Two unrelated announcements in February served to confirm two major trends in the revenue assurance market.
Growth in managed services
Subex has announced yet another managed services deal, this time connected to the deployment of their ROC Fraud Management System in a Middle Eastern operator. They are also deploying their RA system. See their press release here.
Market segmentation: chasing the smaller telcos
WeDo has launched BASE, an RA tools offering that is designed with Tier 3 mobile service providers in mind. This is aimed at the large number of telcos with less than a million subscribers, and predominantly sell services on a prepaid basis. You can see the press release here.
Conclusions
RA vendors, like the rest of RA, have picked a lot of “low hanging fruit” and are working to broaden their menu of products and services. One way to do that is to refine their offerings to make them more palatable to the telcos that were less well served in the early days of RA. In particular, smaller telcos need solutions that are agile, cost-effective and require less up-front investment to get them working. The trend there is towards delivering software, whether on-site or through the cloud, at an affordable price. This means the vendor must also seek to keep deployment and configuration costs low, so they can still earn a viable margin on each deal. The other trend is towards longer-term and more extensive partnerships between vendor and customer. The vendor is contracted to manage the service for several years, instead of just getting a big one-off payment on installation to be followed by a thin tail of licence fees. This reduces the risk for the customer, whilst helping them to limit their capex and headcount. The main benefit for the vendor is they get more stable income and earn margins based on the whole service they provide, not just on the software they develop. Even when the managed service contract expires, the vendor will benefit from improved customer loyalty, as swapping supplier would also mean changing the team of people running the service. Vendors also suffer fewer headaches caused by those telcos that used to buy RA systems without investing in the people needed to run them.
One thing missing from this post is the clear lean of RA vendors towards the utilities industry…. Most of the big players are now developing strategies within this space and some are now actually engaged in RA projects within some of the largest utilities suppliers in the UK.
The shift is a natural progression, the Telco market is almost dried up and with clear similiarities between telcoms and utilities, in particular energy suppliers, this makes perfect sense, add into the mix the size of revenues and costs generated in this market (they dwarf telcos) then the oppurtunuties are vast.