After two very hard years, billing giant Amdocs (NYSE: DOX) is showing signs of getting back on track and winning projects again. Thestruggling communications market is still dragging the entire billing sector down, but Amdocs has begun signing new contracts, including some that were not included in the included in the announcement about the company’s orders backlog that accompanied the publication of its first quarter 2003 financial report.
Nonetheless, one of the issues worrying the New York Stock Exchange about Amdocs is whether the company has really begun to meet the new demands of the communications market, and close the gap with its competitors for IP billing. Everyone knows that Amdocs is a strong company with a stable customer base, and proven technology for price voice-based services. The question is how quickly can the company increase its market share in billing sector for next-generation cellular communications?
The communications industry thinks the billing companies will divide the market along three key factors in the coming years: the rate of increase for off-the-shelf products; the rate of development for prepaid voice and data systems that can handle millions of users; and the rate of development of systems that will allow operators to change prices without having to changesoftware.
Cellular operators want to provide a variable basket of services for different subscriber groups. To do this, they need billing systems whose pricing terms can quickly and easily be revised at a low cost. The billing companies therefore have to deliver systems that enable the operator to easily change the terms of their relationship with subscribers at the application level, not the software.
Amdocs currently has four kinds of systems: Amdocs Enabler; Amdocs Mobile; Amdocs Wireline for end-to-end solutions; and its traditional Ensemble system, which requires customization and is no longer marketed. Amdocs Enabler is the company’s answer to products that do not require customizing. The question is whether the Enabler can be installed without customizing, and if it can price data and content.
“Absolutely,” says Amdocs senior marketing director Darren McKinney. “The Enabler does not require customizing. It can definitely meet billing needs for content and data.”
Another burning issue is prepaid data and voice services billing for millions of users. Prepaid deals require real-time pricing of operations, since the cost of the transactionmust be deducted from the userin real time.
Prepaid users in Europe alone are expected to reach 60-70% of all users within two years. “The moment that all these users begin using data services, the operators are liable to face billing problems,” said a European cellular industry source. “Almost all the billing suppliers are relying on a gradual penetration of data services, giving them sufficient time to develop systems.
“At the moment, no billing supplier can provide a complete prepaid data solution. The solutions developed by small companies, such as Avian Communications, ProQuent Systems, Megisto Systems, and Tahoe Networks, are only partial. In order to provide effective pricing of prepaid data services, the rating engine must be able to simultaneously support tens of millions of events in real time. To the best of my knowledge, no billing company has been yet able to deliver a rating engine that can price data transactions by tens of millions of users in real time.
“Furthermore, the cellular sector now needs a combined prepaid and postpaid platform, and technology that will allow roaming by prepaid subscribers. In these two fields, too, I am unaware of any billing company that has a good solution for handling tens of millions of users. For now, the hosting operator (overseas) has no way of knowing how much credit is left in the user’s account.”
McKinney vehemently disagrees. “Amdocs Enabler allows the cellular operator to integrate the billing system on a unified prepaid and postpaid voice and data platform. Furthermore, Amdocs recently announced a new strategy, called Now-Paid, under which the users can decide whether to pay each transaction from their prepaid or postpaid account.”
“Globes”: What changes did you make to the rating engine so it could support prepaid data pricing for tens of millions of users, and does it work?
McKinney: “We installed a real-time processor in the rating engine. We debuted the Amdocs Enabler, Amdocs Mobile and Amdocs Wireline in February. We recently proved a high degree of scalability in performance tests with Sun Microsystems’ (Nasdaq:SUNW) servers. The tests were conducted on 30 million subscriber accounts. In tests for prepaid services, the Enabler processed over 3,900 transactions per second, including authorization, current customer balance and billing functions with a delay rate of onlya ten-thousandth of a second for 97% of the transactions.”
Another issue for prepaid services is advise of charge: the billing system notifies users about the cost of a transactions, and asks them if they want to go ahead. The e-commerce industry considers the software critical. McKinney says, “The Enabler supports advice of charge.”
One of the biggest problems with Amdocs’s older systems was their extensive, time-consuming, and costly customization. Custom-based systems force cellular operators to summon Amdocs’s programmers for the launch of every new service, and for every change in the basket of services and customer relationships. With other billing systems, by contrast, operators can quickly and easily change the system by revising its applications.
“Let us assume that an operator charges a fee for a music downloading service based on quantity,” explains a communications industry source. “At some point, the operator wants to lower the fee for volume, while simultaneously raising the price for songs in high demand. These are changes that must be made to the application, and that costs a fortune. However, many operators haven’t yet upgraded their networks, so this kind of billing system is not yet relevant. On the hand, all the industry players are ready.”
“Amdocs has three approaches to handle this,” says McKinney. “One approach is the installation of products (without customization). Our billing product is the Enabler, which can be expanded to the Amdocs Mobile. The Enabler allows the operator to reconfigure applications as necessary. There is no need to change the software. Other products are the PRM (partner relationship management), which distributes revenue among the content partners, CRM (customer relationship management) products, etc. Operators can change all of the products themselves, or in collaboration with Amdocs.
“The second approach is a product-based solution. The Enabler is at the core of this system, around which is built a customized solution in an external layer. Both the PRM and CRM products can be used as a product-based solution.
“The third approach is outsourcing. Amdocs products form a project’s foundation, while focusing only on the communications sector. The Amdocs Enabler, Amdocs Mobile and Amdocs Wireline can be a product,the basis for a solution,the basis for a product, or part of an outsourcing agreement.”
Does that mean that the Enabler is automatically suited for every operator’s system, without customization?
“When installing the Enabler, the operator's system’s existing interfaces, including the systems of other suppliers, must be taken into account. Since every operator has a different system,the Enabler must always interface with other systems. The second consideration is the operator’s internal business procedures and the specific services marketed. In order to customize the system to these procedures and services, Amdocs sometimes has to reconfigure the system. We make sure that the reconfiguration is as minimalas possible, by preconfiguring the product in advance, which saves time on-site at the customer.”
Conventional wisdom claims that because Amdocs products are written in Cobol, they cannot be changed without changing the language.
“Our older products were written in Cobol. However, we use C++, EJB, and other programming languages for our newer products. Instead of upgrading existing products, Amdocs reprogrammed its entire product architecture, while adopting the most advanced standards. We used C++, EJB and XML for the Enabler, Amdocs Mobile, and Amdocs Wireline. Amdocs also now offers open interfaces that can support new services.”
What is the breakdown of cellular operators’ demand for products and product-based solutions?
“In principle, we’re seeing rising demand for non-customized products. On the other hand, operators also need systems that can meet their growing and changing requirements. Large operators demand billing high performance systems that can support growing numbers of subscribers, but won’thurt the content partners' revenue.
“The demand for products and product-based solutions varies from place to place, and between small, medium, and large operators. Small and medium operators tend to prefer non-custom products, while large operators prefer product-based solutions. In Europe, where there are more small and medium operators, more operators prefer the product approach. In the US, which mostly has large cellular operators, more customers prefer product-based solutions. We see demand for non-custom products among US operators. The large operators’ billing systems are large and complex, so they sometimes want only a supplementary product, which is usually an non-custom product.”
Products and systems and their differences
The Amdocs Enabler comprises four systems: a rating engine that reads and prices the subscriber’s transactions; a billing system that prepares the bills; a products catalogue that defines the prices for services; and a mediation system.
The Amdocs Mobile provides an end-to-end solution for cellular operators. The Enabler is at its core, surrounded by a service management system, a resource management system, collection systems, an accounts management system, a customer management system, a provisioning engine, and a CRM system.
The Amdocs Wireless provides an end-to-end solution for fixed-line communications operators. Most of its systems are similar to those in the Amdocs Mobile, while a few, such as the provisioning engine, are different. The systems intended for fixed-line communications must also be able to meet the needs of next-generation fixed-line networks, such as a range of XDSL modems, VoIP cable modems, etc.
The PRM system handles the division of revenue among the cellular operator’s m-commerce content partners. The problem in dividingrevenue is that it is based onincoming datafrom the portal servers that handle the transaction. When a subscriber carries out a transaction outside the portal, it is difficult to obtain the details of the transaction.
“Billing subscribers and dividing the revenue from transactions carried out outside the portal is a difficult challenge for all billing providers,” says McKinney. “I agree that the billing provider has available information within the portal, and a lot less information when a subscriber leaves the portal. I believe the operator can obtain information on transactions done outside the portal by partnering with content and commerce providers outside the portal.”
Lets talk about upgrading. To what extent can Amdocs systems be upgraded n a modular manner, while minimizing customization?
“The Enabler can be replaced whenever a new version is launched. The product-based solution can be upgraded in two ways: either by removing the product at the core of the system, and installing the new version; or by changing the solution’s external layer, through customization. So long as these customizations are carried out only in the external layer, the product-based system can be upgraded in a modular manner, i.e. without the need for a special customization. However, the modular replacement could be problematic if changes were made to the product during the system’s life.
“As for the upgrading methods, the system can be upgraded by adding functions, i.e. initially installing the Enabler, and later adding Amdocs Mobile components. Another way to upgrade the system is by installing a new system that operates in parallel to the operator’s existing system. A third way is to install a completely new billing system. We usually propose the Amdocs Mobile to operators who want this option.
“In general, when a customer wants to upgrade the Amdocs Ensemble, we convert to a product-based solution. The Enabler can also be added to the Ensemble as a parallel system. Ensemble components can also be replaced with Enabler components, and Amdocs Mobile can be added.
“A decision to upgrade is not always based on a wish to upgrade to the next generation. An operator sometimes wants to upgrade the system because it can’t support more subscribers, or there are regulatory changes that the existing system can’t handle, etc. It’s usually a combination of factors.”
Linking parallel systems is not an easy challenge. The systems must share information and there are often breakdowns that cause a loss of information.
“The Enabler was specifically designed to be able to interface with other billing systems, both Amdocs’s and other companies. It can also be installed in parallel with the Ensemble.”
Published by Globes [online] - www.globes.co.il - on April 7, 2003