In a recent white paper French test call specialists Araxxe argue the merits for acquiring new revenue assurance tools via a lease-based managed service, instead of purchasing them outright. Their paper is called “Buy or Subscribe?” and readers should be conscious that any vendor has a vested interest in promoting deals that suit them. However, I was pleasantly surprised by how even-handed Araxxe were in evaluating the arguments on either side of this perennial question. Perhaps this is because vendors historically preferred to receive the big one-off boost to revenues that came with a sale compared to the steady drip-drip-drip of revenues that result from a leasing arrangement. The increasing number of vendors who are willing to provide managed services shows that the market has matured.
Here are three takeaways from Araxxe’s paper.
1. Outsourcing Can Give Telcos the Power to Stop Paying for Unwanted Tools
In a refreshingly frank section on the benefits of managed services, Araxxe argues:
If the managed service does not provide the telecom operator with added value any more, it is easy to stop the contract.
Surely that depends on what is written into the contract, but Araxxe makes a good point. Telcos should recognize the benefits of contracts that allow them to terminate a situation which does not deliver value to their business. Araxxe continues by stating:
… [the operator can] feel a bit stuck to what software or hardware they have purchased but stop investing in it because it does not deliver value… With a flexible yearly outsourcing contract, if the vendor does not deliver, the operator can always look elsewhere because the hardware and software are owned by the outsourcer.
2. Outsourcing Introduces Risk
Araxxe does not shy away from the risks, which they list under the following categories:
- security issues;
- loss of control;
- lack of knowledge or expertise;
- difference in culture; and
- unclear terms and conditions.
Reading between the lines, Araxxe is giving telcos some guidance as to what they should be looking for in a potential outsourcing partner. For example, do not ask a managed service to be run by a business with no experience of providing services of that type.
3. Telcos Should Demand a Trial Period
Araxxe concludes their analysis of the key success factors for outsourcing RA services with this observation:
Last but not least, a trial period is highly recommended…
They argue that trials should last up to three months, without any obligations for the telco or the outsourcer. The benefit is that it allows both parties to check the workflows whilst making sure that SLAs and KPIs have been correctly calibrated.
Araxxe’s white paper ends with a hypothetical case study that lists the pros and cons of buying a platform versus subscribing to a managed service. They then make their pitch for why Araxxe should be trusted to provide managed services. Whether the telco is interested in test call generators or some other kind of revenue assurance product, and whether they are willing to consider Araxxe or intend to evaluate another supplier, this paper provides a decent overview of the questions that should be considered when contemplating any new deal with an RA vendor. Outsourcing may be the better option, so long as the related risks can be addressed. This white paper could easily be turned into a checklist for telcos to work through systematically.
You can download the “Buy or Subscribe?” white paper by registering for it here.