IOT MONETISATION PLATFORMS: CSPS NEED NEW SYSTEMS …€¦ · IOT MONETISATION PLATFORMS: CSP S NEED NEW SYSTEMS FOR EFFECTIVELY ... 1 Analysys Mason Research (2018), IoT forecast:

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R E S E A R C H

JANUARY 2019

IOT MONETISATION PLATFORMS: CSPS NEED NEW SYSTEMS FOR EFFECTIVELY MONETISING EMERGING USE CASESJohn Abraham

WHITE PAPER FOR CSG

IoT monetisation platforms | ii

© Analysys Mason Limited 2019 Contents

Contents

1. Executive summary 1

2. CSPs are weighed down by their incumbent legacy systems 2

3. CSPs IoT monetisation systems conundrum 3

4. The journey to modern IoT monetisation systems 4

5. Overview of CSG’s Ascendon platform 6

6. Conclusion 8

About the author 9

Analysys Mason’s consulting and research are uniquely positioned 10

Research from Analysys Mason 11

List of figures

Figure 1: Essential characteristics of IoT monetisation platforms of the future [Source: Analysys Mason, 2019] ....1

Figure 2: Spending on support and maintenance as a share of total CSP spending on billing and charging

systems [Source: Analysys Mason, 2019] ........................................................................................................ 2

Figure 3: Overview of CSPs’ system strategy for monetising IoT [Source: Analysys Mason, 2019] .............. 4

Figure 4: Overview of systems strategies that may be adopted by CSPs for monetising IoT [Source: Analysys

Mason, 2019] ..................................................................................................................................................... 5

Figure 5: CSG’s approach to BSS modernisation [Source: CSG, 2019] .......................................................... 7

IoT monetisation platforms | 1

© Analysys Mason Limited 2019 1: Executive summary

1. Executive summary

Many communication service providers (CSPs) are considering, or actively engaging with, Internet of Things

(IoT) use cases. This focus is driven both by the growing clarity on IoT business models and the strong

headwinds faced by CSPs in growing their consumer business. Across industry verticals, IoT adoption continues

to grow and is expected to reach 5.1 billion connections by 20261 (including traditional cellular networks and

low-power wide-area networks (LPWA)). The total revenue from the value chain for mobile IoT and LPWA

connections is expected to be around USD201 billion by 2025.2

IoT represents an immediate opportunity for CSPs. Consequently, CSPs want to improve their capabilities to

effectively monetise these emerging IoT use cases (Figure 1). However, given the current state of most CSPs’

support system infrastructure, there is much that needs to be done to ensure CSPs remain an integral part of the

IoT monetisation value chain. To begin with, the complexity of CSPs’ existing legacy systems impedes their

ability to rapidly monetise emerging IoT services. CSPs have two options to overcome this challenge: extend

existing systems to support specific IoT requirements, or deploy modern, all-new platforms. While extending

existing platforms may appear to be a cheaper and faster option, this approach can, in the long term, become

complex and expensive to maintain. CSPs are best placed if they adopt new platforms to support IoT

monetisation since it provides them greater flexibility to address new use cases.

Figure 1: Essential characteristics of IoT monetisation platforms of the future [Source: Analysys Mason, 2019]

This white paper provides an overview of the current state of existing CSP systems and discusses the key

system-transformation strategies that CSPs may adopt for the effective monetisation of emerging IoT use cases.

1 Analysys Mason Research (2018), IoT forecast: worldwide technology trends 2017–2026. Available at:

http://www.analysysmason.com/Research/Content/Regional-forecasts-/iot-worldwide-forecast-

rdme0/#13%20March%202018

2 Analysys Mason Research (2017), IoT will have little impact on revenue for most mobile operators. Available at:

http://www.analysysmason.com/About-Us/News/Newsletter/iot-will-have-little-impact-on-revenue-Apr17/


© Analysys Mason Limited 2019 2: CSPs are weighed down by their incumbent legacy systems

2. CSPs are weighed down by their incumbent legacy

systems

For many communication service providers (CSPs), the state of their existing business support systems (BSS) is

a major bottleneck in their ability to effectively enable a new category of services. Over the years, CSPs’

support systems have become intricately complex as CSPs have traditionally been more focussed on adding new

services and features at the lowest cost and accelerating time to market for new product launches, but have given

limited consideration to the overall system architecture. In addition, mergers and acquisitions among CSPs have

also contributed significantly to the complexity of their current systems.

This has led to CSPs having a disparate architecture, with multiple vendor solutions and information silos even

at the departmental level. As a result, CSPs spend a considerable portion of their overall spending on telecoms

software systems on support and maintenance. This is especially the case for monetisation systems (Figure 2),

which is the most grounded of BSS and is also extensively interconnected with other systems.

Figure 2: Spending on support and maintenance as a share of total CSP spending on billing and charging systems

[Source: Analysys Mason, 2019]

The rising wave of digital native companies with their lean operations framework and agile infrastructure models

has had a significant impact on the approach to support systems adopted by CSPs. This has led to CSPs placing a

greater emphasis on improving agility, reducing cost and adopting a platform-based approach to software

development, which has been further advanced by the CSPs’ ambition to become a digital service provider.

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© Analysys Mason Limited 2019 3: CSPs IoT monetisation systems conundrum

IoT presents CSPs with unique opportunities and challenges. On the one hand, IoT can provide an ancillary

revenue stream. On the other, CSPs need to be very efficient in their support infrastructure to ensure low-margin

use cases remain feasible. This means CSPs cannot rely on existing legacy systems alone if they are to build a

sustainable IoT business and will need to consider efficient and cost-effective alternatives.

3. CSPs IoT monetisation systems conundrum

CSPs planning to invest in IoT monetisation platforms have two distinct choices: extend their existing platform

or deploy a new one. Each approach has its own benefits and drawbacks, but regardless of the option selected,

there are six key factors that are essential to ensure IoT systems are future-proof:

1. Viable cost per transaction – CSPs may be able to rely on incumbent legacy systems to support IoT use

cases for testing purposes, or for niche use cases that do not generate substantial traffic. However, existing

platforms will not be able to cope with large-scale traffic for popular IoT use cases, such as smart cities or

home and retail. Furthermore, modifying these platforms to support high-traffic IoT applications will be

ineffective and inefficient because the legacy systems cannot handle the large volume of IoT records in

real-time. Also, the cost per transaction will be significantly higher than what CSPs can afford, given the

thin margins associated with IoT use cases.

2. Disruption by ongoing digital transformation – Many CSPs are reviewing the utility of their existing

legacy platforms as part of their digital transformation strategy, with a view to embracing all-new

architecture frameworks. It would be disruptive to CSPs’ ongoing operations to add support for new cases

such as IoT onto existing legacy platforms, which may themselves be replaced in the short to medium term.

3. Broad support for 5G use cases – IoT is the near-term opportunity for CSPs, while 5G is expected to

become a bigger opportunity in the future. While 5G technology and IoT monetisation platforms share

many common requirements, 5G business models require support for more complex use cases. In the future,

underlying platforms for 5G and IoT may merge. Therefore, CSPs need to consider 5G-specific use cases as

well while planning for IoT monetisation systems.

4. Support for extensive enterprise use cases – Most CSPs have separate monetisation platforms for their

consumer and enterprise businesses. Enterprise-focused monetisation systems are mostly archaic and do not

support modern capabilities, such as real-time charging or complex account hierarchies. A significant

proportion of emerging IoT opportunities lie within the enterprise segment, and therefore CSPs will not be

able to repurpose existing enterprise systems for IoT.

5. Low latency, dynamic scalability – Depending on the type of use case, IoT applications can sometimes

generate high-volume traffic, either as event records or signalling messages, which can overwhelm support

solutions. This makes it essential for CSPs to be able to scale their IoT support infrastructure dynamically

on demand to ensure continuity of service. This is only possible on cloud-based systems.

6. Seamless customer experience – As the scale of IoT use cases increases, it becomes essential to provide a

consistent and seamless experience for partners in terms of onboarding, deployment and settlements.

Customer experience is also crucial for end consumers of IoT services, both for providing an engaging

experience expected in today’s digital world, and also to avoid expensive support costs by deflecting call-

centre traffic.


© Analysys Mason Limited 2019 4: The journey to modern IoT monetisation systems

Based on these six factors, deploying new monetisation platforms will be more beneficial for CSPs’ IoT

initiatives in the long run (Figure 3).

Figure 3: Overview of CSPs’ system strategy for monetising IoT [Source: Analysys Mason, 2019]

4. The journey to modern IoT monetisation systems

For CSPs, the big question is how best to modernise their current support system infrastructure to ensure

effective monetisation of IoT use cases. From a technology perspective, there are three key considerations for

IoT platforms of the future:

1. Architecture – Microservices based on cloud-native architecture frameworks are the building blocks for

the next generation of software systems. The key traits of cloud-native computing include horizontal

scalability; reusable, loosely coupled and open components; continuous integration and delivery; and

container-based deployment. This offers CSPs the highest levels of efficiency, resilience and speed when

delivering software in the cloud. Ensuring cloud-native compliance will help CSPs better utilise and future-

proof their IoT monetisation engines.

OPTION 1:

Extend existing

platforms

Viable cost per transaction

Disruption by ongoing digital transformation

Broad support for 5G use cases

Support for extensive enterprise use cases

Low latency, dynamic scalability

BEST OUTCOME: Deploying new stacks will help drive effective

monetisation of IoT for telecoms operators

OPTION 2:

Deploy new

platforms

Telco systems strategy for monetising IoT

Seamless customer experience

KEY CONSIDERATIONS FOR IOT PLATFORMS


© Analysys Mason Limited 2019 4: The journey to modern IoT monetisation systems

2. Partner ecosystems – Ecosystems are crucial to the success of IoT initiatives. In order to effectively monetise

emerging IoT use cases, CSPs’ partner management systems should be flexible enough to support future

business models. This means they should support multi-dimensional, multi-step value chains and complex

hierarchies with provision for dynamic settlement models. This is essential to attract and drive seamless

engagement with third-party content and service providers, which is crucial to the development of ecosystems.

3. Delivery models – To fully realise the potential of modern software architectures, software-delivery models

need to evolve to embrace the principles of DevOps and continuous integration / continuous delivery

(CI/CD). This will enable CSPs to rapidly deploy platform upgrades and reduce time to market for new

product launches. DevOps and CI/CD will also improve cost efficiency through automation and streamlined

delivery processes.

System-transformation strategies

The pace at which CSPs are capable of supporting new IoT use cases and the level of investment that may be

required is dependent on which transformation strategy CSPs adopt. CSPs have three broad options (Figure 4):

• Option 1 – Adjunct systems approach.

• Option 2 – Overlay systems approach.

• Option 3 – New IoT-specific solution stack.

Figure 4: Overview of systems strategies that may be adopted by CSPs for monetising IoT [Source: Analysys Mason, 2019]

In the adjunct systems approach, CSPs extend the capabilities of existing stack by deploying an adjacent system

that meets specific IoT requirements. The benefit of this approach is that it can usually be deployed rapidly at

limited cost and bypasses complex legacy integrations. In the long run, however, this approach exacerbates the

overall system complexity, making the eventual consolidation of support platforms even more challenging. In

addition, the adjunct systems approach can offer only limited support for IoT use cases which see widespread

adoption demanding dynamic scalability to manage increased volumes.

OPTION 2

OVERLAY SYSTEMS APPROACH

Customers

OPTION 1

ADJUNCT SYSTEMS APPROACH

Existing support systems

Services

Adjunct

system

for IoT

Customers

Existing support systems

Services

Overlay system for IoT

Customers

OPTION 3

NEW IoT SPECIFIC SOLUTION STACK

IoT monetisation suite

Services

EXTEND EXISTING PLATFORM DEPLOY NEW PLATFORM


© Analysys Mason Limited 2019 5: Overview of CSG’s Ascendon platform

In the overlay systems approach, CSPs deploy a digitalised overlay layer over their existing legacy systems

which can encapsulate and abstract relevant information from the legacy layers beneath it. This approach may be

more expensive than the adjunct approach but offers considerably more flexibility in supporting emerging use

cases. However, the success of the overlay approach is strongly dependent on the agility of the overlay platform

deployed in that it should be cloud-ready and extendible. Some vendor platforms can initially be deployed as a

digital overlay and eventually expand to become a standalone platform on their own.

The third option for CSPs is to deploy a new platform specifically for IoT use cases as a greenfield deployment.

This option may be the most expensive of the three but offers significant benefits in that it allows the CSPs to

address a greater number of use cases in a cost-effective manner, since the new systems are not weighed down by

legacy requirements. However, for many CSPs, the overall cost of deployment is often a concern in this approach

as the IoT business cases are not yet proven.

CSP interests are best served if they deploy a new platform for IoT. However, many CSPs may deploy a new

platform purely as an overlay, with the intention to increase its scope over a period of time so that it can become

a standalone IoT platform. This staggered approach is also a good option, but the success of such an approach will

be dependent on the agility and performance of the solution deployed.

Vendor-selection strategies

The capability of the IoT solution deployed is crucial to determining the success of CSPs’ IoT initiatives. CSPs

should consider the following criteria in selecting a vendor/partner for their IoT support systems:

1. Experience working with CSPs – Vendors that have deployed solutions at CSPs, or partnered with other

providers, are usually better prepared than other vendors (such as those serving non-telco enterprises),

because they are familiar with CSPs’ sales cycles and the legacy system integrations that may be required.

2. Business to business (B2B)/enterprise expertise is an advantage – Enterprise and business-to-business-

to-consumer/business (X) (B2B2X) are the main use cases driving CSP investment in IoT. CSPs need to

prioritise vendors that have cross-industry experience in providing IoT or any other support systems to

other verticals.

3. Cloud-native portfolio – From a platform perspective, CSPs should ensure that vendors’ solutions are

cloud-native compliant or have a clear roadmap for becoming compliant.

5. Overview of CSG’s Ascendon platform

CSG is a leading provider of business support solutions to large enterprises from across multiple verticals such

as communications, media and entertainment. With over 35 years of experience, CSG delivers revenue

management, customer experience and digital monetisation solutions for every stage of the customer lifecycle.

On digital transformation, the company has partnered closely with leading global brands such as Arrow, AT&T,

Bharti Airtel, Charter Communications, Comcast, DISH, Eastlink, iFlix, MTN, TalkTalk, Telefonica, Telstra

and Verizon.


© Analysys Mason Limited 2019 5: Overview of CSG’s Ascendon platform

The Ascendon platform was developed by CSG specifically to help CSPs overcome the disabilities of legacy

BSS infrastructure to rapidly monetise and deploy new IoT services (Figure 5). Ascendon is a software-as-a-

service (SaaS), cloud-based platform that enables CSPs to launch and monetise IoT services in 90 days or less

without significant investment in time, cost or resources. The platform provides over 500 application program

interfaces (APIs) out-of-the-box for integration with legacy systems and swift digitisation of front- and back-

office systems. The APIs also provide support for managing complex customer relationships within a B2B and

B2B2X environment.

Ascendon runs on Amazon Web Services (AWS) public cloud, which, apart from being very cost efficient, also

provides data sovereignty and security, and multi-geographical access. AWS also enables the dynamic scaling

of the platform capacity on-demand to manage any traffic spikes.

Ascendon offers several key features critical to the IoT ecosystem, such as:

• collects massive amounts of data associated with connected devices and extracts insights and intelligence

from this data to make informed business decisions

• manages complex, hierarchical B2B2X relationships that are increasingly common in multi-dimensional

IoT business models

• supports a variety of monetisation models and provides customers tailored experiences customised to

preferences and/or devices

• simplifies service ordering, activation and utilisation with a sophisticated order-management module

• provides an omni-channel, personalised experience using history and preferences

• supports a flexible product catalogue that enables bundling of complex IoT services

Beyond IoT, Ascendon also supports a variety of cross-industry monetisation models which allow organisations

to quickly launch, learn from and scale digital service offerings in B2C, B2B and B2B2X environments.

Figure 5: CSG’s approach to BSS modernisation [Source: CSG, 2019]


© Analysys Mason Limited 2019 6: Conclusion

6. Conclusion

Demand for IoT services continues to grow steadily, providing CSPs with a clear opportunity in the short term.

However, most CSPs are weighed down by their incumbent legacy infrastructure, which makes many IoT use

cases impractical due to cost or complexity issues. While some CSPs are considering extending their

monetisation stacks to support IoT use cases, this may be counterproductive in the long term as the high cost,

complexity and rigid nature of legacy systems will make supporting future use cases challenging.

CSPs therefore are best placed to embrace all-new IoT specific stacks. Although these systems may be more

expensive in the short term, they will help lower CSPs’ total cost of operations in the long term. In addition, these

systems will have the architectural agility to support as-yet-undefined use cases which may emerge in the future.

CSPs also need to give due consideration to IoT vendor selection, as the effective engagement with IoT business

models hinges on having the right partners. Vendors who have embraced next-generation cloud-native portfolio

and with experience working within telco and B2B environments will offer an advantage.


© Analysys Mason Limited 2019 About the author

About the author

John Abraham (Principal Analyst) is part of the BSS practice in Analysys Mason’s Telecoms

Software and Networks Research team. He leads our Monetisation Platforms programme and

our research into digital experience for monetisation platforms, as part of the Digital

Experience programme. John also contributes to our research into cloud-native architecture

models, which is covered as part of the Software-Controlled Networking programme. John has

been part of the telecoms industry since 2006, and joined Analysys Mason in early 2012. He

has worked on a range of telecoms projects for operators in Africa, Europe, India and the Middle East. Before

joining Analysys Mason, he worked for several years for a BSS vendor and before that for Dell Inc in India.

John holds a bachelor’s degree in computer science from Anna University (India) and an MBA from Bradford

University School of Management (UK).34

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All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means – electronic,

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Figures and projections contained in this report are based on publicly available information only and are produced by the Research Division of Analysys Mason

Limited independently of any client-specific work within Analysys Mason Limited. The opinions expressed are those of the stated authors only.

Analysys Mason Limited recognises that many terms appearing in this report are proprietary; all such trademarks are acknowledged and every effort has been

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Published by Analysys Mason Limited • Bush House • North West Wing • Aldwych • London • WC2B 4PJ • UK

Tel: +44 (0)20 7395 9000 • Email: [email protected] • www.analysysmason.com/research

Registered in England No. 5177472

© Analysys Mason Limited 2019

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means – electronic,

mechanical, photocopying, recording or otherwise – without the prior written permission of the publisher.

Figures and projections contained in this report are based on publicly available information only and are produced by the Research Division of Analysys Mason

Limited independently of any client-specific work within Analysys Mason Limited. The opinions expressed are those of the stated authors only.

Analysys Mason Limited recognises that many terms appearing in this report are proprietary; all such trademarks are acknowledged and every effort has been

made to indicate them by the normal UK publishing practice of capitalisation. However, the presence of a term, in whatever form, does not affect its legal status

as a trademark.

Analysys Mason Limited maintains that all reasonable care and skill have been used in the compilation of this publication. However, Analysys Mason Limited

shall not be under any liability for loss or damage (including consequential loss) whatsoever or howsoever arising as a result of the use of this publication by the

customer, his servants, agents or any third party.


© Analysys Mason Limited 2019 Analysys Mason’s consulting and research are uniquely positioned

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Documents

IOT MONETISATION PLATFORMS: CSPS NEED NEW SYSTEMS …€¦ · IOT MONETISATION PLATFORMS: CSP S NEED NEW SYSTEMS FOR EFFECTIVELY ... 1 Analysys Mason Research (2018), IoT forecast: