One of the most interesting and important business changes in recent years has been the move towards subscription-based services and content. The subscription economy was growing before COVID-19, but the pandemic has led to an acceleration of this trend. According to UBS, the subscription economy will be worth a whopping $1.5 trillion by 2025. This trend has impacted the way we consume products, software and services, and has now started to enter the world of enterprise software. Thus, the ways that vendors license and price software will consequently drive the move towards Software as a Service (SaaS).
In this article, I want to talk about how Communication Service Providers (CSPs) are making the move to SaaS and specifically how this is impacting the business-critical CSP monetization systems.
SaaS and what it means for CSPs
SaaS refers to how software is licensed, managed and procured from a software vendor. SaaS is a licensing and delivery model where the software is paid for on a subscription basis and is centrally managed by the SaaS service provider.
This is significantly different from the traditional way in which CSPs buy and manage their software. For CSPs, this means that they no longer need to invest huge amounts of capital upfront to procure software, and they are no longer responsible for hosting and the ongoing management and maintenance of the software, nor are they required to pay a vendor significant sums for ongoing managed services. Moving to a SaaS model also enables greater scalability and flexibility so CSPs can free up resources to better serve customers and focus on transformation.Traditionally, CSPs would purchase the software and store it in their environment, but with SaaS, all the operational management aspects are done by the vendor and they just pay as they need based on how much of the service they consume.
The telecommunications industry has been slow to adapt
As with several technology trends in recent years, CSPs have been reluctant to move to SaaS. Some of the key drivers for this are their concern for business continuity, data privacy and security, amongst other things. But CSPs are now beginning to realize that they can leverage the cloud to offer their customers the services that they want and particularly with the advent of 5G, and the ability to create customized 5G services, SaaS is becoming increasingly important.
Critical areas of the business, such as OSS and BSS systems have proven much more difficult to transition to cloud-native architectures and SaaS. This is partly caused by the complexity of the legacy technology stacks over decades of evolution, but the biggest barrier is the highly customized nature of these stacks.
The tide is changing for monetization systems
Until recently, there has been a reluctance to move monetization systems to the cloud, but the tide is changing and many CSPs are now willing to deploy monetization systems on private and public clouds. As 5G and its associated benefits such as network slicing become a reality, and CSPs want to move beyond connectivity to deliver new, innovative services, this willingness will only increase. The fact that CSPs are under increased pressure to continually reduce costs and that customer expectations continue to grow will further drive CSPs to move their critical business systems to SaaS.
New services create more complexity for monetization
One of the key capabilities that is enabled through the advanced 5G network is the ability to orchestrate and monetize network slices. As a result, these services must be able to be easily and efficiently created, and allow CSPs to then rate andcharge for the services using dynamic monetization models. When CSPs orchestrate network slices, it adds more complexity to monetization system and so having a flexible, cloud-native monetization system in place is crucial, with SaaS being a key element. The SaaS model for monetization systems means that you can offer services to a "new slice" or a "new vertical" more easily because you can onboard those new products and devices more simply and directly than through a traditional licensing model – and according to Analysys Mason, SaaS is estimated to be the delivery method for 21% of BSS deployments by 2025.
The benefits of SaaS are far-reaching
The same reasons that CSPs were hesitant to move, particularly the complexities of the system, are going to be a benefit after. By the very nature of SaaS, there is no longer a need to customize the systems for specific operators like before. SaaS also makes sure that the platform is constantly updated to the most modern architecture so that all features are always available.
CSPs will gain faster time to market, rapid deployment of systems, and new capabilities as well as out of box capabilities and functionalities. The SaaS model also provides the benefits of scalability of public clouds, availability and better security.
Done right, SaaS will also eliminate the need for risky and cumbersome upgrades, delivering significant savings when it comes to the total cost of ownership (TCO), and offer a worry-free “as-a-service” model.
The SaaS model is here to stay, and those CSPs who embrace it, especially when it comes to monetization systems, are likely to see the greatest rewards.
