Technology Review 2/2013 by Comarch

no 2/2013 [17] The Magazine of Comarch Telecommunications Business Unit

www.comarch.com

TABLE OF CONTENTS WHAT’S NEW

5 News in Brief

CUSTOMER EXPERIENCE

Software Defined Networking (SDN) is currently a widely discussed topic in the telecommunications industry. There are high expectations regarding the technology, including reducing network maintenance costs and unleashing innovation, thus opening the way to new revenue sources and better network monetization. SDN is a concept where the main principle is to separate the control plane from the data plane, and to move the controller function out from today’s routers, leading to the introduction of OpenFlow switches..

in business takes much more 6 Success than just a good idea Alvin Park and John Mahoney, world class analysts with Gartner, hosted Professor Janusz Filipiak for a Mastermind Interview during the Gartner IT Lead ership Trends 2013 conference.

IN FOCUS: DIGITAL SERVICES

The evolution of the telecommunications ecosystem towards digital services is already happening and it is already having a significant impact on various players – communication service providers, OTT players, vendors of IT systems and end users.

Field Service Management – a new 34 dimension of Customer Experience Management Telecom services are subject to constant changes – new products, related to mobility, LTE technology or Cloud Services surface all the time and quickly become a standard for consumers. It is quite difficult for CSPs to introduce a new product and build a long term competitive advantage based only on the “uniqueness” of it.

ready for the era of digital 12 Getting services – the elements and participants of the service definition process The area of digital services encompasses the complex revenue chains of multiple business partners. Making these partnerships valuable requires high innovation that can be achieved by enabling small companies and developers to connect to the service chain easily and to test ideas with low cost.

of Comarch Smart BSS 17 Implementation Suite For simpliTV ORS/simpli services simpli services, a subsidiary of the Austrian Broadcasting Services (ORS), has launched an innovative terrestrial TV platform – simpliTV. Being a new player on the market, simpliTV began its business operations with an ambitious objective to win a market share of more than 12% for digital terrestrial reception.

to best deliver a cloud service to the 19 How end customer? Large and small telecoms are currently keeping a watchful eye on cloud-based products. They see them, rightfully, as being a chance to increase nose-diving ARPU (Average Revenue per User) rates. Considering all the pros and cons of telecoms playing the role of cloud service providers, it would seem to be a reasonable way for them to maintain a leading position on the ICT market.

EU regulations support or hinder digital 22 Do service adoption in Europe? EU regulators are pushing hard to create a single market for communications and digital services in Europe. It could be a golden opportunity for telecom operators, who can use their power and innovation to improve their position both against larger telecom groups, as well as OTT and OEM players.

CURRENT DISCUSSIONS

oftware Defined Networking – how BSS/ he dynamics on the telco market is like a 29 SOSS 48 Tpendulum tools can help unleash innovation swinging

C-LEVEL VIEW

Four perspectives on Digital Services

M2M

Telekom Austria Group – Implementation of Comarch M2M Platform Looking to expand their business, Telekom Austria Group decided to enter the machine-to-machine (M2M) market and established a dedicated spin-off company for M2M in September 2011. The company mainly addresses B2B customers and solution partners with the objective of becoming the leading M2M boutique provider in the CEE region.

ow to differentiateyour M2M Platform 40 Hoffering to ensure a competitive edge The M2M business is not easy, especially when it comes to trying to find ways to increase profits and revenues. As it is still often perceived as a niche market, investments in this area are still seen as being unjustified. With low ARPU and margins, operators need to find ways in which they can grow their M2M business and generate additional revenue streams.

ENTERPRISE CUSTOMERS omarch initiated a survey on large 44 Centerprises in Europe Telesperience, a global communications and media analyst firm, conducted a survey on European enterprises to find out about how large companies feel about their telecom operators providing more than just traditional connectivity. The research focused on 101 companies that employ more than 500 people. For the results of the survey see page 44.

Between June 27-28, 2013, Comarch hosted an ETIS Billing and Revenue Management Working Group Meeting in Krakow, that gathered many major European telecom operators. At the event, we met Fred Werner and asked him about the history and role of ETIS in the industry, as well as developments and challenges facing telecom operators today.

threats or opportunities – 51 Buzzwords, what is behind the Big Data door? Big data surely has many aspects that need to be considered, but it’s 100% certain that there is no escape from the voluminous stream of data surrounding us at present. Telecom companies, just as other industries, are only at the beginning of the road to monetizing big data. The door to success in the big data world is slightly open, we can see a ray of light coming from behind it, now someone just has to be the first one to figure out how to open it the rest of the way.

GAMIFICATION

55 Let’s Play Field Workforce Optimization! Having delivered tools supporting field services for 10 years now, Comarch has noticed that during the deployment of optimization software, Communication Service Providers (CSPs) are also forced to perform major changes across entire organizations in order to fully benefit from workforce automation tools.

TECH CORNER

58 Home networking of tomorrow Current home networks are based on several types of media, ubiquitous power lines, CAT5 and CAT6 cables, coaxial cables and also Wi-Fi. Each of them uses technology different from the other. There are advantages and disadvantages to all of them.

60 Backjumps in the BPM Workflows The optimization of business processes is of the utmost importance for every company, unfortunately however, it is very often ignored. Introducing processes into an organization is just the first step towards rationalization.

64 A network monitoring Sudoku IP based mobile, broadband Internet, voice and signal ing services, all put huge demand on transport net works. This is why, for some years now, their complex ity has been increasing significantly. Are these beasts still manageable with old monitoring tools?

68 RESTful Web Services – simple as that Deploying systems using RESTful web services from a company’s perspective utilizes the existing knowledge base and current infrastructure and therefore decreases the cost of training, specialized software and hardware as well as improves time to market thanks to delivering more advanced services in a shorter time.

PREFACE

fter I reached the office on my bicycle today, the first thing I heard on entering the building was a colleague of mine asking me if I had tracked my ride with Endomondo. It got me thinking about how much the world has changed over the past couple of years. You can use Spotify to discover new music, FatSecret to count your calorie intake, WhatsApp to send free text messages to your friends. You use your mobile to pay for a taxi, to shop online, to book your holidays. And do I even have to mention Facebook, YouTube and Skype anymore or have they become obvious parts of our everyday lives by now?

We are living digital lives, with all their advantages and disadvantages. You see families eating dinner, busy tapping away on their mobile devices. You could be out having fun with friends, and there is always at least one person who has to share this fact on Facebook. Think about all the things you don’t need anymore – an address book, an alarm clock, a watch, hey – you almost don’t even need a wallet anymore! And think of all the personal data that you share online! This evolution hasn’t gone unnoticed by the telecommunications industry, of course. At the beginning, when confronted with competition from OTT companies, CSPs feared that they would be pushed out to the role of connectivity providers, often referred to as ‘dumb pipes’. Right now, the discussion about the influence of the digital world on the telecom business is more centered on the benefits that CSPs can take out of it. They have the network, they have huge customer bases and a huge amount of information concerning their customers. This data can be used to build better tailored services, as well as delivered as a service to non-telecom companies (for marketing purposes) – its business potential simply cannot be overestimated.

Furthermore, service providers are able to ensure good quality of service, one of the crucial factors in the customer experience of mobile device users (after all, nobody is willing to wait for a YouTube video to buffer for 15 minutes). But in order to embrace the possibilities offered by the digital world, telecoms must adjust to the dynamics of it and be able to launch their offers quickly and conveniently. One thing is for sure though – the new reality in the telecom world is an exciting one and it will hugely influence telecom businesses. This is why we decided to make the digital world the theme of the new issue of Comarch Technology Review. Inside, you’ll find an array of alluring articles that relate to this topic in various ways. You can read about the different perspectives on the evolution of the industry, as seen by telecoms, OTTs, consumers and IT vendors, as well as discover the key elements of a digital service definition. You will also find out about the different delivery models for cloud services and their advantages, as well as whether EU regulations slow down or accelerate innovation on the telecoms market.

MALGORZATA SIWIEC-POLIKOWSKA

Comarch SA

Marketing Manager

Krzysztof Kwiatkowski, Comarch’s BSS Product Manager explores ways in which operators can differentiate their M2M offerings, while Łukasz Mendyk, our OSS Product Manager sheds some light on the potential of the Software-Defined Networking technology, which is currently perceived as one of the major enablers for success in the digital world. Make sure you also read the Big Data article by Agnieszka Dynos, Comarch’s PR Specialist, and come to realize how much information we actually share about ourselves in this new digital world and what can come of it. I would like to thank all those who have helped put this issue together and I hope you will enjoy it during the coming days of Fall.

Comarch Technology Review is a publication created by Comarch experts and specialists. It is created to assist our customers and partners in obtaining in-depth information about market trends and developments, and the technological possibilities of addressing the most important issues. Editor-in-Chief: Alina Wietrzny Circulation: 1 500 Alina.Wietrzny@comarch.com Technology Review is a free publication available Copy Editor: Małgorzata Siwiec-Polikowska by subscription. The articles published here can be Malgorzata.Siwiec@comarch.com copied and reproduced only with the knowledge and Layout & DTP: A dam Dąbrowski, consent of the editors. The names of products and Dominik Pietruszka companies mentioned are trade marks and trade Photos: www.fotolia.com names of their producers. Publisher: Comarch SA Al. Jana Pawła II 39a, 31-864 Kraków To receive your subscription to the electronic Tel. +48 12 64 61 000, Fax: +48 12 64 61 100 version or see the previous issues, please visit: www.comarch.com tr.comarch.com Print: 101 Studio Sp. z o.o. DTP Tomasz Tęgi i Spółka Sp. z o.o. 93-426 Łódź, ul. Ekonomiczna 30/36

NEWS IN BRIEF

News in Brief

Comarch joins Digital Living Network Alliance (DLNA)

Telekom Austria Group selects Comarch for M2M platform

In July 2013, Comarch became a Contributor Member of DLNA, a cross-industry consortium of more than 250 companies who have united to allow consumers to easily connect their home electronic devices and share media, regardless of the manufacturer. Comarch has been cooperating with DLNA since 2011 to develop and maintain certification tools.

The Comarch M2M Platform enables Telekom Austria Group to offer M2M services internationally by supporting multiple tenants, currencies and languages. It allows Telekom Austria Group, its partners and customers to efficiently manage and improve their businesses.

T-Mobile Poland selects Comarch Cloud Solution Comarch has successfully implemented a software package to empower the introduction of cloud services for T-Mobile Poland. Aside from the Cloud Service Management platform, Comarch also delivers business applications available from the cloud which include an application for invoicing, warehousing and accounting.

Pipeline’s 2013 Innovation Award goes to Comarch M2M Platform Comarch M2M Platform was the winner in the ‘Innovation in Connectivity’ category. Comarch’s solution has been recognized as an M2M solution that enables mobile operators to provide Intelligent Connectivity and to succeed in the M2M market.

Comarch initiated a survey on large enterprises in Europe Telesperience, a global communications and media analyst firm, conducted a survey on European enterprises to find out about how large companies feel about their telecom operators providing more than just traditional connectivity. The research focused on 101 companies that employ more than 500 people. For the results of the survey see page 44.

Austria’s simpli services chooses Comarch Smart BSS Suite The solution delivered by Comarch helped simpli services successfully launch a new digital terrestrial platform – simpliTV. Comarch’s all-in-one compact solution ensures that simpli services can benefit from fast and efficient subscriber activation, flexible product catalog operations as well as effective billing & revenue management capabilities.

Comarch Technology Review 02/2012

C-LEVEL VIEW

Source: Gartner

Success in business takes much more than just a good idea An interview with Comarch’s CEO, Janusz Filipiak by Alvin Park and John Mahoney of Gartner lvin Park and John Mahoney, world class analysts with Gartner, hosted Professor Janusz Filipiak for a Mastermind Interview during the Gartner IT Leadership Trends 2013 conference.

lot as a contract researcher in Poland, Australia, Canada, and France. After around 20 years I started thinking about developing my own company based on the knowledge that I had gathered.

Gartner: I am intrigued by the fact that you have an academic background and are now running a very successful company. How did your background help in doing business?

G: You started the company in Poland – what were the reasons to go international?

Janusz Filipiak: At the moment there is huge competition for project funds in technical sciences. Professors at technical universities are obliged to work with technical industries, we can see this in many countries, including Germany, the U.S., Britain etc. As a result the quality of university faculties depends on cooperating with businesses. I started as a theoretician, doing advanced mathematics, optimization, and researched how this knowledge could be applied to telecommunication problems and then I worked a

JF: First of all, even before I established Comarch, I travelled a lot to Western Europe and the U.S. and I worked in them and proved myself, and I saw a lot of other Polish people who had also proved themselves, even before the political transition in Poland. So when I started the company I knew the time would come for Comarch to go international and that we would have the ability to achieve it. IT is a product which is transferable, it can be deployed and made available in many countries.

Comarch Technology Review 02/2013

C-LEVEL VIEW

The second thing is that when Comarch employed 300-400 people, the Polish market was big enough for us to finance our growth. But we continued to grow and then quite quickly we had 2000 employees and it became quite obvious that we had to go international. If you develop products like billing systems for telecommunications, there simply are not enough telecom companies in Poland to provide the necessary growth levels. Especially now, when you have very small margins, you need to expand into new geographical regions, new industries and extend the scope of your offer with different types of products, so it was a must for us to go international. G: How easy is it for a Polish company to achieve that expansion? JF: Polish companies are starting to have independent visions and conduct interesting projects, and sometimes as a result they even take the lead in a certain innovative area within large international corporations that they are part of. It is quite often that we embark on a project with a Polish customer and then we expand and diversify into other countries and other companies within the same group or corporation. For example, many loyalty management systems have been delivered to Polish-based subsidiaries of big global brands, and then the same solution was implemented in the company’s headquarters. However, it is very important that first we show real value, in order to convince international organizations to use and adopt our solutions. G: And what obstacles do you see in regards to innovation and going global? JF: The most important and difficult point of innovation is commercialization, bringing the product to the international market. It costs a lot of money. This is a problem with Poland, there are a lot of young talented people here, who can develop great solutions, but the potential of Polish companies is not big enough to take them to the international market. Nowadays, we have innovative IT products and services, which must be globalized. And this is a problem for local developers, especially in Europe. In each country you have to promote your product from scratch, because of the differences in regulations, languages etc. G: Back again to your background as a theoretical physicist, do you see a link between that and what you do now? JF: Recently, I received a Distinguished Industry Leader award in Budapest, where many years ago I presented one of my very first international papers. It was on a highly sophisticated mathematical theory of optimization, based on Cohen’s theory. I am sure that I would not understand that paper today, as I wrote it nearly 30 years ago. After several months following the completion of the paper I was surprised to discover that the solutions set was empty – there was no solution in my pa-

per! At the time I thought it was a stupid thing that I had produced, because it was so complicated, almost nobody was able to understand it. But looking back on it now, I think that maybe my paper was not all that stupid. If you translate it into real-life business situations, multi-criteria, multi-dimensional, non-linear optimization problems occur all the time. The optimal solution sets are often also empty. What I want to say is that in contrast to mathematical models, in business cases there are many dimensions, and there are no optimal solutions. You always have to choose between some sub-optimal solutions. This type of thinking helps in many business situations. G: So we should recommend to the Polish Academy of Business that every CEO should spend 5 years studying theoretical physics. JF: You could say that, yes. (laughs) G: In closing, what three pieces of advice could you give today to newly established IT companies? JF: First of all, you need persistence and patience. Nowadays, we are in a recession. It was much easier for us to start Comarch 20 years ago than it would be to launch the company now. These days it would take much more persistence to achieve what we have achieved. Quite often, new companies start their projects and have to wait for it to be appraised, and for the first revenues to come in, mostly no sooner than after a year or two. But, like I said, it requires a lot of persistence and hard work, much more than just a good idea. You’ve got to sacrifice a lot, even at a personal level, but of course if you succeed, it’s all worth it in the end. The second thing is that you should surround yourself with people as quickly as possible. Customers, potential users, people who could contribute to innovations. We are very lucky that we managed to meet people who were willing to take risks without knowing the full rewards. Of course, in the end it turned out that our company became successful and the people who trusted us and our solutions were also rewarded. This is a problem with innovation at the moment. You may come up with a great innovative product, but you need to take the risk – if your innovation is not successful, the only thing you can do is to learn from your mistake, but if it is successful, everybody benefits. Thirdly, I think that EU funding schemes should be significantly changed to assist people with funding over a longer time period. In the very competitive IT world, where companies must compete globally, it is impossible to become successful with funds that run out after a year or two. It does not give anyone enough time to bring their solutions to the market, whether regional or international. So these are my three pieces of advice. And, of course, in addition to that, you need luck.

Comarch Technology Review 02/2013

IN FOCUS: DIGITAL SERVICES

Four perspectives on digital services

Comarch Technology Review 02/2013

IN FOCUS: DIGITAL SERVICES

hat will the digital service era change for traditional communication service providers and BSS/ OSS vendors? And how will it influence us as customers?

Being part of the digital service ecosystem has become a natural step in the evolution of many communications service providers (CSPs) looking to find their place on the market, which itself has evolved from a world of pure telecommunications towards an ecosystem of connected devices, applications and services in the cloud. There are many interesting discussions being had all across the globe about how CSPs should position themselves and switch from traditional telecommunications towards digital services, however there is no single recipe for success. The situation is twinned with BSS/OSS software vendors, this new era of services could well become a new era of business and operational support systems, Over-The-Top Content (OTT) players cannot be left out of the equation either, they will need to work on identifying the most efficient model of cooperation with telecoms (on whom they greatly depend). The end users of digital services, i.e. the consumers, are the ones who will definitely benefit the most - many digital services may become very useful and bring about vast improvements in such important social domains as healthcare systems or smart cities. This article will discuss the perspectives of the four main players in the digital service value chain: CSPs, software vendors, OTT players and end users.

Telecom operator perspective As traditional telecom services continue to become a commodity, pricing per minute and generating profits on voice services is no longer a sustainable business model. Customers will continue to use voice and data, but they will increasingly view them as mere enablers for other more exciting activities, accessing them through various applications. This means that from the perspective of the end user, real value is delivered by the providers of applications, content or various types of other services, not by the CSPs themselves. Communications service providers are anxiously keeping an eye on the ever-changing communications’ landscape. What’s for sure is that their existing position will be forever changed. However, they still have the potential to become an incredibly important player on this emerging market. This is mainly due to the direct business relationship they already enjoy with their customers, the security that they are able to provide, the fact that they own the networks and that they can manage the quality of services. It is quite a common thing to say that this market transformation will leave telecom operators divided into two groups: “bit pipes” and “digital service providers”. At the beginning, CSPs seemed to lean towards the second option (“bit pipe”

does sound a bit underwhelming I suppose) – this means they would prefer not to cooperate with OTT, but to provide content, applications or cloud services on their own. However, it quickly proved to be easier said than done and many of these ventures failed to succeed. Does this mean that CSPs around the world aren’t enthusiastic about the “bit pipe” option? If so, what are their remaining options? The most successful telecom operators will probably become digital service enablers and they will focus on building ecosystems (or on becoming part of an ecosystem), where services are distributed and delivered by various parties, most likely multiple partners who will also participate in the revenue chain. Most telecom operators are already fully aware that such partnership-based strategies are imperative to achieving success in digital services. They also know that their existing assets are a strong advantage and can be monetized. These assets include having a global presence and a direct relationship with customers, as well as their own customer service organization. They are also recognized as trusted brands, which can positively influence customer loyalty. In addition, they have vast amounts of experience in cooperating with large enterprises as well as the capabilities to handle B2B settlement processes. However, CSPs need to ensure that the quality of service (QoS) for the connectivity that they deliver is of the highest standard possible and include it as an element of other services they offer. A “best effort” approach may be enough for browsing the Internet but it may not be sufficient for digital services such as e.g. healthcare applications. If CSPs manage to make it technically possible, providing QoS and Service Level Agreement (SLA) management as part of their offering for partners (such as OTT players), it may very well become an interesting differentiator that will make them stand head and shoulders above their competitors.

OTT player perspective It is a commonly held belief that OTT players will be the only winners in this revolution and that the revenue streams previously enjoyed by CSPs will now be heading in the direction of OTT companies. But this is far from being true. Even if a large chunk of the pie goes to OTT players, the lifecycle of such services becomes shorter. People get used to new services very quickly and they forget about the ones they’ve already used before just as fast (even the ones they previously liked and used heavily). Entry barriers are low, so a developer from anywhere in the world can go from loaded to broke in a few short months. The same could also happen to large OTT players, brand strength means very little on this market and unknown companies can enter it easily and be-

Comarch Technology Review 02/2013

KRZYSZTOF KWIATKOWSKI

Comarch SA

Head of BSS product management, Telecommunications Business Unit

IN FOCUS: DIGITAL SERVICES

come successful. This means that the business landscape for OTTs is quite dynamic and unstable. Many CSPs believe that they should be paid by OTT players for the traffic they generate. On the other hand, OTTs demand network transparency and argue that they bring new customers to CSPs and generate business for them. These discussions continue to go back and forth and it looks like no solution is going to make itself known for the foreseeable future. Everything may change when users start thinking about their services in a new way and when they will complain e.g. about their Facebook page loading slowly at an airport, instead of complaining that the network they are with is not stable in a given location. The same may happen with the way they see many other digital services and mobile applications. If it happens, it will definitely create a new quality in the cooperation between communication service providers and OTT players – a shift to deliver comprehensive, high quality digital services instead of applications over connectivity.

BSS/OSS vendor perspective BSS and OSS systems are designed to be deployed as part of large IT projects; they require lengthy configurations related to adding new services, business models or pricing scenarios. Shortening time to market from 12 to 6 months, which is still viewed as a great business result, will be completely unacceptable in the era of digital services, where 6 months can seem like an eternity. Digital services are delivered by various parties and connectivity is just one element of each service. From that point of view there is no clear explanation as to why the entire service should be controlled by systems installed at the operator’s premises. It’s one of many options, but it has to be able to provide all other involved partners with easy access to all systems and a set of easy to use interfaces, which are cheap to integrate, and which respond to the requirements of various industries and technologies. Finally, it means that traditional BSS and OSS tools must be much lighter, smart-

Figure 1. Specifics of the Digital World

Comarch Technology Review 02/2013

IN FOCUS: DIGITAL SERVICES

er, open and ready for the cloud, in order to support digital services. The shift may also require changing how services are created, designed and sold and it will also prompt the development of new technologies that are more open for non-telco specific requirements. Let’s not forget too that it is about much more than just being able to register a customer in the system without identifying them with a phone number and issuing an invoice for services other than voice or SMS. These things are no longer good enough to be proud of a BSS system being future-proof. Recently, I was asked by a CSP about BSS supporting a new type of cloud, such as Amazon’s Elastic Compute Cloud. Being a lot more than just data center technology, it requires a change in the approach to storage, scalability and many other aspects related to creating applications. In the long run it may turn out that putting all “Digital Service Support Systems” in this type of cloud proves to be a good business strategy. Advantages for BSS/OSS vendors on the digital services market can be found in the experience and market position that they have in supporting CSPs in their M2M and cloud offerings. E.g. platforms that Comarch has already deployed for customers such as Telekom Austria Group and T-Mobile provide a very solid basis for future projects in the area of digital services and address many of the issues described in this article.

Consumer perspective As long as new digital services make our lives easier they will continue to support our everyday activities such as sport, energy consumption, traveling, transportation and healthcare. The world of digital services strongly relies on the “less is more” concept. New smartphones require far less configuration from the end user than previous models, this obviously means that they are more intelligent than their predecessors. This is just one of the aspects of simplicity being a big trend in the world of digital services. We want to buy with one click, use applications that do not force us to sit through a tedious tutorial just to be used properly and devices that are super-intuitive. To paraphrase the words of Albert Einstein: “Everything should be made as simple as possible. But not simpler.” Nevertheless, simplicity is not the only thing consumers expect and it may not even be the most important one. The digital ecosystem requires consumers to share more personal data than ever before, hence why security is of the utmost importance. Telecom operators and OTTs alike need to

understand and emphasize this aspect in their digital service strategies in order to win the trust of end customers. Users can be encouraged to share that data without feeling uncomfortable; they must be provided with real value in return for it – be it in offering access to useful applications and information or by providing them with a truly optimized customer experience based on the data they supply service providers with.

Summary The evolution of the telecommunications ecosystem towards digital services is already happening and it is already having a significant impact on various players – communication service providers, OTT players, vendors of IT systems and end users. For CSPs the time is ripe to adjust their traditional strategies and use their existing business momentum to become an important part of the ecosystem, together with many partners, instead of trying to fight the reality of the situation by blocking activities. There’s nothing to be gained from battling against what is inevitable anyway. For OTT players current market developments entail certain changes. Users have started complaining about their experience with digital services, and they no longer separate connectivity from the application that runs on it. This forces OTT companies to change how they cooperate with telecom operators who provide the connectivity – and this may yet prove to be very challenging. The growing dynamics of the market may also weaken the position of OTT players in the not too distant future. BSS/OSS vendors are also in a bit of a pickle too – they need to change their traditional ways of thinking about service characteristics and realize that customers are changing. Only then will they be able to deliver future-proof solutions that will empower telecoms in the digital world. Consumers will, as always, continue to use technology to make their everyday life easier and this way they are the only certain winners in this period of evolution. As they are becoming more and more aware of technological changes they are becoming ever more demanding as customers. Winning their trust will require a lot of effort, as will keeping their loyalty. What the future holds cannot be known, but it is more than certain that the new landscape in the telecom industry will bring about many changes in the traditional roles performed by the main players. Who will be the winner? The answer is simple: the one who can best adapt.

Comarch Technology Review 02/2013

IDEAS IN BRIEF: Being part of the digital services ecosystem, OTT players and telecoms need to find the most efficient model of cooperation BSS and OSS tools must be much lighter, smarter, open and ready for the cloud to support digital services Consumers as the only certain winners in the period of the evolution toward digital services

IN FOCUS: DIGITAL SERVICES

Getting ready for the era of digital services – the elements and participants of the service definition process The ecosystem The increasing amount of data traffic in telecom networks coupled with the strengthening presence of new players in the market (especially OTT) has caused many telecom operators to reassess their business strategies. This is how the

subject of digital services finds its way into the top priorities that service providers need to address in 2013. The area of digital services encompasses the complex revenue chains of multiple business partners. Making these partnerships valuable requires high innovation that can be

Comarch Technology Review 02/2013

IN FOCUS: DIGITAL SERVICES

achieved by enabling small companies and developers to connect to the service chain easily and to test ideas with low cost. Some companies, e.g. Deutsche Telecom, even create dedicated portals to provide better support for innovation (www.ideabird.com) and these initiatives are claimed to be very successful. Such activities stimulate the creation of an ecosystem that involves a large community of developers and other providers as partners. The specifics of digital services and the surrounding ecosystem allow creating many unpredictable services with various characteristics, and created from elements delivered by multiple parties. It will therefore not be true that for each digital service a telecom operator is responsible for the business relationship with customers and / or billing, one partner for the content and another one for support. For each service these roles may be different. Also, the flow of money between the involved partners may vary and include models such as revenue sharing, cost sharing, split revenues, invoicing and many others.

4 elements of a digital service definition Managing digital services includes elements such as: service models, product models, offerings and revenue sharing models. These are the quintessential components required to define a digital service. The Service Model defines which items are composing the service and which party is responsible for delivering each of its elements. The Product Model describes what the end customer purchases and the Offering describes how it will be sold. The Revenue Share model defines all elements related to the flow of money between partners.

Offering

Revenue Share Model

Presenting all these elements together represents the various layers of a digital service definition and each element can be managed by a different party or can even be virtual. Nevertheless, providing the capability to manage such services would help in the development of digital services by automatically adding the possibility to manage service assurance or fulfillment, all in a distributed, multi-party environment.

Service Model Digital Service Models require a high degree of flexibility, and thus it should be possible to allow partners to define Service Models as a configuration. From a telecom operator’s perspective it can be perceived as a kind of service catalog. The TMForum CFS-RFS concept can be applied here. The Service Model is the most important part in defining a service chain. Its creation requires defining a Customer Facing Service (CFS) as a composition of Resource Facing Services (RFS) or other CFSs. During the definition of the CFS, readily available service building blocks (Resource Facing Service Specifications) can be used. RFS Specifications can be provided by various involved parties. They may relate to functions such as billing, settlement handling or trouble management, together with an appropriate set of operational and management interfaces, as well as technical characteristics. While defining a Service Model it is necessary to decide on which party is to deliver each service building block and how they will all interact with other elements. Of course, this definition needs to be backed up with real work related to the development of those service building blocks and interfaces. Based on TMF’s concept, the Service Model is built using existing service blocks (the aforementioned Resource Facing Service Specifications (RFSS), and then by creating instances of these RFSSs (which then become Resource Facing Services (RFS)). So in this context Resource Facing Services are instances of Resource Facing Service Specifications, or in other words – RFS means using a service building block (RFSS) in one of the Service Models (such as e.g. a Freemium offer involving partners or B2B + B2C offers involving partners).

Product Model

Service Model

Figure 1. Four elements of digital service definition

Finally, the Service Model created in the service catalog leads to creating a Customer Facing Service. It aggregates all Resource Facing Services and represents a technical product, which is then used to define a commercial product in the product catalog. In the end the product specification in the product catalog will link directly to the CFSs defined in the service catalog.

Comarch Technology Review 02/2013

KRZYSZTOF KWIATKOWSKI

Comarch SA

Head of BSS product management, Telecommunications Business Unit

IN FOCUS: DIGITAL SERVICES

IDEAS IN BRIEF: A digital service definition consists of 4 elements which may be managed and defined by different parties Telecom operators can offer service capabilities as an added value in the world of digital services It’s important to use Service Lifecycle Management for managing the lifecycle and configuration of distributed services

<<CFS>> Freemium bike rental service

<<RFSS>> Identity Management

<<RFSS>> Settlement Management

<<RFSS>> Order Capture

<<RFSS>> Trouble Management

<<RFSS>> Payment Collection

<<RFSS>> Settlement Handling

<<RFSS>> CSP domain Identity Management

<<RFSS>> CSP domain Settlement Management

<<RFSS>> Partner Order Capture

<<RFSS>> Partner Trouble Management

<<RFSS>> Partner Payment Collection

<<RFSS>> Partner Settlement Handling

CSP domain

<<RFSS>> Service Delivery

<<RFSS>> Partner Bikes rental

<<RFSS>> Partner Bikes service

Partner domain

Figure 2. Sample service model definition

Once a Service Model is defined, all systems responsible for delivering service building blocks have to be configured to support the newly defined services. Each capability used in the Service Model requires that certain technical configuration has to be done in various systems (such as fulfillment, identity management, trouble management, and mediation or billing tools). To make it consistent and compliant in a multi-partner environment, the configuration of these elements should be controlled by a Service Lifecycle Management system, managing the workflow, as well as testing and acceptance of flows internally and between partners. In case some RFS in the Service Model are delivered by partners, the configuration on their side should be controlled by a Service Lifecycle Management system. The question remains as to where this system should reside, but the answer is not clear. Depending on the scenario, it can be delivered by the telecom operator, its partner or it can be an independent platform which all parties must use to manage the cooperation.

Product Model The Product Model is a product specification related to the available Service Models, enriched with all the characteristics needed to make it part of an operator’s commercial offer, and defines a final product delivered to end customers. Partners (such as resellers) become part of the revenue share chain, but are not actual product users.

Offering Model An Offering defines how to sell a product to the end customer (through which channels, in what locations, to whom, at what price etc.). Such a definition may be simple or may contain many different products packed into a bundle. Product offerings are managed and defined by the same party that sells the product to end customers.

Revenue Share Model The Revenue Share Model defines the flow of money between partners involved in delivering a digital service. Examples include revenue sharing, split revenue, or cash out. It also specifies which parties are involved in the settlement process, which one manages business relationships with customers, who issues invoices for customers, provides a product/service to customers, manages revenue sharing (sending settlements or invoices to partners) etc. There is no universal response to which party should manage such settlements, however, based on the fact that CSPs have a lot of experience in settlement management, we can assume that they would be the ones managing it (and making a profit from such a service). As in the case of Service Models, the configuration of all systems related to settlement management should be controlled by a Service Lifecycle Management system.

Comarch Technology Review 02/2013

IN FOCUS: DIGITAL SERVICES

<<CFS>> Freemium bike rental service

<<RFSS>> Identity Management

<<RFSS>> Settlement Management

<<RFSS>> Order Capture

<<RFSS>> Trouble Management

<<RFSS>> Payment Collection

<<RFSS>> Settlement Handling

<<RFSS>> CSP Identity Management

<<RFSS>> CSP Settlement Management

<<RFSS>> Partner Order Capture

<<RFSS>> Partner Trouble Management

<<RFSS>> Partner Payment Collection

<<RFSS>> Partner Settlement Handling

CSP* domain

<<RFSS>> Service Delivery

<<RFSS>> Partner Bikes rental

<<RFSS>> Partner Bikes service

Partner domain

*CSP - a mobile operator

Service Lifecycle Management

Digital Service Management

Identity Mgm

Order Management

Settlement Handling

Convergent Billing

Product Catalog

Offering

Management Digital Service Manager

Order Capture

Payment Collection

Customer Information Mgm

Settlement Mgm

Revenue Share Model

Product Model

Trouble Mgm

Dashboard

Service Model

Product Catalog

Revenue Share

Service Catalog

Partner Information Mgm

Reseller Provider

Reporting

Monitoring

Service Fulfillment

Service Level Agreement Mgm

Figure 3. Service Lifecycle Management processes controlling the configuration of systems involved in the service model

Comarch Technology Review 02/2013

IN FOCUS: DIGITAL SERVICES

A set of well-defined capabilities to be used as elements od Service Models may be one of the most important roles of CSPs in the digital services.

Identity Mgm

Billing

Order Management

Settlement Handing

Convergent Billing

Product Catalog

Order Capture

Payment Collection

Trouble Mgm

Customer Information Management

Figure 4. Sample set of service building blocks – RFSS

Service capabilities As an addition to digital services, CSPs may offer ready-touse service building blocks (RFSS) which can be used in some Service Models – the diagram below illustrates some examples – e.g. in some Service Models an existing (legacy) billing system of the operator can be used, while in other cases a partner may provide this capability (including billing of end customers or billing on the behalf of a partner). A set of well-defined capabilities to be used as elements of Service Models, as depicted in the diagram above, may be one of the most important roles of CSPs in the digital service. E.g. the billing capability may represent not just the technical interface and billing system owned by the CSP, but also the services behind it, delivered by billing departments. The list of capabilities may differ, depending on the CSP’s capabilities and strategy. In some cases it may contain only the connectivity with the guaranteed quality of service (which on the other hand could be a very valuable element of many digital services).

Who should control the service? In order to prepare for the digital services era, CSPs should not only think about transforming their IT environments. Because it is not certain whether or not the software they have will even be used to control any digital services. In many cases this will be out of CSPs’ control, e.g. offered in an independent cloud or controlled by some OTT players, who will only be buying connectivity and some additional services from CSPs. In that case it would be better for CSPs to focus on preparing their IT systems for exposing their capabilities to partners. The second option is that CSPs will also provide platforms to manage the full chain of digital services, encompassing the Service Model, Product Model, Offerings and Revenue Share Model. This model is a bit more complicated as it may additionally require some organizational changes, such as creating special departments responsible for managing digital services for third parties (which in many cases will include di-

rect competitors of the telecom operator). Independent departments of this kind have already been created in some telecom companies, acting on the telecom group level, and managing M2M business. These could potentially evolve into digital service organization units in the future.

Summary Four elements define the digital service – Service Models, Product Models, Offering Models and Revenue Sharing Models. However, it doesn’t mean that all these definitions will always be configured in a specific place, as it has been proposed earlier in this article. In many cases the digital service definition will be distributed among partners involved in delivering the service, and there may even be no direct business relationship between these parties. This is the case of Skype calls - for the end user Skype and a CSP provide voice connectivity over IP as a consistent service, but they do not cooperate or have any direct interfaces between them. But for many other services such direct links between involved parties already exist – e.g. some app stores use direct billing capabilities exposed by operators, so that end users are charged for applications in their phone bill. Usage of Service Lifecycle Management for managing the lifecycle and configuration of distributed services is important for future cooperation between partners in the digital service value chain. High automation is needed to efficiently integrate multiple systems engaged in building the final service and managing the changes throughout its lifecycle. Aside from the changes related to IT systems (such as BSS and OSS) and technologies (such as data centers), which are necessary to effectively support digital services, there are many other questions which remain unanswered. Should the entire service be managed somewhere comprehensively? Which party should be responsible? Is the platform for managing digital services a necessity or should the definition remain distributed without any platforms supporting it? Looking at how fast the digital service landscape is developing, I feel we will be able to obtain answers soon enough.

Comarch Technology Review 02/2013

IN FOCUS: DIGITAL SERVICES

Implementation of Comarch Smart BSS Suite For simpliTV ORS/simpli services

The Challenge Comarch has really lived up to our expectations in terms of engaging in the implementation and their technical expertise. We outlined a very ambitious deadline for the project and Comarch adjusted their offer to fit our needs, ensuring the perfect level of resources to support our goals. Following the successful launch of simpliTV we are looking forward to continue our cooperation with Comarch in the future while extending our offer and addressing the needs of new target groups, such as corporate clients. Dominique Löpfe, Project Manager, ORS/simpli services

simpli services, a subsidiary of the Austrian Broadcasting Services (ORS), has launched an innovative terrestrial TV platform – simpliTV. Being a new player on the market, simpliTV began its business operations with an ambitious objective to win a market share of more than 12% for digital terrestrial reception. To achieve this, simpliTV needed to prove its competitive edge and convince potential customers that it is the best choice available. The company’s strategy was to show viewers how simple it was to register, activate the service, become a subscriber and benefit from its innovative and low-cost offer. The only way for ORS and simpli services to ensure this kind of customer experience was by implementing a tailored IT solution that would support all the necessary business processes and strategic objectives. Here is where Comarch stepped in and took full responsibility for achieving these goals thanks to Comarch Smart BSS Suite, a solution targeted at small and medium sized telecommunication operators and service providers. It covers eight main areas of operation – CRM, product catalog, service activation, self-care, billing, trouble ticketing, APIs and Web Shop – within an all-in-one compact solution. The system has been deployed to support end-to-end processes including sales support, order-to-activation, collection manage-

ment and problem-to-solution and was perfectly capable of meeting the high expectations of ORS and simpli services.

The Approach Comarch was ready to deliver a flexible solution with an open, convergent architecture supporting ORS’s business needs in the long term by facilitating the future introduction of new, prepaid services, controlled in real-time. Apart from that, Comarch presented a customer experience-centric approach and designed the solution with the ultimate goal of improving user experience in everyday operations for simpliTV subscribers.

The Solution Comarch Smart BSS Suite is a modern product that can be used in two ways - as a standalone billing platform or a system that fully integrates with existing billing solutions. Comarch Smart BSS Suite is a CRM/BSS solution that covers the entire billing cycle area, from charging, billing and provisioning through to the generation of bills/invoices ending with payment management. The solution provides a full range of customer service including customer-oriented portals – CRM, Self Care and Web Shop.

Comarch Technology Review 02/2013

IN FOCUS: DIGITAL SERVICES

The solution also contains an internal reporting engine to facilitate configuring and executing reports which gather data from system databases in a time effective and user-friendly manner without the need for specialist database knowledge.

Functionalities:

The Result

• Product Catalog: defines basic, individual products, as well as more sophisticated product bundles simpliTV is a TV-product of simpli services GmbH & Co KG. simpli services is a subsidary of Austrian Broadcasting Services (ORS comm). ORS comm is responsible for construction and establishment of DVB-T and DVB-T2 in Austria. simpliTV is responsible for sales to the endconsumer. About 90% of all Austrians in state capital, big cities and their neighbourhood can watch simpliTV with indoor-, outdoor- and roof-antenna.

cy. This approach runs parallel with simpliTV’s philosophy of offering their subscribers simple registration and quick access to services at a competitive price. Such a convergent approach of both companies helped determine a successful partnership.

• Rating: • Standard charging and pricing models - in the case of a postpaid service the rating is performed based on subscription-based (recurring fee) billing • Rates & fees – different types of charges are supported by the system • Taxes - this module facilitates defining appropriate tax rules and locations that are associated with certain services • Billing & invoicing constitute the basic functions of the system that support any type of billing, including (but not limited to): subscriptionbased (recurring fee) billing, one-time fee billing, usagebased billing

For using simpliTV, customers need a set-topbox or a CI+ Modul TV set which are HD-able. With the right receiving-sets the TV-customer can watch 40 great TVprograms, nine of them in HD-quality. Customers can watch ORF eins HD, ORF 2 HD and ServusTV HD for free, they only have to register. The customers can also watch up to 12 TV-programs in Austria for free.

• Payment collection in a postpaid model is supported by a late payments component that creates simple dunning scenarios

For further information visit the website: www.simpliTV.at

• Web Shop ensures that customer orders are collected, validated and configured

• Voucher Management is built into the solution to support managing vouchers and discounts regarding product subscriptions

To successfully support the launch of simpliTV, Comarch delivered a smart system that contains all the necessary features to run daily business operations smoothly and, as a result, ensure subscriber satisfaction. The first phase of the project was successfully completed within a very ambitious time frame corresponding with the scheduled launch of simpliTV. With the end users in focus, the implemented solution contains modules ensuring the best possible customer service, such as a user friendly web-based portal and CRM.

ORS benefits include: Increased customer satisfaction • User-friendly customer service thanks to webaccessible portals for customers • Complete information concerning customers, thanks to CRM ensuring a 360-degree view • Easy customer access to self-management of services thanks to a self-service portal

Effective payment management • CRM for managing data related to subscribers, resellers and agents, and for easy administration and management of services • Self Care provides the self-service abilities of a customer portal, thus allowing customers to easily order services, activate their subscription, modify personal data and control their payments

Why Comarch

• Full integration with SAP in terms of financial operations • The system supports a variety of payment methods as well as various taxation and dunning models • Efficient module for generating invoices and invoice images

Time and cost savings thanks to process optimization • Comprehensive reports concerning operations performed by the system

To best support simpliTV’s business objectives, Comarch was ready to provide simpli services with a compact, smart and simple solution. Thanks to its ingenuity, Comarch Smart BSS Suite was implemented in a short time frame and the wide spectrum of its functions ensured the desired cost efficien-

• Flexible calculation of complex pricing scenarios • Automated order handling and trouble tickets execution

Comarch Technology Review 02/2013

IN FOCUS: DIGITAL SERVICES

How to best deliver a cloud service to the end customer?

Comarch Technology Review 02/2013

IN FOCUS: DIGITAL SERVICES

arge and small telecoms are currently keeping a watchful eye on cloud-based products. They see them, rightfully, as being a chance to increase nose-diving ARPU (Average Revenue per User) rates. Considering all the pros and cons of telecoms playing the role of cloud service providers, it would seem to be a reasonable way for them to maintain a leading position on the ICT market.

The number of services that can be delivered in the cloud model is colossal and seems to grow with every passing day, as we continue to hear more and more about migrating virtually every application, system and functionality into the cloud. Cloudiness has become a buzzword across the industry and “cloudification” can be achieved in a myriad of divergent ways. Market success depends not only on what kind of service we deliver to customers, but also on how it is delivered to them. The number of different ways to access a given product by end users is quite significant. Different methods of service delivery are suitable for different services and they may be as crucial for the success of the service as its functionality is. Before we move on and discuss some examples of cloud products that can be delivered by a service provider (not necessarily a communications service provider), let’s define what a cloud service is or might be.

A variety of SaaS options SaaS products are usually understood as a piece of software (usually running in a provider’s data center), which can be used or accessed by the end user via the Internet. Of course this is a huge simplification, but it is enough for the purposes of this article. Such a remotely running application can be accessed in a variety of ways, and the most popular ones will be elaborated on further in this text.

Web application A web application is probably the most popular way of delivering a cloud application (and the one with the longest tradition). Web apps are commonly used by all the leading global cloud providers, especially in the case of services and applications aimed at the mass market and for small businesses.

GRZEGORZ WĄCHOCKI

Comarch SA

Cloud, Connectivity & Mobility Director, Telecommunications Business Unit

It is convenient and easily accessible from pretty much any device that can connect to the Internet through a web browser. However, despite all of the supposed advantages, this approach comes with some limitations. It is unsuitable for applications that require extensive computing power, it requires extended access to local resources, it does,

of course provide elaborate functionality with a dedicated user interface but it is more likely than not to be used in certain conditions where the Internet connection is intermittent or of a limited speed.

Dedicated application for the given service In the cases described above, where there are certain limitations regarding Internet access, a dedicated application might be a good solution. At first, it may appear just like a standard application and not a cloud-based service at all. But, in contrast to an old fashioned standalone application, the data is stored remotely, securely and can be automatically synchronized between different devices. This means e.g. that work can easily be temporarily halted at any moment and can be resumed on another device if the user finds it convenient. The disadvantages of this approach include a longer setup process, as the application requires downloading, installation and some basic configuration. Also, ad hoc usage, based on a web browser is not possible in this case, and some basic technical knowledge may also be required.

Mobile application This type of access is very similar to the previous case, except the application is designed to be used via a smartphone. This makes it extremely convenient for the users of a particular mobile OS (such as Android or iOS). Being accustomed to the way in which mobile applications work, they also know how to download and install them and would very often even avoid web applications due to limitations regarding Internet speed, lack of adjustment to small screen sizes, etc.

Desktop sharing This approach sees the application running on a remote machine (somewhere in the cloud) and only the view of the application screen is delivered to the end user (like a video stream). This enables the user to see the application’s interface as if it was running on a local machine (or in a dedicated window). All user actions and inputted data are delivered back to the remote server and the application to be processed. A response in the form of a screen view is then sent to the user and the cycle repeats. A similar process is created in the case when a local application is used. This approach is suitable e.g. for applications that require significant computing power and are delivered to users, who have a stable and relatively fast Internet connection. Another quite interesting case where this model can be put to good use is an application with an expensive license. A service provider invests in a license for the application, then makes the application accessible for end users and charg-

Comarch Technology Review 02/2013

IN FOCUS: DIGITAL SERVICES

es them for the amount of time they use it for. For the end user this approach may also be an interesting option, like when a given application is not meant to be used permanently, but only for certain short periods of time. This way the user does not have to invest in a software license or pay a wad of money upfront.

may create an application for storing and managing photos that may not only enable the end user to display the pictures, but also allow them to order prints directly on the TV while looking at the photos.

IaaS, PaaS and more

Application streaming This is a technology that enables a kind of application virtualization – the application is stored on a streaming server and then distributed to clients’ computers that it then runs on. The thing is, that in order for the application to be launched on a user’s machine, only an essential part of its binaries has to be transferred. Other parts are only transferred if it is required for the execution of specific functions. This approach would best serve a corporate environment, where private clouds can be employed for the centralized management of applications. In some cases, if the license allows it, the application streaming server can make it possible to optimize the number of licenses used by the company. This is done by allowing many users to share the same license – in which case the total required number of licenses equals the maximum number of simultaneous users at any one time. From the customer’s perspective it’s a convenient way of using an application, even if it requires the installation of a software package in order to allow the use of streaming technology on their computers. What’s important to remember here is that this package only has to be installed once for all the applications available on the streaming server. The problem is that not all applications can be virtualized, this could be a significant limitation of this approach, but only time will tell.

Dedicated devices Sometimes it is quite convenient for end users to receive a readily available and easy-to-use device to access a service. Many popular services are delivered to end customers in this way – they include music players, electronic book readers or TV receivers that connect directly to the TV. I expect that in the foreseeable future many simple devices dedicated for a particular service will be created as customers continue to demand more and more simplicity when using a new product or service.

Embedded applications The functionality of some popular devices delivered to users can also be extended by using software applications created and delivered to the device. A good example is a television set that provides a good means to deliver far more services than just TV channels. For instance, the provider

Another group of cloud products that could be of interest for telecoms who want to stimulate new revenues are those that are generally understood as IaaS (Infrastructure as a Service). This kind of service includes resources, mostly virtualized, such as computers, servers, storage, network etc. and permits customers to build their own systems without having to invest in and maintain their own hardware/data centers. Furthermore, IaaS provides end users with the possibility of scaling their infrastructure according to their actual needs, and often empowers them with additional tools such as online management and monitoring, as well as the corresponding API to incorporate e.g. dynamic scalability of the infrastructure into the system built on top of it. Platform as a Service (PaaS) is yet another option, where (in contrast to IaaS) the provider not only delivers the resources, but a complete computing platform, including operating systems, databases, web servers, a development and execution environment, etc. The delivery of such products and tools may be done using the same methods as the ones described for SaaS.

Summary There are many ways to deliver a cloud product to end users - only some of them have been mentioned in this article. The best choice for a specific service depends highly on the way in which it’s going to be used, the profile of the targeted customers, the environment that the end user works in, the licensing model, etc. It almost goes without saying that it’s best to have an application available via several channels in order to widen the target group of potential customers. Telecom operators (and other cloud service providers) should be prepared to support the delivery of their products through as many channels as possible, and be able to flexibly adjust their business strategies according to customer needs (and not the other way round). Strong focus on providing easy access to their offered service results in a far greater user experience of the product and can potentially increase revenue streams. Never forget than even a superb product or service can fail if it is not served to the customer in an appropriate way.

Comarch Technology Review 02/2013

IDEAS IN BRIEF: Different methods of service delivery may be as crucial for the success of the service as its functionality There is a variety of ways to access a remotely running application Telecom operators should be prepared to support the products delivery through as many channels as possible

IN FOCUS: DIGITAL SERVICES

Do EU regulations support or hinder digital service adoption in Europe? How the Digital Agenda for Europe and other EU initiatives influence the development of digital service innovation

telecommunication industry is highly standardized in the fields of network technology and interconnection. It is also highly regulated by both the European Commission and national regulation authorities (NRAs), who cooperate under the umbrella of the Body of European Regulators of Electronic Communications (BEREC). Since large national telecoms went down the road of privatization and new independent telecoms emerged on the market, the telecommunication business has been a game played out between the goliaths of politics and business. It was a fairly well-balanced game, for the most part, that is until it became affected by the new technological and business reality – a world of digital services. These were initiated by global companies, using unlimited innovation and enjoying the freedom of business that is not subject to national regulations.

THE

PIOTR MACHNIK

Comarch SA

Vice President, Product Management & Marketing, Telecommunications Business Unit

Aside from the obvious threat to traditional telecoms – i.e. the fact that Over-The-Top (OTT) and similar companies will grab their share of the market – the area of national and international regulations will also be quite challenging for European telecoms in the digital world.

A recently published report, Reforming Europe’s Telecoms Regulation to Enable the Digital Single Market, by The Boston Consulting Group1, shows that Europe lost its position as leader in both modern telecommunications as well as in value-added service innovation. Similar conclusion has been presented by GSMA in report Mobile Wireless Performance in the EU & the US2 . The amount of people who have access to fast Internet and mobile broadband and who are able to use digital services is much lower in Europe, especially when compared to the USA and Asia. Locally fragmented telecommunication service providers are not able to compete with global OTT players or smart digital service providers from other continents. Telecom companies headquartered in Europe are constantly losing out on revenue and their share of the global telecom revenue pie, while those hailing from elsewhere are more than happy to lay than hands on more than just one piece of it. The European Union has become sluggish in digital innovation and rapid Internet adoption. Neelie Kroes, the Vice President of the Commission and the Commissioner for the Digital Agenda for Europe, claims that Europe has to boost investment into Internet technology and

Comarch Technology Review 02/2013

IN FOCUS: DIGITAL SERVICES

define incentives for both telecom entrepreneurs and digital service providers. Similar activities are already underway thanks to the FCC in the USA and several other countries by virtue of their regulators.

The Digital Agenda for Europe – a path towards leadership in innovation? The Digital Agenda for Europe relates to the market changes, actions and regulations which have a direct or indirect impact on digital service enablement, as well as to those stimulating growth and innovation in the telecom industry.

Single Digital Market – will pan-European telecoms and fair competition compensate for falling roaming revenues? The Single Digital Market is one of the most important goals defined in the Digital Agenda for Europe. Its aim is to create

consistent regulations and business rules for all countries in Europe, not only for telecom operators, but also for OTT players, content distributors and other digital service providers. This will of course be quite challenging to implement, because it means that regulators have to be up-to-speed with the latest technologies and business models. Moreover, new regulations will need to contain special incentives for the development of new network infrastructures. Only then will it be possible to achieve the proper balance between the huge investments that telecoms (infrastructure and connectivity vendors) will have to make and the openness of the networks for smaller, Tier-2 / Tier-3 operators (access network consumers). This is central for the development of fair regulations between all market players. The most important expectation of the Single Digital Market is to facilitate the creation of strong and consolidated pan-European telecoms and digital service providers. Ones that would be capable to compete with companies from the Americas and Asia, both on the domestic (European) market as well as globally, in the fields of innovation and business efficiency on the growing market of digital services. Current analysis supported by the European Telecommunications Network Op-

VALUE OF EU TELCOS CONTRACTED OVER PAST FIVE YEARS WHILE OTT, OEM AND CABLE, COMPANIES BENEFITED

CAGR Total (€ billion)

446

567

592

567

609

European digital eco-system market cap. in % (abs. in (€ billion) 100

7% (32)

10% (57)

12% (72)

13% (75)

9% (40) 80

2% (7)

15% (88)

19% (111)

OEM1

32%

OTT1

45%

5% (32)

Cable2

47%

49% (300)

Telco2

-5%

16% (99)

23% (131)

2% (12)

29% (178) 3% (20)

3% (19)

82% (367) 40

73% (411) 66% (390) 61% (342)

0 2008

2009

2010

2011

2012

1Estimate

based on major OEMs and OTT’s listed; market cap. estimate based on approximated European revenue share per player

2Estimate

based on major European network owners listed; ˜50% of top-20 EU cable companies currently not listed and thus excluded Comarch Technology Review 02/2013 Source: Capital IQ 2013, Google & Ipsos Media 2013, Worldbank 2013, BCG Value Science Center 2013;

IN FOCUS: DIGITAL SERVICES

What is the Digital Agenda for Europe? The Digital Agenda for Europe (DAE) contains 101 actions, in 7 pillars, which will help the EU to reboot the economy and enable Europe's citizens, and businesses, to get the most out of digital technologies. The DAE contains 13 specific goals which encapsulate the changes they want to achieve: the entire EU to enjoy broadband access by the end of 2013 the entire EU to be covered by broadband above 30 Mbps by 2020 50% of the EU to subscribe to broadband above 100 Mbps by 2020 50% of the population to buy online by 2015 20% of the population to buy online cross-border by 2015

But let’s look at this in another way. Currently, when a user switches off their data roaming while abroad during vacations or business trips, telecoms are also losing money. As a result, digital service vendors can’t offer their services on location, which is not only a problem for them, but also for consumers who would otherwise find these services helpful when travelling. Neelie Kroes comments on her blog at http://blogs.ec.europa. eu: I find this curious. Although roaming actually represents a relatively small proportion of telecoms revenues, it is a disproportionate irritant for travelers; an unnecessary reminder of borders that are supposed to have disappeared; and a significant obstacle to a digital single market.3

33% of SMEs to make online sales by 2015 the difference between roaming and national tariffs to approach zero by 2015 to increase regular Internet usage from 60% to 75% by 2015, and from 41% to 60% among disadvantaged people to half the proportion of the population that has never used the internet from 30% to 15% by 2015 50% of citizens to use e-government by 2015, with more than half returning completed forms all key cross-border public services, to be agreed by Member States in 2011, to be available online by 2015 to double public investment in ICT R&D to €11 bln by 2020 to reduce the energy required by lighting by 20% by 2020

In the end it looks like the Single Digital Market may be beneficial for everyone. For BSS and OSS systems it will be imperative to be ready for product and process consolidation, asset sharing and upcoming service and offer innovations. Nowadays, telecoms sell connectivity bundled with data center services, third party services, as well as devices. These kinds of offers need to be extended because of the demand that digital services will have for higher interaction with the network, as well as for improved customer management and billing. Of course, the IT tools will also have to be improved upon to meet the new requirements. These will include: automated regulation reporting, multi-tenancy and being able to withstand higher performance and availability.

Find out more at: https://ec.europa.eu/digital-agenda/en

erators’ Association (ETNO) shows that Europe has become rather slow regarding innovation and swift Internet adoption. This is having a detrimental impact on the EU economy and growth, and not only in terms of telecommunications. Another expected benefit is the decrease in prices of high speed connectivity, as a result of consolidation and economies of scale. Operators can expect to be pressured into lowering MTR (Mobile Termination Rates), as well as aligning them with roaming prices within the European Union – what this means in practice is that by 2015, roaming prices will be practically down to zero. Decreases in both mobile termination rates (MTR) and roaming prices will be crucial for digital service adoption in the context of growing mobility in everyday life and in business. On one hand, this creates an opportunity for communication service providers (CSPs), as it forces all companies to play by the same rules, where business agility and service innovation will become the main differentiator. Of course, on the other hand, it will also entail losses for telecom operators, annual revenues are predicted to plummet by approximately 10%-15%.

Single Euro Payment Area (SEPA) – good news for e-commerce and implications for BSS New digital services, both for the B2B and B2C markets, as well as all the related business models, such as e-commerce and m-commerce, all demand unified, cheap and automated payment processing. People like to buy with just one click and be able to get their hands on a new digital service immediately, where they are and at the time they need it. And nobody likes paying high commissions or currency exchange rates, especially when they buy many small things in separate transactions (when the cost of payment operations very often makes the deal unprofitable). The introduction of SEPA is to support online international payments, both Euro credit transfers (SEPA Credit Transfer STC) and Euro direct debit transfers (SEPA Direct Debit - SDD) in the whole EU, as well as to automate money transfers between companies, especially in the e-commerce and digital service industries.

Comarch Technology Review 02/2013

IN FOCUS: DIGITAL SERVICES

In the world of payment processing, the role of the data format used to exchange information between banks can be compared to the role of language in communication between people. In the past, dozens of different data formats were set in place to process payments across different national and common EU clearing systems. SEPA therefore requires that an agreement is reached on a common set of data to be exchanged in a common syntax. SEPA data formats are XMLbased files, supporting local languages based on the global ISO 20022 message standards.

It will also have implications for the future of BSS systems – SEPA data formats, New Payments APIs and processing will have to be implemented in billing and payment collection and clearing systems, both for retail billing and inter-partner settlements in B2B and B2B2C business models.

The goal is to lower the cost of financial services, money transfers and payments, both for companies and end users, thanks to making the payment processing market more competitive, and as a result of using standardized procedures and formats. SEPA is also expected to save the European Union about 2-3% of GDP (which is currently being used to cover the costs of money transfers). Moreover, SEPA would support micropayments and the automation of payment procedures, which is especially important for the future of e-commerce and m-commerce (business models that are very relevant in the world of digital services).

Another important change (aside from lowering roaming fees) will require implementing separate sales of regulated retail roaming services within the European Union. An EU document 1203/2012, On the Separate Sale of Regulated Retail Roaming Services within the Union, dated 14th December 20125, introduces the possibility of contracting regulated roaming services between consumers and operators in countries (including MVNOs), instead of using one roaming partner selected by the user’s home operator (effective as of 1st July 2014). In practice, it may lead to a model similar to using Wi-Fi hotspots, but with far better quality, session handover and service availability. The technical model of this service is quite complicated, it has been specified both for Single IMSI and Multi IMSI terminals for signaling and data transfer via a visiting network, with the integration of specialized services (such as voicemail) handled by the home operator.

In February 2012, the European legislator adopted Regulation (EU) No 260/20124, thus establishing the technical and business requirements for credit transfers and direct debits in Euro and amending Regulation (EC) No 924/2009 which sets February 1st 2014 as the deadline for the Euro zone countries to comply with the core provisions of this regulation. For the member states that have not introduced the Euro the deadline is set for October 31st 2016.

The freedom to choose your roaming operator – Alternative Roaming Providers (ARP)

There is still almost a year to go, but the day is fast approaching and operators are preparing their BSS/OSS systems as well as their sales organizations already. BSS solutions will

Comarch Technology Review 02/2013

IN FOCUS: DIGITAL SERVICES

need to support the new service (orders, contracts, complaints, support etc.), New clients and new billing records will have to be processed and invoiced. BSS will also have to provide seamless contracting, mediation and roaming billing, while OSS will have to support the appropriate service quality and readiness. To quote the words of one of our customers (a large service provider), “every roamer is a VIP customer”. This just goes to show how important this market is for telecom operators and how important the quality of a data roaming service is.

Taxing users in their own country In 2008 the VAT Directive was modified in order to take into account the development of e-commerce. From 1st January 2015 all online services, including telecommunications, broadcasting and digital services will be subject to taxation in the service user’s country of residence, instead of the service operator’s country6. This means that service providers like e.g. Skype, registered in Luxembourg, where VAT for telecom services is much lower than in other countries (15%), will be forced to open branches in each European country, in order to be able to clear taxes. For the customer the VAT rate will be the same regardless of where suppliers are established. To facilitate the introduction of this change for businesses, the EU will offer a one-stop-shop tax clearing service, but the procedure will still be quite complicated. Businesses will be obliged to use a web portal in their member state to declare the due VAT in the member state of their customers. The Regulation on Administrative Cooperation and Combating Fraud in the Field of Value Added Tax (Council Regulation (EU) No 904/2010)7 details all the technical aspects of the implementation of this one-stop-shop model. Nevertheless, there will still be some cases when the definition of “residence” will be almost impossible8. For example, when a German citizen will use a public phone booth in Sweden or when a Swedish citizen purchases a prepaid card in France. A Spanish telecommunications company will have to put Swedish VAT on the service used by a private individual resident in Sweden, who e.g. uses a landline in his holiday home in Spain. It can safely be assumed that, in practice, the telecommunications company will charge Spanish VAT on that service, even if it sends the invoice to the customer’s address in Sweden. Similarly, a hotel in Spain will have to charge Italian VAT to guests from Italy for Internet access and using the telephone in their rooms, which seems to be hard to implement. New digital service vendors from Europe and telecoms headquartered in Europe will observe some opportunities for growth with the introduction of unified VAT regulations, be-

cause it will mean that OTT players (such as Google or Skype) will have to raise the prices of their services by approx. 5-7% or face a decrease in profits. New regulations will also mean higher service prices for end customers too, because local taxes in most European countries are far higher than the aforementioned 15% in Luxembourg (e.g. 27% in Hungary). What this means for BSS and mediation systems is that they will need to be enriched with some new functions, supporting location identification and multi-tenant taxation on reports and invoices.

Fast Internet – the crucial element in the development of digital services Of course, what’s most important for the broader adoption and development of new innovative digital services in Europe is investing in new, rapid Internet and mobile broadband. The pressure from the regulators and politicians is very high and increasing all the time. 4G technology (LTE) and fiber networks (FTTH) will ensure that the high performance parameters defined in the Digital Agenda are met, however the costs of rolling out these technologies is extremely high, and long term financing and credit are both expensive and limited. In addition, LTE demands a new spectrum and new terminals, which leads to more costs, which can be in the millions. FTTH requires special equipment in buildings and new modems in houses, which also do not come free of charge. So, how can operators meet the Digital Agenda requirements and open their networks for new digital services without them ending up in the poor house? One possible solution is to improve the performance and capacity of existing infrastructure and technologies. Bitstream Plus or Virtual Unbundled Local Access (VULA) offer many opportunities, while using HSDPA+ rather than LTE (in mobile) or VDSL2 Vectoring instead of FTTH (for fixed connections) also look like cheaper and promising options. HSDPA+ is already quite popular, Bitstream Plus and Virtual Loop unbundling have already been tested by BT and eircom9, while Chinese Unicom has been testing VDSL2 Vectoring10 technology on a large scale. In Europe, Deutsche Telecom gave a strong signal to the market when they announced plans to apply VDSL2 vectoring and a hybrid box that is supposed to combine the strengths of LTE and vectoring11. The Digital Agenda wants Europe to be covered by 30 Mbps by 2020, with 50% of the EU expected to subscribe to broadband above 100 Mbps by the same year. Removing cross talks between lines could be able to secure as much as 100Mbps within a 600m distance, while in the case of using VDSL2 Vectoring it could be 100Mbps up and 40Mbps down with-

Comarch Technology Review 02/2013

IN FOCUS: DIGITAL SERVICES

in a 100-600m distance using existing infrastructure. This means that there are numerous opportunities to meet the requirements of the Digital Agenda for Europe, even without having to deploy costly fiber networks. Another trend we can observe is Wi-Fi offload and the integration of Wi-Fi with traditional 3G/4G access. At the moment this simple and easily accessible technology with its readyto-use devices and clearly defined set of standards seems to be a strong supporter for the adoption of digital services. The first serious initiatives to streamline Wi-Fi connectivity and interwork it with 3G/4G have already been taken by regulators, e.g. the handover between Wi-Fi and 4G, Distributed Antennas Service etc.). We can expect growth in the HetNets domain (which also means increased interest in umbrella NG OSS solutions that can support it).

EU initiatives paving the way for digital service adoption There are many EU regulations and initiatives that relate to the development of digital services and encourage innovation. Even those that do not directly relate to the telecom industry can still be seen as creating new opportunities for telecoms, as each digital service requires connectivity. Telecom operators can also become the providers of certain digital services.

Living smart and green The European Initiative on Smart Cities is one example of a program that has created a massive opportunity for the digital services market. The goal here is the better utilization of natural resources (water and energy) for cities and their inhabitants. There are also many EU activities that relate to environmental issues, promoting the use of green paper, contracting, ordering and on-line invoicing. These are not only friendly for the planet, but they also have great potential to enhance customer experience by making the new services 100% digital and available at any time, from any location.

Intelligent transport and automated emergency handling In June 2013, the European Commission adopted two proposals that ensure that by October 2015 cars will automatically call emergency services in the event of a serious road accident, using Europe’s single emergency number, 112. This will enable emergency services to identify the vehicle’s location, even without a phone call being made. Estimates say that the system may save up to 2500 lives each year. Even though the commercial opportunities of this appear limited, it may well open up new possibilities for the development of the emerging connected cars market. Other EU programs assume growth in e-health, intelligent transport, public and private surveillance, security, privacy in the cloud etc.

Security European regulations are very focused on security and privacy issues. Some companies however, may perceive them as being a block to innovation. Security, privacy control and good practices are strong assets of telecoms, which they can use to support Digital Services for the B2B and enterprise segments. In the era of ACTA, SOPA and PRISM we can clearly see that information (which is a key asset of most businesses) can easily be stolen and used for various purposes. Telecoms should definitely support regulations in this domain, because their introduction is in their best interest. A good example here is the area of enterprise cloud services – large companies will more than likely tend to trust telecoms to store their data in the cloud, as the business is highly regulated and thus secures better protection of information (as opposed to companies that are not subject to such strict regulations). This has been emphasized by Fred Werner of ETIS, who has also been interviewed for the current issue of our magazine.

What do regulators have to say about the new market players? So, will the regulations start to enter the world of non-traditional players in the telecom market, such as IPTV providers or OTT companies? An important regulation for IPTV, mobile TV services and mobile advertising has been defined in the Fully Converged Audiovisual World and in Audiovisual Media Services Directive (AVMSD)12. It’s an important EU directive in the context of digital services and digital content distribution over networks, as it takes note of the fact that there is a segment of companies in the communications industry who are not subject to EU legislation. Consistent regulations for communications, broadcasting, advertising, etc. in multi-channel communications are important for fair competition between traditional telecoms and the emerging OTT and on-line based companies.

Security requirements also create new challenges for BSS/ OSS systems and a need for extended and convergent configuration management of services such as: data centers, hosting, IP VPNs etc.

Comarch Technology Review 02/2013

IDEAS IN BRIEF: The Digital Agenda for Europe - a path towards leadership in innovation? Single Digital Market - will pan- European telecoms and fair competition compensate for falling roaming revenues? What do regulators have to say about the new market players?

IN FOCUS: DIGITAL SERVICES

Service innovation beyond 4G About every ten years or so we see a new technology emerge on the market which is seen as necessary to fulfill the new demands of consumers and businesses. But defining a new technology like 3G or 4G takes time, as much as ten years or even more. During the 2013 Mobile World Congress in Barcelona, Neelie Kroes said that where there are innovative opportunities, we must ourselves innovate to seize them... European 5G is an unmissable opportunity to recapture the global technological lead. Europe should be preparing for a new wave of changes and invest in the research and the deployment of 5G technology in the 11GHz+ spectrum to recapture the leadership position in innovations and the global telecommunication market. But for now, while the EU has prepared a small budget for research (50 mln EUR), Samsung has already tested 5G achieving 1Gbps on a 2km distance, and NTTDoCoMo tested 5G handover in a car driving at the speed of 9km/h. One can be a little bit skeptical as to whether regulators and politicians can really boost innovation this way. But the important thing is that they finally realize that regulation is not only about selling spectrums and lowering the prices of Internet service for local householders.

It is always an interesting discussion as to whether the development of new technologies can keep pace with market needs. Let’s imagine 5G and envisage communication with no barriers, without degradation of signal in buildings and with a practically unlimited spectrum between 11GHz and 30GHz. It seems like an ambitious goal, but perhaps by the time it is implemented on a broad scale, it will no longer be enough for digital services and communications?

Summary EU regulators are pushing hard to create a single market for communications and digital services in Europe. It could be a golden opportunity for telecom operators, who can use their power and innovation to improve their position both against larger telecom groups, as well as OTT and OEM players. For European service providers and software companies it’s a strong message that the EU wants to invest in the development of the digital business and are looking to achieve cooperation between all EU telecommunication market stakeholders in this area. For OSS and BSS vendors it means that their systems need to be more flexible and more open for new business models, which must be based on the realtime flow of services.

http://www.etno.eu/datas/publications/studies/BCG_ETNO_REPORT_2013.pdf http://www.gsmamobilewirelessperformance.com/GSMA_Mobile_Wireless_Performance_May2013.pdf 3 http://blogs.ec.europa.eu/neelie-kroes/roaming-grief/ 4 http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012:094:0022:0037:En:PDF 5 http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012:347:0001:0007:EN:PDF 6 http://ec.europa.eu/taxation_customs/taxation/vat/traders/e-commerce/ and http://ec.europa.eu/taxation_customs/ resources/documents/taxation/vat/how_vat_works/e-services/press_notice_en.pdf 7 http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2010:268:0001:0018:EN:PDF 8 More examples are provided by Patrick Wille in the INTERNATIONAL VAT MONITOR, January/February 2012, http://www.empcom.gov.in/WriteReadData/UserFiles/file/No_1%20A-2%20%20New%20EU%20VAT%20Rules%20for%20Telecommunications%20Services%20from%202015.pdf 9 http://www.nextgenerationnetwork.ie/downloads/proposed_ipm/ipm_nga_v2_0.pdf and http://www.econstor.eu/bitstream/10419/60365/1/720281938.pdf 10 VDSL2 Vectoring was developed in 2002, but it had to wait until 2013 to finally find its business case. The idea is very simple – you can improve performance when you decrease cross-talks (noise). So by generating an anti-noise (noise in an opposite direction) you can neutralize the original noise. The name “vectoring” comes from the math algorithms used for that purpose. 11 http://ovum.com/2012/12/17/deutsche-telekoms-vdsl2-vectoring-decision-will-be-a-catalyst-for-others/ 12 http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2010:095:0001:0024:EN:PDF 1 2

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Software Defined Networking – how BSS/OSS tools can help unleash innovation

oftware Defined Networking (SDN) is currently a widely discussed topic in the telecommunications industry. There are high expectations regarding the technology, including reducing network maintenance costs and unleashing innovation, thus opening the way to new revenue sources and better network monetization. SDN is a concept where the main principle is to separate the control plane from the data plane, and to move the controller function out from today’s routers, leading to the introduction of OpenFlow switches.

At first this definition does not sound very exciting, but placing the controller function centrally should enable much more “intelligent” network traffic control and, as a result, efficiently

deliver new, innovative services for customers. The problem is that for now SDN is still only a concept, and currently the only tangible specification is OpenFlow, but it only defines the protocol between a controller and a switch. To make the promises of SDN technology come true, there is a need for a platform, enabling a business application that will help opening up telecom networks. The specifications and APIs for this kind of a business application need to be defined to shape the network according to what is required and make it “smarter”. In order for the latter to happen, a controller needs a comprehensive end-to-end view of the network and all connected services. However, the SDN concept does not define, how to provide such an end-to-end view.

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The main promise of SDN technology, which makes it so attractive, is that it should boost service innovation by “pro-gramming” the network, so that operators do not need to up-grade the existing infrastructure (“hardware”). But to achieve this, the network must be opened up with a set of APIs.

One idea is to leverage the operators’ existing assets like the BSS/OSS ecosystems and prove that SDN won’t make BSS/ OSS investments obsolete. This article describes an IT architecture, where BSS/OSS investments can not only be saved, but even act as a significant enabler for the SDN “revolution”. This means that telecom operators will be able to provide significant added value to the SDN ecosystem.

ized and can have resources allocated as required by the application layer. This is similar to virtual machines (VM) technology, widely used in data centers – a domain that in fact saw the first adoption of SDN. If virtual machines can adapt to application software needs, it would be great to have networks adapting as well. The SDN architecture promoted by the Open Network Foundation in re-created form is depicted in Figure 1.

What is SDN? Since SDN is a concept, not a specification, it is in a way open for interpretation. However, the main principles seem to be well defined by the Open Networking Foundation, an industry organization that promotes and guides the adoption of SDN principles. The main principle of SDN is the separation of control and data planes and centralizing the controller function, thus moving it away from individual network elements. The idea of separating the control plane from the data plane is by far nothing new, but in this context it means that the network can be “liberated” from the hardware limitations of routers. As the behavior of the network is determined mostly by the control function, it also means that networks can be virtual-

The architecture assumes using OpenFlow as a protocol between a controller and network elements. OpenFlow, unlike SDN, is not just a concept – it is a formal specification that facilitates building switches and controllers compliant with it. A whitepaper that has been published on OpenFlow [1] describes it as a way for researchers to run experimental protocols in the networks they use every day. At first glance it may not sound like something of great commercial value, but it’s not uncommon that something invented in universities as an internal tool for researchers ends up having huge commercial value. The history of internet (and hypertext in particular) proves this. The fundamental element of OpenFlow is the separation of the data and control layers. The specification defines an OpenFlow switch, the primary role of which is to forward packets

Application layer

Business application

API

Business application

API

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SDN Control Software

Network service

Control Data Plane interface (e.g. OpenFlow)

Infrastructure layer

Figure 1. SDN architecture (patterned on Open Flow Foundation materials)

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between ports according to flow tables – a concept that’s not new, as this is what switches usually do. What’s new is that the OpenFlow switch specification defines that the flow tables are managed by an external entity, a central controller for the entire network. This is a radical change compared to a previously observed evolution, which had led to more and more “intelligent” routers. The problem with those “intelligent” routers is that placing the controller function inside individual network elements makes the equipment more expensive. What’s even more important is that by being placed in individual network elements, the traditional controller does not get an end-to-end view of the network, inherently limiting the “smartness” of the controller’s decisions. With OpenFlow the situation is completely different. According to this concept, a centralized controller has an end-toend view of the network and its “smartness” can evolve by just upgrading the software, without the need to upgrade the entire network hardware (i.e. switches). This is because there is a synergy with the Network Function Virtualization concept. It assumes that network functions are implemented in the software, not in the hardware. In other words, it means that software-based network functions do not require installing any extra hardware equipment. Controller software can be deployed on standard equipment (even PCs) and physical hardware boxes can be allocated to the software needs. This means that the SDN controller can have virtually unlimited “intelligence”, since it is not confined to dedicated individual IP Router hardware. Explaining the SDN concept with OpenFlow may be difficult, but the best way to see its potential is to become familiar with use cases promoted by the Open Network Foundation, described in the next paragraph.

SDN use cases – understanding the potential of the technology Since SDN is a new technology, its full potential is still being examined. Currently, a number of use cases have been presented by the Open Networking Foundation or by individual industry players. Presenting them all here would be impossible, so a few have been chosen to highlight its benefits.

Ericsson and Smart Service Routers The use case scenario, demonstrated by Ericsson using their Smart Services Routers, assumes that home users are connected to the Internet by a communications service provider. When a user begins an internet session, the packets are forwarded to an authentication service. In the case of children accessing the Internet, the authentication is done according to a defined policy. Once the packets get authenticated, the central SDN controller defines the

flow tables in a way that the whole traffic goes through a content filtering service. When it’s adults (parents) accessing the Internet, according to the agreed policy, the central SDN controller modifies the flow tables so that the traffic flows directly, bypassing a content filter. Another scenario is e.g. accessing a trusted movie source, which would see the central controller reconfiguring the flow tables in a way that the traffic bypasses the content filtering and firewalls, thus reducing the burden on these network elements.

IDEAS IN BRIEF: The separation of control and data planes and centralizing the controller function - the main principle of SDN How to use the existing BSS/OSS infrastructure for introducing SDN

Mobile wireless VoIP clients This use case is described in an OpenFlow whitepaper[1]. It presents the idea of a new call-handoff mechanism for Wi-Fi enabled phones. The scenario assumes that the SDN central controller is able to track, which Wi-Fi access point a phone is connected to. When a phone moves from one access point to another, the SDN controller can redefine the flow tables of the network switches and direct the traffic to the phone. This use case does not intend to present any alternative to cellular phones, but only demonstrates the huge potential of SDN technology. In this scenario service providers can benefit purely by implementing the software, without any hardware upgrades whatsoever.

The relationship between SDN ans BSS/OSS - the plug-in model

Providing Bandwidth on Demand, Bandwidth Exchange and Pay for Service Quality Another group of use cases is provided in another white paper by the Open Network Foundation[2]. It describes the concept of applying SDN technology to provide Bandwidth on Demand, Bandwidth Exchange and Pay for Service Quality. The main idea is to use the capability of a centrally located controller which, based on flow identification, can allocate network resources according to the agreed policy. The policy may depend on the extra fees that the customer is paying, e.g. for a fee they may receive higher bandwidth, better quality of service (QoS) etc. All the above use cases have one thing in common – the potential of SDN originates from centrally implemented control functions, which can dynamically reshape the behavior of the network in a “smart” way. This “smartness” can be further improved with additional software and data which will enhance the view of the network that the controller manages.

How to use the existing BSS/OSS infrastructure for introducing SDN ŁUKASZ MENDYK As presented earlier, SDN technology seems to have huge potential that originates from centralizing the control function. The OpenFlow specification only describes how to manipulate the flow tables of the network switches, but it

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Application layer

Business application

API

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Bussiness application

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Product, customer 360 view (Customer) Servie e2e view Network e2e View

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Figure 2 SDN Architecture – employing BSS/OSS system for an e2e view

does not define what the controller should base its “smart” decision on. On one hand it is an advantage of the specification, as it opens the field for innovation. On the other hand, there is a need for guidelines regarding the way in which SDN technology should be implemented, since the controller’s “smartness” depends on its ability to obtain a holistic view of the network, services and defined policies. In order to provide the SDN controller with a holistic view of the network, telecom operators can use the BSS/OSS tools that they already have. A Network Inventory Management system delivers a complete view of a multi-technology, multi-domain network. Using existing OSS systems can be easily justified, as it helps operators get more return on the investments they have already made and avoid the costs of implementing a dedicated inventory-like system for SDN technology. A full view of products and services can be delivered by the Service and Product Inventory systems, which are part of a typical BSS/OSS infrastructure.

In addition, the controller may need information regarding the current status of the network from the alarm and quality perspectives. This could be provided by Fault Management, Service Monitoring, Performance Monitoring, and SQM systems, as well as by the much hyped Customer Experience Management solutions. In addition, applying Big Data and the accompanying analytics can help to transform the information that operators already have at hand into valuable assets, enabling the SDN controller to make “smarter” decisions. What’s even more important, providing APIs for these assets is expected to facilitate the development of new network services just by some further programming of the network.

The relationship between SDN and BSS/ OSS – the plug-in model Traditional network architecture assumes that BSS/OSS controls the networks in a “push” model. It means, that e.g. during the process of new service fulfillment and delivery, the OSS ecosystem needs to orchestrate network elements and apply an appropriate configuration to the network. In this mod-

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el the relationship between the OSS system and the network can be described as static. It assumes that once the network is configured, it works independently until a new orchestration order is applied. The SDN architecture can transform this static relationship into a more dynamic “pull” model. This means that a controller (a network service depicted in Figure 1 and Figure 2) may access information available in the BSS/OSS infrastructure at runtime, by pulling the data needed to make “smart” decisions. This should also have a far-reaching effect on boosting innovation. In the “push” model, OSS needs to know what data should be configured into the network elements. In the “pull” model, the OSS system does not need prior knowledge on all the details of controller algorithms. It is the controller software that is supposed to know, what it needs to implement in order to provide the best service. This means that in the “pull model” a controller needs to “plug” into the BSS/OSS system to gather the required data. From a network service development perspective it means opening up the API to the BSS/OSS ecosystem and to controller service developers.

Opening up the network – what does it really mean? The main promise of SDN technology, which makes it so attractive, is that it should boost service innovation by “programming” the network, so that operators do not need to upgrade the existing infrastructure (“hardware”). But to achieve this, the network must be opened up with a set of APIs. The problem is that SDN architecture does not define the API between the business applications and the controller layer (see Figure 1). It only defines the OpenFlow protocol between the controller and the infrastructure (switches). The question is, whether the traditionally strong separation between business applications and the network should be maintained. The right approach seems to be to allow business applications to have their own “private” networks, adapted to their own needs. From an innovation perspective, what should be considered is whether opening up the API between the application and the controller layer is enough. Is it possible to open up the OpenFlow API for developers? It may sound shocking, but if we go back to the goal of OpenFlow (as defined in the Open Network Foundation’s whitepaper[1]), it is a way for researchers to run experimental protocols in the networks they use every day. Could SDN then be a way for developers to experiment with applications and networks? This definitely leads

to many security issues related to developers manipulating the flow tables of the switches. But with appropriate control over the privileges and restrictions in the ability to effect the “private” virtual network, this might be a chance to really boost innovation. This approach assumes that there could be different developers employed for end-user applications and the network, but they would closely collaborate with each other and, as a result, improve the overall service quality for end customers. In any case, opening up the network requires API exposure. Whether the developer’s API would be restricted only to the one between the application and network layers or whether it should also include the ability for developers to develop their “own” network services, based on OpenFlow, remains an open question. Even if we assume that developers won’t develop network services, to really get the innovation ball rolling would still require opening up the API to BSS/OSS systems, in order to enhance the view of the network that the controller has. This would also entail security issues, especially if it is to be available to third companies, such as operators’ business partners. The current problem is that SDN does not define these APIs, just the OpenFlow ones.

Summary The Software Defined Networking (SDN) technology is very promising and expected to help operators in reducing costs and boosting service innovation. The cost reduction factor derives naturally from centralizing the network control functions. Following the Network Function Virtualization concept, it ensures that the control function can be implemented on standard equipment (even PCs). But the real strength of this technology is in its potential to speed up innovation and open up the network. The “smartness” of the SDN controllers comes from the ability to access a complete end-to-end view of the network. Instead of implementing a completely new infrastructure for an SDN controller, the end-to-end view can be delivered by the existing BSS/OSS systems. In this way, combined with the potential of Big Data and analytics, the “smartness” of the controller could be virtually unlimited. But to achieve this, BSS/ OSS APIs must be defined. In addition, to implement the idea of defining “private” virtual networks for applications, the APIs must be available for developers. If opening up the OpenFlow API to developers is possible, it will probably raise more questions, but at the very least the application to control layer APIs must be defined and opened.

References [1] www.OpenFlow.org – “Openflow whitepaper” [2] Open Networking Foundation – “Operator Network Monetization Though OpenFlow™ – Enabled SDN”

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Field Service Management – a new dimension of Customer Experience Management elecom services are subject to constant changes – new products, related to mobility, LTE technology or Cloud Services surface all the time and quickly become a standard for consumers. It is quite difficult for CSPs to introduce a new product and build a long term competitive advantage based only on the “uniqueness” of it. The reason for this is that any new product launched by a telecom operator in a given region is immediately pounced upon and replicated by other CSPs. Products become only tools to address customer needs and what customer needs may be could have a multitude of characteristics and not all of them are related directly to the product on offer.

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If you’re not first, you’re last The ever-growing speed of life has created huge consumer demand for fast communication, quick access to information, and service delivery at the speed of light. Keeping this information in mind, let’s analyze two examples of call center sales discussions.

Example 1 (John Smith)

Example 2 (Tom Johnson)

CSR: Good morning, my name is Anne. How can I help you? John: Good morning, my name is John Smith and I’m interested in your Hyperspeed Internet offer for 100 EUR. CSR: Great choice, our customers are really satisfied with this service. Could you please give me your address? I need to check if we can deliver this service in your location.

CSR: Good morning, my name is Chris. How can I help you? Tom: Good morning, my name is Tom Johnson and I’m interested in your Maxspeed Internet offer for 99 Dollars. CSR: Great choice, it’s a very popular product right now and our customers love it. Could you please give me your address? I need to check if we can deliver this service in your location.

John: My address is Princess Street 14, London, England. Tom: My address is 34th Street 62, New York, NY 10016. CSR: OK, it looks like this is your day, your address is covered by our network.

CSR: OK, it looks like we can cover that location. Do you have any preferred installation date and time?

John: Perfect, when can we schedule the installation? CSR: Our technical services team will contact you within a week and schedule a time that’s convenient for you.

Tom: Yes, as soon as possible please, I can’t live without Internet access. CSR: Are you available tomorrow between 8 and 10 AM?

If you take a closer look at the two similar dialogs it is easy to assess that Tom will be the more likely of the two to sign an agreement with the Internet Service Provider (ISP). Both providers have advanced systems which allow them to instantly check service availability (without any visits to the sites), but the second one enjoys the distinct advantage of being able to fulfill customer expectations i.e. activating the service quickly. And in fact, it is not just a problem related to setting appropriate Key Performance Indicators (KPIs) and upgrading legacy IT systems. It is actually more about the different business strategies used. This article will focus on an incredibly important aspect of a customer-focused field service strategy and explain why business decisions won’t work without the use of the prop-

er tools, as well as describe the tools that were used in our second Call Center example.

How to efficiently manage site visits? There are many strategies for on-site installation scheduling: technicians can manage the schedule themselves if they know that they will have time for it, it can be scheduled during the the customer’s initial call and based on the predefined capacity of field personnel, but there is also a third option, which we believe to be the best. When a technician tries to schedule the time of each visit alone, they are usually faced with various problems: they may not be able to reach the right person on the phone, they could end up spending half a day on a wild goose chase in their car and as a result will not get to meet the different

Comarch Technology Review 02/2013

SZYMON UCZCIWEK

Comarch SA

FSM Product Manager, Telecommunications Business Unit

CUSTOMER EXPERIENCE

Time slots presented to the customer

All day long time slot

re / mo ost ptions er c Low ation o iz im opt

Mo re slo conve t, h igh niet tim er c ost e

2h time slot

Tech 1 timeline, Service region A Possible time slots calculation

Idle Time

Tech 2 timeline, Service region A Tech 3 timeline, Service region A

Driving time

Task Duration

Idle Time

Possible time slots calculation

Idle Time

9:00 AM

11:00 AM

1:00 PM

3:00 PM

5:00 PM

Figure 1. On-Site Visit Time Slots based on real data about field forces

KPIs. This train of events will, of course, lead to our technician thinking that the different KPIs “were set up without any basic knowledge concerning the reality of field work”. The second option – i.e. providing the call center with a pre-defined capacity of the workforce in the field, expressed in a number of time slots which can be utilized during the day, is very often the main mechanism of scheduling visits in an outsourced field personnel model. This kind of schedule looks all well and good on paper, but in the real world the process involves far too much direct contact between the customer and the technician. As a result, field workers end up reaching a site too late (because the scheduling process did not take into account the driving time, traffic, technicians’ priorities etc.) or even worse – a customer could wind up waiting as long as two weeks, or even longer, for an ordered service. This is why the visit scheduling employed should be based on solid data concerning the availability of resources, and what is yet even more important, this data should be presented to customer service representatives in the simplest and clearest way possible.

Modern field service management tools allow users to discover the best time slots to deliver services and provide operational support to meet the agreed upon visit times.

In order to automate this process, operators need a field service management system that includes a mechanism to correctly calculate site visit times. The duration of each time slot can be configured differently for various work order types or service regions – these time slots should be calculated in real time based on the actual availability of technicians and resources, and based on the actual duration of on-site tasks (preset or dynamically calculated based on historical data).

Flexibility is never overrated There are two other important factors that must be taken into the consideration when scheduling field forces – customer satisfaction (quality) and field service costs. The diagram below presents how difficult it is to find the right balance between costs and service quality in the case of field services. Time slot management can be a powerful tool, but it must be used properly. If a CSP predominantly focuses on service quality and customer satisfaction, a customer service representative can agree upon the exact time of a site visit with the customer. The customer will definitely appreciate it, but the field service costs will be relatively high, as there won’t be much space for optimizing routes and resources. Setting the priority on cost optimization, a customer service representative could ask the customer to wait at the site all day for the installation because they are unable to provide the exact time for the visit. Routes, resources, overtime etc. can be optimized this way, reducing costs to the minimum, but customers will be less than impressed with the service. It is therefore crucial to combine time slots which are different for each work order type (e.g. activation usually gets a higher priority than service calls), each location and customer type. If a CSP can manage time slots and configure optimization goals in a flexible way, it would enable them to achieve an optimal service level and be able to quickly adapt it according to the company’s changing strategy (if

Comarch Technology Review 02/2013

CUSTOMER EXPERIENCE

Figure 2. Tuning field service automation mechanisms allow to find right balance between customer satisfaction and field operations cost

e.g. one day the company’s new slogan could become “Internet in 24 hours in your home”).

You can outsource field services, but not customer experience We agreed with our subcontractors that they have to be on time, they give us a hundred 2-hour time slots per day and it is not our responsibility to optimize their resources. This is something that even an experienced telecom specialist might let slip. Outsourcing field services has become a popular model as it really helps CSPs to considerably reduce their field service costs. But even when technical services are outsourced, the customers are still CSP subscribers and it is the CSPs who need to worry about customer retention and satisfaction issues. What’s more, if there are SLAs defined in reference to the number of work orders being executed daily, it’s not possible to create a flexible customer service strategy. Telecom operators often have multiple subcontractors in the area of field workforce management, i.e. they sell their services via many dealers, resellers and other companies. Managing service fulfillment, when there are many partners involved, together with scheduling based on real data from the field allows CSPs to efficiently manage the quality of service they deliver. This constitutes a major market differentiator and a massive competitive advantage.

Modern field service management tools allow users to discover the best time slots to deliver services and provide operational support to meet the agreed upon visit times. To illustrate this with an example, let’s take a situation when a CSP’s service quality assurance team notices that something has gone wrong with certain tasks of a given subcontractor (e.g. they have been delayed). When this happens, the dispatchers can try to help the technicians (e.g. new staff) or assign additional technicians from other service regions to maintain the proper KPI level. Without modern, flexible Field Service Management (FSM) tools such a scenario is virtually impossible, even when technicians are motivated by a dedicated incentive program. It’s because managing customer experience is not only in the hands of one technician, but depends on the wider strategy implemented across the entire organization. Focusing directly on field services can be one of the many ways for CSPs to ensure that the highest level of customer experience is attained. When managed properly, it can help them find the right balance between operational costs and the quality of customer service. Rapid service activation and flexibility both constitute great customer experience, but couple this with the proper use of solid data coming from field engineers and CSPs can pretty much be certain of securing long-lasting customer loyalty. Regardless of whether field services are outsourced or managed in-house using advanced FSM tools, it is always the responsibility of telecom operators to remain focused on customer experience. This kind of approach can go a long way in the eyes of customers.

Comarch Technology Review 02/2013

IDEAS IN BRIEF: A swift and simplified service activation process could be a major differentiator for Communication Service Providers (CSPs) Flexibility in building a field service strategy is key to finding an optimal balance between customer service costs and its quality Even when field service delivery is outsourced, the responsibility for maintaining customer satisfaction firmly remains in the hands of CSPs

M2M

Telekom Austria Group – I mplementation of Comarch M2M Platform

The Business Need Looking to expand their business, Telekom Austria Group decided to enter the machine-to-machine (M2M) market and established a dedicated spin-off company for M2M in September 2011. The company mainly addresses B2B customers and solution partners with the objective of becoming the leading M2M boutique provider in the CEE region.

The Challenge

to maintain a fully independent platform and keep costs under control.

The Solution Comarch M2M Platform is a modular solution based on Comarch COTS products from BSS and OSS domains combined with M2M-specific dashboards, processes and configurations

Functionalities:

Telekom Austria Group was looking to support their new business with a platform that would meet the following requirements: Provide the highest flexibility to fulfill the company’s boutique provider strategy Offer superior efficiency to enable high volume and low margin business conditions Enable dynamic development of features Support automated, end-to-end business processes Deliver services in a multinational set-up supporting the group structure Ensure full operational independence

The Approach Comarch was ready to deliver a licensed platform with full outsourcing of operations and hosting of hardware and software. This efficient approach enabled Telekom Austria Group

Convergent Billing responsible for rule-based pricing of usage fees related to all M2M services offered by the operator; all services are controlled and charged in real-time Product Catalog delivers a wide spectrum of functions related to product definition M2M Dashboards come with a set of dynamic charts and summary tables, supported by reporting and statistics modules Trouble Ticketing module that handles customer contact and support Order Management for managing SIM card orders Resource Management for controlling and storing M2M SIM cards and managing their lifecycle, as well as the lifecycles of MSISDN numbers and IMSI ranges SIM Cards Monitoring with custom rules Provisioning Module for activating services in the network and supporting SIM Lifecycle Management

Comarch Technology Review 02/2013

M2M

IT Systems of M2M Partner Operator CSA

Interface

Operator Account Manager

Front end layer

Exisiting Systems

Back end layer

DWH

Accounting

Operator Marketing

M2M Partner Admin

M2M Platform

M2M Dashboards

CRM - partner management

Order Management

Self Care

Trouble Tickets

Reports

Statistic

SIM Management

Billing & Revenue Sharing

BMP

Invoicing

Provisioning

SIM Inventory

Monitoring

Product Catalog

B2B Gateway - web services

Logistics

Online & offline processing

AAA

Network

connectivity M2M devices

Figure 1. Comarch M2M Platform Architecture

Business Process Management ensures automation of end-to-end processes, responsible for the orchestration of all business activities, as well as the creation of automatic and manual tasks, and the appropriate distribution of tasks between platform users CRM facilitates stakeholder management B2B Gateway is responsible for the safe exposure of all the platform’s features to multiple partners via easy-to-use interfaces (Web Services) Self-Care Portal for customers streamlines customer management by enabling web-based self-service and the automation of bulk SIM management processes

AAA and Policy Management functions enable service and policy control, as well as integration with various network components

The Result The Comarch M2M Platform has enabled Telekom Austria Group to readily respond to the needs of the machine-to-machine market with the highest flexibility and scalability. Customers have full control of their services, with features customized to their needs. This gives them the independence to function with minimal operator involvement. Full-scale platform management allows easy implementation of business processes in the value chain - from ordering, activation, operation, pricing to invoicing.

Why Comarch At Telekom Austria Group M2M, we work with international partners who are leaders in their respective industries and expect the highest quality of M2M managed connectivity services. With our M2M SIMplify platform, we are able to provide customized connectivity services to our customers. With advanced self-care tools, automated business rules and APIs, our customers can run their businesses efficiently and independently. We chose Comarch because their existing product portfolio provided a good basis for the platform. More importantly, Comarch was able to prove their ability to quickly develop custom features upon request. We believe that in dynamically growing markets, flexibility and customer orientation are the keys to success. The set-up we have chosen with Comarch helps us deliver just that. Phat Huynh, Managing Director, Telekom Austria Group M2M

Comarch Technology Review 02/2013

Telekom Austria Group M2M was founded in 2011 and is wholly owned by Telekom Austria Group, the leading telecommunications provider in Central and Eastern Europe with more than 24 million customers across its markets. Telekom Austria Group, with headquarters in Vienna, addresses its markets with strong local brands in Austria (A1), Bulgaria (Mobiltel), Croatia (Vipnet), Belarus (velcom), Slovenia (Si. mobil), Republic of Serbia (Vip mobile), Republic of Macedonia (Vip operator), and Liechtenstein (mobilkom liechtenstein). Telekom Austria Group M2M scores with a strong regional footprint, a vast international network of strategic partners and roaming coverage in approximately 200 countries worldwide. The company is strongly rooted in the M2M business units of its local mobile network providers in the eight countries and consolidates over 10 years of experience and knowhow into one specialized and streamlined organization. To address the rapidly growing field of M2M, the company provides premium connectivity solutions and value-added services to international customers in a wide range of industries. Telekom Austria Group M2M enables completely new business models that result in process optimization, improved resource allocation and substantial cost reduction. m2m.telekomaustria.com

M2M

How to differentiate your M2M offering to ensure a competitive edge

RCH’S UCTS & CES:

arch M2M orm

Is there any revenue potential in M2M beyond connectivity?

ccording to Pyramid Research’s Analysis of Growth Drivers (Market Segments and Operator Approaches, Research And Markets), the number of cellular M2M subscriptions nearly doubled between 2010 and 2012 and has reached 143.7m1. This is fantastic news for Communication Service Providers (CSPs) eager to invest money and effort into further developing their M2M offerings. However, according to Informa-SAP M2M Communications Survey (2012), most CSPs act as M2M data wholesalers, and only 1 in 10 CSPs actively run revenue-sharing models with their partners.

A Telesperience survey that Comarch recently commissioned shows that 71% of enterprise customers would not hesitate to change their CSP if it meant they would receive a better quality of service. The survey focused on large European enterprises, which, as we all know, form a major part of key M2M customers for European telecoms.

M2M poses many challenges which CSPs will need to tackle in order to remain profitable.

Challenges ahead Regulatory issues Various market regulations can drive or hinder the development of M2M business. This is especially visible in energy, automotive and healthcare verticals, the most lucrative customer segments in M2M. Of course, regulations, for the most part, can help in certain cases, but they can also potentially block any planned business developments, even for several years. They can also be responsible for introducing an element of uncertainty in M2M, as it is also often unclear how exactly regulations will be introduced and enforced.

Regional preferences and cultural differences These figures show that there is an abundance of opportunities for CSPs to compete in M2M, all they have to do is sharpen how they approach their customers. However, the world of

Large CSPs with multi-country M2M strategies can find that it is difficult to benefit from the scale effect as different coun-

Comarch Technology Review 02/2013

M2M

tries have different levels of enthusiasm for certain services. E-health may enjoy high demand and keen interest in one country, while at the same time it may not sell at all in another one, e.g. for cultural reasons.

71%

WOULD CHANGE THEIR CSP TO OBTAIN BETTER QUALITY SERVICES

Lack of standard adaptation There are numerous industry standards and initiatives (e.g. 3GPP, ETSI, OneM2M) that have been developed in the area of M2M, the problem remains though that they still aren’t commonly used everywhere. Various industry-specific solutions remain stubbornly dominant and this makes cross-vertical integration quite challenging and laborious. OneM2M has shown some hope of solving these issues, as does a new body which was launched at CTIA 2013 in Las Vegas – the International M2M Council (IMC). IMC will focus on promoting the business value of M2M across vertical markets, while striving to make integrations easier for all involved.

M2M-specific technologies, solutions and operators In the case of some applications there are alternative technologies and solutions and even M2M-dedicated operators (e.g. sigfox, a cellular network operator dedicated to M2M and Internet of Things, with low throughput and costs), some of which appear to be doing quite well in selected markets around the world. These players pose some competitive threat to CSPs.

Privacy issues There are many areas which seem to show interesting opportunities for growth in M2M. Big data is one of them and can be highlighted as a good example here – operators could collect and manage data coming from various sources, and then monetize it by selling access to it or by analyzing it and discovering interesting patterns of behavior that could be used to enhance existing marketing campaigns, or to establish new ones. However, in must be kept in mind that many issues related to privacy and regulations go hand in hand with big data. It’s still early days as far as big data and business opportunities are concerned and this area has still not been fully explored, nor is there a clear vision of how to monetize the opportunities on offer.

You can do it, but you can’t do it alone Despite these challenges there are many opportunities that CSPs can still find in various areas of the M2M business which can lead to growth in the area. New revenues can be seized from services other than just pure connectivity. It is unlikely that the growing competition in M2M connectivity will lead to a decrease in connectivity prices. Current margins for M2M connectivity are relatively high (even if the average revenue per user (ARPU) is low), but in the long term it will be

68%

WOULD CHURN IF THEY FOUND THE SAME SERVICE CHEAPER ELSEWHERE

57%

HASSLE-FREE AND SECURE MIGRATION

51%

A SINGLE CONTRACT/SLA FOR ALL OFFICE LOCATIONS

43%

HIGH QUALITY ADDITIONAL, NON-TELECOM SERVICES

45%

BETTER CUSTOMER SERVICE

17%

ABILITY TO MANAGE MY TELECOM SERVICES AND MY IT INFRASTRUCTURE

ACCESS TO ONLINE SELF-MANAGEMENT TOOLS FOR ALL EMPLOYEES

SUPPORT FOR BRING-YOUR-OWN-DEVICE POLICY

PACKAGES DEDICATED TO SPECIFIC EMPLOYEE PROFILES

NONE OF THE ABOVE

Figure 1. Reasons to change CSP based on Telesperience-Comarch survey

difficult for CSPs to grow the M2M business if they continue to only sell connectivity services. CSPs must learn to diversify if they want to ensure lasting success. There are a couple of roles that communication service providers could play in the M2M value chain in order to create additional revenue streams and to develop their M2M business opportunities. A huge part of the M2M industry is the hardware required to run projects in various industry verticals which CSPs could potentially resell. This includes elements necessary to provide connectivity (M2M units with a SIM card, antennas, batteries and simple logic) and M2M end devices (equipment for using the connectivity, e.g. payment terminals, wireless monitoring cameras etc.). However, prices for this kind of equipment are constantly decreasing, and it doesn’t look like this trend will reverse any time soon. Additionally, many companies may be reluctant to invest in this equipment from telecom operators especially if no additional value can be gained from it. Hardware reselling is not really a viable option for CSPs to increase their M2M profits in the long term. So where can we find additional M2M opportunities beyond providing just connectivity? The answer can be found in providing additional services, by providing full, refined end-toend M2M offerings tailored to what customers really want.

Comarch Technology Review 02/2013

KRZYSZTOF KWIATKOWSKI

Comarch SA

Head of BSS product management, Telecommunications Business Unit

M2M

This may well be an interesting and profitable strategy, especially for large CSPs. Such end-to-end solutions could consist of hardware, connectivity, horizontal Platforms-as-a-Service (sets of generic capabilities for all verticals), vertical Software-as-aService applications (sets of applications dedicated for specific vertical markets), as well as professional services and managed services. If CSPs decide to provide all of these elements, they may find that there is a lot of unexplored growth potential in M2M. Of course, to be able to offer such end-to-end M2M solutions, telecoms will need to come to grips with many various technologies, devices and go-to-market partnerships. This is why CSPs that would like to follow this strategy should focus on establishing an appropriate M2M partner ecosystem, where they could nurture the value of “intelligent connectivity”, together with a set of additional capabilities and services listed above.

Quality matters

IDEAS IN BRIEF: The real value of CSP M2M offerings lies in bundling connectivity with vertical enablers, quality of service, service level agreements, telecommunication services and Cloud offerings A recommended strategy for CSPs would be to offer maximum support to integrators with vertical enablers and convince them to use their services in vertical market projects, which would lead to increased M2M revenues

In 2011 we gave a presentation on a medical device for one of our customers in Western Europe. The device had an embedded SIM card to provide the necessary connectivity. Even though the device had been rigorously tested and seemed to be stable, from time to time it appeared to have certain issues with connectivity while roaming. Unfortunately, as Murphy’s Law would dictate, the device started playing up, and as a result it was unable to send its collected data to the data center. There was no available hotline we could even have called to have the problem resolved. At the time there was no telecom operator who could offer quality of service (QoS) and/or an SLA together with their M2M SIM card. Two years later, at an M2M-focused conference, I asked the telecom operators in the audience whether or not they included any QoS-related KPIs in their M2M agreements. There was one (!) person who said that their company did it for some customers, but only internal ones. And as you can see from the graphic at the beginning of this article, enterprises (which are a large part of all M2M customers) perceive service quality as the single most important feature and differentiator when it comes to their service providers. Of course, not all verticals require the same quality of service. For healthcare applications, the quality of service is critical, where it actually can be a matter of life and death, whereas for something like smart metering a best effort approach is more than enough. Nevertheless, offering high quality of service KPIs for M2M customers should ensure that CSPs notice plenty of additional business opportunities. Of course, as we all know, it is pretty much impossible to guarantee specific quality of service in mobile networks. But, based on existing technologies, including existing OSS systems already used by CSPs, it is possible to calculate the impact of network quality degradation on the service quality at the customer’s end. In this way it is at least possible for CSPs to react and provide a basis for QoS improvements. In the long term it is worth keeping in mind that many technological changes are required in

network infrastructures for CSPs to be able to appropriately address the area of service quality in the context of digital services.

The need for personalized SLAs When we talk about the quality of service in the context of large enterprise customers, Service Level Agreements (SLAs) immediately spring to mind. During contract negotiations with these kinds of M2M customers, many personalized SLAs may emerge and influence the final price of the service. M2M SLAs can be related to the availability of dashboards for partners, APIs, performance, trouble resolution, logistic processes, quality of service KPIs and many more besides. Telecom operators have a particular advantage here as they already have years of experience in managing personalized SLAs which they have gained from managing traditional telecom services for enterprise customers. This experience should be used to improve M2M offerings with the addition of personalized SLAs, another potential differentiator for CSPs.

What about M2M system integrators? A strong group of player in the M2M market consists of large system integrators who run extensive projects in various industry sectors (automotive, utilities, smart cities etc.). M2M is often a very small portion of these projects and while the involved telecom operator may perceive it as an M2M project, the integrator’s perspective is far wider. But are they friend or foe? It’s not a simple question to answer, but what’s for certain is that there are many different ways in which telecoms can benefit from cooperating with integrators. In order to make M2M technology easier to use, integrators need special application servers called M2M application enablement platforms (companies which deliver these include e.g. AXEDA, ThingWorx, DIGI). These can be a very generic piece of software or a system dedicated for a particular vertical. In most cases it is used by system integrators to build M2M application logic and to manage metering data. To win extra market share in M2M, CSPs should not try to convince system integrators to use application enablement platforms that they provide or to try and deliver their own integration capabilities. They would be far better off focusing on delivering the best possible support they can provide for these integrators in each vertical market – and this support can be achieved by providing a set of vertical enablers. These enablers may include QoS management, billing-as-a-service for various verticals, ERP applications, product catalogs and many more. All these capabilities should be presented to integrators, together with the benefits that they entail, such as simplification of M2M projects (e.g. thanks to using a CSP’s billing solution in a managed service model) or improving the quality of a comprehensive service provided by an integrator

Comarch Technology Review 02/2013

Application Enablers

Application Integration Framework capabilities

M2M Application Enablement Platform

System integrators

Partners’ systems

...

... ...

Telematics

Security & surveillance

...

Automotive

Utilities

M2M

QoS Management

Product Catalog

CRM Billing for Applications

Data Management

ERP

Software Management

Device Management

Connectivity Management

CSP domain

Connectivity Enablers

Vertical Enablers

Application Integration Framework

All platform features

Figure 2. CSP and integrator domains in M2M

(e.g. thanks to managing QoS for connectivity). The offered capabilities do not have to be limited to just a set of APIs though, they can also contain managed and consultancy services.

partnerships. As part of an ecosystem, CSPs will be able to use their extensive experience and size to fully address the requirements of M2M customers and provide them with innovative and comprehensive offers.

Summary

Nevertheless, operators should not let themselves forget that a large portion of vertical markets belong to system integrators. A recommended strategy for CSPs would be to offer maximum support to integrators with vertical enablers (e.g. QoS management, billing-as-a-service for various verticals) and convince them to use their services in vertical market projects, which would lead to increased M2M revenues (larger numbers of sold SIM cards).

The M2M business is not easy, especially when it comes to trying to find ways to increase profits and revenues. As it is still often perceived as a niche market, investments in this area are still seen as being unjustified. With low ARPU and margins, operators need to find ways in which they can grow their M2M business and generate additional revenue streams. The real value of CSP M2M offerings lies in bundling connectivity (data, devices, and connectivity-related services) with vertical enablers, quality of service, service level agreements, telecommunication services and Cloud offerings (such as hosting or backup services). Additional value for telecom operators who create their own M2M offerings will be in the ability to offer a superior experience for their M2M customers and to better address the requirements of digital services (where M2M technology may prove to be a crucial asset that CSPs offer). In order for CSPs to be able to position themselves as providers of end-to-end M2M solutions, it is crucial for them to establish and cultivate technology, device and go-to-market

These two strategies (entering partnerships and supporting integrators) can of course be used either together or separately. An essential element of service provider differentiation in the M2M market can be found in unaddressed areas, such as providing quality of service and SLA management. Even if this entails some technical challenges (related to e.g. switching from a best effort approach to guaranteeing the quality of service), it can be addressed on a basic level, where the operator can calculate the impact of network quality degradation on the provided service as perceived by their end customers. Addressing service quality for selected verticals and ensuring it is better than competitors may well be a future unique selling point for CSPs.

http://www.researchandmarkets.com/reports/2391963/cellular_m2m_connections_an_analysis_of_growth

Comarch Technology Review 02/2013

ENTERPRISE CUSTOMERS

The opportunity for CSPs: Understanding the needs of large enterprises in Europe

urope is a critical market for the global ICT industry, accounting for over $1.2 trillion or one-third of the worldwide spend on ICT in 2012 (Gartner). A mere 40,000 large enterprises in Europe account for 35% of that spend. Therefore, for Communications Service Providers (CSPs), understanding the business needs of large en-

terprises is vital to preserving and enabling further revenue streams in this sector. However, most CSPs are not very good at segmenting the business sector, and thus fail to understand it is not consistent in terms of its requirements, the needs, methods of buying

Comarch Technology Reviewâ&#x20AC;&#x2026; â&#x20AC;&#x2026;02/2013

ENTERPRISE CUSTOMERS

over 500 employees) thought about their CSPs, the services they provided, as well as their views on services that CSPs are interested in selling to them. We found that the average European large enterprise has 3.8 service providers for mobile, fixed line and internet services, which is even more than the number of CSPs used by the average European SME (which uses 2.3 service providers on average). By consolidating this spending away from their competitors, CSPs could thus realistically triple their revenue from large enterprise customers.

MONICA ZLOTOGORSKI In order to consolidate this spending though, CSPs need to understand why large enterprises have so many service providers. We found that seventy-four per cent do so because they are seeking the best quality service for each service type, and 71% say they would change CSP to get better quality services. However, using multiple CSPs causes large enterprises problems. For example, 52% of large enterprises say having to manage multiple contracts and SLAs is a problem for them. European large enterprises also outlined that there are other services they would consider buying from CSPs. Around onethird said they were interested in having their CSP(s) manage their telecoms infrastructure, but of this group, 96% were also interested in receiving cloud services from their CSPs. This clearly shows that where CSPs are trusted to manage telecoms or IT infrastructure, the large enterprise becomes more willing to consider buying other services from them as well. In addition, unified communications was identified as a service that large enterprises are very interested in and something they see as a logical extension of CSPs’ capabilities. In order to harvest these opportunities though, Telesperience believes CSPs need to work much harder to build trust amongst large enterprises that they can provide additional services, beyond their core offerings. While most large enterprises are not dissatisfied with their providers, satisfaction rates are also not stratospheric – meaning there is much CSPs can do to differentiate their offering and make themselves stand out from the crowd. Telesperience advocates that CSPs should initially seek to consolidate telecoms spending by reducing the number of competitors providing services to their enterprise customers, and then work on targeting supplementary services that are a logical extension of their core competencies or necessitate features that CSPs are well positioned to deliver (such as is the case with cloud services, where the ability to control quality of service is vital). ICT, and behaviours, which vary substantially between large enterprises and small and medium-sized enterprises (SMEs). In order to understand the needs of large enterprise customers, Telesperience conducted research that focused on delivering a picture of what large enterprises (companies with

For more information on this research, please download the document Telesperience Revenue Maximisation Series: Understanding the needs of large enterprises in Europe available at: http://www.comarch.com/telecommunications/resources/ white-papers/contact-form-large-enterprises-in-europe/

Comarch Technology Review 02/2013

Telesperience

VP Research

ENTERPRISE CUSTOMERS

UNDERSTANDING

TELESPERIENCE SURVEY JUNE 2013

THE NEEDS OF LARGE

ENTERPRISES IN EUROPE

“

LARGE ENTERPRISE

CSPs NEED TO WORK HARD TO INCREASE TRUST AMONGST THE LARGE ENTERPRISES THAT THEY CAN PROVIDE ADDITIONAL SERVICES TO

CSP

AVERAGE NO. OF CSPs PER LARGE ENTERPRISE

CSP

3,8

THE AVERAGE NUMBER OF CSPs USED BY LARGE ENTERPRISES IS 3.8

4% 16% 27% 53% 74% OF LARGE ENTERPRISES USE MORE THAN ONE SUPPLIER SO THEY CAN HAVE THE BEST QUALITY OF SERVICE FOR EACH SERVICE TYPE AND NOT DEPEND ON A SINGLE SUPPLIER

ATTITUDE TO CSPs MANAGING TELECOMS INFRASTRUCTURE

RATING FOR EACH TYPE OF CSP

96%

CSP

INTERNET

MOBILE

24%

10%

FIXED

30%

PERCENTAGE SCORING THEIR CSP 5 (EXCELLENT)

AROUND ONE THIRD OF RESPONDENTS SAID THEY WERE INTERESTED IN HAVING THEIR CSP(s)MANAGE THEIR TELECOMS INFRASTRUCTURE

OF THIS GROUP, 96% WERE ALSO INTERESTED IN RECEIVING CLOUD SERVICES FROM THEIR CSPs

REASONS FOR USING MORE THAN ONE CSP

74%

SELECTED THE BEST QUALITY OPTION FOR EACH TYPE OF SERVICE

30%

58% DON’T WANT TO BE DEPENDANT ON A SINGLE SUPPLIER

IT’S CHEAPER

13% NO SINGLE SUPPLIER IN OUR MARKET

Comarch Technology Review 02/2013

6% THAT’S THE WAY IT’S ALWAYS BEEN DONE

ENTERPRISE CUSTOMERS

PROBLEMS WITH MANAGING TELECOMS SERVICES

52% TOO MANY CONTRACTS AND SLAs

39% AN INEFFICIENT SELF-CARE PORTAL

TOO MANY CONTACT POINTS TO MANAGE

TRUST IN CSPs PROVIDING IT INFRASTRUCTURE

2.73

71%

ANNOYING CUSTOMER SERVICE

TOO MANY INVOICES

REASONS TO CHANGE CSP

11%

18%

19%

WOULD CHANGE THEIR CSP TO OBTAIN BETTER QUALITY SERVICES

(UNTRUSTWORTHY)

68%

HASSLE-FREE AND SECURE MIGRATION

51%

A SINGLE CONTRACT/SLA FOR ALL OFFICE LOCATIONS

43%

HIGH QUALITY ADDITIONAL, NON-TELECOM SERVICES

45%

BETTER CUSTOMER SERVICE

17%

ABILITY TO MANAGE MY TELECOM SERVICES AND MY IT INFRASTRUCTURE

ACCESS TO ONLINE SELF-MANAGEMENT TOOLS FOR ALL EMPLOYEES

SUPPORT FOR BRING-YOUR-OWN-DEVICE POLICY

PACKAGES DEDICATED TO SPECIFIC EMPLOYEE PROFILES

NONE OF THE ABOVE

5 (EXTREMELY TRUSTWORTHY)

TRUST IN A CSP MANAGING AN ENTIRE IT INFRASTRUCTURE AND PROVIDING NEW VALUE-ADDED SERVICES IS LOW

WOULD CHURN IF THEY FOUND THE SAME SERVICE CHEAPER ELSEWHERE

57%

UNIFIED COMMUNICATIONS

MANY LARGE ENTERPRISES IDENTIFY UNIFIED COMMUNICATIONS SERVICES AS OF GREAT INTEREST TO THEM, AND SOMETHING THAT IS A LOGICAL EXTENSION OF THE CAPABILITIES OF CSPs

DEMOGRAPHICS OFFICE LOCATIONS 23% 13% 9% 9% 7% 7% 7% 5% 4% 4% 4% 4% 3%

UK OTHER NETHERLANDS FRANCE SWEDEN GERMANY ITALY BELGIUM POLAND SPAIN IRELAND SWITZERLAND AUSTRIA

HEADQUARTERS OF RESPONDENT LARGE ENTERPRISES 15% 14% 12% 9% 9% 7% 6% 6% 6% 4% 3% 3% 2% 2% 2%

UK GERMANY FRANCE SWEDEN OTHER NETHERLANDS SPAIN SWITZERLAND ITALY POLAND AUSTRIA BELGIUM BULGARIA IRELAND LUXEMBURG

INDUSTRY VERTICALS OF RESPONDENTS 21% 15% 13% 12% 9% 8% 5% 4% 4% 4% 3% 2%

MANUFACTURING RETAIL SERVICES ENGINEERING TECHNOLOGY HIGH TECH FINANCIAL SERVICES OTHER TRANSPORT LOGISTICS CONSTRUCTION DISTRIBUTION/WHOLSALE HOSPITALITY FOOD SERVICE INSURANCE

Comarch Technology Review 02/2013

SIZE OF RESPONDENT (NUMBER OF EMPLOYEES) 54% 25% 14% 7%

MORE THAN 5000 2001-5000 1001-2000 500-1000

CURRENT DISCUSSIONS

The dynamics on the telco market is like a pendulum swinging An interview with Fred Werner, Communications and Program Director at ETIS

etween June 27-28, 2013, Comarch hosted an ETIS Billing and Revenue Management Working Group Meeting in Krakow, that gathered many major European telecom operators. At the event, we met Fred Werner and asked him about the history and role of ETIS in the industry, as well as developments and challenges facing telecom operators today.

discussions on topics such as: security, billing, business intelligence, and enterprise architecture are relevant across the whole industry. Telcos have the same headaches, and by coming together and talking to one another they can share experiences on how to deal with certain issues. This is where ETIS is today. AD: What is the competitive advantage of ETIS?

Agnieszka Dynos: ETIS is over 20 years old now. What was the concept behind its origin? Fred Werner: Yes, we have been around for a while now. It all started with the big telco operators understanding the need for common IT software development. Back in those days this kind of IT software development was very expensive, so the original idea was: let’s bring our resources together and jointly work on development. At the same time, they were working on some standards and requirements. Quite quickly however, the scope and the mission of ETIS changed. AD: In which direction has it evolved? FR: We have moved away from software development, which was the very first idea, and now we are really looking at the effective use of IT in the telecom business. We are trying to be the link between IT and business, and we basically organize our activities around the main pillars of IT for telecoms. Though our members are competitors on some markets, the

FR: Well, there are many telco associations and each of them has their own niche. What makes ETIS unique is that we deal with the practical real-life experiences of people working in telecoms. Some organizations might be discussing theoretical IT models, and we will deal with the applications of these models. ETIS offers real exchange of information built on personal relationships and trust. I like to say that some associations are building recipes by providing models for the industry, while ETIS is building a cake, discussing the applications of those models in the real world. AD: What are the best ways of exchanging experiences at ETIS? FR: We address all the relevant issues at the meetings of our working groups, like the one in Krakow we are having now. At the moment, we have 10 working groups and each one of them meets 2 or 3 times a year. A different company hosts the meeting each time so there is additional value in travel-

Comarch Technology Review 02/2013

CURRENT DISCUSSIONS

ling and visiting different countries. The presentations prepared by participants are a very practical way of exchanging information and learning from one another. The groups also do the benchmarking, identify best practices, work on common requirements, and develop common KPIs. AD: It really seems like a huge load of valuable knowledge. Who participates in these meetings? FR: It’s a combination of representatives of our Members, i.e. telecom operators and Associate Members, i.e. major IT vendors. Most European countries are represented within ETIS. Many of our 31 members are also global players, so we have a European focus but with a global perspective. AD: And what is the role of Comarch within ETIS? FR: Comarch is one our Associate Members, a status that is assigned to major IT vendors, as I have already mentioned. The operators decide which vendors they want to see at the table. Vendors share the latest technological knowledge with telcos, and at the same time they receive very important feedback on user and market requirements. It is a partner dialog beneficial to everyone. Comarch has been with ETIS for the past 11 years and I must admit you are one of our most active vendors and a very good contributor to our working groups. AD: You have been with ETIS for almost 10 years, what major changes on the market have you witnessed during this time? FR: One thing that I have definitely seen over the years is the constant reorganization of telcos. The dynamics we have been experiencing on the telco market are incredible. We have seen constant shifting, almost like a pendulum swinging, going from outsourcing to insourcing, from centralization to decentralization with telcos always reorganizing units. Along with all of this, for the past few years, there has of course been very strong cost pressure linked to the economic crisis on different markets. AD: How about the biggest surprise of the past few years? FR: Surely the over-the-top players and how that element of the market has emerged. Google, Skype, Facebook…When I joined ETIS almost 10 years ago, none of these were really in place and no one could have really predicted the impact they would go on to have. AD: … and the competition they would become. How can telcos compete with them? FR: Telcos are actually well placed to compete with them. One thing that telcos have is the trust of their customers. What’s more: the connectivity and the context. I really think that telcos can take advantage of that and provide an end-to-end experience using all the available resources to their advan-

tage – starting with connectivity, through value-added services, storage, to billing. If they can find a way to put that all together, they are in a good position to compete with them. Besides, I think people find it very difficult to trust Google’s or Amazon’s offer for cloud services for example, and when you have on the other hand a telecom operator with a data center in Europe, tougher privacy laws and more security – it puts telcos in a good position to capture some of the emerging market opportunities.

FRED WERNER ETIS

AD: What other market opportunities for telcos are still out there?

Communications and Programme Director

FR: The promise of big data. Telcos have so much data: location, customer data, and demographics. How can all that information be monetized? Everyone sees the opportunity but no one has figured out how to do it yet. There are many reasons for this – legal issues, as well as practical and technical challenges linked to data processing. I think a huge opportunity is still there, someone just has to figure out how to use it. AD: Big data is linked to security and trust. How important are these issues for telcos today? FR: With all the data leaks we have seen lately, it is definitely trust and security that have powered up the agenda for telcos. I would even say that these recent incidents have moved security up to a higher level. There is amazing pressure to prevent customer data leaks and a lot of awareness building to do too. The thing is, security is not a technical issue, it’s really a people’s issue. You can have all the latest technology in the world in place, but it might not be enough, you also have to raise awareness among people about how they should behave to ensure data security. We think that ways to address security issues include information security awareness campaigns, both for employees and customers. Within ETIS we have even created a completely new working group to keep telcos secure. Around a year ago we started the Computer Emergency Response Team (CERT) Group. The members of the group are constantly in touch with one another to talk about the latest threats and attacks affecting the industry. AD: Any other headaches telcos are suffering from at the moment? FR: Yes, this year it is all about cost-cutting. How to optimize costs, reduce portfolios, simplify things to boost revenues. Unfortunately, even within ETIS we still haven’t discovered the remedy for this. Cost optimization also affects things like travel expenses. Despite this though, we have a full house here at the ETIS meeting in Krakow, which makes me very happy.

Comarch Technology Review 02/2013

ETIS is a membership based organisation which brings together the major telecommunications providers in Europe on key information and communication technology issues. The mission of ETIS is to enable its members to improve their business performance by personal exchange of information on using ICT effectively. ETIS achieves this by engaging its members in various working groups, sharing best-practices, benchmarking, webbased information services, discussion forums, EU projects, workshops and conferences. www.etis.org

CURRENT DISCUSSIONS

AD: Coming to that: what are your impressions after the first day of the meeting?

and how they might affect billing and offers. These are basically the main topics of our meeting in Krakow.

FR: Actually, it is the first time we have had an Associate Member hosting a Billing meeting. The hospitality and the organization is more than we expected. In addition to that, earlier today Comarch provided an outstanding presentation on cloud billing, which went on to start an interesting discussion on cloud services as a business opportunity for telcos.

AD: Is it your first time in Poland?

One of the issues that popped up was the location of cloud data centers and how to build the trust of customers. Because of data privacy issues, customers are looking for secure solutions and they are willing to turn to telcos, as they trust them in this matter.

AD: Enjoy your visit then. To wrap up, tell me how do you see the future for telcos?

AD: What other topics are on the agenda here in Krakow? FR: As the billing group has evolved, telcos have a good hand on billing, they know how to manage it and now with the pressure on flat, economic packages, complicated realtime billing options might not be so necessary anymore. So this working group started focusing on other areas, including revenue assurance, but also revenue leakage, which is strongly linked to security. They are also looking for ways to monetize the situation with over-the-top players and third party partners and to offer billing as a service, for example to utilities and other industries. This has started to emerge as a new business model for telcos. Another important topic on the agenda is new roaming regulations coming into force

FR: Yes, and I’m really looking forward to seeing more of Krakow today. I have read a lot of books about Poland, where Poland was sort of central to European history. Many people don’t realize how much Poland has been involved in the story of Europe over the centuries.

FR: Our next big event is an ETIS Community Gathering in Riga, Latvia in October, where we will actually have a futurologist, whose job it is to predict the future. So I won’t steal his thunder and try to predict the future myself. For sure the future of telcos is linked to all the topics we have discussed today, such as: trust, security and information context. In Riga we will try to transfer for a moment to the world where we have self-organizing networks, information overloads, access to information 24 hours a day, augmented reality, personalized experience, biometrics – quite a mess from our point of view, let’s say. There is a need for someone to create something from this mess and let’s hope that telcos will be able to do it and use these developments to their benefit. AD: Be sure to let us know as soon as you know the next big thing. Thank you very much for your time.

The interview was led by Agnieszka Dynos, PR & Marketing Specialist, Telecommunications Business Unit, Comarch

Comarch Technology Review 02/2013

CURRENT DISCUSSIONS

Buzzwords, threats or opportunities – what is behind the Big Data door?

hat do Borat and big data have in common? (And no, I don’t mean they both start with the letter “b”). There has been such a tremendous amount of hype around big data that even Borat needed to contribute to the subject on his BigDataBorat Twitter account subtitled Learnings of Big Data for Make Nation of Kazakhstan #1 Leading Data Scientist Nation, satirizing big data. As ridiculous as it seems, the tweets make sense. You actually need

to master some basic big data vocabulary to follow it, for example he has recently tweeted: “I quit consulting job for become VC Data Scientist in Residence. Job remain very similar, sell idea that no does work to large enterprise” and “CEP stand for Can’t Earn a Profit”. Twitter isn’t the only area that has weighed in on the subject, it is rife with debate among the media, industry organizations and companies so it is definitely a subject worth taking a look at.

Comarch Technology Review 02/2013

CURRENT DISCUSSIONS

IDEAS IN BRIEF: Buzzwords shape communication in a certain industry at certain times. Big data is the buzzword of 2013 Security issues and awareness raising are strongly linked to big data Big data offers new revenue streams for telecom companies, but it’s still the beginning of the road to monetizing big data

Big data – the top buzzword of all time? There has been so much hype surrounding big data that it looks like it has become THE buzzword of 2013, and not only in the telecommunications world. A personal friend, who works in banking has told me lately that he had a feeling that big data was kind of stalking him, as it is being mentioned in pretty much every third e-mail he opens. Buzzwords have the power to shape and influence all communication in a certain industry at certain times. They are terms and expressions that are in fashion and which are widely discussed. The IT industry has a well-deserved reputation of being full of buzzwords, as a result of the heavy use of jargon and technical vocabulary. Fred Werner, Programme and Communications Director at ETIS, when asked about 2013 telco buzzwords, confirms that big data is one of them: “Big data, cloud, security and trust, these issues certainly come up in all of our working groups and they strongly influence the topics we are discussing during our meetings.”

What is behind the hype? The positive thing about buzzwords is that they unify communications within a certain industry. They create a kind of a common understanding and play an educational role too, being discussed so frequently that there is hardly anyone who hasn’t come across them. However, overusing or misusing these words entails a risk that they might get drained of meaning and become nothing more than empty phrases. I have seen this often happen with big data – a lot of people use the term, when referring just to data of any kind, without the context of data processing, data variety and other characteristics that turn regular data into “big” data. How can we all avoid this mistake? Let’s have a brief look at the features usually referred to when defining big data.

The mysterious V’s Big data is most often described by the 3 V’s: Volume – a key characteristic of big data, it refers to the large amount of data Velocity – linked to the speed at which big data is generated Variety – different types of data, saved in different formats, coming from different sources You talk about big data when referring to the ability to acquire, collect and analyze vast amounts of various and constantly moving data, generated at a high frequency. Many

would also add the context of data analytics to the picture as a constituting part of what defines big data. As the definition has already been used for some time, it is evolving and a fourth “V” is often added to the classic definition. It stands for “veracity” – the data is so imprecise and incomplete that as a consequence people find it difficult to trust and even more difficult to analyze. Some also say that it is worth adding another “V” for “value” in the context of opportunities to monetize big data. But, without a doubt, the large volume of data is the key to understanding why we are currently talking so much about it.

Petabytes, yottabytes, quintillions or quadrillions – how much of your life is online? A statement made by Google’s Eric Schmidt shows very clearly why nowadays we are faced with large and ever-growing data sets: “Every two days now we create as much information, as we did from the dawn of civilization up until 2003. That’s something like five exabytes of data,” he explains. A significant part of this data is user-generated content in different formats, posted online over social media, blogs and other websites by millions of people worldwide every day. It includes not only text data but also media such as pictures and film. Other data sources include electronic device sensors feeding data back to systems, online transaction records (e.g. related to purchasing transactions), smartphones logging our locations and the many different monitoring applications we use, music streaming or Internet searches – to name just a few, and the list is by no means exhaustive. It is estimated that every day some 40 million photos are posted to Instagram and 400+ million tweets are sent through Twitter, and there are 72 hours of video uploaded to YouTube every minute.

Is what you give, what you get? New digital services, such as connected home or mobile payments send out massive amounts of data just at the touch of a finger. On the one side, new services and new ways of using the Internet has provided us with amazing new opportunities: content sharing, networking or online shopping. We certainly don’t want to give it up and go back to how it was before, so we accept the fact that our data is constantly moving around out there. The more aware users among us who understand the value of their personal data have started to demand something in return, e.g. easy, user-friendly access to their data in real-time, personalized data visualization and personalized self-care portals. Unfortunately, there are still many consumers who are not aware of the fact that an incredible amount of information concerning them is be-

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CURRENT DISCUSSIONS

ing collected, stored and analyzed. This, as a consequence, creates opportunities for major data misuse.

Security as a top priority Not so long ago we witnessed a hot debate that sparked following revelations concerning alleged widespread surveillance performed by the U.S. National Security Agency. The media stories on the subject probably made many of us wonder if any kind of privacy exists in today’s networked world. “Vigilance” and “total surveillance” were the buzzwords which repeatedly appeared on our screens and in newspaper reports. Having decided to split our lives into virtual and real ones, we have all sacrificed part of our privacy and as a result we have become more vulnerable to these kinds of privacy breaches. So we have arrived at an important aspect of big data, security and trust. Security is strongly linked to big data – not only because of the potential personal data leakages and data misuse, but also because of the lack of consumer awareness regarding who, how and where our data is being processed and stored. This creates a strong need for educational campaigns to raise awareness.

What can happen? “Communication doesn’t stay behind these needs. Many interesting campaigns have already been created to prevent consumers from generating and posting inconsiderate amounts of data. One of the most compelling ones was created in Belgium and features a YouTube video that shows how easily “freaks” can take over your life. Its aim was to make people aware of how personal data posted over social media can be retrieved by simple data stealing techniques such as phishing. As a result, we can be deprived not only of our privacy but also of many other things we value: money, friends, our reputation and finally control over our lives. Such campaigns show how security and privacy issues are important concerns regarding big data,” comments Malgorzata Siwiec-Polikowska, Marketing Manager at Comarch. Interestingly, the above mentioned campaign was launched by Febelfin, a Belgian Financial Sector Federation representing the interests of large, small and medium-sized banks, not by some non-profit, social organization acting on behalf of consumers. The spot was part of a broader campaign entitled “Safe Internet Banking”.

From responsibility to opportunity Whose responsibility is it to educate people about big data threats and to raise awareness? Surely there must be many

stakeholders interested in having educated consumers and data users in place. Companies who offer their consumers services that bear the risks of data leaks, telecommunications service providers being among them, should provide information to their customers on how to share their data securely and with full awareness, as well as provide details regarding how it will be used. Fred Werner from ETIS confirms that security is one of the important issues for telcos today and that a need for education in this matter exists.

AGNIESZKA DYNOS “With all the data leaks we have seen lately, it is definitely trust and security that have powered up the agenda for telcos. There is amazing pressure to prevent customer data leaks and a lot of awareness building to do too. The thing is, security is not a technical issue, it’s really a public issue. We think that ways to address it include information security awareness campaigns, both for employees and customers.” Big data is not just a threat and a matter of responsibility for telecommunication operators. It also carries a lot of business opportunities, a thing that has most probably pushed it up to the top of current telecom buzzwords.

Monetizing the buzzword Analyze or die. However exaggerated that statement may seem, it brings attention to one of the biggest challenges in the world of big data – data analytics. Telecom operators have access to enormous amounts of data, including operational data from the network, product information as well as customer data. Discovering the right ways to fully analyze and apply the results of such analysis to business processes can improve decision making and as a result: bring “big money”.

Big data and marketing Marketing is the department where the benefits of processing big data are already visible, as marketers are using data analysis tools to raise the effectiveness of their campaigns and support the efforts of their sales teams. Big data can be very useful in analyzing the needs of CSP customers and creating offers perfectly tailored to their needs. Location-based data and correlating customer experience with network monitoring are valuable sources of information that can ensure that delivered services improve the overall quality of all services for end users. We have already experienced sophisticated marketing techniques based on data analysis – e.g. getting an SMS upon leaving a furniture shop, saying that tables are now available at discounted prices just after we have purchased a set of chairs. Mobile advertising, location-based data, the history of purchasing, cross-selling, understanding customer behavior are all key terms linked to these kinds of marketing cam-

Comarch Technology Review 02/2013

Comarch SA

PR & Marketing Specialist Telecommunications Business Unit

CURRENT DISCUSSIONS

paigns and the marketing opportunities for CSPs are wide open in these areas.

Offers tailored to the needs An example? Data analysis can help define the profile and behavior of customers using certain services e.g. unlimited voice and data quotas. An operator can then offer such services to other customers with a similar profile and further develop the portfolio - having established that a customer streams music, the offer for them could be enriched by a set of matching accessories such as headphones. Customer actions leave a trail that can be monitored and stored for further analysis, the appropriate people within an organization must determine what the purpose of such analysis should be and how the results can support marketing objectives.

Another tempting big data opportunity for telecom operators is linked to the possibility of selling sets of data to third parties. Of course this does not mean that privacy has to be breached. CSPs could simply extract the desired data from the massive amount of information that they already have available. This could include anonymous customer profiles/ behavior patterns or location-based data. Industries that could benefit from such an offer include transportation, infrastructure, media, marketing, content providers, and retailers. What challenges can CSPs be faced with on the way to successfully offer data as a service? Surely, privacy and security issues have to be considered, together with certain legal regulations limiting data trading and processing.

Ultimately, if telecom operators can explain to their customers how the data that they share will come back to them in the form of well-tailored offers, personalized user portals and invoices, it will be easier for end users to understand that aside from the threats, there are also opportunities.

One thing is certain, the opportunity is there, however it is still hard to answer the question concerning how big data can be fully monetized in telecommunications. Will the hype live up to the expectations? Lavastorm’s Analytics 2013 survey of 600 analyst professionals showed that 35 percent of companies were expanding their analytic investments because of big data, so let’s hope we are on a one way road to a place where big data is no longer just a mysterious buzzword, but an integral and important part of successful business strategies.

What’s next?

Find the opening key

Big data has the potential to be used across all CSP departments, not only marketing. The question is how to analyze and incorporate such amounts of information into crossdepartment plans? Telecom operators are huge companies where data is being spread across entire organizations. So a lot needs to be done to establish where the necessary data is within the organization and how to gather it in one “place” and (desirably) in a format facilitating further analysis. The structure of telecom companies often doesn’t correspond with the requirements of global data management. Very often no cross-function, cross-department positions are in place, so the responsibility is spread. As a result big data analytics is currently applied to a specific usage rather than to holistic telecom business management. Practices in telecom companies include using big data in the context of network quality assurance and as a result, in preventing churn. Predicting how network problems may affect customers and act accordingly long before they are dissatisfied with the service they receive. Having the relevant information from the network beforehand makes it possible to prevent customer complaints. An analysis of network events can also be complemented by advanced data e.g. related to business impact calculated using information from an external system.

Big data surely has many aspects that need to be considered, but it’s 100% certain that there is no escape from the voluminous stream of data surrounding us at present. So the next time you consider big data as someone else’s problem, think twice. Everyone is affected but is everyone ready? Surely not. Lots of awareness raising, defining and the development of analytical tools still needs to be done. Without it we might find it hard to handle all the exabytes of data generated every day around the world. Telecom companies, just as other industries, are only at the beginning of the road to monetizing big data. The door to success in the big data world is slightly open, we can see a ray of light coming from behind it, now someone just has to be the first one to figure out how to open it the rest of the way. Buzzwords, threats or opportunities? Many are excited to know what is behind that door and it seems that the light we will see when the door is fully opened will be truly dazzling.

VanillaPlus, Big Data Analytics, April/May 2013,Issue 15 Volume 2 http://www.analysysmason.com/About-Us/News/Insight/Big-data-analytics-revenue-Apr2013/#.UhHwe9JQbyE http://www.booz.com/media/file/BoozCo_Benefiting-from-Big-Data.pdf http://www.rcrwireless.com/article/20130617/opinion/reader-forum-dumb-pipes-not-big-data-say/

Comarch Technology Review 02/2013

GAMIFICATION

Let’s Play Field Workforce Optimization!

aving delivered tools supporting field services for 10 years now, Comarch has noticed that during the deployment of optimization software, Communication Service Providers (CSPs) are also forced to perform major changes across entire organizations in order to fully benefit from workforce automation tools.

Experience shows that lean management or similar approaches can help transform field personnel departments for the better. Of course, one of the main problematic issues is the involvement of human resources (e.g. dispatchers, technicians etc.) and their lack of motivation when it comes to working with new software tools. Technicians often feel that they are

Comarch Technology Review 02/2013

GAMIFICATION

over-controlled and dispatchers fear that automation will leave them looking for a job. These attitudes can pose a major risk when deploying field service automation tools.

Staff involvement is fundamental for the optimization of field services

SZYMON UCZCIWEK

Comarch SA

FSM Product Manager, Telecommunications Business Unit

IDEAS IN BRIEF: Gamification approach ensures boosting employee engagement in their daily work The engagement of technicians impacts directly not only on the operational costs of CSPs but also on revenues Comarch Field Service Management provides a set of simple tools which help CSPs benefit from the idea of gamification

Service management market analysts have noticed that even a small change in the involvement of technicians can boost the results of organizational optimization provided by workforce management tools. It is of course true than an engaged team is more productive and satisfied with their daily work. Recently, I made note of some personal experiences in the field and the table below presents a correlation between the measured engagement of technicians and important KPIs for service providers.

the most productive technicians and information regarding their achieved points and prizes they had won (picture presented below). We were told that that it really motivates employees and they enjoy carrying out their daily tasks far more now. It was one of the reasons why we began analyzing the gamification approach, its impact on staff productivity and trying to implement this rewards wall into Comarch Field Service Management (FSM).

Gamification doesn’t mean changing work into entertainment, it means adding similar engagement into work as in a game

Competition ensures achieving better results

Marcin Kwilosz, in a recent edition of Technology Review, wrote an article entitled “Gamification – The New Black” defining what gamification really is. Marcin highlights why it is so important and why it could have a huge role to play in the current world of business. Here is a short explanation.

To achieve continuous improvement in the field, Communication Service Providers continue to try to find new incentives and better commission management. This is, of course, unique for every company but as specialists say, it is worth remembering that the incentive has to be, from the viewpoint of employees, worth their work as well as individually rewarded. It is surprising how a good tool can be seen as direct competition between technicians. While visiting a current client it was noticed that technicians can be rewarded not only with the normal perks associated with daily work, but also by taking part in some internal game where they are rewarded according to their productivity. On the wall in the main hall of the company there was a list of

Wikipedia describes Gamification as: the use of game design techniques, game thinking and game mechanics to enhance non-game contexts. Typically, gamification applies to non-game applications and processes in order to encourage people to adopt them or to influence how they are used. Gamification works by making technology more involving, by encouraging users to engage in desired behaviors, by showing a path to mastery and autonomy, by helping to solve problems and not being a distraction, and by taking advantage of a human psychological aptitude for game engagement. The technique can encourage people to perform tasks that they consider boring, such as completing surveys, shopping, filling in tax forms, or reading web sites.

Measured engagement of technicians in their daily work

Influenced KPIs

< 0.7

Customer retention

72%

> 0.7

Customer retention

87%

< 0.7

Customer utilization

56%

> 0.7

Customer utilization

69%

< 0.7

Customer increase

> 0.7

Customer increase

Comarch Technology Review 02/2013

Average value of KPI in the context of engagement metric

GAMIFICATION

Additionally, Agnieszka Molęda from Sointeractive, a part of Comarch Group providing gamification solutions says:

(also displayed in the dispatcher’s and manager’s view panels)

“Tasks at work will never be fully entertaining and devoid of responsibility or risk – this is not what gamification is about. The real objective is to influence the attitude of players/employees to increase their involvement in tasks, motivating them to participate in training sessions, and to enhance cooperation and work efficiency. The goal of a gamification system depends on defined business problems that are faced by gamification elements. (…) Gamification does not focus solely on indicators who did ‘the best’, ‘the most’, who was ‘the quickest’ and ‘who won’. It motivates and brings the best out of weaker players. It identifies individual player qualities and develops them.”

Skill level updates according to completing tasks. Gamification in theory means a lot more, for example it assumes defining advanced game plots, or different levels of complexity according to employee achievements. FSM started with basic changes to check which direction should be followed. We all remember how it was with technologies such as: goal-based optimization, dispatching automation, mobile access, GIS and others. These tools were also quite simple and basic in the beginning and now are quite sophisticated and bring substantial value for field work organization. Gamification is just now at the beginning, but its future looks bright. Let’s play!

Let’s play Comarch Field Service Management Comarch Field Service Management features a built-in lean management approach, which helps to unify tools introduced into organizations. It facilitates defining KPIs and organizes field service work according to business goals, such as: reduction in mileage, achieving SLAs, reducing employee idle time, etc. We decided to support it with a set of functions which helps to engage field staff. In the case of workforce management, the gamification approach can be implemented quite easily as technician assessments and evaluation is fast and delivered in real-time (just after a field task is executed) and tasks are precisely defined in terms of their scope. The idea is to add additional tools which allow users to understand tasks as challenges, to award the methods technicians use to achieve tasks (speed, the right quality, etc.), and to compare results with the entire team. It introduces many small tools that create a new environment and work atmosphere, by focusing on the employee’s own success and its direct impact on the organization’s success as a whole.

Figure 1. Technician screen with information concerning task execution time in comparison to average and best achieved time

Gamification tools in FSM: Real time information concerning task execution time in comparison to the best and average completion times Work Order execution quality ranks (based on audit results) Configuration of points scoring, badges and rewards Configure achievement rules and define achievement levels Possibility to add achievements (for example, badges) into the technician account information

Figure 2. Simple method of motivation used by field services of one of MSOs

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Home networking of tomorrow

Existing home networking technologies No single home networking technology has emerged as the clear winner. A combination of technologies including MoCA (Multimedia over Coax Alliance), Wi-Fi, Ethernet, and HomePlug (power lines) are used. With hundreds of millions of devices already deployed in today’s networks, tomorrow’s successful networks will build upon these technologies to meet future demands.

GRZEGORZ KAFEL

Comarch SA Consulting Manager at Cloud Connectivity and Mobility Business Unit

The specs includes procedures, protocols and guidelines to add devices, set up encryption keys, extend network coverage and provide network management features, such as neighbor and topology discovery, path selection, QoS negotiation and network control.

Benefits for all: service providers, retailers and consumers

Current home networks are based on several types of media, ubiquitous power lines, CAT5 and CAT6 cables, coaxial cables and also Wi-Fi. Each of them uses technology different from the other. There are advantages and disadvantages to all of them. For power line networking, sources (like modems, routers, DVD players, etc.) are connected to the power line. Thus, wherever power is available users can plug a module into the nearest outlet and access the sources. For networking with Ethernet and coaxial cables, the sources and destinations must be physically connected at either end. Wireless access, of course, does not need any physical connection at all though the reception will be poor or none at all if either the source or the destination happen to be in a blind spot.

The benefits of 1905.1 technology include simple setup, configuration and operation of home networking devices using heterogeneous technologies. Leveraging the performance, coverage and mobility benefits of multiple interfaces (Ethernet, Wi-Fi, Powerline and MoCA) enables better coverage and throughput in every room for both mobile and fixed devices. Standardizing the use of multiple networking technologies to transmit data to a single device in a transparent manner enables powerful use cases in home networks: Increase the capacity by load balancing different streams over different links Increase the robustness of transmissions by switching streams from one link to another in case of link degradation

Approaching IEEE 1905.1 technology

Service providers look for new ways to address growth in network traffic resulting from more devices in more rooms and trends towards demanding applications such as IPTV, Video on demand, multi-room DVR and device to device media shifting. 1905.1 adds new network intelligence that serves as the backbone to improve existing deployments and enable new whole-home products and services. Some example features/ benefits to Service Providers are as follows: Self-Install: Common setup procedures for adding devices to a network simplify network setup for consumers and reduce call volumes and truck rolls

As there is no a single networking technology that ideally addresses all of today’s applications, platforms and environments, the P1905 Working Group of the IEEE association emerged to create a bridge between the world’s most popular wired and wireless technologies. The IEEE 1905.1 standard brings fundamental improvements, making home networks easier to use and elevating their overall performance (including End-to-end Qualityof-Service (QoS), which is very important for pay-TV services).

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Advanced Diagnostics: Network monitors itself

to maintain reliable operation and simplifies troubleshooting for Service Providers Aggregated Throughput: Enables a single device to aggregate throughput from multiple interfaces to ensure sufficient performance and coverage for video applications Fallback: Optimizes the hybrid network by making an alternative route available when a link is down or congested which increases reliability on the customers’ network Load Balancing: Limits network congestion by enabling a hybrid network to intelligently distribute streams over different paths Multiple Simultaneous Streams: Network utilizes multiple mediums simultaneously enabling multiple streams to exceed the maximum throughput of a single medium

Integration of wired and wireless products enables consumers to easily self-install networking equipment capable of significantly improving capacity and coverage in their home network which improves end user satisfaction and reduces product returns. Some specific benefits of 1905.1 networking to the retailer and end user include: Ability to upgrade some components of a home network with ensured interoperability with legacy equipment Simplifies network setup and security authentication with consistent password procedures and button push security configuration Increases performance and coverage of home networks which increases the networks capacity to increase the overall number of devices in the home

Comarch involvement Cloud, Connectivity and Mobility Business Unit at Comarch is involved in a number of projects and activities concerning advanced communication protocols which include, for instance: Bluetooth, BLE, USB, NFC, Wi-Fi, UPnP, DLNA, MirrorLink and TR-069. Our deep domain knowledge combined with years of experience enables us to serve our customers by delivering complete projects that consist of analysis, technical consultancy, architecture design, development, deployment, integration and advanced quality assurance. Our contribution to leading standardization organizations in the digital connectivity domain, such as UPnP Forum, Digital Living Network Alliance and Car Connectivity Consortium ensures that our solutions adhere to the industryset guidelines.

Summary Layering IEEE 1905 on multiple technologies will ensure easier installation and maintenance through topology discovery, metrics, and unified security and allow devices to select the most appropriate path. Home networking technologies will become an increasingly important component of delivering satellite, cable, telecom and over-the-top content, including premium movies, sporting events and Internet-based services. Gateways will emerge as a media hub in the home which will stream content over the home network directly to devices such TVs and game consoles and will support the proliferation of mobile devices such as smartphones and tablets.

Figure 1. Example of 1905.1 home network topology

Comarch Technology Review 02/2013

IDEAS IN BRIEF: Improved performance by seamlessly switching traffic between interfaces Advanced diagnostics simplifies troubleshooting for Service Providers

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Backjumps in the BPM Workflows

optimization of business processes is of the utmost importance for every company, unfortunately however, it is very often ignored. Introducing processes into an organization is just the first step towards rationalization. It enhances the overall quality of output and ensures the unification of activities. Secondly, optimization ensures that valuable time and costs are saved. The only problem which can appear in both of these phases can be summed up with one word, Backjumps. Below, I’ll explain the heart of the matter.

THE

Process steps for a “happy path” The appearance of Backjumps in complex process diagrams necessitates additional analysis of the system and its surroundings. If these analytical activities are not performed, the usage of a configured system can be highly risky. In such cases, it can certainly lead to the system crashing or

expensive errors because the states of the surrounding objects change over time. One of the most significant examples is the planning process, building and establishing microwave link connections between 2 points in an urban area. These two points are normally located on the highest buildings in a neigh-

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POINT 1

POINT 2

a) Planning phase a) Planning phase

POINT 1

POINT 2

b) Running phase b) Running phase

Figure 1 – Example of a problem related to environmental factors

borhood: for example a smokestack (Point 1) and a radio pole (Point 2). Generalizing business processes consists of activities in the following sequence: Creating a plan for microwave links Estimating the cost of installation and infrastructure maintenance Carrying out visibility tests between two ends Leasing buildings on both link ends and acquiring all the required permissions Installing equipment on the link ends Running the equipment Carrying out connection tests Running technical installations Preparing documentation and protocols

Each of these steps - in cases when some inner-activity problems appear - have their own backjump to the current or previous step. In the case of a positive process, the path without any problems on it – the so-called “happy path” where nothing bad should happen, however …

Surprises in happy path processes For example, one problem which appeared during performing a certain process was when a newly build high-rise was built in the microwave link’s line-of-sight, as illustrated in Figure 1. This factor wasn’t taken into consideration when the original link was establish. So as a result, the newly designed link turned out to be useless and had to be disassembled.

Credit process application

Success (Finish)

Start

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User

Credit documents preparation and filling out

Correction of the credit documents

Credit decission

Bank

Request for creditworthiness in Debtor system

Receiving of the status

Checking borrower creditworthiness

Credit preparation

Rejecting of a credit application

Giving a credit to the borrower

6 7

External system

POINT 2

POINT 1

Checking borrower creditworthiness

Figure 2 – Example of a backjump in a credit application process

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external backjump – flows to one of the previous

In Figrue 2, a similar outcome was avoided by simply double checking the status of the neighborhood status – making sure that the information was up to date and trustworthy.

PRZEMYSŁAW LIZUREJ

Comarch SA

OSS Solution Manager, Telecommunications Business Unit

Backjumps complicate the overall design of more complex processes. One of the issues which can make diagrams appear complex are interfaces to any external systems which are used. On the process level, data consistency and synchronization between systems should be ensured. Frequently the appearance of a backjump in processes means that a negative path must be designed. This situation illustrated in Figure 2, describes the steps for acquiring bank credit. A positive path in this diagram would follow the path: 1-2-3-45-6-7-8-9. A negative path would begin with: 13-14….-2-3-1. Whenever actions are repeated they fall into a loop. Of course, we can exit the loop if conditions are not being fulfilled. Applying backjumps in basic processes is both simple and useful. The most common situation occurs by logging into any system. If they’re not correct, we’re moved back to the same point with the appropriate feedback. Leaving the loop means that only exit conditions are met (login and password are correct). One factor, which is crucial for diagram correctness, poses synchronizing parallel task paths in the workflows. An example of such cases is shown in Figure 3. The following types can be distinguished: close internal backjump – includes tasks in close relation to the predecessor and successor – an example in Figure 3 is path 9-11, which represents gathering lease contracts from owners general internal backjump – includes tasks not closely related but ones inside certain processes or process phases – an example in Figure 3 is path 18, which illustrates an incomplete or negative answer from an external system

process phases or one of the previous tasks outside of the process – an example in Figure 3 is path 12, which describes a situation when only some of the required leaseholders were taken into consideration during an investment planning phase Protection against problems related to an internal backjump can appear in one swim lane. These can require the consolidation of tasks. All related activities and business logic should be merged in a new process. This case is shown in Figure 4. The advantage of this solution is the elimination of backjump (transitions 9-11). This means that time interval limitation in the case of loops for every elementary activity occurs. New activities will last shorter than old ones. The disadvantage is the loss of control over the elementary operations and the ability to monitor them. It will not be possible to report how often the loop object was wrongly prepared, what caused the backjump– and who was responsible for it. That decision belongs to the process designer. The solution, which can solve the problem involves repeating activities into universal sub-process blocks. Maintenance of negative paths can be carried out in them. Figure 5 presents a backjump which goes into one of the parallel paths. In such a case, activities A, B, C, D have already been performed and with transition 10, once again activities C, D, will be repeated. This is problematic for the system engine, on this diagram it is depicted as node “J” (join-node), it poses a complementary pair of nodes with “F” (fork-node). In this case, node “J” may block the process flow.

Preparation of the investment area

IDEAS IN BRIEF:

Previous phase (Finish)

Investment area preparation

Start

Next phase (Finish)

How to develop business processes based on workflow diagrams with backjumps?

User

Investment documentation preparation

System

Sending request for permission to the local authorities

Sending lease contracts proposals to the leaseholders

Receiving signed lease contracts from the leaseholders

Consder the permission decission

13 14 15

External system

How to protect business process against unforeseen changes?

Data preparation and delivery

Permission processing 12 18

Figure 3. Example of problems related to backjumps in parallel paths

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Make corrections in permission request

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Sending lease contracts proposals to the leaseholders

Receiving signed lease contracts from the leaseholders

Managing of lease contracts proposals (Sending & Receiving to the leaseholders)

Figure 4. Internal backjump solution proposal

I’ve mentioned above about a solution proposal where a universal sub-process applies. Another one is a cancel path which applies with specific case maintenance and process finishing. This solution can be difficult to apply in process diagrams, but it’s definitely recommended. Thanks to its efficiency, process optimization and re-engineering will be greater. From a process engine perspective, the important issue is how processed activity should behave on the second performance. Previously used data cannot be relied upon, but it is useful as a hint. Process designers by actively defining the creation of loops should be able to predict these situations and be able to work them out. Defining process measurements (without backjumps) is quite easy, as is the planning and scheduling of materials and human resources, organizing them into groups and their hierarchy. When a backjump appears in a diagram the situation, of course, becomes unpredictable. Its simulation cannot provide a full estimation, which is required for the optimal operation of the system and the company.

Summary Business processes redesigned in the planning phase will ensure that a more efficient system is achieved overall. The impact of mistakes on the real system cannot be analyzed in the process design phase. Complex backjumps in workflow processes should be omitted by the process designer or substituted by one of the suggested methods above. Applying backjumps in processes yields a profit, but only when they’re well thought out in the analysis or optimization phases. In one of the biggest German project Comarch undertook, we limited the appearance of backjumps by about 30%. This was achieved by remodeling the process flows, where the very complex backjump construction was replaced with simple, more refined backjump constructions. Backjump cases can pose as only examples of real system issues. Real efforts to protect processes against problematic cases should be taken to ensure the full and best optimization of activities.

Preparation of the investment area

Previous phase (Finish)

Investment area preparation

Start

Next phase (Finish)

3 7

User

Investment documentation preparation

System

Sending request for permission to the local authorities

Sending lease contracts proposals to the leaseholders

Receiving signed lease contracts from the leaseholders

Consder the permission decission

13 14

External system

Data preparation and delivery

Permission processing 12 18

Figure 5 – Jump on the parallel path inside

Comarch Technology Review 02/2013

Make corrections in permission request

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A network monitoring Sudoku based mobile, broadband Internet, voice and signaling services, all put huge demand on transport networks. This is why, for some years now, their complexity has been increasing significantly. Are these beasts still manageable with old monitoring tools? Can Network Operations Center (NOC) operators win the battle with network failures and planned works using plain old alarm lists? The answer is yes, but they will not be as cost-effective any more.

So, what does all this have to do with Sudoku? Like in this fantastic game of logic, you can sometimes be sure of your reasoning, seeing only a part of the network, but it can easily turn wrong in the broader picture. In this article, we present a state of the art solution for monitoring a transport network, and show how growing network complexity can be efficiently managed.

The cut The story starts like this. Somebody carelessly using a bagger or a dragger, cuts a ‘fat’ cable (measured of course, in units other than the diameter). Such a cable is usually one of the links in a chain of an end-to-end connection. Luckily, there is usually a spare connection that can protect the broken one. In such cases, there will be no noticeable impact on client layers, but this doesn’t mean that no alarms will be set off. On the level of the cut, alarms will pop up as a result of the failure. These alarms, like any other that happen on a network, will flow over the Network Management Systems (NMSs) into a general bucket of active alarms, and it will contain information concerning the interface and indirectly regarding the device and the location. This is where most of the fault management systems will stop with automations, leaving the rest to operators, who can display the connec-

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tion’s topology for the faulty connection/interface and see that there is some protection in place. They will look for the alarm list to see if there are alarms on any related connections. Not a very complicated task for skilled and experienced staff, but it always takes time. It is fairly easy to calculate that the more failures in the network, the longer it takes to find the cause and to issue properly described tickets. But, there are more forces here that are working against the operator.

Unification Networks are usually heterogeneous, composed of various equipment types produced by different vendors, and managed over multiple NMSs. These are configured to provide different kinds and different numbers of alarms for the same fault in different points of the network. A simplified connection scenario is depicted in Figure 1. It is virtually impossible to find a transport network that is managed with only one type of NMS. Luckily, most vendors comply with industry standards in generated alarms, but there are however always some small differences and specifics. Like in the depicted image in Figure 1, a cable can be connected on both sides to network elements produced by different vendors. As a consequence, there will be two different sets of

alarms reported by two NMSs. The alarms will provide information about the same technology-dependent failure but will be slightly different. It gets even more complicated though, NMSs can be configured to suppress or provide some pre-correlated alarms. Also, depending on the implemented NMS, alarms can pop-up at different times (especially during alarm flood, it can take a few minutes before an alarm will even be reported). Again, people can understand the alarms regardless of their small vendor-specific differences, what they cannot do efficiently however, is find the links between tens or hundreds of these alarms. On the other hand, automations are very sensitive to even the smallest of differences, but can handle multiple alarms very fast. This is why, in the early stage of alarm processing, Comarch Fault Management unifies alarms, performing translation from vendor-specific to a technology-oriented and vendor-agnostic alarms catalog.

The root cause And so, the monitoring Sudoku begins with unified alarms. The system can start to correlate them, which is easier said than done. At any given moment in time, there are thousands of active interrelated alarms. Their relationships are dependent on network topology stored in the network inventory. And there is

NMS Vendor A

NMS Vendor B

section 01

section 02 (protected)

02.01.01

section 03

02.01.02

hop 01

02.01.03

hop 02

02.02.01 hop 01

hop 03

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Protection No. = 1 (main protection path)

hop 02 Protection No. = 2 (spare protection path)

SDH Trail - SNCP protected SDH Container “Provides Trails” relation

XYZ - X-Section, Y-Protection No, Z-Hio in Section

Figure 1. A simplified connection scenario

Comarch Technology Review 02/2013

PAWEŁ SABINA

Comarch SA

OSS Solution Manager, Oracle Certified Master, Java EE 5 Enterprise Architect Telecommunications Business Unit

TECH CORNER

IDEAS IN BRIEF: Fault Management, Topological Correlations and Planned Works provide automatic endto-end monitoring and processing of service faults in transport networks The relationships of active alarms are dependent on network topology stored in the network inventory The planned works module facilitates registering planned works and outages in the network and checks if they are not overlapping in terms of interdependency, mainly protection

a constant stream of alarms being updated, flowing into the system from the NMSs, some of them stay for longer, some just come and go. Each of them can be related with tens or hundreds of other alarms on any resource in the network. Taking this into consideration, it is easy to understand how complicated it is to do the correlations. This is also the reason as to why it is so uncommon to have this kind of automatic processing in Fault Management systems available on the market. But what exactly is the purpose of topological correlations? Let’s start with the obvious. A transport network is composed of layers, starting from a physical layer, up to some logical layers with a server-client relationship among them (Figure 1). If there is a failure in the server layer, it will usually propagate to the client layers. In such a case, the server layer’s alarms are the causes of the alarms in the client layers. Usually there are multiple client connections provided by one server connection, which means that problems are multiplied in every client layer. A loss of alarm signal in the server layer can eventually cause tens or hundreds (sometimes thousands) of alarms in the client layers. All of them will feed into the Fault Management system, and eventually to the alarm list of the operator. And if this wasn’t already enough, there are multiple (often interwoven) network failures every moment in time. Despite the huge amount of alarms, most of them are symptoms and have no additional value for the operator. In the case of a failure, the most important thing is to find the root cause, and handle it quickly. Today’s servers are very fast, but not fast enough to correlate alarms in the same way that people would. Dealing with the complexity of them requires sophisticated algorithms and the use of state-of-the art technologies. Comarch Topological Correlations engine (part of the Fault Management solution) is capable of correlating hundreds of alarms per second for all main transmission technologies, like SDH, DWDM, IP/MPLS, etc. It achieves on average, over 75% reduction in the number of alarms presented to users.

A planned work Faults are not the only things a network operator needs to monitor. We have already said that a network consists of thousands of connections. Most of them will be owned by the operator, but some (sometimes the proportions can be different) are leased from other companies. We don’t need to bother with faults in those externally managed and monitored connections, because the topological correlation engine can deal with symptoms and infer the root cause, even if they happen externally. What an operator should fear however, is a double-cut caused by overlapping planned works on their own or external connections. It usually goes like this. A company we have leased a line from, notifies us about a work planned in the near future on

one of the connections. At that time, the connection can be treated as being down, or faulty. But what if your company also plans to do something on a connection that happens to be the protection path for the first one, on exactly the same date? A double cut, no doubt. The Planned Works module facilitates registering planned works and outages in the network and checks if they are not overlapping in terms of interdependency, mainly protection. In such cases, the operator has a chance to reschedule one of the planned works, to avoid double cuts, or to at least prepare a temporary workaround. The module can even take into consideration the current network state, and calculate if faults interfere with planned works. This simulation is performed as a short-term check on registered planned works, usually a few hours before a planned work is due to commence. This gives an additional chance to react and prevent a double-cut on critical services.

Conclusion Fault Management, Topological Correlations and Planned Works are three modules of Comarch OSS which provide automatic end-to-end monitoring and processing of service faults in transport networks. This unique composition leaves no gaps in the monitoring chain, and what is most important, carries out undertakings in near real-time, even for very big networks. In order to be able to handle alarms even from the largest networks in the world, a complete change of approach is required. A specialized high-performance graph database used in the Comarch Fault Management system is at the center of this processing, thus ensuring exceptional performance. Regardless of how heterogeneous a network is, and how many different NMSs are used to monitor technology-vendor domains, the Fault Management module will unify all incoming alarms so they can be processed according to general technology-oriented rules. Topological Correlations alone ensure a 75% reduction (on average) of alarms presented to the operator, increasing the overall Network Monitoring Center’s productivity. Still, no alarms will be removed from the system, instead all symptoms, even ones deemed the least important will be grouped behind the root cause alarms, ready to be displayed if needed. The Planned Works module finally, facilitates constantly keeping track of works planned internally or by 3rd party suppliers. Various modes of simulation allow users to check if initially safe planned works will eventually lead to double cuts, taking into consideration the current state of the network, giving the operator sufficient time to prevent a serious impact on services provided to customers.

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RESTful Web Services – simple as that The best ideas are the simple ones Most of the great ideas we benefit from in our everyday lives are simple, extremely simple. Consider the wheel – simple as it is, it completely and utterly changed civilization. Think about fire, a light bulb, a pair of glasses, basic single-cylinder engines, a transistor or a telephone. Could you honestly even begin to imagine life without all of these things? It

would most certainly be a colder, darker and more muted place. In all of these cases the basic idea was very simple. Many new products and services when they launch on the market can become incredibly popular if they are simple. SMS at the beginning was just an additional mobile phone service, not really designed for wider use at all. However, unexpectedly text messaging became hugely popular with mobile phone users.

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People get used to things We need to take into account that most people get used to the things they already know. In most cases it is totally rational – acquiring new knowledge and experience is costly. For example, changes in an application’s user interface (UI) could mean many hours or days of getting to grips with it. Not to mention the frustration that comes with the realization that the previous ways in which we effectively executed our jobs are as dead as disco. We become temporarily useless and need to wrestle through all the stages we’d already mastered all over again.

standout candidate for market success. In practice though, most of the large market players have developed their own RESTful web services already (Google, Twitter, Yahoo, Amazon, Flickr to name a few) while some of them have already decided that REST will be the only interface of their architecture. Why is REST so hot anyway? Well, for that answer we need to consider the following: http(s) – most of the previously mentioned frameworks define the protocols used to exchange data, REST does not do this, instead it is based on http. This simple difference has a huge impact:

Communication between systems For many years IT and the communications industry have been dreaming of ways to support the exchange of information between systems and to forge more advanced, faster services on top of existing basic components distributed all over the world. One of the attempts, originally meant for network management purposes, was the Common Management Information Protocol (CMIP) with its Guidelines for the Definition of Managed Objects (GDMO) being data description language. The first relatively popular way of building distributed systems for exchanging information was based on the Common Object Request Broker Architecture (CORBA) with its Interface Description Language (IDL). Additionally, Microsoft used the Distributed Component Object Model (DCOM) in its systems. Both CORBA and DCOM are still in use, however it seems that they were neither good nor straightforward enough so Microsoft established Web Services with the Simple Object Access Protocol (SOAP) using XML (text) to exchange information between systems and Web Services Description Language (WSDL, XML based as well) to describe data being exchanged. All the above mentioned attempts introduced simplifications and usability improvements however, they are still relatively complicated and have some downsides. Occasionally, a function, previously considered to be just a feature can cause unexpected issues, such as difficulties with introducing new versions of an interface and the coordination of these changes between multiple parties, which do not have or have only loose business relations.

RESTful Web Services In recent years, the so-called RESTful web services have been acquiring a larger and larger market share in the area of interconnecting different systems. Representational State Transfer (REST) is a kind of software architecture which facilitates exchanging information between different systems in almost the same way as people communicate through the World Wide Web. REST is simple and based on technologies people are used to i.e. WWW, therefore it seems to be a

all WWW infrastructures such as proxy servers, caches, load balancers, etc. work well with RESTful web services security is implemented through well-known https i.e. in the same way as for web pages; the same applies to single sign-on, etc. any content allowed by http can be served using RESTful web services – if there is a need to transfer a jpeg image – no problems occur and is done the same way as for standard web pages; the same applies to mp3 files. There are many specialists out there who know exactly how to deal with http(s) protocol stacks – you can reuse their knowledge also when dealing with RESTful web services. your data is addressed using normal URLs, like http://...../data/users/ to list users, http://...../data/ users/Smith to get information about user Smith, etc.

web services can be called directly from your WEB browser by specifying a URL (the same way as you do for web pages). So, simply put it in http://..../ data/users/Smith, and voila – you receive all the required data from the web browser (if the web service returns JSON format and you want to have it displayed in a more attractive way instead of just being downloaded as a file – consider installing a small plugin called JSONView).

no need for GDMO, IDL or WSDL anymore – REST does not need to describe the data being exchanged What is the advantage of the last feature? It depends on the case. If you exchange mission-critical information, like data describing money transfers or data between air traffic control systems you need a solid description of your data. In such a case you can use a formal, XML-based description called Web Application Description Language (WADL) with the use of REST, similarly IDL or WSDL could also be used, with CORBA and SOAP respectively. In most other use cases, data description is not so critical you only need to use a small subset of available functions, you have integrated multiple systems

Comarch Technology Review 02/2013

ROBERT CHWASTEK

Comarch SA

Chief Architect Telco Telecommunications Business Unit

TECH CORNER

IDEAS IN BRIEF: On a competitive market winning companies are these which can provide better services in a shorter period of time for lower prices and still earn money An important cost (in means of money and time) factor for delivery of different projects is integration of multiple systems used to provide services RESTful web services has a potential to exchange significantly more complicated integration methods for new offerings and therefore improve market competitiveness

and/or you have only limited influence on the other business side. In all these cases changes to the interface will for sure be introduced. The provider responsible for the interface can introduce many of them and keep backward compatibility or simply introduce extensions to the functions which you do not use. In such a situation enforcing strict control of the data being transferred could mean that communication with all of the clients will be stopped and you may need to recompile all of the client’s software. If the system is used by different companies or even by different units of the same company – the coordination of such a change would be very difficult if not completely impossible. So, if the interface does not exchange missioncritical data it is better to make it elastic to allow backward compatible changes so that there is no need for data description for the purpose of data checking. You may want to implement data description to generate a code for clients, but in most cases interface providers can generate client code for you in some programming languages directly from their code.

How REST works RESTful web services simply utilizes http protocol commands i.e. GET to read objects, POST and PUT to create and write data as well as DELETE to remove it. Objects that are the subject of an operation are addressed by a URL in the same way as other resources are addressed by URLs in your browser. RESTful web services can provide different content, however in most cases they return JSON (JavaScript Object Notation) which is basically shorter and more readable than XML. All security measures i.e. https, authentication, authorization are available for service creators in the same way as they are available for web pages or web application creators. And that’s it. Simple as pie, isn’t it? You can use your web browser to communicate with RESTful web services (at least to read data). You can use any programming language which has an http client library (most of them have it because web and http is really the standard). You do not need anything else whatsoever, no special compilers, no expensive tools, not even expert knowledge. People familiar with http and web programming can use RESTful web services as well.

RESTful Web Services in your environment RESTful web services are based on http(s). Http(s) (and its stack of lower layer protocols) is probably the most popular and best-known protocol in the network. What does this really mean for us all though?? First of all your IT people will already be fully aware of this because they deal with standard WEB traffic every day. Http powers the Internet with its unlimited capabilities. It means that there are multiple hard-

ware and software solutions available at reasonable prices or even for free, allowing you to scale your systems according to your needs and imagination. You can add a load balancer and start adding new servers quite easily (REST is stateless so you can use advanced load balancing strategies). Do you think that network traffic is too high? No problem – you can use well-known http caches and store your data closer to the users – applications exposing RESTful web services can use different caching strategies available in http protocols – simple caching for specified periods as well as advanced ETags mechanism. Using RESTful web services allows users to separate Graphical User Interface (GUI) code (the code itself is static while the GUI can be dynamic) from data being transferred. Therefore, GUI code can be located anywhere, preferably in the user’s browser cache so that it does not need to be transferred over and over again. Do you think you will want to write a mobile application? No problem! Android, iOS and other mobile operating systems allow the use of RESTful web services. In such cases, the appropriate GUI code is installed directly on the mobile device. Do you need to integrate your currently implemented system directly with an additional system to use RESTful web service s? You are free to begin immediately by using web services with your web browser and whatever programming language your programmers prefer to write the code in. Do you prefer integration using SOA/ESB? No problem here too, most ESB systems can use RESTful web services with only a few mouse clicks needed for configuration.

Summary In the IT and telecoms industry we are witnessing the emergence of new simplified methods of communication between systems based on the well-known htpp(s) family of protocols. While it is simple (as we’ve already said, you can even use REST from your browser) and utilizes what people already more or less know, it has the potential to significantly increase in popularity over the coming months and years. Deploying systems using RESTful web services from a company’s perspective utilizes the existing knowledge base and current infrastructure and therefore decreases the cost of training, specialized software and hardware as well as improves time to market thanks to delivering more advanced services in a shorter time.

Further reading REST Tutorial: http://rest.elkstein.org/ Wikipedia: http://en.wikipedia.org/wiki/ Representational_state_transfer Tutorial from IBM: http://www.ibm.com/developerworks/ webservices/library/ws-restful/

Comarch Technology Review 02/2013