2015 Global Stratecast CSP Billing - Interconnect ...€¦ · market. All are expressed in US dollars. The billing report series covers the period 2015– 2019, with 2014 as the base

2015

2015 Global Stratecast CSP Billing - Interconnect & Settlement Market Leadership Award

Contents Background and Company Performance .................................................................... 2

Introduction ................................................................................................... 2

Industry Challenges ......................................................................................... 3

Telarix ........................................................................................................... 4

Market Leadership of Telarix ............................................................................. 6

Conclusion ..................................................................................................... 9

Significance of Market Leadership .......................................................................... 10

Understanding Market Leadership .......................................................................... 10

Key Performance Criteria ..................................................................................... 11

The Intersection between 360-Degree Research and Best Practices Awards .................. 12

Best Practices Recognition: 10 Steps to Researching, Identifying, and Recognizing Best Practices ........................................................................................................... 13

About Stratecast ................................................................................................. 14

About Frost & Sullivan ......................................................................................... 14

BEST PRACTICES RESEARCH

© Stratecast | Frost & Sullivan 2015 2 “We Accelerate Growth”

Background and Company Performance Introduction

The Stratecast Operations, Orchestration, Data Analysis & Monetization (ODAM) Global Competitive Strategies team is preparing a major update for its report series covering the communications service provider (CSP) end-to-end monetization solution market as shown in the figure below, which includes end-to-end billing functionality.

Suppliers that deliver monetization functionality in one or more of the following categories are included in this report series based on the following functionality sectors:

Billing Mediation o On-line and Off-line Mediation (in support of monetization)

Rating & Charging and Other Core Billing o Rating & Charging, Balance Management, and Customer Notification o Invoicing, Receivables, and Other Core “Back Office” Billing Functions

Policy Management o Policy Rules Function

Interconnect & Settlement and Partner Management o Wholesale Interconnect & Financial Settlement (CSP to CSP) o Partner Relationship Management (CSP to Other Partners) o



Stratecast will soon release five reports that address a market share analysis and long-term forecast for each of the functional portions of end-to-end CSP billing. Already published, the first assessment report in this series is a market share analysis of the overall billing market.1 The other four market sizing reports, as listed previously, will be released by early 3Q 2015. An additional report, to be released in the second half of 2015, will provide an in-depth strategic analysis of the drivers and business trends affecting each component of end-to-end CSP billing. Another report, scheduled for publication in late 2015, contains a detailed profile and capability assessment of the more than 100 suppliers that provide some level of billing functionality. Industry Challenges

The Stratecast global CSP billing market share report series provides a five-year revenue forecast and a base year market share analysis for the end-to-end billing market. It also provides the same analysis for each of the major functional components that define this market. All are expressed in US dollars. The billing report series covers the period 2015–2019, with 2014 as the base year. As in previous Stratecast forecasts, each market share and forecast report in this series uses the revenue generated by supplier offerings in one or more of the six related global billing segments including:

Part 2 – Billing Mediation Part 3 – Rating & Charging Part 3 – Other Core Billing (invoicing, collections, payments, accounts receivable,

promotions management, loyalty management, and journaling) Part 4 – Policy Management (rules function only) Part 5 – Interconnect & Settlement Part 5 – Partner Management

In the soon to be released Stratecast report, Global CSP Billing 2015 Edition Part 5: Interconnect and Settlement and Partner Management Market Forecast and Market Share Analysis, Stratecast examines the interconnect & settlement market in greater detail. Telarix leads in market share for the global CSP interconnect & settlement market, with approximately 19% of this market. The next four competitors collectively address 49% of the market, with Company 1, Company 2, Company 3 and Company 4 accounting for 18%, 12%, 12%, and 7% of the market respectively. For the 2015 edition of our billing report series, Stratecast interviewed more than 100

1 See recently released Stratecast report OSSCS 16-04, Global CSP Billing 2015 Edition Part 1: End-to-End CSP Billing Market Forecast and Market Share Analysis, May 2015.



billing suppliers that address one or more of the above mentioned market segments. Stratecast revenue estimates include vendors with software solution offerings that generate revenue from license fees, maintenance fees, services associated with the initial installation and configuration of a solution, service bureau fees, cloud services fees, and installed solutions managed by a supplier. Internal CSP spending on business support and billing processes attributed to internal work teams or assistance from professional services consulting resources is not included. In addition, hardware-related revenue and revenue generated by system integrators or companies without their own billing solutions is not included. Professional services fees for integration of new solutions with existing systems and updates to CSP business processes are also not included in the forecast. All revenue forecasts are developed by analyzing multiple sources including information supplied to Stratecast through a direct market questionnaire, information from public sources, direct interviews, and raw market data. The analysis is developed from 2014 company-level revenues, projection of future earnings, global financial market insights, as available, and our strategic acumen concerning the billing functions. To obtain estimated revenues for this five-year market forecast, Stratecast uses a modified Delphi method for revenue analysis. Factors such as known deployments, publicly and privately reported revenue, customers served, press releases, financial reports, estimated cost of solution deployments, and related information are analyzed by a multi-person analyst team, each working independently, to estimate each vendor’s 2014 revenues, where such was not specifically provided. Final estimates are iterated to reach a consensus using a 90% confidence interval. From the base year level, the five-year forecast is established using insights about specific company directions, events, customer comments, general business insight, global economic indicators, and our strategic insight concerning each billing sub-sector. Telarix

Telarix is a privately held independent software supplier headquartered in Vienna, Virginia. Telarix was founded in 1996, with a global customer base including CSPs in Asia, Europe, North America, and South America. The company’s offerings fall within the CSP billing segment of interconnect & settlement. Telarix focuses on what it calls Interconnect Business Optimization, which aims for more efficient carrier-to-carrier relationships through its portfolio of wholesale solutions. The portfolio includes two complementary, patented interconnect & settlement solution suites: iXTools and iXLink. Telarix explained to Stratecast that these solutions give CSPs the ability to:

Proactively manage volume commitments Detect and correct negative margin relationships



Dynamically and proactively optimize traffic routing Identify arbitrage opportunities Capitalize on structuring and managing inter-carrier agreements Audit all vendor invoices Monitor and enforce quality of service parameters with vendors Assure revenue streams through differentiated services Optimize a CSP customer’s interconnect business

The Telarix iXTools suite can be offered in a licensed, hosted, or Software as a Service (SaaS) model. The company reports that the suite provides CSPs with a comprehensive management, optimization, and settlement solution for their interconnect business. The five primary business modules that define the iXTools solution suite include:

iXConnect – The core module for the iXTools suite, iXConnect, serves as a “business intelligence platform,” collecting and managing all business information. This includes network elements, products, route plans, rates, and agreements. This business information forms the main data repository for all other modules. iXConnect also defines and manages agreements between CSPs and partners, and applies rates to different types of traffic within the scope of each agreement. Finally, iXConnect provides near real-time access to business information via its reporting capabilities, including dashboards with drill-down functionality.

iXRoute – The module enables CSPs to identify and implement optimal routing strategies, to keep the network profitable. By incorporating volume commitments and margins, termination costs, network capacity, quality of service requirements, and other user-defined criteria, Telarix explained to Stratecast that iXRoute can produce “the optimal commercial and technical route guides” by leveraging the company’s patented routing algorithms.

iXTrade – iXTrade is an offer management and decision support solution, which allows CSPs to simplify and automate the buying, pricing and selling processes within the wholesale interconnect business. This includes managing international interconnect complexities resulting from non-standardized numbering plans for country, city and mobile terminations and allows rating of calls based on each partner’s specific numbering plan to give CSPs the ability to gain near real-time margin visibility.

iXBill – This module ensures that all billable activities are captured, rated and billed. iXBill leverages its integration with other iXTools to provide embedded revenue assurance capabilities. It allows CSPs to support a variety of agreement types and rating scenarios including multi-party settlements and revenue sharing partnerships.

iXAudit – iXAudit is an end-to-end audit and dispute management system designed to streamline the validation of interconnect invoices, reconcile charges, and manage settlements. It serves as the data repository for all carrier invoices. iXAudit automatically reconciles invoice data with internal traffic and cost management information. The solution matches a CSP’s interconnect agreements



with invoice data, traffic usage, and cost data, to determine if discrepancies exist. This process includes auditing and reconciling incoming interconnect invoices, in addition to tracking and managing disputes of incoming invoices from vendors, and outgoing invoices to customers.

Telarix provides an additional interconnect & settlement solution associated with interconnect agreement management. It is branded iXLink, which the company explains is “an open, secure, global business information exchange designed by carriers for carriers.” The company reports 4000 iXLink members and 40 million iXLink-facilitated transactions per month. The service “links” partners together, regardless of interconnect management system, so that they can exchange business documents; i.e, pricing quotes, rate and dial code changes, numbering plans, invoices, and declarations. iXLink performs these tasks electronically, with validation and time-stamps. iXLink also allows members to apply business rules that are specific to each partner and/or service to validate transactions, meet internal business objectives and capture errors so that the sender can be notified immediately. iXLink is designed to reduce risks and costs associated with the manual exchange of business information relating to interconnect & settlement by automating and assuring the process. Initiated in 2007, iXLink has become the de facto standard business information exchange for the interconnect space, with a large majority of global service providers participating. Stratecast views Telarix as the market leader within the wholesale interconnect & settlement sector, with an entrenched focus on this space through its Interconnect Business Optimization strategy. With both the iXTools suite of interconnect & settlement solutions and its iXLink carrier-to-carrier information exchange, Stratecast expects the company to remain a strong leader in this space. Market Leadership of Telarix

The 2015 Stratecast Global Market Leadership Award in CSP Billing for the Interconnect & Settlement Market is judged based on ten criteria detailed later in this document. Telarix was compared against two other leading suppliers in the CSP end-to-end billing space. They are referred to as Competitor 2 and Competitor 3 in the remainder of the document. The following details a selection of comparisons from the ten criteria. The data behind the comparisons comes from the upcoming Stratecast report on CSP billing interconnect & settlement market share and forecast, as well as from the recently released Stratecast report market share and forecast report addressing the overall CSP billing market. Growth Strategy Excellence

Stratecast annually analyzes the end-to-end CSP billing market and the functional



segments that define it. This market, and most of its components, has grown over the last six years. Stratecast forecasts the five-year compound annual growth rate (CAGR) for the interconnect & settlement market to continue to climb at a single-digit rate from 2015-2020. In a marketplace that has been expanding such as the end-to-end CSP billing market, in general, and for interconnect & settlement in particular, growth is essential to maintain market position. For the 2015 version of the Stratecast end-to-end billing market assessment, we identified in excess of 100 suppliers delivering some type of billing solution capability, with over 60 of those suppliers contributing solution focus to the interconnect & settlement segment. Telarix continues to grow at a year-over-year rate higher than the overall interconnect & settlement market, with control of approximately 19% of the global interconnect & settlement market sector. Competitor 2 and Competitor 3 offer a similar solution set to iXTools in the interconnect & settlement space, but neither have an information exchange solution that rivals iXLink—no other supplier in the interconnect & settlement domain offers a similar solution. For the 2015 Stratecast reporting period, Competitor 2 exhibited above market growth and narrowed the revenue gap with Telarix, while Competitor 3 showed below market growth and lost ground. Competitor 2 remains one percentage point behind Telarix and Competitor 3 remains seven percentage points behind Telarix. Implementation Excellence

To be a leader in CSP billing, in an individual segment of CSP billing, or in any of the areas of the CSP operations and monetization functions, a supplier must be able to implement the solutions they have sold; each and every time. An implementation that goes less smoothly than planned, can cause a CSP to lose trust in a supplier; an implementation that fails can have reverberations far beyond the individual CSP customer. The CSP community (and analyst community) is relatively small and less than expected results are noted throughout the industry, sometimes for an extended time. Stratecast's knowledge of the excellence in implementation with regard to Telarix is well founded based on several customer testimonials, continued press from Telarix that identifies CSPs by name, and the ongoing discussions Stratecast has with both Telarix and its competitors. Together, these facts indicate that Telarix is keeping its existing customers happy as it continues to gain new ones. Similarly, Competitor 2 has experienced revenue growth, which indicates its solution implementations are also going well. Competitor 3 has experienced relatively flat revenue growth, but Stratecast has not heard of any implementation struggles. Brand Strength



Brand is often of great importance to a customer when choosing a product for purchase. This is true of consumer goods and it holds for CSPs when they choose their operations and monetization systems with price tags that usually reach into the millions of dollars. Within the end-to-end billing domain, and in interconnect & settlement, CSPs are trusting their ability to generate revenue, and even in their ability to stay in business, on a vendor—trust in a company and a brand is of utmost importance. Brand strength is not something Stratecast measures directly, but increasing revenues correlate strongly with CSP trust in a brand. Telarix increased its revenues and CSP customer base over the past year. This indicates, through example, that the Telarix brand strength is significant and has increased since Stratecast’s previous examination of the CSP end-to-end billing market and associated market segments. Similarly, Competitor 2 has experienced revenue growth, and by correlation, brand strength, while Competitor 3 has experienced relatively flat revenue growth and therefore little if any increase to its brand strength. Product Quality

Similar to the market leadership measurement criteria of implementation excellence and brand strength, product quality is very important to a solution supplier's customer audience. CSPs continue to be the broadest customer opportunity market for interconnect & settlement solution suppliers. In turn, CSPs expect any solution they purchase to work as advertised, often without much configuration beyond the typical business definition parameters. Poor solution quality immediately causes issues with the CSP customer and, as mentioned under the implementation excellence section of this report, bad news travels fast. Product quality is not something that Stratecast measures directly, but revenue growth indicates that CSP customers continue to put trust in a supplier and in the quality of its products. Telarix’s continued growth over the last few years is a strong indicator that its CSP customers find the company's products and solution delivery capabilities to either meet or exceed expectations. Similarly, Competitor 2 has experienced revenue growth, which would indicate its product quality is meeting expectations. Competitor 3 has experienced relatively flat revenue growth, but Stratecast has not heard of quality issues. Product Differentiation

While Telarix and its two competitors share many similarities, particularly when comparing the Telarix product suite iXTools against other competitive offerings, Telarix is unique with



its iXLink offering. iXLink, which the company explains is “an open, secure, global business information exchange designed by carriers for carriers,” is the de facto standard in interconnect & settlement information exchange. Telarix reports that more than 4000 iXLink members generate in excess of 40 million iXLink-facilitated transactions per month. The iXLink solution gives Telarix a huge competitive advantage when selling its iXTools solution set to almost every CSP already using iXLink. Competitor 2 and Competitor 3 have no product or solution that addresses, even remotely, the business needs managed by the iXLink exchange service. Given the dominance that Telarix has in this area, competitors are not likely to attempt to compete in this business solution domain. Technology Leverage

Much of the above discussion concerning product differentiation directly relates to Telarix leveraging technology to gain a competitive advantage. Creating an information exchange solution through its iXLink offering solved a fundamental business problem within the interconnect & settlement domain. Using its in-depth knowledge of the interconnect and settlement space, combined with the company's technology know-how and extremely effective marketing, Telarix essentially has every global CSP as an iXLink member, giving it a huge and ongoing advantage in this market space. Competitor 2 and Competitor 3 have no product or solution that addresses the business needs accomplished by iXLink. Given the dominance that Telarix presently possesses, competitors are not likely to attempt to compete for the foreseeable future. Conclusion

Stratecast has taken a deep dive into the changing communications marketplace, and evaluated the role of billing within the communications service provider (CSP) business support system and monetization functions. We have interviewed and analyzed over 100 suppliers, covering various aspects of the end-to-end CSP billing marketplace. Stratecast defines CSP billing as six related and interconnected segments, namely: billing mediation; rating & charging; other core billing functionality; policy management; interconnect & settlement; and partner management. The Stratecast 2015 CSP billing market assessment analysis finds that Telarix holds the lead within the CSP billing interconnect & settlement market with 19% market share. For this merit, we award Telarix with the 2015 Stratecast Global Market Leadership Award in CSP Billing for the Interconnect & Settlement Market.



Significance of Market Leadership Ultimately, growth in any organization depends upon customers purchasing from your company, and then making the decision to return time and again. Loyal customers become brand advocates; brand advocates recruit new customers; the company grows; and then it attains market leadership. To achieve and maintain market leadership, an organization must strive to be best-in-class in three key areas: understanding demand, nurturing the brand, and differentiating from the competition.

Understanding Market Leadership As discussed on the previous page, driving demand, strengthening the brand, and competitive differentiation all play a critical role in a company’s path to market leadership. This three-fold focus, however, is only the beginning of the journey and must be complemented by an equally rigorous focus on the customer experience. Best-practice organizations therefore commit to the customer at each stage of the buying cycle and continue to nurture the relationship once the customer has made a purchase. In this way, they build a loyal, ever-growing customer base and methodically add to their market share over time.



Key Performance Criteria For the Market Leadership Award, Stratecast | Frost & Sullivan analysts focused on specific criteria to determine the areas of performance excellence that led to the company’s leadership position. The criteria that were considered include (although not limited to) the following:

Criterion Requirement

Growth Strategy Excellence Demonstrated ability to consistently identify, prioritize, and pursue emerging growth opportunities

Implementation Excellence Processes support the efficient and consistent implementation of tactics designed to support the strategy

Brand Strength The possession of a brand that is respected, recognized, and remembered

Product Quality The product or service receives high marks for performance, functionality and reliability at every stage of the life cycle

Product Differentiation

The product or service has carved out a market niche, whether based on price, quality, uniqueness of offering (or some combination of the three) that another company cannot easily duplicate

Technology Leverage Demonstrated commitment to incorporating leading edge technologies into product offerings, for greater product performance and value

Price/Performance Value Products or services offer the best value for the price, compared to similar offerings in the market

Customer Purchase Experience Customers feel like they are buying the most optimal solution that addresses both their unique needs and their unique constraints

Customer Ownership Experience Customers are proud to own the company’s product or service, and have a positive experience throughout the life of the product or service

Customer Service Experience Customer service is accessible, fast, stress-free, and of high quality



The Intersection between 360-Degree Research and Best Practices Awards Stratecast | Frost & Sullivan’s 360-degree research methodology represents the analytical rigor of our research process. It offers a 360-degree-view of industry challenges, trends, and issues by integrating all seven of Stratecast | Frost & Sullivan's research methodologies. Too often, companies make important growth decisions based on a narrow understanding of their environment, leading to errors of both omission and commission. Successful growth strategies are founded on a thorough understanding of market, technical, economic, financial, customer, best practices, and demographic analyses. The integration of these research disciplines into the 360-degree research methodology provides an evaluation platform for benchmarking industry players and for identifying those performing at best-in-class levels.

360-DEGREE RESEARCH: SEEING ORDER IN THE CHAOS



Best Practices Recognition: 10 Steps to Researching, Identifying, and Recognizing Best Practices Stratecast | Frost & Sullivan Awards follow a 10-step process to evaluate award candidates and assess their fit with select best practice criteria. The reputation and integrity of the Awards are based on close adherence to this process.

STEP OBJECTIVE KEY ACTIVITIES OUTPUT

1 Monitor, target, and screen

Identify award recipient candidates from around the globe

Conduct in-depth industry research

Identify emerging sectors

Scan multiple geographies

Pipeline of candidates who potentially meet all best-practice criteria

2 Perform 360-degree research

Perform comprehensive, 360-degree research on all candidates in the pipeline

Interview thought leaders and industry practitioners

Assess candidates’ fit with best-practice criteria

Rank all candidates

Matrix positioning all candidates’ performance relative to one another

3

Invite thought leadership in best practices

Perform in-depth examination of all candidates

Confirm best-practice criteria

Examine eligibility of all candidates

Identify any information gaps

Detailed profiles of all ranked candidates

4

Initiate research director review

Conduct an unbiased evaluation of all candidate profiles

Brainstorm ranking options

Invite multiple perspectives on candidates’ performance

Update candidate profiles

Final prioritization of all eligible candidates and companion best-practice positioning paper

5

Assemble panel of industry experts

Present findings to an expert panel of industry thought leaders

Share findings Strengthen cases for

candidate eligibility Prioritize candidates

Refined list of prioritized award candidates

6

Conduct global industry review

Build consensus on award candidates’ eligibility

Hold global team meeting to review all candidates

Pressure-test fit with criteria

Confirm inclusion of all eligible candidates

Final list of eligible award candidates, representing success stories worldwide

7 Perform quality check

Develop official award consideration materials

Perform final performance benchmarking activities

Write nominations Perform quality review

High-quality, accurate, and creative presentation of nominees’ successes

8

Reconnect with panel of industry experts

Finalize the selection of the best-practice award recipient

Review analysis with panel

Build consensus Select winner

Decision on which company performs best against all best-practice criteria



STEP OBJECTIVE KEY ACTIVITIES OUTPUT

9 Communicate recognition

Inform award recipient of award recognition

Present award to the CEO

Inspire the organization for continued success

Celebrate the recipient’s performance

Announcement of award and plan for how recipient can use the award to enhance the brand

10 Take strategic action

Share award news with stakeholders and customers

Coordinate media outreach

Design a marketing plan

Assess award’s role in future strategic planning

Widespread awareness of recipient’s award status among investors, media personnel, and employees

About Stratecast Stratecast collaborates with our clients to reach smart business decisions in the rapidly evolving and hyper-competitive Information and Communications Technology markets. Leveraging a mix of action-oriented subscription research and customized consulting engagements, Stratecast delivers knowledge and perspective that is only attainable through years of real-world experience in an industry where customers are collaborators; today’s partners are tomorrow’s competitors; and agility and innovation are essential elements for success. Contact your Stratecast Account Executive to engage our experience to assist you in attaining your growth objectives.

About Frost & Sullivan Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth and achieve best in class positions in growth, innovation and leadership. The company's Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined research and best practice models to drive the generation, evaluation and implementation of powerful growth strategies. Frost & Sullivan leverages almost 50 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from 31 offices on six continents. To join our Growth Partnership, please visit http://www.frost.com.

Documents

2015 Global Stratecast CSP Billing - Interconnect ...€¦ · market. All are expressed in US dollars. The billing report series covers the period 2015– 2019, with 2014 as the base