Comverse Technology

1
Comverse Technology

• Overview and Technical Recommendations

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Organizational Background

• Comverse is a leading provider of software and
  systems enabling value-added services for voice,
  messaging, mobile Internet and mobile
  advertising converged billing and active
  customer management and IP communications.
• The company has approximately 3,700 employees.
• It is primarily a software product company, and
  mainly serves the telecommunications industry.
• It also provides services including Professional
  services, Support services and Learning services
  through its Comverse Global Services
  organization.

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Organizational Background Product Offerings

• Comverses product offerings address the three
  domains of Billing and Active Customer
  Management, Value Added Services (VAS), and IP
  Communications.
• The four products corresponding to these domains
  are ComverseONE Billing and Active Customer
  Management suite, Comverse HUB, Mobile Internet
  HUB, and Comverse NETCENTREX.
• ComverseONE Billing and Active Customer
  Management suite is a large-scale Business
  Systems Support (BSS) system for telecom
  operators which includes
• a Product Catalog, a real-time rating engine, a
  billing and financials back end, and an extended
  CRM component which includes Case Management,
  Sales Force Automation, and Campaign Management.
• The value proposition of this product is that it
  is a unified BSS and CRM system, for both
  real-time and postpaid telephony operations,
  built around a single code base and data model.
• Deploying this system will reduce systems
  integrations costs compared with implementing
  multiple solutions from other vendors which would
  provide comparable capability.

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Product Offerings, continued Comverse HUB,
Comverse Mobile HUB and NETCENTREX

• Comverse HUB is a suite of Value-added services
  for telecom operators
• It is comprised of Comverse HUB Next-Generation
  Voicemail, Comverse HUB Call Completion and Call
  Management, Comverse HIB SMSC, Comverse HUB MMSC,
  Comverse HUB Messaging Router, Comverse HUB IP
  Messaging Center, Comverse HUB Service Enablement
  Middleware, and Comverse HUB Applications.
• Comverse HUB applications include Mobile
  Advertising, Visual Voicemail, Communicator,
  Smart Call, Personalization and Messaging
  anti-spam.
• Comverse HUB is a suite of Value-added services
  for telecom operators
• Comverse Mobile Internet HUB includes the
  following data services Enforcement Services
  Traffic Management and Optimization, Mobile
  Browsing and Streaming, and Content Adaptation
  and Filtering Central Policy Management and
  Broadband Data Charging.
• Comverse NETCENTREX IP Communications provides
  IP-based voice and video solutions that enable
  communication service providers to deliver IP
  telephony, converged communications and FMC
  services.

5
Basis for Competitive Advantage

• A theme of the software product offerings is
  their unifying, integrated nature, simplifying
  deployment and operations and reducing
  integration costs.
• The business earns its revenue primarily from the
  sale and licensing of these software products.

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Technology Introduction SaaS

• The technology I would recommend Comverse to
  adopt is to transition to offering their
  products, particularly ComverseONE, using a SaaS
  platform.
• SaaS, or Software as a service is software that
  is licensed to customers. either as a service on
  demand, through a subscription, in a
  "pay-as-you-go" model, or based on advertising
  revenues Wika
• I would not recommend moving to a full cloud
  computing model, including hosting of the
  customer service providers customer data on
  Comverse servers.
• Doing so would divert the company from its core
  strength as a software provider.
• However, I would recommend providing integration
  with other telecom operator services that are
  offered over the cloud, such as inventory, order
  fulfillment, eCommerce and Payment Gateways.

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Competitive Benefits

• Since the proposal is to incorporate SaaS into
  the products the company offers to customers, the
  primary benefits would be competitive.
• Some providers of BSS/OSS systems are already
  offering their solutions as a SaaS.
• For example, Mobitel is offering their BSS/OSS
  solution via a SaaS platform to Telekom Slovenia
  group eTOM10
• Transverse has also introduced a SaaS version of
  an Open Source BSS solution OSS09
• Tranverses Cloud Optimized Business Logic
  Execution Environment Platform or blee(p) system
  is also optimized to use with applications that
  run on cloud computing platforms Har10
• Additionally, this version of the blee(p) suite
  offers integration to public cloud services such
  as inventory, fulfillment, eCommerce, and payment
  gateways.

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Competitive Benefits, continued

• The introduction a SaaS option would address the
  competitive forces that these other vendors are
  introducing by entering into the SaaS space.
• It could also make the product suite more
  accessible to smaller operators
• Would greatly reduce startup costs for software
  acquisition, deployment and maintenance.
• Comverses existing strength in providing
  pre-integrated solutions would also enhance
  synergy with the SaaS model
• Both the comprehensive nature of ComverseONE and
  the SaaS platform would work to reduce up-front
  investment costs and speed deployment.
• Since ComverseONE already includes modules for
  managing Inventory, Order Fulfillement,
  eCommerce/Self Service, and Payments including
  integration with Payment Gateways, it would have
  an advantage in integrating with such services
  available via the cloud by other vendors.

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Technology Analysis

• Technology Maturity and Adoption
• SaaS technology, while far from fully mature, is
  rapidly gaining market share over license-based
  software delivery models.
• By 2009, 68 of U.S. companies were making use of
  SaaS to some extent While just 10 percent of
  U.S. companies have either adopted cloud
  computing or have immediate plans to do so, SaaS
  is being used by a whopping 68 percent, according
  to the results of a new cloud computing survey
  released by business service provider Avanade.
• Even more interesting By a ratio of 41 (21 on
  a worldwide basis), respondents said they would
  prefer to have their applications delivered as
  services from internal platforms. Har09
• The IDC Exchange Blog Gen10 predicts that In
  total, spending on public IT cloud services will
  grow from 16.5 billion in 2009 to over 55
  billion in 2014. This is scorching fast growth of
  27 per year.

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Technology Analysis, continued

• Technology Displacement and Disruption
• While it is possible that offering Comverses
  products using the Service model could replace
  some of the current license-based customers with
  ones opting for the SaaS option, this is not
  necessarily a bad thing for continued revenue
  generation.
• Additionally it correlates with the SaaS
  adoption statistics quoted above and would align
  Comverse closer with the transformation of
  software delivery models.

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Technology Analysis, continued

• Technology Impacts
• Offering its products using the SaaS model would
  expose Comverse to a slew of new reliability,
  security and privacy risks and challenges.
• The reliability and availability of the service
  would need to be extremely high, since the online
  components of a real-time billing system must
  have uptime in the 5 nines (99.999 of the
  time)
• Having access to all the subscribers of its
  provider customers data would necessitate
  provisions for security and reliability of an
  extent a software provider normally has no need
  for.
• Technology Evolution
• The evolution of SaaS to become a more mature
  technology may provide improved options for
  ensuring the reliability and security of the
  service.

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Operational and Competitive Risks

• The major risks identified above including the
  newly introduced requirements for service
  availability, security and privacy would be the
  main challenges for the organization
• The organization would need to transform itself
  into a service provider, with the concomitant
  organizational changes required such as having a
  division to support and maintain the SaaS
  operations.
• It would need to harness its expertise in
  creating highly available real-time rating
  systems to ensuring high availability of its SaaS
  offerings.
• It would need to raise its security provisions to
  a new level, reflecting the need to protect
  actual customer data being processed over its
  networks.
• A new security division may need to be created
  inside its service component to deal specifically
  with the security needs of the SaaS
  implementations

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Adoption Analysis Summary

• Adoption Cost and Value
• According to Fra10, for most SaaS software,
  engineering costs are higher whether the company
  is a start-up or an established software
  publisher.
• Most enterprise applications are customized to
  some extent for the customers unique
  requirements.  That customization is typically
  performed by the purchasers of licensed software,
  or they pay the vendor or a third party
  consulting company to deliver the solution. 
  Thats not the case for SaaS software providers
  that must design the capability for users to
  customize the application into their software,
  and it requires development of a robust user
  interface to deliver that functionality Fra10
• This would not be as big a concern with
  ComverseONE because the software is already
  extremely flexible and configurable. We also
  have an existing customization engineering
  division that could be harnessed/
• In addition, development costs are incurred to
  create the specialized architecture to support
  application customizations for multiple clients
  Fra10

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Adoption Analysis Summary, cont.

• Adoption Cost and Value continued
• Unfortunately, a SaaS business model does not
  generate the early cash flow of a successful
  licensed software business selling high-priced
  software.  Venture capitalists have estimated
  that a SaaS start-up requires 70 to 100 percent
  more capital investment and a longer time (6 to 7
  years) before it can reach a liquidity event
  (sale, refinance, or IPO). Fra10
• Comverse would have the advantage of an
  established customer base that can fund the
  investment of infrastructure to support SaaS.
• As Fra10 points out, Established companies
  have a resource advantage over start-ups in this
  regard as current revenue from licensed software
  sales can fund the SaaS product development, and
  the skilled resources required may already be on
  staff.
• On the positive side, the market values SaaS
  companies higher at that liquidity event due to
  the predictable nature and consistent growth of
  their recurring revenue models.  Fra10
• Hence my recommendation is to move to a SaaS
  delivery model over the next 5 years.

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Adoption Analysis Summary- POWS