The present prevalent economic downturn has slowly started impacting telco’s cost and ability to serve customers. This growing problem may hamper a company’s ability to quickly introduce new products and services to the marketplace.
One of the initiatives at the forefront of discussions to lower operating costs and ensure a higher return on investment is the software as a service (SaaS) model. SaaS is a software distribution model in which applications are hosted by a vendor or service provider and made available to customers over a network, typically the Internet.
The conditions are more conducive for SaaS now, more than ever, since this model will help telcos to reduce their IT expenditure and pose as an effective way to predict their IT spending in these difficult times. The model also lowers the infrastructural barrier and allows small, emerging telecom operators to compete on a par with incumbent, bigger operators, armed with equivalent billing functionality and without having to invest upfront on a licensed billing system. SaaS holds enormous market potential in the coming months as IDC study predicts that SaaS market will reach USD 8 billion by next year.
Today, several telcos in the industry seem to lack a clear and consistent vision for their billing approach and strategy. Instead, they tend to resort to piece-meal investments and quick-fix solutions that lead to duplicated effort and inefficiencies across the organization. In fact, some large service providers use over 50 disparate billing systems – either designed for new services or inherited through acquisition – which often cripple their ability to bill bundled products and packaged services efficiently. Such a tough hurdle can hamper the operator's ability to introduce new products and services to the marketplace on the fly. The situation could also snowball to impact the operator's costs and ability to serve customers.
SaaS could be the panacea to all these problems faced by telecom providers. Combined with an efficient, new technology platform, streamlined processes, focused and skilled workforce and retired legacy systems, this model can potentially reduce the cost of billing operations to the tune of 15 to 40 per cent.
SaaS shifts focus from the one-time, up-front payment model (product model) to the recurring, usage-sensitive ‘service' model that includes installation, support, configuration, hosting and maintenance. Being a hosted solution, it has obvious benefits in terms of reduced infrastructure requirements and administration overhead. The SaaS approach mitigates problematic IT issues, such as scale, performance, uptime, disaster recovery and maintenance.
SaaS can manage complex account structures and provide the option of multi-variant payment models. Subscription fee per/user per/timeframe (month, quarter, year). Subscriptions can be flexible, not only monthly, quarterly or annually or by named user vs. simultaneous user, but also for additional users for short periods of time, as required.
Typically, SaaS providers are experts, who address upgrades and related services, process large volumes of usage data and perform complex settlements (such as interconnect and revenue sharing). They can handle rapid service creation, provision complex product bundles and manage enterprise sales processes. They possess powerful rating and online charging systems that can support any pricing strategy and perform real-time authorization. The benefits of the SaaS model include cost reduction, risk minimization, mobility, minimal training, market-readiness, end-customer self-administration portals, etc.
The SaaS platform also empowers telcos to comprehend the needs of their customers better. This, in turn, helps telcos to create and deliver a compelling customer experience and to retain customers, all the while allowing them to focus on the core business and other critical areas, especially during new service launches (large telcos) and operational launches (for emerging telcos). Moreover, since the SaaS provider manages the mechanics of bill production and billing capability maintenance, telcos can strategize better on competitive differentiation through product enhancement and by leveraging the enhanced billing capabilities for revenue generation.
In fact, apart from ensuring effective billing operations for all players in a SaaS model, a professional, centralized billing system also paves the way for emerging telcos to migrate to the licensed model in the future, wherein they can actually enjoy the high flexibility of that model.