Telco Knowledge is Key OSS Formula
Volume 6 Issue 1

Key Issues: Convergent Billing

Amos Sivan is founder and chief executive of Formula Telecom Solutions (FTS), VanillaPlus recently talked to him and found him in bullish mood, unfazed by increased competition in the market and contemplating further acquisitions as well as geographic expansion plans for the company. Here, he explains his vision of how the market will develop over the next year and reveals FTS' approach to partnering and new payment models for OSS systems.

FTS, which is part of the NASDAQ-quoted Formula Group, is a provider of convergent telecom management solutions for mobile, fixed-line, and advanced services operators. FTS offers a range of solutions that include convergent real-time prepaid and postpaid billing and CRM, order management, infrastructure management, EBPP software, as well as state-of-the-art call center implementations. FTS' solutions range from stand-alone modules, through adjunct Next-Generation platforms, to complete integrated end-to-end systems, offered on a fixed-price project basis. The company's Leap platform provides operators with a total management solution to support the entire service operation. The modular construction allows for partial or complete installations, thereby providing the operator with complete control of their telecom environment and enabling them to quickly respond to rapidly changing market conditions.

VanillaPlus: You've made the transition from carrier to vendor, having spent time working at Bezeq. How useful is this experience in the vendor market?

AS It is one of the most critical advantages that we have within the company, the management team has accumulated 400 years of experience at operators and that gives customers more confidence in us because we understand their business and can give consultancy on how to manage processes that are outside the technology we offer. This is very important and from time to time customers ask us to give them ideas on how to improve processes in their companies.

Software giants such as Oracle, SAP, Microsoft and Siebel have neglected the billing and OSS market in the last five years. However, now some vendors are making strong progress, the large players are becoming interested in the sector again. What's your view of software Goliaths entering the market? Do the large players understand the market? How might the market be changed by their arrival?

In my opinion these companies - the giants - are not really looking for vertical markets and telecoms is a vertical industry. They should think twice before entering the market because it's better for them to develop with a horizontal orientation. The large companies are also less flexible than vendors that concentrate on a specific market as Formula does with the telecoms market. If someone asks us to provide solutions outside telecoms, we reject it because FTS was created only to serve the telecoms sector. Another point is that because they are the giants, they move slowly and I'm not sure that they'd be successful in penetrating the telecoms market if they tried to.

Multi-vendor partnerships, which can be something and nothing, are proliferating. What partnerships is Formula involved in and does the company regard partnering as a means to work closely with other vendors and gain access to more customers?

FTS believes in partnering both locally and worldwide. It’s very important to partner to penetrate markets and we are continually looking to improve our partnerships with integrators and vendors that support hardware and equipment to the telecom industry. We have partnered with HP Global Services in the US and IBM Global Services in Europe on major projects and partner with two big integrators in Africa. One of our important partnerships is with a major prepaid platform supplier with whom we have just finished a joint project. We also have new deals imminent with Chinese and Russian integrators as well as in the Czech Republic.

There's a lot of talk about consolidation with many companies expected to exit the market in the coming year - either through sale or ceasing trading. Does Formula regard this as an opportunity to acquire technology and customers?

We have already made acquisitions but in my opinion there are too many companies that, in general, have the same intellectual property – it’s a big mess. There’s no point in acquiring companies that have the same intellectual property unless there are geographical advantages or customer-base advantages such as Convergys buying TelesensKSCL for its customer base and Geneva for its European presence. For sure, we will acquire again to gain penetration in geographic markets.

Can you explain how Formula's Leap suite of products works to the benefit of carriers?

LEAP comes from our specialized Telco oriented focus – which I see as a big advantage. We can give telcos the tools to manage and control their organization backed by a lot of knowledge in that industry. We have a complete end-to-end solution to fulfill billing and CRM under one database, under one platform. We eliminate not the integrator but the integration. Another factor is that we are very fast in the implementation because there are two major issues today: time and money.

Do you think carriers in the current market want solutions they can manage themselves or are providers that can manage solutions for carriers more attractive?

Customers are very willing to have the option of defining their needs themselves rather than calling their vendor for every change. Today the emphasis is on user definable tools, however, for users to achieve 100% functionality it’s difficult for vendors to transfer all their knowledge in a two-month period. Carriers don’t necessarily want outsourcing but do require ongoing support in the back office. The US market does prefer the service bureau option while the European markets want to operate by themselves but still need a lot of support.

Carriers are averse to both capital and operational expenditure. How appealing to them are carriers that can offer pay-as-you-grow solutions rather than traditional license based fees for solutions?

The mobile industry, let’s admit it, makes a lot of profit so it prefers license fees and support but in other areas we find it best to take an initial fee and offer a pay-as-you-grow approach. Revenue sharing, which was talked about a lot a few years ago, has turned out to be just a slogan and I don’t see any operators – even in green field situations – working with revenue sharing arrangements. It’s far more likely that the beginners ask for financing and the ability to spread payment over the life of a system. Those going the pay-as-you-grow route are now beginning to ask for a cap on fees at say three million subscribers.

Do you think carriers have understood the importance of OSS/BSS and it is now a boardroom issue being given adequate attention?

For sure, because operators have realized the importance of these systems. Decisions now are brought to the highest level of a carrier’s operation. I know the chairmen of all our clients and they want to be highly involved because they understand that if there are problems with these systems only for a few days they are losing a lot of money.

How difficult is it for Formula to gain access to markets and how challenging do prevailing market conditions make it for you to increase revenue and profits?

I admit it’s difficult. We have hundreds of competitors and operating in the Telco market requires a deep understanding. FTS is now ready for further global growth. This will be achieved through partnership with systems integrators, partners and increasing our global presence, as well as growing our European and US operations. It is very important for us to be close to our customers.

What does the future hold for Formula?

I would need to be a prophet to answer that question for the long term. In general terms we will open new offices around the globe, which is important not just from a sales point-of-view but to provide local support to customers. We believe we will get and retain more satisfied customers, which are the best sales people from our perspective. We bring to the market new standards in the customer/vendor relationship and penetrate new geographic markets.