Just as telecommunications service providers are transforming to meet the digital age, Amdocs is transitioning from a developer and integrator of customer experience solutions into a partner that helps service providers become data-empowered digital powerhouses, according to executives at the company's recent Americas Summit in Orlando, Fla.
Competition from cable and over-the-top (OTT) providers, demand for Zappos-quality customer experience, plus continued pressure on network ownership encourages service providers into mergers and acquisitions, bundling pacts between telco-OTT and telco-TV, buying more bandwidth and investing in advanced technologies such as New IP networks, big data and analytics and interactive voice response, says Rotem Katsir, head of services marketing at Amdocs Ltd. (NYSE: DOX).
Adopting a digital model is critical, says Frank Palase, senior vice president of IT strategy and innovation at AT&T Entertainment.
"It's do or die. If we don't change we'll have an issue. But we have a problem at a mature company. We've been successful. How many releases do we have normally? Four releases? In no way is that going to bring you to the velocity you need," he says. "Eventually people get used to the technologies, they get absorbed and it becomes part of the culture. We need to empower people. This is going to take a lot of different models for us to get used to."
Indeed, many service providers feel unprepared for conducting business in a digital age, for quickly responding to customers, for speedily launching new services or communicating with consumers where, when and how they prefer, says Katsir. Although 61% of business executives state their organization has a clear digital transformation strategy, only 39% of service providers' IT professionals concur, according to an IDC study conducted for Amdocs.
Serving Up More Service Provider Services
Services bring CSPs a rich array of opportunities, including new revenue sources, higher profits and the chance to deepen customer ties, says Rotem Katsir, head of services marketing at Amdocs, during its recent Americas Summit in Orlando.
One reason? Legacy systems, many of which dominate core operations such as billing and invoicing (60%); OSS (57%); self-service and portals, as well as customer relationship management (41%) and enterprise resource planning (39%), the IDC study finds. A second reason? CEOs must balance the seemingly opposing need for cost-control with demand for innovation, Katsir says.
"How do we leverage the legacy assets but how do we transform and empower the IT organization to be closer to the business? If we look at a standard SLA KPI of five 9s, for the business person it doesn't mean anything. Does it mean my customers are more loyal? If IT can now show if the system is constantly up and running, there is no revenue lost because we constantly bill our customers. It is important for IT to speak the same language as the business," she says.
In with the old and new
Approximately 50% of Amdocs' annual R&D spending goes toward new areas and technologies such as software-defined networking (SDN) and network FV, says Gary Miles, general manager of strategic initiatives at Amdocs, during the event. But the company is aware of the investment service providers have made in its legacy systems, product executives say.
"We realize that being able to support the virtualization of the network is important," says Shannon Bell, vice president of Business, Revenue and Customer Management Division at Amdocs, noting that it will be at least ten years until there is full integration of virtualization. "In the interim there's probably going to be a hybrid model. That's the premise behind our NFV. We look at support for design, testing and launching services and we look at how that gets launched in the network capability. Having the ability to manage physical and virtual [networks] is key to supporting your needs in this evolution."
Beyond traditional services, telecommunications providers must extend into new offerings to vie against a legion of different competitors. Amdocs hopes its new and expanded integrated services in areas like entertainment, financial and Internet of Things help service providers, their customers and Amdocs itself expand into profitable new markets.
"We see service providers across the globe moving more and more into offering entertainment content. How do you go about getting that service off the ground? Part of it is multi-play: Taking communications services and bundling them with entertainment services," says Guy Hilton, head of product marketing, Amdocs Portfolio and Solutions division.
— Alison Diana, Editor, The New IP. Follow her on Twitter @alisoncdiana or @The_New_IP.