Cellcom, Israel's biggest telco, is diversifying its BSS supply line with the addition of relative newcomer Vlocity as its CRM (customer relationship management) system supplier, a decision that appears to have left BSS giant Amdocs flat-footed.
Vlocity Inc. , a three-year-old company that uses the Salesforce.com Inc. platform to offer cloud-based CRM capabilities, announced its deployment by Cellcom this week in a deal that seems to be a further sign of the digital transformation underway in the market for telco IT systems, as operators look to take advantage of more sophisticated, cloud-based technologies. (See Cellcom Picks Vlocity, Salesforce for CRM.)
That shift is creating opportunities for young companies such as Vlocity, Matrixx Software Inc. and ItsOn Inc. and poses a challenge for players that have traditionally provided "on-premises" IT systems to the world's biggest service providers, including Amdocs Ltd. (NYSE: DOX), Ericsson AB (Nasdaq: ERIC), Huawei Technologies Co. Ltd. , Netcracker Technology Corp. and Oracle Corp. (Nasdaq: ORCL), which currently dominate the market. (See ItsOn Scorns OSS/BSS Rivals as It Snags STC and ItsOn Slams 'Stale' Ericsson, Huawei as It Lands Telefónica.)
Vlocity CEO and founder David Schmaier reckons 80% of operators globally will use cloud BSS in the next ten years and sees a new paradigm whereby telcos mix and match different vendors to create the best solution for their needs.
All of this ties in with a new Salesforce initiative targeting communications service providers: Eyeing a bigger role in this market, the software-as-a-service pioneer launched a new framework earlier this year aimed at helping operators to integrate their legacy systems with the cloud. (See Salesforce Targets CSPs With New Cloud Framework.)
"You can now integrate systems from other providers through web APIs, so why not pick the best?" says Schmaier. "If you have trouble with your heart, you wouldn't have a foot doctor operate on it." [Editor's note: That would depend on your level of insurance…]
Vlocity claims its cloud-based systems have a number of advantages over the legacy ones still in widespread use. By helping operators to release products more quickly and market new offers more efficiently, it already claims to have boosted average revenue per user for some of its customers.
Others, including pay-TV provider Sky Italia and Canada's Telus Corp. (NYSE: TU; Toronto: T), have been able to slash costs by taking the pressure off customer contact centers, with subscribers using self-service and web features to resolve problems, according to Schmaier.
What may have prompted Cellcom's decision to select Vlocity is the growing importance of triple- and quad-play services to the operator. "It makes more sense to put CRM and order management on top of those different stacks than do a giant billing convergence," says Schmaier. "You might get some benefits from that but the customer wouldn't notice the difference, and if you spend time and money on an onmichannel experience that integrates into those three or four stacks, there is much higher ROI [return on investment]."
Even so, any Cellcom transformation will certainly not happen overnight. Working with another Salesforce partner and integration specialist called Blat-Lapidot, Vlocity plans to shift Cellcom on to its cloud-based technology in a seven-phased approach that will take about two years.
"You gradually roll out more and more value and features over time and slowly turn off on-premises capabilities," says Schmaier. "No one wants to shut down the company while you change systems and this evolutionary approach is what makes sense."
So what is being shut down? In its official announcement of the deal, Vlocity noted that it has been selected by Cellcom "to replace its existing CRM system." Schmaier suggests that incumbent is Amdocs, Cellcom's long-time billing system partner, which announced in mid-2014 that it had been selected by the Israeli operator to supply software to update its CRM capabilities. (See Cellcom Israel Deploys Amdocs CES 9.1.)
"Cellcom Israel had been working on a project with Amdocs, which has its own CRM capabilities, but decided after a couple of years that Vlocity was modern and cloud-based and therefore more agile," says Schmaier.
Cellcom did not respond to repeated requests for a comment on its latest BSS system selection, while Amdocs had not responded with an official comment as this article was published.
Vlocity now claims to be working with about 50 operators worldwide, including the likes of Deutsche Telekom AG (NYSE: DT), Telefónica and Swisscom AG (NYSE: SCM), and says it is the fastest-growing of Salesforce's 3,000 partners.
Schmaier would not disclose details of its financials but drew a comparison with Veeva, a Salesforce partner and CRM specialist that targets pharmaceuticals companies, when discussing Vlocity's prospects.
"Veeva is now a public company worth $5 billion and with annual revenues of $600 million, and it's used by 22 or 23 of the top pharma companies," he says. "We think we can be Veeva times ten, because our market is ten times bigger than pharma, and so far we are growing faster than Veeva did."
On the funding side, Vlocity has now raised a total of $50 million, including $42.8 million during a round led by Salesforce and systems integrator Accenture last year, and is channeling its spending into product development and the opening of new sales offices around the world.
Of critical importance to the company's growth could be the "Go Digital" partnership it announced in January with Matrixx Software, another BSS startup that develops charging systems as an alternative to the billing platforms sold by the likes of Amdocs. (See Matrixx Lines Up New Customers, Funding and Matrixx, Vlocity Launch Go Digital.)
Schmaier reckons telcos are sometimes wasting billions of dollars on outdated and unnecessary billing systems that could be replaced by Matrixx Software's solution.
"We have a huge business interest in this and will be making a series of announcements," he says. "Matrixx has customers like Vodafone, Telstra and PLDT from the Philippines and so it's a great partnership from a business point of view."
— Iain Morris, , News Editor, Light Reading