Heavy Reading Research

What's Next for SDM?

Given the overwhelming pre-Christmas buzz around Software Defined Networking (SDN) and Network Functions Virtualization (NFV), I had fairly low expectations that Subscriber Data Management (SDM) would have as strong a focus at MWC 2013 as it did in 2012.

However, I was disappointed to find that SDM was hardly represented at all at MWC. From what I can tell, there seem to be a number of underlying factors. First, the focus on SDN and NFV has likely triggered operators to reconsider strategic plans and spending. Second, in 2012 several major carrier outages identified as SDM related were well documented, which I believe has caused some operators to delay consolidating data into a single database.

Despite this pause, I still believe SDM remains an integral part of any carrier successful personalized services vision. Let's review why.

Data Management & Network Intelligence
There is no question that data management remains a challenge for network operators, which was the original driver for the design of new next-gen HLRs utilizing a common larger backend database. These systems were first deployed in the 2005 timeframe and have achieved carrier grade status (99.999% availability). Therefore, while the failures of last year should not be taken lightly, I believe they should be considered as individual network complex events, which do not reflect that the underlying SDM technology is unstable.

This is not meant to be disrespectful to network operators. Having worked as a network planner, I know operator network engineers and vendors follow an exhaustive suite of best practices, including lab software and regression tests, code reviews, first office verification live traffic trials and conducting network cutovers in the early morning hours when traffic rates are lowest.

Unfortunately, the reality today is that mobile networks manage many more subscribers, are more complex and potentially more vulnerable to software failures. I view this risk as not SDM unique, but tied to many new approaches, including SDN and NFV, since both will add additional complexity by expanding the use of distributed software intelligence in the network.

Services Model Acceleration & Evolution
Without question, SDM represents a services change agent on several fronts.

Personalized Subscriber Services
The role of SDM is well documented here, including support of mobile broadband with highly personalized content. This remains a strong business driver, but even here I believe we have only scratched the surface of services potential of utilizing SDM and analytics to provide highly contextually aware services. A related consideration is the value of utilizing SDM techniques to deliver customer care in a more personalized manner, which can be a strong competitive differentiation for an operator.

Rise of the Two-Sided Business Model
In addition to subscriber personalized services, SDM will continue to evolve in response to market and business forces. And one of the untapped opportunities remaining for network operators is the exploitation of the two-sided business model. While the concept of a two-sided business model has existed for some time outside of the telco domain, the approach is becoming more attractive to telcos in part due to the ability to leverage SDM and analytics to enhance service outcomes.

As we covered in our report SDM & Analytics: Reshaping the Services Landscape of Man & Machine, SDM extends conventional business relationships into a new sphere of influence for telecom operators by not only focusing on the traditional subscriber customer base or downstream customers, but also upstream customers, which are third parties that can benefit in some form by gaining access to downstream customers via the network operator.

These third parties may be developers, advertisers, financial institutions, retail outlets or content owners that operate and are engaged via a two-sided Business to Business (B2B) model. Since SDM personalized subscriber information is inherently useful to upstream customers, SDM and analytics support is vital for assisting telcos as they struggle to cope with the changing realities of the telecom marketplace upstream.

The Two-Sided Business Model

The Two-Sided Business Model
Source: Heavy Reading

B2B High Runner Services
While the B2B services landscape is still being defined, already there are several distinct business opportunities that have attracted considerable attention. These include, m-commerce, M2M and Identity Management.

Since 2012, m-commerce – including mobile payments – has become a more mainstream focus of major mobile operators as they look for new opportunities to generate revenue and maintain subscribers. While solutions, such as mobile payments, do not necessarily require SDM if deployed as an overlay, we believe that in the long run integration of applications such as mobile payments with SDM will not only simplify service administration, it will expand service reach if end-users have more options to personalize their payment experience.

SDM2M: The Impact of Machine-to-Machine
Although SDM and analytics by nature seem suited only for human interaction, given the emergence of smart grids and consumer devices with embedded wireless chips, we believe both are extremely well positioned to play a role in the M2M adoption curve. While the realm of inhuman business experience is not yet fully defined in a commercial setting, these devices unquestionably represent unique FE requirements that operators must integrate into their services portfolio.

Although M2M devices will not generate close to the traffic patterns of human subscribers, the sheer number of devices that will be deployed represents a considerable challenge from a data management and authentication perspective. Even though, machine requirements are unique we believe that the convergent model also applies here and will drive a model in which M2M and human profiles will start to overlap as human service models become even more data-centric. In this case, integration with SDM and M2M is highly desirable.

Identity Management
Another key function that SDM supports is Identity Management. While Identity Management is fairly broadly defined, it clearly represents a powerful capability/service in its own right, especially as an enabler for B2B services, such as m-commerce, to validate users and for M2M to link devices to subscribers. I believe network operators have traditionally underestimated the inherent value of identity information, but are now starting to realize it's a strategic enabler that OTT cannot support since they lack network specific and device level information.

Ironically, this was reinforced at MWC 2013 when I faced a myriad of new security question challenges (some of which I had forgotten the correct answers to) in order gain access to social network applications when logging in for the first time in Barcelona. While OTT applications could ultimately days later validate where I had tried to access them from, my mobile had received a welcome SMS and been authenticated as soon as I had arrived.

In conclusion, despite recent setbacks, I believe the technology foundation of SDM remains strong and will help operators not only more effectively manage data, but also more successfully complete in this era of aggressively changing business models and services expectations.

— Jim Hodges, Senior Analyst, Heavy Reading

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