Posts Tagged ‘Telecom Billing’

Why “owning” the customer relationship is so important for service re-sellers

November 15, 2017

Sales and billing models have been top of mind for me recently, particularly as Datagate is in the process of expanding into the North American market and getting an understanding the dynamics of the service re-sellers and vendors who operate there.

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In the ICT industry – in particular, business computing and communications – we have seen a huge shift towards the “as-a-Service” model and a shift away from the earlier model of selling hardware and desktop software solutions.  This has brought about what we refer to as the age of the service re-seller.  Service re-sellers are everywhere at this time – you just need to know how to recognize them.

Service Re-sellers

Within the ICT industry, service re-sellers are businesses that sell on-line services that are built, owned and supplied by another another party – a service vendor.  Typically in the ICT Industry,  service re-seller are Managed Service Providers (MSPs), Business Solution Providers, Value-Added Re-sellers (VARs) and Telecommunications specialists.

Often, service re-sellers have the advantage of being able to offer a closer, more personalized service than what the large service vendors can offer. MSPs can often position themselves as a single point of contact for all ICT services to their end-customers. Service re-sellers will often combine and bundle services together from different vendors to create unique value offerings – which are more difficult for competitors to displace.

With any online service sold by re-sellers, such as cloud solutions, telecommunication and data services there are a number of different marketing, sales, billing and support models that are possible.  Each is model is significant as to who “owns” the customer relationship.

Who “owns” the customer relationship?

Any relationship has at least two parties and obviously the customer owns one side of the relationship.  But on the the other side, the ongoing supplier relationship; who “owns” it will depend on who controls it and who is more visible to and engaged with the customer.  Most important is the flow of money; who bills the customer and under what brand?

If the re-seller sells, bills and supports the service under the re-seller’s brand and also holds the supply agreement with the customer, then clearly the re-seller fronts and owns the supplier side of the customer relationship.  If the re-seller allows the service vendor to perform any of these functions under the vendor’s brand (particularly billing and the flow of money), then it cannot be said that the re-seller owns the relationship.  If the service vendor performs all or nearly all of these functions under their brand, then the service vendor owns the relationship.

Why is owning the customer relationship so important?

The “owner” ultimately gets the most business value from customer relationship, in terms of control of the service and also the boost in valuation of their own business.

If the re-seller is the relationship owner, then the re-seller has more power in negotiations with service vendors and is often able to change or re-negotiate service contracts or change vendors in the background to the customer relationship.

Business valuations are most often calculated on multiples of revenue.  Locked-in monthly recurring revenue  (MRR), such as what you have with contracted on-line services, is valued significantly higher than other types of revenue.  This is because MRR is the best quality revenue – in that it is regular, ongoing and largely predictable – a solid cash platform for building valuable businesses on.

How to own customer relationships in the service re-selling model

For a service re-seller to “own” a service relationship (such as telecoms, Cloud software & services etc), those services must be named, billed and supported under the re-seller’s name and/or brand.

This typically requires a white-label service-billing solution, such as Datagate that can plug into usage data supplied by service vendors, apply pricing plans created by the re-seller and the automatically create & distribute re-seller-branded bills to the end-customers.  Datagate also provides re-seller branded portals where the end-customer can view invoices, reports and analysis of their service consumption.

Datagate’s mission is to enable service re-sellers (who are typically MSPs in the ICT industry) to maximize the value of their business and “own” their customer relationships in the areas of telephony and other on-line utility services.

We are also committed to helping service vendors maximize their sales channel growth through service re-sellers.

 

 

MSPs are Trusted Advisers, Solution Aggregators

October 9, 2017

The ever-increasing economy of scale of the Cloud is driving the business computing world towards fewer, larger vendors offering massively scale-able public-cloud platform services, while at the same time also driving a trend towards tighter specialization of on-line applications (“Apps”) that work together to provide integrated business solutions.

Computer media and internet communication concept

The role of the MSP (Managed Service Provider) is evolving towards the following areas;

  • Providing strategic advice and planning for business IT and communication requirements. Helping clients decide on what technologies, platforms and applications are best suited for their needs and which will work together in a coordinated, integrated solution set.
  • Brokering Cloud services – aggregating solutions.  Sourcing, acquiring, integrating and optimizing applications and services to build cohesive, well integrated and economic business solutions.
  • Management, optimization and support of business applications, services and platforms; regardless of where they are located – public or private Cloud.
  • More focus on business processes and the solutions required to support them.
  • Recognizing new adjacent sales and service opportunities, in order to provide more value to clients and thereby maximize potential revenue per client.  For example, many MSPs have recognized that the convergence of phones and computers means that MSPs can extend to providing VoIP, broadband and other traditional telco solutions to their clients – becoming a single point of supply and support – which is increasingly attractive to end-customers.

MSPs are well suited to the role of trusted adviser and solution aggregator, because they typically have a much closer relationship and understanding of their clients’ business processes than the larger telcos, application developers and public cloud providers.

The challenge to MSPs is to recognize and lock in these new recurring revenue services whilst maintaining their own brand & identity, gaining differentiation & competitive advantage – and also keeping their own business complexity down to a minimum.

This is where white-label, cloud billing systems such as Datagate, capable of billing numerous telco & utility services on a single MSP-branded invoice and end-user portal are ideal.  The services, no-matter where they are sourced, appear together on the invoice and portal under the same MSP branding, thereby minimizing complexity and maximizing MSP brand exposure to the end-client.

MSPs that evolve and adapt to this new service-based, knowledge-based environment will be those that lead and win.  Recognizing, locking in and monetizing new adjacent opportunities is key to this success.

Paradox of the Telecom Sector

August 20, 2017

The telecom sector is facing a paradoxical mix of circumstances. On one hand it provides the mission-critical technology platform for innovation, growth and disruption across nearly every industry; whilst on the other hand, it faces enormous changes and disruptions to its own traditional business model and revenue streams, more so than perhaps any other sector.

Furthermore, the average revenue per user, across the entire global telecom industry, is falling every year.

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The telecom sector provides the platform for innovation and disruption across nearly every industry, yet faces the challenge of innovation and disruption itself, perhaps more so than any other sector.

Incumbent telecom providers need not be the victims of disruption and reducing revenues in their own industry; they can be the agents of change and disruption, by recognizing (or even creating) shifts in the market, differentiation and moving faster than their competitors to meet the new market dynamics.

Recognition of new trends, agility and speed of execution are critical factors. Reinventing business models, bringing new offerings and services to market must be done in quick time.  A major factor, once new offerings are selected, is how quickly billing systems can be adapted to facilitate new offerings, bundles with new services and pricing plans. Billing is so often the Achilles heel in the telecom world.

Differentiation between Telecom providers can be achieved by bundling complementary or value-adding services or offerings with standard telecom services. This can often be achieved through partnerships with service providers outside the traditional telecom sector.

A significant disruption (or opportunity) for the telecoms sector is its convergence with other on-line service providers.  Telecom services are now being successfully integrated and sold by the I.T. industry, managed service providers (MSPs) and other service sales businesses. Electricity companies are bundling telecom services such as broadband with their offerings. Cloud software businesses are also selling and bundling telecom services.  Phones and computers are now one and the same.

Billing is so often the Achilles heal in the telecom world.

Bundling different yet complementary service types under a single pricing plan, on a single invoice makes it more difficult for competitors to undercut pricing with only a single service type. Service bundling is said to make telecom customers more “sticky” and provide differentiation.

Rather than competing with and resisting new convergent players in the sector, some telecom providers are actively embracing and pro-actively driving this convergence. A prime example in New Zealand, is Spark Wholesale that offers a range of telecom services to its clients, to enable them to sell telecom services under their own branding, giving Spark access to more customers and markets that it might not otherwise be able to reach.

Wholesale telecom providers enable service businesses, such as Managed Service Providers (MSPs) – who have trusted adviser status with their customers, to market and sell telecom services such as broadband, SIP, VoIP and mobile offerings to predominantly business customers.

Telecom resellers require specialized automated usage-billing solutions. Datagate is an agile, white-label, cloud-based billing solution which partners with Wholesale Telcos to get new telecom re-sellers up and running quickly, with billing functionality that integrates with the Telco’s usage data to rate, produce and distribute invoices to their end customers. Datagate can connect to and bill most usage-based services and make it easy for convergent bundling of service types, where multiple service types are combined on a single invoice.

Embracing new business models, new offerings, partnerships, agility and speed to market are the key requirements for success in the telecom sector of this new disruptive, paradoxical world.