News from Globes
by: waitingpatiently4 10/24/02 10:15 pm
Yahoo Msg on PRSF: 33754 of 33781
Telecom industry sources claim that Amdocs has so far been unable to come up with an IP billing system capable of meeting these challenges. As a result, Amdocs’ competitors have succeeded in winning over half the billing projects for advanced-generation cellular networks.
Even worse, telecom operators used to talk about IP billing systems as a future need. They knew they would need them one day, and let billing system suppliers know. In the meantime, they continued buying traditional billing systems. Amdocs assumed it had sufficient time to prepare and would have the new billing systems ready by the time they were needed.
But time is running out. Until now, Amdocs would send a 10-12-man team to each meeting with an operator. Its systems are complex, and any change, no matter how minor, consumed huge resources of time and money. At a time when telecom operators must quickly change their systems, Amdocs’ billing system is problematic. Telecom operators now know exactly what they need, and the key word is “flexibility”.
“Customers now know what to ask,” said a telecom industry source. “They want to know how the billing system will adapt to their requirements, and how it can be altered in a few months. Operators can, for instance, demand a system able to bill its customers according to six parameters. At the same time, they want to be able to add another three parameters four months down the road.
“Unlike its competitors, Amdocs cannot make changes to its systems easily and quickly, because each change to its existing systems requires changing program code. Today, this is the company’s weak point, because to carry out every change it has to send 30 engineers who stay with the operator for six months. This costs tens of millions of dollars.
“Let’s suppose that I want to add two new parameters to my system. I want to add something to a certain service that will cost the user an extra $1 an hour, and $2 for broadband. With the systems of some of [Amdocs’] competitors, the operators can add new fields themselves with a simple action that takes a few hours. In more complex cases, the billing company will send someone to assist, which might take another few hours more. As I mentioned, with Amdocs, there is a need for 30 engineers who alter the system from the foundations.
“Customers no longer want this bother, because they know their systems will probably have to undergo a great many changes within very short timeframes. The entire market is undergoing trial and error. No one now knows which services will have to be supplied quickly and how they will be priced. If every change requires calling Amdocs to send a team over who will stay on for months at a cost of tens of millions of dollars, the services won’t be economical. And if Amdocs’ competitors have systems in which operators can easily update themselves, it’s obvious which they will choose.
“Bottom line, Amdocs has superb traditional billing systems capable of handling tens of millions of customers. The problem is that it isn’t built for change, because its technology isn’t dynamic. The most important challenge Amdocs faces today is to change the basis of its systems. This is a difficult task, especially since its competitors are rushing ahead.”
It will be remembered that Amdocs has an IP division, but the development of a system competitive against MaxBill or Geneva [acquired by billing giant Convergys (NYSE:CVG)] could take too long. The best solution might therefore be to acquire a company that already has a working IP billing system. The only possible candidate is Portal Software (Nasdaq:PRSF). While Portal’s system suffers from some deficiencies, it’s better than the current situation.
Portal’s current market value is only $45 million, pennies for Amdocs, which has a $1 billion in the till, especially when its potential to Amdocs is taken into account. It isn’t clear whether Amdocs was too badly burned by the failed acquisition of Solect Technology Group, or if there are other barriers blocking an acquisition of Portal, but many industry sources believe such an acquisition would be quite beneficial to Amdocs.
The alternative to an acquisition is to independently develop a suitable system. But developing a system in-house would cost too much and take too long, since Amdocs lacks engineers with an IP background. Amdocs engineers have backgrounds in traditional telephony switches technology.
All billing and telecom industry sources have no doubt that Amdocs will ultimately survive. The question is what measures will it take in the next to years, and which companies will it acquire to get back in the running. |
