1111 Symsoft Cloud Messaging White Paper

8/3/2019 1111 Symsoft Cloud Messaging White Paper

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White paper

October 2011

www.symsot.com

MeSSaGiNG iN the CLOUD

Ground break ing operator opportunit y or ad ?


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Messaging In The Cloud

October 2011

exeCUtive SUMMary

Cloud-based solutions have been a talking point in the telecommunications industry during the past ew

years with many mobile service providers evaluating the advantages o the new approach to service delivery.

One strong reason or an increased interest in the cloud is a ocus on nding more ecient and scalable

ways to oer messaging services to an existing market. Another reason is a constant drive to identiy and

address new market opportunities such as Application-to-Person (A2P) messaging services in fexible and

cost-ecient ways.

To reach ull benet rom cloud-based messaging solutions, operators should review the opportunity rom

ve perspectives.

Deployment model Operators considering cloud-based messaging services must decide whether theywant to own and operate a private cloud or i a third-party cloud provider is a better choice. This decision

should be inormed by the size o the operator and the amount o trac to manage.

Market selection Operators must choose which trac to handle using a cloud solution. Through the

cloud, resources can be shared between dierent networks with dierent trac patterns. This presents an

attractive possibility or operators managing trac with high peaks or large seasonal variations in one or

more markets.

Infrastructure architecture To avoid that extreme trac patterns in one location have a negative impact

on other sites, the solution should also allow or a separation o dierent markets.

Reliability For a successul launch o new cloud-based services, it will be vital or operators to select a

cloud provider that has the experience and tools necessary to provide a reliable service. Service capabilities It is important to ensure that solutions are t to address the requirements and

demands o dierent customer groups and market segments, or example enterprise messaging.

Properly deployed, cloud solutions can improve time-to-market or new services and decrease capital

expenditure and total costs or delivering messaging services. In this way the cloud presents a new paradigm

or continued operator business growth.


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October 2011

the MObiLe MeSSaGiNG

OppOrtUNity

reaChiNG five biLLiON pOCketSText messaging is an essential part o the operator service portolio representing up to 20% o all operator

revenues. With 200,000 text messages sent every second by over 5 billion mobile users, SMS is by ar the most

requently used messaging technology. Total revenues rom text messaging worldwide exceed revenues rom

video gaming, the Hollywood movie industry and the music industry combined.

Due to a number o valuable qualities, the SMS medium keeps a superior position in the market place even as

new alternatives to SMS text messaging are being introduced. SMS is a unique application in that it works onall handset models, on all networks, anywhere with basic cellular coverage.

Text messaging via SMS has an unrivalled immediacy and ease o use. It is ast, discreet and in many ways the

quickest, most personal and most cost-ecient way to communicate. Practically all mobile phones provide

an intuitive interace that is usable or all literate subscribers. Most subscribers have acquired the refex o

reaching or their mobile phone as soon as they hear an incoming message, reading them within seconds o

receiving them.

prOfeSSiONaL MeSSaGiNG appLiCatiONS

As a complement to SMS sent rom one person to another, enterprise or Application-to-Person (A2P)messaging is emerging as the sending o tailored text messages rom enterprises to their mobile end

customers. Increasingly, companies realize that they can use SMS in their business processes to develop and

deepen relationships with customers and to increase business. A2P messaging is now used by companies

in virtually every industry sector or everything rom providing reminders and time-critical alerts to

banking services and payments, rom mobile marketing and customer service updates to authentication and

transaction oriented services.

Enterprise messaging services currently represent 25% o the messaging revenues globally and are orecasted

to grow to 40% in ve years [Footnote: Portio Research Ltd, 2011]. A2P messaging is also expected to give

mobile operators higher revenues per message compared to traditional Person-to-Person (P2P) trac. .

the Shift frOM perSONaL tO prOfeSSiONaL

MeSSaGiNG

Looking ahead, SMS trac is predicted to keep growing or both P2P and A2P purposes (gure 1). The total

trac growth or traditional SMS messaging is orecasted to a healthy annual rate o 7% [Footnote: Portio

Research Ltd, 2011]. While some markets are reaching saturation, emerging markets such as Arica, Middle

East and South East Asia show double-digit growth.


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Due to increased market saturation and the adoption o smartphones supporting instant messaging, the

growth rate or P2P messaging is however assumed to decrease over the period. The A2P segment on the

other hand is orecasted to grow at around 20% yearly. This will help compensate or the reduced growth

rates or traditional messaging and help maintain the position o SMS as a premier mean o mobile

communication and an important source or operator revenues.

Figure 1: Worldwide SMS trafc continues to grow over the coming our years. Source: Portio Research Ltd, 2011.

When considering the projected revenue streams over the coming years, the dierence between the two

business areas becomes even clearer (gure 2). Total revenues rom P2P trac are projected to startdecreasing due to increased market competition. A2P revenues will on the other hand continue to grow due

to an increased market interest in commercial messaging, in combination with maintained higher revenues

per message. For mobile operators, this presents a clear opportunity to compensate or a potential loss in

traditional messaging by re-directing some ocus to enterprise messaging.

Figure 2:A2P messaging presents new opportunities as P2P revenues begin to decrease. Source: Portio ResearchLtd, 2011

3 535,4

4 633,7

6 123,3

7 031,1

7 900,58 747,7

9 301,8 9 731,0

437,5 591,9 813,5964,4 1 188,8

1 415,7 1 666,91 934,0

0

2 000

4 000

6 000

8 000

10 000

12 000

2008 2009 2010 2011F 2012F 2013F 2014F 2015F

SMS traffic (in Billion)

P2P SMS traffic

A2P SMS traffic

68,173,4

83,989,5

93,6 95,5 94,289,4

22,4 25,530,7

37,444,2

52,360,4

69,6

0

20

40

60

80

100

120

2008 2009 2010 2011F 2012F 2013F 2014F 2015F

SMS revenue (in USD Billion)

P2P SMS traffic

A2P SMS traffic


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October 2011

MeSSaGiNG StiLL iN the SpOtLiGht

For mobile operators with an invested interest in the messaging market, the ollowing conclusions can bemade:

TraditionalPerson-to-Person(P2P)messagingcontinuestorepresentasignicantmarketopportunityinthe next ve years and will remain an important part o operators service portolios worldwide. Decreasedgrowth rates in P2P messaging and orecasted reduced revenues will however require operators to look ornew and smarter ways o controlling cost o operations to maintain bottom-line protability rom SMS.

ThegrowingmarketsegmentsofenterprisemessagingwillbegintocompensateforthepotentiallossinP2P messaging. Grasping this opportunity requires a true understanding o the demands o enterprisecustomers and the emergence o new trac patterns, and an ability to match these new requirements inproessional, scalable and cost-ecient ways.

RevenuesfromA2PmessagingwillinitiallyberelativelylowcomparedtomostoperatorsestablishedP2P revenue streams. It is thereore important or operators to ensure that new business development oenterprise messaging services does not take place at the expense o current business operation and revenuestreams. Existing services must at all times be protected rom any negative impact o enterprise trac.


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aN iNtrODUCtiON tO CLOUD-

baSeD ServiCe

a NeW paraDiGM fOr ServiCe DepLOyMeNtCloud-based services represent a new business model or how organizations get access to hardware andsotware applications and unctionality. The idea is to leverage the speed o modern computer networks andgive customers access to unctionality and applications as services in the network or the cloud rather thanphysically distributing hardware and sotware. In a cloud-based solution, a single installation is typicallydeployed to cater or the needs o a number o dierent entities such as sites, countries or individualoperators. All services are updated and administered centrally rather than being distributed through thegeographical organization or across companies.

The cloud is attributed a number o benets such as reduced capital expenditure, lower recurring costsand reduced time-to-market or new services. As a result o this, cloud-based services have gained hugemomentum in the IT industry during the past ve years and are currently increasing at a yearly rate o 25%on the expense o traditionally sold sotware and application.

As todays mobile operators re-evaluate their current business and delivery models or messaging services, tobetter capitalize on existing and new market opportunities, cloud-based services are emerging as a qualiedalternative also in the operator domain.

DiffereNt pathS iNtO the CLOUD

The common theme or all cloud-based services is that they are centrally hosted while serving severalgeographical locations. With this as a starting point, there are basically two ways o realizing cloud-basedmessaging services in a mobile operator ramework.

In a third-party cloud-based service, an external service provider is operating and administering a commonmessaging platorm or the benet o two or more operators. While the operators are sharing a technicalplatorm, the messaging services are marketed and delivered to operator customers as an integrated part oeach respective operators service oering. Technically the services deployed on the common platorm arestrictly separated with each logical partition serving one o the operators.

In a private cloud, the organization deploying cloud-based services instead choose to operate the serviceas an integral part o its own operator inrastructure. Rather than sharing the platorm with other externalparties, the cloud-based services are shared between dierent internal entities. The most typical scenario isan international operator providing value added services in several countries, deploying message servicesthrough a private cloud across the dierent geographical markets. Another likely scenario is a major operatordelivering messaging services under several dierent brands rom one central platorm.

A third concept sometimes discussed in a similar context as cloud-based services is managed services. While

managed services in many ways can be set-up to deliver the same benets as a cloud-based service in termso cost reduction and increased cost eciency, these services do not necessarily involve a virtualization othe service. Although being sold and delivered under a service or license model, the hardware might well bedelivered and installed at customer site in a traditional manner.


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DepLOyiNG the CLOUD fOr

bUSiNeSS GrOWth

freeD CapitaL aND iMprOveD rOiA strong incentive or mobile operators to choose a third-party cloud solution or their messaging services isto avoid direct costs and capital being tied-up in privately owned inrastructure. Rather than investing in localhardware, cloud services present the possibility to pay or services as a monthly or quarterly ee.

The concept o sharing resources between several sites, whether in a private or a third-party cloud, givesadditional benets. Synergies help in reducing overall operating costs, foor space, power-consumption andthe amount o sta needed to administer a complete messaging solution. Typically, a cloud-based messagingsolution also provides relatively rapid cost advantages in that solutions are ready to use and continually

updated by the cloud-service provider, without the need or local installations, upgrades and administration.

A successul cloud implementation can thus result in direct cost savings as well as a reduced need or capitalemployed or mobile operators, compared to deploying and running an own messaging inrastructure.

ShOrteNeD tiMe-tO-Market fOr NeW

ServiCeS aND NeW CapaCity

In a cloud service, all unctionality is deployed centrally. This gives mobile operators new unctionality andopportunities in a more scalable and fexible manner than usually possible with local development andadministration.

Third-party cloud services urthermore enable organizations to scale up or down on the utilization o theirservices as the needs o the organization change. This can be done without any additional cost associatedwith the changes being made and without paying or unused excess capacity. Tying operations together overdierent geographical locations can also present the additional benet o load-sharing between dierent sites.This results in improved customer satisaction and also increased utilization and resource eciency in bothhardware and sotware licenses as a result.

This means that cloud-based mobile messaging services can contribute not only by reducing investments andcutting costs, but also by presenting concrete advantages when meeting market needs.


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CONSiDer atiONS fOr MObiLe

CLOUD-baSeD ServiCeS

Cloud-based services present an attractive option or mobile operators looking or new ways o addressing thechanging messaging market. To ully grasp the benets oered by the cloud, mobile operators evaluating dierentdeployment alternatives could consider a number o variables impacting the type o solution selected.

DepLOyMeNt MODeL

Operators looking to deploy cloud-based messaging services must decide whether they want to own andoperate a private cloud, or i a third-party cloud provider is a better choice. Operators with signicant tracvolumes rom a larger number o geographical markets can realize large savings with a private cloud. Smaller

players are on the other hand typically better served by third-party clouds. Dierent inrastructure andsolution providers will have dierent approaches to solutions, sometimes tting one scenario better than theother.

Market SeLeCtiON

An operator has to choose which trac to handle using a cloud solution. I not all trac is managed in thecloud, it is oten preerable to move trac with large peaks into the cloud to share resources between dierentnetworks with dierent trac patterns. It is also valuable to work with a supplier that has worked with cloud-based messaging beore and can assist in this analysis.

iNfraStrUCtUre arChiteCtUre

Capacity sharing is a key eature o cloud-based service delivery solutions. Still, to avoid that extreme tracpatterns in one location have a negative impact on other sites, separation must also exist between dierentmarkets. I an unmanageable peak in one market would be allowed to stop trac or all customers served bya common solution, cloud-based SMS would become less reliable rather than more reliable. It is important toensure that the solution allows or trac limits to be set per country, to ensure that a peak in one market doesnot aect trac in other markets.

reLiabiLity

I a third-party cloud model is preerred, it is important to select a provider that has the experience and toolsnecessary to provide a reliable service. Even more than with a stand-alone SMSC, it is important to evaluate thesupport capabilities o the provider and their uture plans or their cloud-ready SMS oering.

ServiCe CapabiLitieS

As the market or P2P messaging becomes saturated, most mobile operators will be considering solutionsthat are t to address the requirements and demands or enterprise messaging solutions. It is also advisable towork with a player that has a true understanding o the demands o enterprise customers, one that is able tomatch these new requirements in proessional, scalable and cost-ecient ways.

As revenues rom A2P messaging initially will be relatively low compared to most operators established P2Prevenue streams, it is important that a cloud-based service can be designed to address the new opportunitiesin a manner that does not have a negative impact on current revenue streams.


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SUCCeSS StOry: DepLOyiNG a private

CLOUD

For a multi-country operator with operations in a large number o European countries and a signicant shareo young customers, SMS is an important source o revenue. As part o an ambition to continuously nd newways to leverage the large geographical ootprint the mobile operator searched or a multi-country SMS solutionthat would allow them to oer similar services in dierent markets while retaining the possibility to customizeservices and integrations in each country. Key requirements on the new solution were the possibility to: quicklybringnewsolutionstomarketinseveralcountries centralizeSMScompetenceintheorganization increaseoperationalefciencyandimprovesystemutilization

The new messaging solution is based on a private cloud, enabling the mobile network operator to deliver shortmessage services in a large number o countries rom one single messaging platorm. Functionality is addedonce to be accessible in all markets simultaneously, without the need or hardware or sotware applications tobe installed in the individual markets. A small group o operator employees is eciently managing the completesolution.

Figure 3: A private messaging cloudrevolutionizes the business logic orinternational mobile operators

The cloud-based messaging solution presents a number o benets or the international operator:

Greatlysimplifed introduction o new services as a single upgrade o the messaging solution is sucient tomake new unctionality available to all markets being served. This has lead to increased agility in the market

place with shorter time-to-market or new services and better understanding o service trends.

Withonlyoneinstallationtoupgradewhenrollingoutnewupgrades,costs or implementing new

unctionality has decreased signifcantly.

Theconcentrationofalltrafctoacommonsolutionhasenabled the operator to gain abetter overview oservice adoption and trafc patterns in dierent markets.The competence gained leaves the operator better

prepared to identiy trends that can be exploited commercially.

Improved utilization o SMS inrastructure through the sharing o capacity between markets while

maintaining service quality.

Capacity utilization has improved over SMS-intensive holidays that are specic to a single market. These arehandled more eciently as capacity can be shared rom other markets that experience lower trac at the time.

SMSC SMSC SMSC SMSC


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SyMSOft yOUr partNer fOr

CLOUD-baSeD MeSSaGiNG

virtUaL SMSC fUNCtiONaLity fOr the CLOUDThe Symsot SMSC solution supports dierent approaches to cloud-based operations, both private andhosted third-party solutions. Symsot SMSC includes Virtual SMSC unctionality that enables the hosting oseveral virtual SMSCs on a single hardware cluster. The solution even makes it possible to operate a separateSMSC or an individual enterprise customer i needed. With a product architecture adapted to the needs omulti-network operators, unctionality can be shared between all virtual SMSCs with service congurationspecic to each market.

fULL raNGe Of prOfeSSiONaL ServiCeSFor private cloud deployments, Symsot provides integration services to ensure a successul deployment. Thisincludes integration towards all the dierent markets to be served by a solution, both with mobile networksand with existing online charging, BSS, and OSS inrastructure.

hOSteD SMSC SOLUtiONSSymsot-hosted SMSC solutions provide an attractive alternative or mobile operators wanting to purchaseSMS capacity rather than investing in a dedicated hardware-based system. We support integration o ourhosted virtual SMSC directly to mobile operator networks, online charging, BSS and OSS inrastructure, tocreate a seamless solution or scalable SMS delivery. By enorcing capacity limits or each virtual SMSC, wecan secure that trac is not negatively aected by peaks in other Symsot-hosted SMSCs.

LONG experieNCe aND LeaDiNG expertiSeFrom working with over 30 mobile operators worldwide and through close cooperation with our sistercompany CLX Networks, we have in-depth knowledge and a thorough understanding o mobile messaging.We closely monitor market developments and trends, including the demanding enterprise messaging segmentto ensure that our customers stand ready to eciently grow their messaging business.


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Symsot is a trusted charging and messaging expert

with over twenty years o industry experience. Symsot

provides solutions enabling operators globally to stay

ahead o their competitors in an increasingly competitive

telecom market. Its innovative products are used by

leading operators such as America Mvil, Millicom,Polkomtel, Saudi Telecom, Telenica, Telenor, Tele2,

TeliaSonera and 3 in more than 30 countries, serving

over 120 million subscribers.

www.symsot.com

Middle East & Arica

Symsot MEADubai Internet CityP.O. Box 500649Dubai, United Arab EmiratesTel +971 4 36 16 637

Americas

Americas Symsot Inc.5700 Granite Parkway,Ste 200Plano, Texas 75024, USATel +1 972 731 6708

Corporate HeadquartersSymsot ABKista Science TowerFrgatan 33, PO Box 1219SE-164 28 Kista, SwedenTel +46 8 566 166 00

Asia PacifcSymsot Asia Pacifc9 Temasek Boulevard#31-02 Suntec Tower TwoSingapore 038989Tel +46 8 566 166 00

20 S AB All i h d

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