With e-commerce proliferating and Internet protocol (IP) emerging as the networking protocol for business activity globally, providers of Internet services find themselves in an increasingly crowded and dynamic marketplace. How does a service provider extend advanced IP services to its business customers creatively, reliably and, at the same time, profitably?
| "If service providers could partition the services they offer, quickly capture and organize user and service information, and then synchronize it with a billing system, then they could tap into and cost-effectively sustain a new range of IP services possibilities." --Jim Alsman, vice president and director of network management and operations support system research, Probe Research Inc. |
The escalating demand for advanced IP services is being driven not by the industry or by technology, but by a new breed of business customer that proactively is seeking IP services specifically tailored to its unique expectations, needs and preferences. This new Internet services delivery model is having a profound effect on how Internet business is being done. With the technology available today to enable advanced IP service offerings, service providers need to practice market segmentation in its ultimate form--the segmentation of one. Service providers must hone in on the desires of individual business customers and offer, manage and bill for solutions customized exclusively for each.
To make the strategy work, service providers require a scaleable, integrated end-to-end software platform for IP service delivery that is based on a common management framework and open architecture. The solution should have one point of control for streamlined administration, but no single point of failure. Service providers must be able to tailor service attributes easily to the unique needs of a specific customer; to offer predefined service packages so that new customers can be brought online simply and quickly; to be able to create special offers that automatically are propagated to all appropriate users; and to securely extend self-management features to their business customers. And, of critical importance, service providers must be able to flexibly bill for all their creative offerings.
"Service opportunities in IP are constantly shifting with no fixed business models," says Barton Taylor, senior analyst of utilities research with The Aberdeen Group, Boston. "It is, therefore, essential for providers to plan for the utmost flexibility in provisioning and billing for high-value services."
Offering More, Profiting More
Obviously, a service provider can grow its business by offering more value-added, advanced IP services. But how can that service provider become more profitable when expanding its service offerings traditionally has entailed the complexity and cost of installing, managing and scaling disparate systems?
Service providers' existing systems are being overwhelmed by subscriber growth. They want to build on their investment and implement a solution that will grow with their business, while not being restricted to dealing with one particular network vendor.
About two years ago, Island Telecom Inc. fit this profile precisely.
"The whole Internet piece is a bit like anarchy, and sometimes it's almost impossible to put order to anarchy," says Stephen Murray, manager of information solutions for Island Tel Advanced Solutions (ITAS), a subsidiary of Charlottetown, Prince Edward Island-based Island Telecom. "Our goal is to stake out a place in cyberspace to help foster order out of chaos."
| "We have found that if we provide our customers with the means for self-help, they are more than willing to help themselves ... Being able to do it yourself is an attractive benefit for the business customer. " --Stephen Murray, |
Since fall 1997, ITAS has introduced a wide range of innovative new Internet, intranet and extranet offerings that has attracted a new crop of business customers willing to pay for advanced IP services that are delivered reliably and customized to their specific needs. The ITAS Electronic Business Service enables small and medium-sized companies to experiment with e-commerce and other elements of an online suite of business applications. With ITAS's video-on-demand service, companies can convene international videoconferences, record them and make them available at a later time to additional employees or customers not involved in the original broadcast. ITAS hosts online catalogs that design houses create and update at the retail customers' request. And more than 60 schools are complementing their traditional curriculum with cutting-edge, multimedia distance-learning applications over the ITAS network.
But none of these new revenue streams would have been possible had ITAS not installed an effective software solution for service control, provisioning and billing. ITAS sought and implemented a system in which every aspect of its available services could be tailored and re-tailored to the unique needs of a specific business customer easily and inexpensively--and, in many cases, by that customer.
"We had to go into these markets with a creative, price-competitive solution and offer customers a level of flexibility otherwise unavailable," Murray says. "If we had not done so, those customers would have ended up buying the services elsewhere."
Billing Options
"Billing is of growing importance in the IP services market," says Jim Alsman, vice president and director of network management and operations support system (OSS) research with Probe Research Inc., Cedar Knolls, N.J. He is developing a report on the IP billing market. "It's still a very young, relatively unformed market, but it's fast-developing. Right now, there is considerable focus on billing systems. What many service providers would really appreciate is a closely integrated, synchronized solution in which the service provisioning and billing systems cooperate seamlessly," he says.
| Billing and Customer Care Issues to Consider * Identifying the unique needs and preferences of a business customer and then offering a solution designed specifically for those needs is a powerful way to differentiate Internet protocol (IP) services in a highly competitive and crowded marketplace. * It's important to be able to roll-out predefined service packages very quickly so new customers can be brought online faster and easier. A service provider that waits to address a vertical market, in which its competitors have gained a foothold, has impaired its opportunity in that segment. * Being able to create temporary, special offers that are propagated to all appropriate users automatically gives service providers the ability to experiment with a variety of marketing programs. * Carriers can increase customer satisfaction by securely extending management features to those customers and, at the same time, saving on operational costs. * Billing should be flexible, so the carrier can track services based on the most appropriate parameter(s) based on that service, should that be per user, organization and/or domain. Source: Bridgewater Systems Corp., Kanata, Ontario |
In addition, service providers require an effective tool to cost-effectively handle temporary activation and suspension of customer accounts based on account status at a particular moment. Many service providers will need to upgrade their legacy billing systems to more advanced solutions that provide flexible options on how provisioned services are charged--allowing them to fully capture their potential service revenue.
ITAS, for example, "recognized quite early on that content was going to be a critical differentiator," Murray says. "An organization that could manage its subscriber base from the perspective of content, as well as services, would have a sustainable competitive advantage."
Many of the small and medium-sized businesses making use of ITAS's Electronic Business Service would not have signed on, Murray believes, had they been limited to paying a flat, monthly subscription rate, as opposed to rates based on length or content of a particular session with a service. Offering billing options has, instead, created a broader customer base for the Electronic Business Service.
This flexibility is made possible by the fact that ITAS's directory-based service-provisioning system is closely integrated with its open billing interface, which can communicate with a wide range of billing applications. Account information automatically flows between the two systems, so that updates, such as temporary subscriber activation and temporary account suspension, occur automatically based on the account status at a particular moment. Service usage can be tracked per user, organization and domain.
"If service providers could partition the services they offer, quickly capture and organize user and service information, and then synchronize it with a billing system, then they could tap into and cost-effectively sustain a new range of IP services possibilities," Alsman says. "Basically, the more things service providers can bill for, the more services they can afford to offer and derive profit from."
For its electronic-catalog service, for example, ITAS bills for the disk space to store a catalog, as well as per sale transacted through its website.
"Just as important to our customers," Murray adds, "if a service isn't used in a particular month, our customer doesn't get billed for it. If you haven't used your videoconferencing services, for example, you won't have a line on your bill that says, 'videoconferencing services.'"
An additional benefit of the system is that consolidated, customized bills are generated automatically, ensuring accuracy, timeliness and savings on ITAS's operational costs.
Self Management
Also of critical importance to the service provider's business strategy is the ability to extend to its business clients the control, security and convenience they need to view and manage their own sensitive user, service and billing data. With this approach, the service provider monitors a business customer's entire account, heading off performance inefficiencies in mission-critical networks. The customer, meanwhile, maintains full control over all service attributes--essentially defining who can access what and when on a flexible user, organizational and/or domain basis.
Business customers welcome the assurance of knowing that their IP service accounts will be as up-to-date and relevant as they make them. And serving as the keepers of their own sensitive data--in a system employing remote authentication dial-in user service (RADIUS) features--lends customers another measure of comfort that they are doing business in a secure, controlled environment.
"We have found that if we provide our customers with the means for self-help, they are more than willing to help themselves," Murray says of ITAS's system, which extends its self-management features via a Java-based interface. "It's actually an incentive for the customer to go with our services. Being able to do it yourself is an attractive benefit for the business customer. And it's a win-win scenario for both parties because it frees the service provider from the profit-draining expense of supporting and managing account updates."
What's Next?
"Many service providers see that they cannot afford to wait until there is a large demand for a clearly defined feature," says William Flanagan, program director at NetReference Inc., a network architecture consultancy in Sterling, Va. "The enthusiastic, clever players are using today's emerging technologies to bundle services and features in imaginative ways for very small segments of customers--and, in some cases, even single customers."
"Not only do they quickly roll out solutions that are ideally suited to the immediate needs of these current customers, they are creating test markets for new products to find the customers that will generate future revenue," he adds.
Innovative service providers such as ITAS and others are enhancing their IP services infrastructures with service creation, control and billing mechanisms that effectively are building the new public network--a public network that is based on the segmentation of one. In this highly customer-driven environment, investing in an open, flexible IP services platform today really is the best business strategy to help service providers position themselves to meet the unforeseen demands of their business customers and realize the IP market opportunities of tomorrow.
Probe Research's Alsman offers this simple, blunt forecast: "You either grow stronger or die. It's an interesting study in evolution, really."
Dave Curley is vice president of marketing for Bridgewater Systems Corp., Kanata, Ontario. He can be reached via e-mail at davec@bridgewatersys.com.
