The rise in partner settlement complexity needs to be addressed to ensure IoT success, writes Vic Bozzo.
Analysts are predicting there will be up to one trillion potential M2M (machine-to-machine) connections by 2020 – a number that more than doubles the size of the telecoms market today. That’s a lot of growth over the next few years, and its growth that isn’t coming from the traditional set of services such as voice and broadband. It’s coming from the connection of things, with communications service providers (CSPs) creating new platforms for partnerships with enterprise businesses and OTT players that want to offer new applications and connected solutions to their customers.
A partnership explosion
New partnerships and connected ecosystems are popping up like dandelions in the spring time, and as all of these various partners scramble to figure out how to best participate in the new M2M economy and determine what business model works best for them, it’s important not to overlook a very important piece – partner billing and settlement. Telecoms companies will need a way to manage potentially thousands of new partners and a highly complex value chain. M2M will give CSPs the ability to derive new revenues from settlement and interconnect opportunities, and many of these M2M transactions will need to be accounted for based on usage, with often complex key performance indicators (KPIs), commissions and revenue share deals to account for.
New complexity, new challenges
Traditional telecoms services such as voice are well covered by revenue assurance, however, as TM Forum states in a recent report, coverage of services identified as ‘the future growth engines’ for CSPs, such as digital services and IoT, is still low, and further investment is needed in these areas. There is no doubt that the increase in these highly complex M2M revenue streams will give rise to new avenues of revenue leakage. Revenue leakage thrives on complexity and change, and it can spell huge losses for companies and affect business profitability. The question is, how can all of these new high volume/low value M2M transactions be managed when many of today’s service providers are using outdated settlement and revenue assurance systems that were built for another era, and often still depend on manual processes? In addition, many revenue assurance teams are lacking experienced personnel, yet they are about to encounter a tsunami of data that needs to be audited and validated. Billions of different types of events require rating and analysis; agreements are complex and quality of service requires constant oversight. In such an environment, CSPs need a partner settlement solution that can manage new service launches with complex tariff plans and revenue-share agreements.
It’s all about automation
Experience shows that vendors overcharge an average of 4-9% of the total invoice value, and 50/50 settlements of disputes are often agreed to only because CSPs lack the compelling evidence to win disputes. There is real money at stake, and it’s only going to get worse as the number of transactions continues to climb.
The only way around this dilemma is through automation. Billing, settlement, and dispute management functions need to be highly automated and designed to mutually support each other. The Telarix solution gives the billing and settlements process a major revenue assurance boost as it validates data upon receipt, normalises that data, and removes the errors that always occur whenever human hands touch high volumes of data. Traditionally, lack of automation has made auditing one of the most overlooked components of a comprehensive revenue assurance strategy, but now is the time to get your proverbial ducks in a row when it comes to partner billing and settlement. Ensuring your back office can manage tomorrow’s front office challenges is the only way to protect your investment as partner complexity and data transactions continue to climb at a frightening pace. The opportunities M2M is bringing to CSPs are tremendous, just be ready for the challenges.
By Vic Bozzo
