DSP economics: sweating the small stuff to lift the bottom line
- Rather than rely on big new applications to justify continuing heavy investment in the network, there might be a better way
- A new report focuses on using advanced digital business support systems to squeeze out marginal gains across the piece
- Process improvements on real time billing management, automated service configuration and partner and wholesaler relationships, and more, can do wonders for the bottom line
As a general approach to Digital Service Provision for mobile networks, the quest for the ‘Killer Application’ has probably had its day. While it seemed to dominate the telco services conversation for the introduction of both 3G and 4G, with 5G it’s been replaced by faith in the network’s ability to scout out new ‘vertical’ business applications taking advantage of network slicing, low latency and the characteristics of the 5G core. Big, one-off solutions are no longer believed.
So network operators, while welcoming the idea of finding a profitable killer app or business model if they can (why not?), are now more willing to take a long, pragmatic view in the expectation that improved capabilities on the network will surface the profitable applications eventually. In the meantime there are many ways to use the powerful abilities now being built into the networks (both 4G and 5G) to lever up revenues and improve profitability a bit at a time.
MDS Global, BSS-as-a-Service provider of VNO, B2B and IoT solutions, and London-based consultants STL, say they’ve uncovered a host of these marginal gains that can be applied to reap big rewards of up to 34 per cent. The key, they claim, is to focus on so-called ‘digital’ business support systems.
Their report - The Digital BSS Dividend - says that “digitising BSS systems will allow operators to increase EBIT profit margins for enterprise services even in the face of declining revenue growth. Importantly, the report does not tag a single major factor to underpin the profit boost, but rather highlights marginal gains across a number of areas that impact profitability.”
Their research selected five key areas of a service provider’s operations - real time billing management, automated service configuration, partner and wholesaler relationships, customer data analysis, and account management.
The report studied the individual and combined effects the incremental changes and marginal gains enabled by digital BSS systems could have on service provider EBIT across the five areas over a three-year period.
The improvements ranged from a low of 2.7 percentage points to a high of 4.1 points. The expected midpoint improvement of 3.4 percentage points would equate to a 34 per cent hike in profitability for a typical service provider operating at an overall historic EBIT margin of around ten per cent. These EBIT improvements could come both from digital measures that can reduce service provider operating costs, as well as those that can drive new revenues by making customer acquisition and new service introduction easier and more efficient.
The report sees that new capabilities such as Edge Cloud, 5G, IoT and AI all promise to open up new services and business models for B2B customers that service providers can embrace - especially given the transition towards more flexible, efficient and ‘as-a-service’ solutions. The digital business support systems can support and augment the delivery of these services by creating the seamless and dynamic back-end systems required for both customers and channel partners.
Although the report identifies automated service configuration and purchasing as the area where digital BSS can have the greatest impact on EBIT margins; it also stresses that the real time billing management provided by digital systems is capable of addressing a major pain point by providing customers and partners with accurate and timely access to information.
On top of all that, the findings show that adopting these measures helps develop new or customised services by providing access to up-to-the minute customer data that can inform and define those ‘sticky’ service propositions and reduce enterprise churn.
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