Who ate all the pie? The healthy eating approach to M2M

Sitting listening to one of the speakers whilst attending the ‘M2M: Beyond Connectivity’ seminar hosted by European Communications this week, for a moment I was reminded of the classic football chant – “Who ate all the pies?”  The general consensus is that the chant was originated by Sheffield United supporters at the end of the 19th century and aimed at their 140kg goalkeeper.  Not sure he would be playing in the top flight nowadays!!

So what was it that led me to draw a parallel between an overweight football player and M2M?  In the presentation by Ansgar Schlautmann from Arthur D. Little, an interesting and revealing view of the holistic value chain for smart solutions was given.

 

 

 

The individual players in the spread of total revenues need not however be concerned by the splits shown; even in fact for the CSPs who see their connectivity portion with a distribution of somewhere between 15-20%.  With the anticipated value of the M2M market projected to reach approximately $86 billion[i] by 2017, even this slice of the pie should be enough to get their teeth into.

The analogies associated with balanced nutrition and how the industry will ensure that each participant will get its own healthy share can be drawn in a number of ways, so let’s consider them.

Use by

If we have to be honest, it’s a good thing that the M2M industry has come to us with a long shelf life.  It’s been a number of years to even get us to this point where we see on the horizon a potential explosion of new product/service offerings being crafted for the market.

There will always be those people who want to be early adopters and will derive the niche, well crafted packaged service for their market, but surely one of the keys here is to just start thinking M2M in all areas of our lives, we need to start using it, to start realising the potential it can bring to daily routine where in a sense – decisions are made for us.  This isn’t to a Skynet level, albeit the goal there was for speed and efficiency and to reduce human error – even though M2M can bring us that.  To reap the benefits of M2M, we need to build it, we need to use it, when by?  The sooner the better.

Best before

Even though we can get excited by cars that will arrange their own services; highway maintenance being done based upon vehicular data relating to potholes; smart cities that will see routine maintenance programmes scrapped for self servicing provisioning and so on – the reality is we are a little way from reaching this best before point.  Now I say best before not in the context of a product/service will expire in it’s usefulness at some point in the future.  I mean with regards to when we will see offerings come to us as consumers that will encapsulate all of the richness that M2M could potentially bring to us.  It is getting closer, advancements are being made in all sectors of the industry, but to reach a best before point – I don’t see that happening until we see wholehearted adoption within the verticals themselves.

Ingredients

Having the right ingredients, i.e. providing energy, protein, carbohydrates etc. in the right quantity, quality and packaging in many cases are a key factor when we hit the supermarket or the online grocery sites.  As consumers in this M2M arena, will we be so different?  We want well packaged, well balanced, quality products and services.  As participants in this M2M value chain, the balance will come from the blend of services that can be offered; the partnerships that are built; being able to craft simple, yet wholesome solutions to the consumer flavour of the day.

Martin

Head of Billing Practice EMEA
Martin has over 13 years’ experience working with BSS systems in the telecommunications industry. Moving from a pure financial accounting background into business systems when joining Nokia Telecommunications, he specialised in ERP and BI implementation and operational support. Shifting direction to focus predominantly on billing systems, he has extensive knowledge in retail billing through his time at Convergys as a Business Consultant. Joining Subex in Feb 2007, he has in excess of 5 years’ experience of specializing in wholesale management, covering partner settlement, route optimization and cost management – where he now heads up the Billing Practice.

Why do Telcos settle for less?

What makes a Telco settle for less? Is it the budget, fear of survival in a highly competitive market or knowledge and skill issues?

Bangladesh recently opened up the Interconnect landscape with 21 new ICX and 22 new IGW licensees entering the fray. This, without doubt, has fragmented the entire Interconnect market and has put significant pressure on the incumbents (to fight emerging competition) and for the new telcos (to have a viable business case for break even and eventually survive).

In a recently concluded InterConnect Conference at Bangladesh hosted by Subex, I had the opportunity to interact with a wide range of audience – CXOs, consultants & IT personnel. While it was acknowledged that a billing system is important to start the operations and convert “usage” to “cash”, it was evident from the discussions, that price was the driving factor in deciding a billing platform and to that end operators were scouting for “low cost” billing systems or looking at developing it in-house. Severe cash-flow issues, as the roll-out along with statutory payments to the regulator for obtaining and maintaining the license, was proving to be very costly. Hence cash-flow and total cost of ownership (TCO) were the main contributing factors to look at a low-cost billing option. The new telcos, in addition, were also exposed to the following risks:

  • Survival : Accurate and prompt billing will be a significant differentiating factor in the highly competitive market
  • Agility : As competition intensifies they need to be flexible to adapt to market needs and offer innovative products and services at the shortest possible time
  • Revenue leakages : Bangladesh as a market is highly prone to fraud and as per the regulator more than 10% of the revenue is lost due to illegal bypass

So, how are the telcos going to remain agile, competitive and eventually break-even at the shortest possible time? Do they have to settle for less and allow the forces of the market to dictate the future?

Subex unveiled a cloud offering for the Interconnect operators in the roadshow. It gives the best of both the worlds – low cost and superior technology, and help the telcos be ready for the future. The cloud model mitigates the business risks and provides the following benefits to the ICX and IGW:

  • Low cost of deployment & operations : With a TCO less than 30% of a licensed/in-house model and completely managed by experts, and CapEx requirement lesser by 50-60%
  • Low commitment : Volume based pricing to fit the business needs and scale as the business grows
  • Minimal risks : Easy sign-on and sign-off to the cloud model
  • Ready to launch: Pre-configured application requiring minimal customization (about 20%) to suit telco specific needs
  • Minimal domain knowledge: With service provider completely managing the core activities, knowledge and resource requirements from Telco are minimal. They are already constrained with resources and those can be used for growing their business
  • Flexibility : The cloud model can very easily extend into Revenue assurance, Fraud Management, Analytics for future

Naturally the excitement was evident when such an option was presented to the telco representatives. The only objection was around security (which was expected) and security is very easily addressable with the right technology and stringent processes.The “best-in-class” solution is available on a “best-in-class” service model which suits the pocket and addresses the business risks. It was time for the operators to go back and “relook” at their business case.

After all, when they have a great option, why do they have to settle for less?

The Madness of New Technology!! NFC – Nightmare For Consumers?

History tells us that safety and security are afterthoughts. From the Gold Rush at the end of the 19th century to the technology Gold Rush at the end of the 20th, the rush for riches was so great that the idea of security was thrown to the wind. Revenue assurance only came to the Mobile table once the rush for customers had subsided and the focus moved from top line revenue to bottom line margin.

It is happening again. As the rush for market share of the payments market heats up, companies large and small are inventing new ways of transferring funds – paying people – easily. This aim for easy to use, attractive products creates a potential nightmare for consumers; easy is seldom secure. The whole concept of mobile wallets, while attractive, means that when someone steals your phone, they steal your wallet too – worse, you can’t phone for help! It is not just NFC that is at ‘fault’ here, although it is an obvious example. If you have your credit card or bank details stored in a mobile phone you have a monetary instrument and that is attractive to Bad Guys.

The potential of NFC is enormous. It will enrich and enable the whole shopping/living experience of millions of people and will create opportunities for operators and third parties that we can only imagine. It is the difference between shopping in a warehouse and walking the aisles of Macy’s or Harrods.

For a moment, though, let us step to the Dark Side. As you walk into the store, your phone lets the store system to pick up your details as you walk inside its co-ordinate boundaries. Google have quietly patented a face recognition technology that enhances this ability. No records exist, until a transaction takes place, but when you walk through the door into the store, you have opened the door into your phone. This means that your phone, and therefore your wallet, can be cloned. A Disgruntled Shop Assistant could potentially steal your details or there may be a Bad Guy in the store with you, and it is possible for him to clone your phone while simply standing close to you.

Another threat is the excellent concept of the QR code or NFC tag. Again, they are easy to produce – three clicks and the means to produce are in front of you. Point your phone at a QR code or NFC tag and it is possible, easy in fact, for someone to take control of what happens next. They could have designed the code so that you are re-directed to a site that is fizzing with malware, that can empty your phone of all its information, sends this to a clearing house and on to other Bad Guys. The very ‘connectedness’ of the ubiquitous mobile device could potentially be harnessed to launch Distributed Denial of Service attacks of unprecedented scale. Unlike having your ‘wallet’ stolen it is likely that you will not even know that it has happened. And this gives the Bad Guys a real head start. You will not know when it happened, who did it, and, frankly by the time the authorities are involved the ‘who, when and where’ will be entirely academic

As with the new acknowledgement that people need educating about online security, it is time that we take a very serious look at the security of new technologies that are making payments easier. There need to be standards and accountability, as there are in the credit card industry.  If your credit card is stolen the liability lies with the credit card company – as long as you report its loss in a timely manner. Not so, yet, with the phone company – or if so, accountability is patchy at best. If your phone is stolen and you receive a huge phone bill as a result of someone else’s online shopping spree, the phone company has no liability and it is their discretion alone that will let you off or not.

There are some ideas emerging. Many of them revolve around a second stage authentication and one of the most promising is that when you use your phone to pay, a photo of you will appear on the terminal in the store. This works fine as long as a) there is a photo of you on your phone and b) your kids have not borrowed your phone!

As with any Gold Rush that can create riches and a better life for consumers, security is likely to remain an afterthought. But in this connected world, where one person can steal the identities of 100 million others, this is no longer acceptable. There are too many people, too much money at risk. We need to have security built in.

John Brooks

Vice President – Product Management – John Brooks serves as the Vice President of Product Management in Subex. He has over 26 years of experience in Telecommunications, spanning Fixed, Mobile, Data, and Video technologies. Within the industry Mr. Brooks was a board member for the GBA, founded the TM Forum Fraud team (authoring the first International Fraud Operations and Fraud Classifications guides), and now leads the TM Forum Network Asset Management team, focusing on transformative best practices for SDN/NFV operations. Over the years Mr. Brooks has served as an Advisory Board member for a prominent technical university, and has spoken at over 50 industry events and authored numerous papers on topics spanning IoT, Digital Disruption, Big Data, and Enterprise Risk Management. With Subex (formerly Connexn/Azure) since 1999, he has directed over 40 successful Cost, Revenue, and Business Optimization engagements at over 24 top-tier carriers globally, including AT&T, America Movil, BT, Vodafone, and Verizon.

Why inline fraud management is necessary to combat POS Frauds?

Over the years Fraud Management teams have been more reactive in nature and Frauds were usually detected once the event has occurred and the losses are incurred. With the revenues from the traditional services such as Voice & SMS crumbling down and operators looking for newer avenues to sell products and services, it is essential that the wafer thin margins are well protected. This has also forced the Fraud Management teams to be more proactive in nature.

One of the key focuses of being proactive is to prevent Fraudsters from entering the network. Fraud protection at point of sales stage has got an increased focus in the recent years. CFCA Fraud survey report of 2011 estimates global Point of Sale fraud at almost $5.5 billion. One other startling fact reveals that UK Mobile Operators lose £136M annually to fraudulent transactions at Point of Sales.

Some of the traditional challenges at Point of Sale include Subscription Fraud and loss due to Handsets being bundled to subscriptions. However with 4G and data heavy environments coming into play there would be more products, services and content sold over various sales channels such as Web Stores and Retail Centers.

To meet such requirements Fraud Management systems have evolved from being just Near Real Time systems to Real Time Inline systems which can integrate to various Sales Channels. On receiving the orders the system evaluates various order attributes such as Location, Subscriber demographics, Type of order, Type of Retailer and evaluates whether the order is genuine or not.

If an order is found suspicious, the request can be routed through various workflows within the system such as generating an alert for analyst approval or declining the order directly. Fraud Management system should be flexible enough to add new rules and workflows as the

new products are launched by the product teams. Behavioral profiling can be also used to track and monitor suspicious behavior patterns on the orders that have been placed.

Benefits of proactive and inline fraud management is unchallenged. Banking & Payments industry has been practicing these for a long time. By configuring and fine tuning the rules over a period of time it would be possible to detect and prevent majority of Fraud events. One of the recent implementations of Inline Fraud Management for Subscriber Acquisition helped save the operator nearly 2 Million $ in losses and it was observed that Fraud Hit ratio was about 60%. It was also noted that the Fraud Hit over the weekends where as high as 100%. However care has to be taken during such an implementation that only confirmed fraudulent orders are directly rejected by the system as any rejection of genuine orders can give a direct blow to Customer Experience.

To download infographic, click on the link: Inline Infographic

Nithin

Senior Consultant – Nithin has more than 6 Years of experience in Fraud Management. He started his career as an Implementation Consultant with Subex Ltd and has been part of many Fraud Management implementations across APAC & Middle East. Currently working as a Consultant for Business & Solutions Team, Nithin specializes in new areas of solution development for Fraud Management such as Mobile Money, Data Frauds etc…

Chasing the Elusive Business Case

Let’s say that you’re ready to take the plunge and  launch a business optimization project to make the world a better place.  You’re convinced that the benefits of the project will be quite compelling.  Who could argue the value of reducing revenue leakage, mitigating fraud risk or recovering stranded network assets?   There’s only one thing standing between you and your dream of making a significant impact to the bottom line—a winning business case!

In times past, the decision to pursue a new project was generally driven by a combination of need and budget.   If there was a manifest need, and appropriate budget had been allocated, then it was generally a matter of stack-ranking solution alternatives and picking a winner.   Ah, for the good old days…  today’s reality is that Opex and Capex are tightly managed and projects need to sink or swim based on rigorously scrutinized financial metrics such as NPV, ROI and Payback Period.    Business optimization projects that remove costs from operations, improve the leverage of Capex dollars or manage risk more effectively tend to score quite favorably against these metrics compared to many other candidate projects competing for enterprise budget allocation.

Which brings us back to the business case.    Years ago, when I worked for a major North American operator, the business cases I developed to get IT projects over the line were founded on “guestimates”.  Remember those?   They were cool because everyone knew that once the budgeting exercise was done, and the project approved, no one was going to come back and hold you accountable.   Remember what I said about the good old days?   In today’s business climate, defending a business case is akin to defending a master’s thesis.

In our Managed Services practice, I have spent a lot of time coaching clients on their business cases.  Before you read this as “here’s how to overstate the case to bump it to the head of the line,” think again.  Executives and finance departments are too savvy.  Plus, overstating a case ultimately serves no one’s interest.  My approach is to gather the best possible information to produce a solid and realistic case.  Look at the business case as a tool—it can help ensure that you are pointing scarce resources in the right direction and may indicate that your original direction needs to be changed.

Based on my experience, a well-constructed business case should:

  • Illustrate not simply costs and benefits but the expected timing of each.   It may be just as important to understand how long the project will be generating negative cash as the 3-year NPV.
  • Garner buy-in.  No, not just from the executive committee who will evaluate the project, but from the impacted stakeholders.   Do the groups most impacted by your projected Opex or Capex savings agree with your assumptions?  When they line up behind you, they can be a powerful force to help promote the benefits of the project.
  • Avoid “MBA math”, i.e. a small percentage of a large number is still a large number—look what we can save you!   Benefit calculations need to be specific, as granular as possible and have defensible and traceable assumptions– ideally using data sampling techniques or a limited-scope assessment.
  • Use a WACC (Weighted-Average Cost of Capital) that is approved by Finance for calculating discounted cash flows.
  • I could go on, but you get the idea…

Once you have completed a draft of the business case, there are other questions I suggest you consider, including:

  • Do I have Opex or Capex dollars to spend?
  • Does the project need to be self-funded?
  • How is the case improved if there is limited up-front investment or if I spread out my payments?
  • Do I need an operational assessment to derive my business case assumptions?
  • Will my solution and/or services partner stand behind the numbers in the business case and offer to put some “skin-in-the-game”?

Admittedly, these are leading questions.  Managed Services can influence the answers to these questions in a significant way and may just give you the flexibility you need to get the business case, and your project, over the line!

Andy Jacobs

Director of Business Development for Network Analytics
Andy has 20+ years of experience in engineering management, business operations and IT, primarily with Tier 1 operators including Level 3, MCI and GTE. His responsibilities included leading IT development teams that built mission-critical network management, provisioning and inventory systems with thousands of users. Prior to joining Subex, Andy was a Senior Manager overseeing a Data Governance organization at a major Internet Services provider. Andy graduated from the University of Pennsylvania with degrees in Electrical Engineering and Economics (Wharton). He holds an MBA from the University of Colorado.

Press & Analyst Contact

Sandeep Banga
E-mail : sandeep.banga@subex.com