M2M Revenue management - Transforming the M2M promise into profit
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The document discusses the challenges faced by 'Drink & Snack Anywhere Ltd' in implementing smart vending technology due to high ownership costs and the complexities of the M2M (machine-to-machine) value chain. It emphasizes the need for communication service providers (CSPs) to transition to a business model that supports small and medium enterprises and end consumers by enabling effective M2M applications. Furthermore, it highlights the importance of robust revenue management solutions, such as nginius-chargingTM, to address the monetization challenges in M2M services.
M2M Revenue management - Transforming the M2M promise into profit
- 1. | 16 | Dimitris Paschalis (Principal Product Marketing Engineer, Telco Software, Intracom Telecom) Vangelis Foukalas (BSS & IN Manager, Telco Software, Intracom Telecom) Article Introduction ............................................................... “Drink & Snack Anywhere Ltd”, trading as DSA, is a fictional medium size vending machine operator with 300 machines installed in various sites, scattered across several districts of a Balkan country. DSA operates 12 vans travelling around the area filling, maintaining and supporting, the vending machines. Each van follows a specific route every day carrying stock of all sellable products since there is no way for DSA to know which machine has run out of what item. DSA company founder and CEO came across an article about “smart vending” while surfing the internet. The article was addressing the technology that allows vending machines to communicate directly with a Smart Vending Application in real time in order to issue refill requests for one or more specific products or report malfunction. The topic sounded very interesting, especially when he realized that the smart vending application, after receiving a machine refill request, could locate and advise the filler (DSA van/ employee) who is closer to the site. M2M Revenue Management Transforming the M2M Promise Into Profit The CEO shared his thoughts with the DSA managing team and they decided to get in touch with several smart vending application providers to explore the features that would help the company to minimize operational costs and revenue leakage. The DSA management team instantly and clearly figured out the potential of the machine-to-machine (M2M)technology.Itisbroadlyrecognized today that the expansion of IP networks across the world has made far easier for M2M to connect pervasive machines and fuel the next wireless revolution. However, very soon DSA managers real- ized that the ownership cost of such a smart vending application was far beyond DSA budget. Besides, they were really shocked to find out that they needed an additional investment on a vehicle track- ing application for their vans. In addition they should have to deal with a complex supply chain (mobile operator, M2M hard- ware vendors, M2M application develop- ers, aggregators, integrators, consult- ants) the maintenance of which DSA could not afford. DSA discouraged and decided to postpone any further activity related to smart vending technology for the time being.
- 2. | 17 | DSA story reveals the main setback in M2M moving ahead today and brings up the necessity for shifting to a new business model. In this model the key stakeholders of the M2M value chain shall partner in order to create and promote M2M products which are attractive not only to large enterprises but also to a vast number of Small & Medium Enterprises (SMEs) and the emerging market of end consumers. The Role of CSPs in the M2M Value Chain ............................................................... In the era of M2M, Communication Service Providers (CSPs) are limited to provide only the required connectivity services and their revenue comes from just wholesaling data, suffering from an ever decreasing Return-on-Investment. However,CSPsaredestinedtoplaythekey roleintheemergingsupplymodelandthat role is increasingly recognized by all M2M business stakeholders today. Not only do CSPs enjoy the potential customers’ reputation and maintain a database of the target market but they also possess the necessary knowledge, experience and infrastructure to provide the M2M service end-to-end and effectively manage the value chain. In spite of this potential, CSPs in order to play that key role, must efficiently address the current technology limitations. Currently, CSPs are enabling M2M through platforms that allow M2M vertical applications to access the M2M devices (e.g. vending machines). Beyond doubt, such platforms constitute a valuable tool-set by supplying the necessary connectivity, security and many times SIM/Device management and M2M Portal capabilities. However they are far from providing an end-to-end M2M enablement solution, since they offer limited or no M2M oriented functionality in the areas of Customer/Partner Management, Product Catalog and Rating/Charging/Billing. TheM2Mverticalapplicationsareenabled through CSP connectivity and SIM/device management capabilities and provided to the M2M Customers via the following supply channels: • Business-to-Business (B2B) Directly to enterprises that acquire and use the service for their day-to- day business (e.g. transportation companies) • Business-to-Consumer (B2C) Directly to individuals that acquire end consumer oriented service (e.g. vehicle tracking for theft control) • Business-to-Business-to-Consumers (B2B2C) Service provided through a third-party (e.g.MVNO)oracquiredbyanenterprise, like in B2B, but it is consumed by its end customers (e.g. Utilities) The Critical Success Factors for CSPs In M2M business no deal is really typical and nothing is certain but the underlying costs.TheCSPs,astheprimeM2Mservice providers, will have to address several factors that they are critical towards successfully facing the major challenges of M2M. The three most important factors are: 1. Manage the M2M service end-to-end M2M service delivery requires two or more partners working together efficiently since no one owns all the services that make up total value being delivered to a customer. The converged delivery of such combined services as a valuable offer to the customers is vital for the success of M2M and requires flexible and robust end-to-end service management. Equally vital is to provide M2M custom- ers with self-care access to various in- formation and reports regarding their accounts and subscriptions. 2. Cope with the M2M monetization As it is already mentioned there is no typical deal in M2M business today. For example, the data tariff plan for energy sector related M2M applications, which exchange huge volume of data with the M2M SIMs/devices, may not be suitable for vehicle tracking case where the M2M SIMs/devices communicate very frequently with the vehicle tracking application passing a very small amount of data. Nor is the connectivity cost of smart vending is the same with healthcare which requires 100% service availability. Even in the same domain, an M2M application with advanced features than the basic ones should be priced differently. The complexity increases if one considers that new metrics must be supported and the fact that many CSPs today maintain different charging and billing systems for their different technologies. 3. Share the revenues generated within a complex value chain The added value and the responsibility of each partner/stakeholder can vary not only from domain to domain but also in projects within the same domain. For example, there is a huge difference installing & supporting Telematics units in several taxis for a medium- sized operator that serves a single city and providing the same services to a large transportation company with a fleet of trucks that travel abroad. The revenue sharing models and processes may become extremely intricate due to the need of Service Level Agreements (SLAs) across the supply chain. The secret of maintaining resilient partnerships lies with the fair distribution of profits and risks through one or more partner agreements. Nevertheless, such mission is neither easy nor straight forward. The Added Value of a Robust M2M Revenue Management ............................................................... As it is already discussed, there are several limitations in the M2M enabling technology of today. If we only needed a single term to describe what is missing from the current technology towards fully addressing the above CSFs that would be revenue management and the underlying business processes & entities to support it. Such a revenue management solution will comprise the following functional areas: Communication Service Providers’ key role in the emerging M2M supply model is increasingly recognized by all M2M business stakeholders. In order to succeed however, they must efficiently address the challenge of M2M apps monetization.
- 3. | 18 | • M2M Customer & Subscription Management A comprehensive Customer Manage- ment system enables an M2M solution to become Customer-centric by shifting the business importance from the SIM/ Device to the Customer level. Such mod- ule must provide the necessary multi- tenancy to support the various B2B2C models. The M2M Subscription lifecycle should be accurately managed since it has a direct impact to the service availability. Furthermore, the service provided to the M2M Customers must be efficiently priced. • M2M Rating & Charging Most M2M platforms available today rely on the existing CSP technology to provide the rating & charging function- ality. However that infrastructure is suf- ficient only for the Telco business and therefore there is a need for a M2M ori- ented Rating & Charging component. Such a component should provide the tools to not only model rating plans of multiple and novel M2M oriented metrics but also produce all types of recurring and non-recurring charges that in many cases, unlike Telco, are parameter dependent. The latter is necessary to hide M2M complexity from the existing, telco oriented, billing/ invoicing systems of the CSPs. • M2M Product Catalogue An M2M oriented Product Catalogue must be able to support products from different domains with diverged requirements and this is the main reason why traditional Telco oriented product management is not adequate. An M2M Product Catalogue must provide comprehensive M2M Product performance related reporting. Those reports must be accessible on-line by the M2M Partners through the M2M Portal. • M2M Partner Management The effective management of multiple partners and partner agreements ensures fair distribution of revenue and risks across the supply chain which is really the key to profitable M2M business. A M2M Partner Management module must be powerful enough to maintain Revenue Sharing Policies and Service Level Agreements across a complex supply chain. These policies and agree- ments are subject to frequent changes due to the fact that the M2M market has not yet reached the level of maturity re- quired for specifying best practices. Introducing NGINius-Charging™ for M2M ............................................................... NGINius-Charging™ for M2M is one of the first, flexible, cost effective solutions addressing end-to-end the revenue management needs of M2M. It is actually an evolution of the Intracom Telecom’s Rating & Charging product for Telco and has been modeled to facilitate the monetization of all vertical and horizontal1 applications. The core system provides comprehensive, M2M oriented, Product, Customer & Partner Management and a number of rules based engines to support flexible Rating/Charging and Revenue Sharing both online and offline. Also, depending on the capabilities of the M2M platform, NGINius-Charging™ for M2M may provide the following add-on functionalities: • M2M Portal • Order Management • Provisioning • M2M Gateway & Policy Management NGINius-Charging™ for M2M maintains a powerful data model that allows individuals and enterprises to be both M2M Customers and Partners enabling flexible billing/settlement and comprehensive reporting. Further, its Partner Management module can define and manage revenue sharing policies and SLAs at Product, Partner or both levels. NGINius-Charging™ for M2M is designed around the concepts of multi-tenancy, linear scalability and interoperability. Those capabilities make it the ideal monetization engine and revenue management solution for M2M platforms since it can seamlessly support all the B2B, B2C and B2B2C models across all M2M domains. For more information contact us at sales@intracom-telecom.com 1 Vertical applications support a single M2M function (e.g., vehicle tracking for the fleet management of a transportation company). Horizontal applications support multiple, combined M2M functions (e.g. smart vending and vehicle tracking for the end-to-end logistics management of vending machines operators). Telecom NetworkVending Machine Vehicle M2M Applications M2M M2M Vending Light Transport Premium M2M Platform