Market Leadership Award

2015

2015 Global Stratecast CSP Billing – Mediation Market Leadership Award

BEST PRACTICES RESEARCH

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

Contents

Background and Company Performance ..................................................................... 3

Introduction .................................................................................................... 3

Industry Challenges .......................................................................................... 4

Huawei ........................................................................................................... 6

Market Leadership of Huawei ............................................................................. 7

Conclusion ..................................................................................................... 10

Significance of Market Leadership ........................................................................... 11

Understanding Market Leadership ........................................................................... 11

Key Performance Criteria ....................................................................................... 12

The Intersection between 360-Degree Research and Best Practices Awards .................. 13

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

About Stratecast .................................................................................................. 15

About Frost & Sullivan .......................................................................................... 15



Background and Company Performance

Introduction

The Stratecast Operations, 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.

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

o Policy Enforcement Function

• Interconnect & Settlement and Partner Management

o Wholesale Interconnect & Financial Settlement (CSP to CSP)

o Partner Relationship Management (CSP to Other Partners)

Stratecast is releasing five reports in 2015 that address a market share analysis and long-

term forecast for each of the functional portions of the global end-to-end CSP billing

market. Already published, the first three assessment reports in this series are a market

share analysis of the overall global CSP billing market 1 and one global market share

analysis report each for the billing mediation market,2 and the rating & charging market.3

The other two market sizing reports, will be released during 3Q 2015.

An additional report, to be released in Q4 2015, will provide an in-depth strategic analysis

of the drivers and business trends affecting each component of end-to-end CSP billing.

The final report in this series, 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 from

2015–2019, utilizing a base year of 2014. As in previous Stratecast forecasts, each

market share and forecast report in this series is based on 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

1 See 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. 2 See recently released Stratecast report OSSCS 16-06, Global CSP Billing 2015 Edition Part 2: Billing Mediation Market Forecast and Market Share Analysis, July 2015. 3 See recently released Stratecast report OSSCS 16-08, Global CSP Billing 2015 Edition Part 3: Rating & Charging and Other Core Billing Market Forecast and Market Share Analysis, July 2015.



• 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 recently released Stratecast report, Global CSP Billing 2015 Edition Part 2: Billing

Mediation Market Forecast and Market Share Analysis, Stratecast examines the billing

mediation market in greater detail. Huawei leads in market share for the global CSP billing

mediation market, with approximately 20% of this market. The next four competitors

collectively address 50% of the market, with Company 1, Company 2, Company 3 and

Company 4 accounting for 19%, 12%, 11%, and 8% of the market respectively. In

addition, Huawei is among the leaders in all six segments of the end-to-end billing

process.

For the 2015 edition of our billing report series, Stratecast interviewed more than 100

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 that are 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. The 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, projections 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 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 percent 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.

Huawei

Based in Shenzhen, China, Huawei Technologies is a private information and

communications technology (ICT) provider. Founded in 1987, Huawei has grown from a

small local company to a global organization, with 2014 revenues of approximately U.S.

$46.5 billion. In addition to network equipment and network-based solutions, Huawei

offers a range of OSS and BSS offerings, as well as solutions aimed at the consumer and

enterprise markets. The company reports that its monetization solutions are addressing

the communications needs of approximately 1.5 billion customers at 180 CSPs, in 98

countries.

Huawei offers a full complement of billing, policy, customer, and partner management

solutions that span all six segments of CSP billing. The company’s newly released BSS

suite—the Huawei Business Enabling System (BES)—includes the Huawei

Converged Billing Solution (CBS) and Huawei Mediation platform. CBS is Huawei's

end-to-end convergent charging and billing solution capable of supporting all types of

networks, services, and subscribers. BES also includes the Huawei Mediation platform—

the company's mediation offering for addressing the needs of both online and offline

transaction usage processing.

Huawei Mediation delivers convergent mediation capabilities that support any service,

on any network. Designed for ease of configuration and management, the solution

includes pre-built interfaces, out-of-the-box templates, and a Web-based configuration

platform to simplify integration with new network elements, services, and downstream

systems. The company reports to Stratecast that the solution improves time to market for

new services from “months to days.” Huawei Mediation is built upon a rules-based

engine that allows configuration of any step in the end-to-end mediation processing flow.

The solution features centralized operations management for monitoring, dealing with

exceptions, and reporting.

Huawei stated to Stratecast that Huawei Mediation delivers on the following value

propositions:

• Network- and vendor-independence, easing integration with legacy systems, and

the capability of extension into future environments and services.

• A rules engine for addressing usage transactions from multiple sources. It comes

with a graphical interface for flexibility, to accelerate new network deployments

and service launches and to reduce cost.

• High performance and availability, using N+1 load balance redundancy, overload

flow control, and automatic fault recovery. These high performance and availability



functions allow the Huawei Mediation platform to support any number of usage

transactions.

Real-time customer expectations place mediation, along with real-time rating & charging,

at the forefront of effective long-term customer satisfaction. Next on this expectation list

is the rising concern of CSPs, globally, to understand, in real time, which services

customers are using, where the highest value customers are in the network, and on what

advanced service options they are willing to spend to better address their needs. Analysis

of mediated data is at the forefront of this type of business approach.

Given the market size of Huawei across all segments of the end-to-end billing

space, Stratecast expects Huawei to continue its leadership role in each of these

areas for the foreseeable future. This is critical, given the pace with which policy-

enabled real-time rating & charging has gained importance among CSPs, and the rapid

rate at which data volumes have grown. These solutions, enabled to a large extent via a

robust mediation engine, are essential for any CSP’s quest to provide advanced,

customer-appealing services that match with the capabilities that user device evolution

continues to deliver to the converging communications marketplace.

Market Leadership of Huawei

The 2015 Stratecast Global Market Leadership Award in CSP Billing for the Mediation

Market is judged based on ten criteria described later in this report. Huawei was compared

against two other leading suppliers in the billing mediation space. They are referred to as

Competitor 2 and Competitor 3 through the remainder of this document.

The following is a selection of the comparisons from these ten criteria. The data behind

the comparisons comes from the upcoming Stratecast report on the global CSP billing

mediation market share and forecast assessment report.

Growth Strategy Excellence

Stratecast examines the end-to-end CSP billing market and the components that define

this market, every year. End-to-end CSP billing and most of the parts that make up this

market have grown over the last six years. One of these growth segments is billing

mediation. Stratecast forecasts the five-year compound annual growth rate (CAGR) for the

billing mediation segment to continue to climb at a low double-digit rate from 2015-2020,

one of the highest growth rates of all billing segments.

In a market that has been expanding such as CSP billing mediation, growth is essential to

the supplier community for even maintaining one’s market position. Comparing the

Stratecast 2015 billing mediation market assessment with the previous assessment from

two years ago, the top 7 suppliers each increased their annual mediation-based revenues.

Some, including Huawei, increased mediation revenue substantially and in so doing,

increased market share in this sector. Huawei now controls approximately 20% of the



billing mediation market, up from 18% previously. This increase is a direct result of the

need by service providers to address the growing volume of user generated data, the

accountability of that data, and now the directionalization of summarized data for multiple

internal business functions that go beyond just billing.

Competitor 2 and Competitor 3 offer very similar solution profiles to Huawei in the billing

mediation market and both are among the revenue leaders in this market space. Both

have exhibited strong market growth.

Competitor 2 has narrowed the revenue gap with Huawei, but remains one percentage

point behind Huawei at 19% of the global billing mediation market. Competitor 3

essentially maintained its revenue gap with Huawei, remaining eight percentage points

behind Huawei with 12% of the billing mediation market.

Implementation Excellence

To be a leader in CSP billing, in an individual segment of CSP billing, or in any of the areas

of CSP Operations, Data Analysis & Monetization, 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 Huawei is well

founded based on several customer testimonials, continued press from the company that

identifies CSPs by name, and the ongoing discussions Stratecast has with both Huawei and

its competitors. Together, these factors indicate that Huawei is keeping its existing

customers happy as it continues to gain new ones.

Similarly, Competitor 2 and Competitor 3 each have experienced revenue growth, which

would indicate their implementations are also going well too.

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,

Data Analysis & Monetization systems with price tags that usually reach into the millions

of dollars. In the area of CSP end-to-end billing, 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. Huawei increased its revenues and therefore

its brand strength since Stratecast’s previous examination of the CSP Billing market in



2012, in the overall billing market, and in various billing segments, including billing

mediation.

Competitor 2 and Competitor 3 have also increased revenues and by correlation, brand

strength.

Product Quality

Similar to the previous two criteria, product quality is very important to CSPs, who expect

any solution they purchase to work as advertised. Poor quality solutions immediately

cause issues with the CSP customer and, as mentioned under the implementation section

of this report, bad news travels fast, which is hard to overcome. Product quality is not

something that Stratecast measures directly, but revenue growth indicates that CSP

customers continue to put trust in a supplier and the quality of their products.

Huawei’s continued growth over the last few years, one of the highest rates amongst the

revenue leaders, is a strong indicator that its CSP customers find the company's products

and solution delivery capabilities to either meet or exceed expectations.

Competitor 2 and Competitor 3 have also increased their revenues, indicating they too are

experiencing positive perceptions with regard to product quality.

Price/Performance Value

Huawei entered the Operations, Data Analysis & Monetization marketplace as a lower cost

supplier, initially offset by its network equipment sales, to gain a foothold in the market.

As the company has grown to be a revenue leader in the CSP billing market, its billing

solution offerings, including mediation, have increased in functionality, in quality, and in

performance. Additionally, the company's business support software group now stands on

its own and "deals" involving network equipment bundles are no longer the major means

for project delivery success.

To impress its customers on pricing, Huawei does not have to off-shore its operations to

take advantage of lower cost labor, at least not to the extent of some of its competitors.

As a large Chinese company, with local low-cost labor, Huawei provides a

price/performance advantage that is attractive to many of its customers, especially those

in emerging markets. In fact, Huawei has also explained to Stratecast that many of its

newest CSP customers have purchased its mediation and billing solution offerings due not

only to Huawei's solution pricing offers, but also from the company's long-term strategy

and vision tied to its latest release of its end-to-end billing, customer and partner

management solution, known as the Huawei Business Enablement System (BES).

Competitor 2 and Competitor 3 do not have this same local advantage, though both off-

shore some operations to reduce Huawei’s price/performance advantage.



Customer Service Experience

Customer service is very important to CSPs, who expect any solution they purchase to

work as advertised and their suppliers to always put their experience as the top of the list.

Poor quality solutions immediately cause issues with the CSP customer and degrade their

service experience. As mentioned under the implementation section of this report, bad

news travels fast, which is hard to overcome. Customer service experience is not

something that Stratecast measures directly, but revenue growth indicates that CSP

customers continue to put trust in a supplier and the quality of their products.

Huawei’s continued growth over the last few years, one of the highest rates amongst the

revenue leaders, is a strong indicator that its CSP customers find their customer service

experience with Huawei’s products and solution capabilities to meet or exceed

expectations. Huawei has a solid "can do" attitude for several years, in delivering solutions

that meet all customer expectations. With this approach to business, CSP customers are

finding that Huawei solutions can and do meet their expectations.

Competitor 2 and Competitor 3 have also increased their revenues, indicating they too are

experiencing positive perceptions with regard to customer service.

Conclusion

Stratecast has taken a deep dive into the changing communications marketplace, and

evaluated the role of billing and policy management 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 including six related segments: Billing

Mediation; Rating & Charging; Other Core Billing functionality; Policy Management (rules

function); Interconnect & Settlement; and Partner Management capabilities.

Huawei leads in market share for the base year of 2014 for CSP billing mediation.

Stratecast believes that Huawei controls approximately 20% of the billing mediation

market. In addition, Huawei is among the leaders in the overall CSP billing market and in

all six billing sectors. Therefore, Stratecast awards the 2015 Stratecast Global Market

Leadership Award in CSP Billing for the Mediation Market to Huawei, with a 20% share of

this 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 7 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.

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

360-DEGREE RESEARCH: SEEING ORDER IN THE CHAOS

Technology

Obsolescence

Disruptive

Technologies

New

Applications

CEO

Demographics

Needs

and

PerceptionsSegmentation

Buying

Behavior

Branding

and

Positioning

Competitive

Benchmarking

Emerging

Competition

Competitive

Strategy

Capital

Investments

Availability

of

Capital

Country

Risk

Economic

Trends

Crowd

Sourcing

Growth

Strategies

Career

Development

Growth

Implementation

Industry

Evolution

New Vertical

Markets

Industry

Expansion

Industry

Convergence

Emerging

Technologies

Smart Cities

Sustainability

New Business

Cultures

GeoPolitical

Stability



STEP OBJECTIVE KEY ACTIVITIES OUTPUT

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

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

Market Leadership Award