gartner advises organizations against simply selecting vendors that appear in the Leaders quadrant because:

  • All selections should be buyer-specific.
  • Vendors from the Challengers, Niche Players or Visionaries quadrants may be better matches for your business goals and solution requirements.

This Magic Quadrant will help CIOs and business and IT leaders that are developing their IRCM strategies to assess whether they have the right products and solutions to support them.

Figure 1. Magic Quadrant for Integrated Revenue and Customer Management for CSPs
Figure 1.Magic Quadrant for Integrated Revenue and Customer Management for CSPs

Source: Gartner (October 2013)

Vendor Strengths and Cautions

Amdocs

Amdocs is a software provider and outsourcer with a 2012 total revenue of nearly $3.3 billion. IRCM revenue amounted to about $1.9 billion in 2012, according to Gartner estimates — of which about 4% came from licenses, 77% from services and 19% from outsourcing.

Strengths
  • Amdocs has one of the most comprehensive and widely deployed IRCM portfolios. It has a wide range of clients, including large and midsize CSPs, fixed and mobile CSPs, and multiple-system operators (MSOs).
  • Amdocs uses its own delivery organization. This simplifies customer relationships, as opposed to the use of external integrators.
  • The company has strong mind share with CSP buying centers.
  • Amdocs marketing strategy is comprehensive across revenue management and customer management, including innovative approaches.
Cautions
  • Amdocs has a limited number of system integrator (SI) partners. This means that it often suffers from a lack of local subject matter expertise across its entire portfolio, increasing the cost and time of delivery.
  • The company tends to be relatively inflexible in terms of adhering to contractual obligations, managing contracts to the letter.
  • The price point for the IRCM solutions tends to be at the high end.

AsiaInfo-Linkage

AsiaInfo-Linkage is a specialized IRCM vendor. IRCM revenue was about $530 million in 2012, according to Gartner estimates — of which about 87% came from licenses and 13% from services.

Strengths
  • The company has stepped up its efforts to build an international presence — especially in the Middle East, Africa and Europe, where it has a regional sales office and is in the process of recruiting local staff.
  • It has a comprehensive IRCM product footprint covering all major subcomponents with flexible commercial and delivery models.
Cautions
  • AsiaInfo has few client references outside its home market in China.
  • The company has a formal SI partner program, but it has only a few partners that can offer services internationally. Most partners are China-centric.

Comarch

Comarch is an SI and software provider with a 2012 total revenue of around $220 million. IRCM revenue amounted to about $40 million in 2012, according to Gartner estimates — of which about 19% came from licenses and 81% from services and outsourcing.

Strengths
  • Despite its relatively small IRCM revenue base, Comarch has a strong product portfolio that covers most areas of IRCM.
  • The company has gained traction for M2M connectivity platforms and is investing in B2B and CSP asset monetization solutions.
  • Comarch's flexible and cooperative approach, even in highly complex projects, accounts for high client satisfaction.
Cautions
  • Project delivery and governance require improvement.
  • Comarch lacks a formal SI program, relying heavily on its own internal services capabilities and tactical alliances with other vendors.
  • Comarch lacks very large reference customers that can demonstrate the real-life scalability of its core charging platform.

Comverse

Comverse is a software provider with a total revenue of nearly $680 million in 2012. IRCM revenue, including policy management, was about $287 million in 2012, according to Gartner estimates — of which about 48% came from licenses and 52% from services.

Strengths
  • Comverse's revamped product portfolio, built on a single data model, has been gaining traction with customers.
  • Its focused offering and road map support multiple migration paths to the new product portfolio. It provides for incremental expansion, including additional CRM functions and a social channel for customer interactions, policy management, analytics and enforcement.
  • It has certified SI relationships with Accenture, IBM, Capgemini and Tata Consultancy Services (TCS), with numerous joint implementations. Infosys and Wipro are also frequent SI partners.
Cautions
  • Comverse's regional marketing strategy requires more fine-tuning to account for local CSP demands.
  • Project governance and alignment with SI partners require improvement, in particular for larger projects.
  • Strong focus and customer deployments for mobile convergence and quad-play solutions may dilute capabilities in offering pure fixed-line solutions.

CSG International

CSG International is a software provider and outsourcer with total revenue of nearly $760 million in 2012. IRCM revenue was more than $400 million in 2012, according to Gartner estimates — of which about 7% came from licenses, 32% from services and 61% from outsourcing. In 2012, CSG acquired Ascade, a provider of interconnect billing, routing optimization and quality assurance solutions for CSPs.

Strengths
  • CSG has a broad IRCM product portfolio (the only exception is PCRF, which is partner-provided) that shares a common data model.
  • CSG offers a flexible pricing structure across different delivery models, from software to services, and pricing models, from fixed to performance-based ones.
  • The company has strong mind share and existing relationships among cable and satellite providers.
Cautions
  • The IRCM platform requires better modularization and ready-to-deploy modules. The real-life benefits of CSG's architecture are not always obvious.
  • CSG's product offering lacks compelling competitive differentiators.

Elitecore Technologies

Elitecore Technologies is a software provider with a 2012 total revenue of around $25 million. IRCM revenue, including policy management, amounted to about $13 million in 2012, according to Gartner estimates — of which about 60% came from licenses and 40% from services.

Strengths
  • Elitecore brings a strong network and IP-centric view to IRCM, leading to solutions that address real-time customer experience management and monetization of next-generation networks.
  • Despite its relatively small size, Elitecore has a product portfolio that covers most areas of IRCM.
  • Elitecore's leadership shows a proactive approach and overall responsiveness in engagements.
Cautions
  • Elitecore is a relatively small player with visibility mostly in emerging Asia/Pacific, the Middle East, North Africa and sub-Saharan Africa, the areas where the company has existing clients.
  • Partnerships with SIs are largely tactical and account-based. Elitecore's alignment with partners needs improvement, especially regarding program management and ongoing support.
  • Elitecore has low profit margins compared with the industry average, despite growing top-line revenue.

Ericsson

Ericsson is a network equipment provider (NEP), software provider, SI and outsourcer, with a total revenue of $35 billion in 2012. IRCM revenue amounted to nearly $950 million in 2012, according to Gartner estimates — of which more than 43% came from licenses, 54% from services and 3% from outsourcing. Recent acquisitions involving IRCM include Telcocell (2013), Devoteam (2013) and ConceptWave (2012).

Strengths
  • Ericsson has created significant momentum in new client wins in the past 12 months, facilitated by a global presence and experienced staff in various IRCM-related business units.
  • It has a strong services organization that can prime large transformation projects and provide full outsourcing around its own solutions.
  • The company has made a substantial investment in combining services and IRCM software solutions.
Cautions
  • The integration of multiple acquisitions is not yet externally visible. Future acquisitions might prolong portfolio reconfiguration.
  • Ericsson lacks a cohesive marketing strategy that cuts across the different organizational units to highlight the role of IRCM around major themes such as monetization and customer experience.
  • The price point for IRCM solutions tends to be at the high end.

Huawei

Huawei's is an NEP and software provider with a total revenue of approximately $35 billion in 2012. IRCM revenue amounted to about $1.4 billion in 2012, according to Gartner estimates — of which about 45% came from licenses and 55% from services and outsourcing.

Strengths
  • Huawei is enhancing its IRCM portfolio with investment in supporting regional infrastructure to aid in localization and delivery. It is gaining market attention beyond emerging markets.
  • Huawei's strength lies in providing a "value for money" approach. Its marketing focus emphasizes customer centricity through outreach programs and high-visibility campaigns.
  • It continues its focus on being standards-compliant. Huawei is part of working groups in many standards bodies.
Cautions
  • Huawei's lack of consultative approach to selling limits its ability to connect technology solutions to business value.
  • Huawei tends to back end-to-end offerings by its own services. Services are weaker for third-party solutions than for its own solutions.
  • Projects could benefit from greater efficiency in managing ongoing change requests.

NEC (NetCracker Technology)

NEC is an NEP, software provider and outsourcer with a 2012 total revenue of around $35 billion. IRCM revenue, via its NetCracker Technology division, amounted to more than $1 billion in 2012, according to Gartner estimates — of which about 21% came from licenses, 67% from services and 12% from outsourcing. In 2012, NEC acquired Convergys' Information Management (IM) division.

Strengths
  • NetCracker's latest IRCM solution is built on a single platform and is tightly integrated with the company's services division.
  • The company is building on relationships inherited from Convergys by upgrading legacy implementations and branching out into other industries.
  • NEC gives NetCracker deep resources to acquire capabilities. NEC appears to give NetCracker freedom in pursuing its IRCM strategy.
Cautions
  • NetCracker has limited SI partnerships because of its direct sales and delivery model. It uses NEC as a channel and managed service partner, limiting delivery flexibility.
  • There have been hiccups after the merger with Convergys' IM division, such as communications between CSP clients and NetCracker.
  • The integrated NetCracker portfolio is yet to gain brand recognition. Most of the NetCracker IRCM traction is based on existing Convergys customers.

Openet

Openet is a specialized IRCM vendor. According to Gartner estimates, IRCM revenue amounted to around $130 million in 2012 — of which about 42% came from licenses and 58% from services.

Strengths
  • Openet has Tier 1 CSP customers in North and Latin America, Western and Eastern Europe, Asia/Pacific, and the Middle East/Africa.
  • An efficient marketing campaign has put Openet on the radar screen of CSPs globally. This includes targeted industry surveys and a campaign around the replacement of intelligent network (IN)-based charging solutions.
  • Openet's strong investment in charging and policy management is an enabler for service innovation and evolution for CSPs.
Cautions
  • The product suite shows some gaps, particularly in billing and account management and partner relationship management. Openet's focus is real-time charging and policy management.
  • No formal SI partner certification program in place. There are plans to launch such a program by the end of 2013.

Oracle

Oracle is a hardware and software provider with total revenue of around $37.2 billion in 2012. IRCM revenue was about $410 million in 2012, according to Gartner estimates — of which about 63% came from licenses and 37% from services and outsourcing.

Strengths
  • Oracle has a comprehensive set of modular and configurable components that cover every aspect of an IRCM solution, and can run on many OS platforms.
  • Oracle has a global presence and extends the reach of its IRCM solutions via its SI partner and developer ecosystem, and its own consulting division.
  • The company has acquired and integrated many companies offering IRCM solutions. It is expected to make more acquisitions.
Cautions
  • IRCM projects can suffer from layers of organizational red tape and complex arrangements between Oracle and its delivery partners.
  • The integration of various IRCM modules can be more complex than the open and modular architecture promises, particularly when legacy systems are involved.
  • The price point for the IRCM solutions tends to be at the high end, particularly the initial undiscounted license fees. Maintenance contracts can be complicated and costly, particularly in cases where Oracle acquires companies.

Orga Systems

Orga Systems is a specialized IRCM vendor. IRCM revenue amounted to around $100 million in 2012, according to Gartner estimates — of which about 44% came for licenses and 56% from services.

Strengths
  • Orga Systems' customer-centric business model accounts for high client satisfaction with its product and services.
  • Orga Systems' focused product road map is built on a common architecture that can be leveraged for adjacent industries.
  • The company has a clear method of improving customer experience by communicating and measuring the quality of its products by capturing and acting on multiple key performance indicators (KPIs).
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 beyond the scope of Orga's delivery model.
  • Its SI/partner certification program is progressing, but the company requires more live projects with its certified partners.

Redknee

Redknee is a specialized IRCM vendor. In 2012, Redknee acquired the BSS unit of Nokia Siemens Networks (now Nokia Solutions and Networks). IRCM revenue (combined with the NSN BSS unit), amounted to about $240 million in 2012, according to Gartner estimates — of which, about 15% came from licenses and 85% from services.

Strengths
  • Redknee's portfolio, combined with NSN's IRCM assets, is broad and incorporates all IRCM components.
  • The company seems to be doing a good job in maintaining existing NSN customers and building on this installed base.
  • Redknee has a global client base.
Cautions
  • The company's main focus is on stabilizing the accounts acquired from NSN.
  • Redknee has an SI partnership program but only has two certified partners. It delivers most of its solutions on its own. This limits the choice for customers to work with their preferred SIs.
  • Customer support generally requires improvement.

SAP

SAP is a software provider with total revenue of around $20 billion in 2012. According to Gartner estimates, IRCM revenue amounted to around $125 million in 2012 in the CSP sector alone — of which about 52% came from licenses and 48% from services.

Strengths
  • SAP leverages its IRCM portfolio across multiple industry verticals.
  • SAP differentiates itself by a flexible rating and pricing engine.
  • SAP's IRCM portfolio has a predictable road map and is financially stable as part of a large company.
Cautions
  • Gaining 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 within SAP.
  • SAP's IRCM portfolio, with the exception of CRM and business intelligence (BI), is yet to be ported to SAP Hana. It is currently supported on other databases.

Sitronics

Sitronics is an NEP, software provider, SI and outsourcer, with a total revenue of nearly $1.9 billion in 2012. IRCM revenue was approximately $190 million in 2012, according to Gartner estimates — of which 24% came from licenses, 56% from services and 20% from outsourcing. Sitronics is an affiliate of Sistema, the largest diversified public financial corporation in Russia and Eastern Europe. In 2012, Sitronics merged with NVision, and the integration of the two companies is in progress.

Strengths
  • Sitronics offers a comprehensive product portfolio built on a common architecture that is designed to support Tier 1 CSPs.
  • Its multitenant, cloud-based approach enables CSPs to expand into new markets without having to reinstall the system.
Cautions
  • Sitronics has low visibility outside Eastern Europe.
  • Its number of SI partners remains relatively limited, with Sitronics performing most of the services around its product suite.

Tecnotree

Tecnotree is a software provider with 2012 revenue of around $100 million. IRCM revenue amounted to about $80 million in 2012, according to Gartner estimates — of which approximately 60% came from licenses and 40% from services.

Strengths
  • Tecnotree provides dedicated customer relationships from project inception through the postimplementation support phases.
  • The company's portfolio is well-rounded and based on industry guidelines.
  • Tecnotree has a strong innovation funnel strategy. It is investing in solutions that support digital commerce and that facilitate bundling and personalization, and it is improving customer lifetime value using analytics and unified customer care.
Cautions
  • Tecnotree's lack of an SI partnership model impacts scalability in execution in the case of large deployments.
  • Most of Tecnotree's revenue comes from few clients in two geographies. In 2012, its two largest clients accounted for more than 50% of its total revenue, and more than 85% of its revenue came from Latin America and the Middle East/Africa.
  • The company has been operating at a net loss during the past four years.

Volubill

Volubill is a specialized IRCM vendor. IRCM revenue, including policy management, was about $21 million in 2012, according to Gartner estimates.

Strengths
  • Volubill has strengths in the area of charging and integrated policy management, with nearly 70 named clients.
  • Selling strategy is aligned toward group CSPs with a multicountry presence — especially in Latin America, emerging Asia/Pacific countries and the Middle East/Africa.
  • Volubill emphasizes integrating policy and charging and building out-of-the-box use cases for policy-based control.
Cautions
  • Volubill lacks a formal SI program, relying on its own internal services capabilities and tactical alliances with other vendors.
  • The product road map requires higher visibility, and support services need improvement.
  • Revenue has been flat during the past three years. Net profit margins are low compared with industry standards.

ZTE

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.

ZTE is an NEP and software provider with a total revenue of around $13 billion in 2012. IRCM revenue was about $370 million in 2012, according to Gartner estimates — of which about 79% came from licenses and 21% from services.

Strengths
  • ZTE provides comprehensive coverage across all IRCM functions, with flexible delivery and pricing options.
  • The company's charging platform is highly scalable, 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 expand 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 only two certified partners.
  • Its product marketing is centered on technology and R&D capability, rather than emphasizing the effectiveness of its IRCM solution.
  • ZTE lacks mind share outside Asia/Pacific. It faces difficulty competing with stronger international players in new markets.

Vendors Added and 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's appearance 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. It may be a reflection of a change in the market and, therefore, changed evaluation criteria, or of a change of focus by that vendor.

Added

  • Elitecore Technologies
  • Openet
  • Volubill

Dropped

  • Nokia Siemens Networks (now Nokia Solutions and Networks), which sold most of its IRCM assets to Redknee.

Inclusion and Exclusion Criteria

Worldwide, more than 200 vendors 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.

We evaluated vendors with a combined license and service revenue of more than $100 million in 2012 and 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:

  • Inclusion criteria:
    • Independent software vendors (ISVs) — Only software publishers are included. 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, as well as 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 will also be considered.
      • Adjunct functions can be provided in-house or through partners.
  • Geographic reach — Vendors must have customers in more than three regions as defined in "Market Definitions and Methodology Guide: Telecom Operations Management Systems, Worldwide."

Evaluation Criteria

Ability to Execute

This axis evaluates 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. 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. Vendors are judged on their ability and success in executing 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 and improve 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.

Table 1. Ability to Execute Evaluation Criteria

Criteria

Weight

Product or Service

High

Overall Viability

Medium

Sales Execution/Pricing

Low

Market Responsiveness/Record

High

Marketing Execution

Medium

Customer Experience

Low

Operations

Medium

Source: Gartner (October 2013)

Completeness of Vision

This axis evaluates 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. Vendors are rated on their understanding of how they can address market forces to meet and anticipate customer demands. Completeness of Vision is primarily a combination of 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.
  • 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. Completeness of Vision Evaluation Criteria

Evaluation Criteria

Weighting

Market Understanding

Not Rated

Marketing Strategy

Medium

Sales Strategy

High

Offering (Product) Strategy

High

Business Model

Not Rated

Vertical/Industry Strategy

Not Rated

Innovation

High

Geographic Strategy

Medium

Source: Gartner (October 2013)

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 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:

  • 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.
  • 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, but have constrained capabilities geographically or financially.

They are characterized by:

  • Their ability to anticipate market transformation, such as increased analytical functionality or integration
  • 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 Visionaries. An increased focus on their IRCM technology and solution delivery can move Visionaries into the Challengers or Leaders quadrant. Visionaries can also develop partnerships that complement their strengths.

Niche Players

Niche Players are still worthy of consideration. Given the fragmentation of the market, buyers should consider that any listing on this Magic Quadrant is a good indication of a vendor's credibility.

Vendors are situated in the Niche Players quadrant because of:

  • A limited geographical presence.
  • A narrow or limited focus on marketing strategy, innovation and delivery models, or limited partnerships.
  • A lack of financial strength (that is, they have not achieved financial viability compared with the Leaders).
  • A failure to match the Leaders in advancing their technologies or functionality.

This prevents them from being universally suitable to all customers.

Context

Changes From the 2012 Magic Quadrant

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

  • Inclusion Criteria:
    • Geography:
      • We stipulated that vendors must have customers in more than three regions.
      • Previously, we included vendors that had representation in more than one geographic region.
  • Evaluation Criteria:
    • Completeness of Vision: Vertical/Industry Strategy:
      • We added this criterion as a subcriterion to Completeness of Vision: Sales Strategy, and no longer rate it as a stand-alone criterion.
      • The reason for this change is to highlight vendors' suitability for CSPs, rather than for other vertical industries.
      • Impact on vendor position:
        • The result of the change is a relative shift to the left on the Completeness of Vision axis for vendors with a well-developed vertical strategy or a solid client base outside of the CSP vertical, primarily Amdocs, Comarch, NEC (NetCracker Technology), Oracle, Orga and SAP.
  • Weights:
    • Ability to Execute: Sales Execution/Pricing:
      • We reduced this weight from "medium" to "low" because most vendors in the Magic Quadrant offer multiple pricing options. In addition, the Overall Viability category already considers new customer wins.
      • Impact on vendor position:
        • There is a relative shift to the bottom on the Ability to Execute axis for vendors that have added a large number of new clients during the past two years, and that offer a comprehensive roster of pricing options.
    • Ability to Execute: Customer Experience:
      • We reduced this weight from "medium" to "low" because customer support is relatively standardized and most vendors have customer support improvement initiatives in place.
      • Impact on vendor position:
        • There is a relative shift to the bottom on the Ability to Execute axis for vendors with successful initiatives to improve the experience of their customers.

Key Findings

  • Product or Service:
    • The IRCM solution portfolios across all vendors rated in this Magic Quadrant look relatively similar.
    • This shows an increasing product commoditization.
  • Completeness of Vision:
    • Innovation is in short supply.
    • All vendors invest in the same technologies and use the same industry jargon.
    • Even small vendors don't have compelling differentiators.
  • Market Responsiveness and Track Record:
    • Customer satisfaction is mixed.
    • CSPs would like to see IRCM vendors as partners rather than solutions or software providers.
    • Common gripes include cost overruns, project management, internal red tape, product support and price.
  • Partnerships:
    • There are major differences in the way vendors work with solutions and service partners:
      • Some vendors prefer providing the entire suite plus services on their own.
      • Others have elaborate OEM and SI ecosystems in place.
  • Vertical Strategy:
    • Some vendors continue to expand their client base beyond communications, such as in utilities, finance, content/media and other verticals.
    • They can feed back experience with other verticals to CSPs that target the enterprise sector.
  • Viability:
    • The survival of many IRCM vendors remains uncertain.
    • Many vendors featured in this Magic Quadrant show only modest or no organic growth, or negative net profits.
    • This leaves the door open to more mergers and acquisitions in the near future.

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 has sufficient localization.
  • Ask vendors to specify their solutions' support for nontraditional services, such as data-centric and digital value-added services.

Market Overview

The IRCM market differs from other software markets:

  • Software licenses account for 20% of the market.
  • Services account for 70%.
  • Outsourcing accounts for 10%.

This peculiarity accounts for the survival of many small vendors.

CSPs emphasize software features, 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, maintenance and upgrades:

  • Large CSPs generally source their core IRCM solutions from a handful of ISVs, such as the ones featured in this Magic Quadrant.
  • For small and midsize CSPs, and for large ones looking for adjunct solutions, dozens of suppliers remain.

Vendors Not on the Magic Quadrant

Although they don't meet the inclusion criteria to be included in this Magic Quadrant, there are many viable alternative IRCM vendors. This list includes vendors that operate in more than one region:

Evaluation Criteria Definitions

Ability to Execute

Product/Service: Core goods and services offered by the vendor for the defined market. This includes current product/service capabilities, quality, feature sets, skills and so on, whether offered natively or through OEM agreements/partnerships as defined in the market definition and detailed in the subcriteria.

Overall Viability: Viability includes an assessment of the overall organization's financial health, the financial and practical success of the business unit, and the likelihood that the individual business unit will continue investing in the product, will continue offering the product and will advance the state of the art within the organization's portfolio of products.

Sales Execution/Pricing: The vendor's capabilities in all presales activities and the structure that supports them. This includes deal management, pricing and negotiation, presales support, and the overall effectiveness of the sales channel.

Market Responsiveness/Record: Ability to respond, change direction, be flexible and achieve competitive success as opportunities develop, competitors act, customer needs evolve and market dynamics change. This criterion also considers the vendor's history of responsiveness.

Marketing Execution: The clarity, quality, creativity and efficacy of programs designed to deliver the organization's message to influence the market, promote the brand and business, increase awareness of the products, and establish a positive identification with the product/brand and organization in the minds of buyers. This "mind share" can be driven by a combination of publicity, promotional initiatives, thought leadership, word of mouth and sales activities.

Customer Experience: Relationships, products and services/programs that enable clients to be successful with the products evaluated. Specifically, this includes the ways customers receive technical support or account support. This can also include ancillary tools, customer support programs (and the quality thereof), availability of user groups, service-level agreements and so on.

Operations: The ability of the organization to meet its goals and commitments. Factors include the quality of the organizational structure, including skills, experiences, programs, systems and other vehicles that enable the organization to operate effectively and efficiently on an ongoing basis.

Completeness of Vision

Market Understanding: Ability of the vendor to understand buyers' wants and needs and to translate those into products and services. Vendors that show the highest degree of vision listen to and understand buyers' wants and needs, and can shape or enhance those with their added vision.

Marketing Strategy: A clear, differentiated set of messages consistently communicated throughout the organization and externalized through the website, advertising, customer programs and positioning statements.

Sales Strategy: The strategy for selling products that uses the appropriate network of direct and indirect sales, marketing, service, and communication affiliates that extend the scope and depth of market reach, skills, expertise, technologies, services and the customer base.

Offering (Product) Strategy: The vendor's approach to product development and delivery that emphasizes differentiation, functionality, methodology and feature sets as they map to current and future requirements.

Business Model: The soundness and logic of the vendor's underlying business proposition.

Vertical/Industry Strategy: The vendor's strategy to direct resources, skills and offerings to meet the specific needs of individual market segments, including vertical markets.

Innovation: Direct, related, complementary and synergistic layouts of resources, expertise or capital for investment, consolidation, defensive or pre-emptive purposes.

Geographic Strategy: The vendor's strategy to direct resources, skills and offerings to meet the specific needs of geographies outside the "home" or native geography, either directly or through partners, channels and subsidiaries as appropriate for that geography and market.