Your Telecom Software Vendor’s Business Stability Matters—Here’s How Much

You hear about change and uncertainty in the telecommunications industry so often, it seems that change is the only constant. Uncertainty is the only certainty. After all, your telco business continually adapts to shifting market forces, like the explosion of AI and the economics of 5G. The last thing you want is for your telco software vendors to introduce even more uncertainty.

Think about how much your business relies on software functions like roaming quality of service (QoS) testing, network steering, new service launch testing, revenue assurance and billing and settlement. The quality of the software is key to these critical functions, but so is its continuity. Telco software vendors can undergo drastic change themselves—restructuring, litigation, bankruptcies, mergers and acquisitions.

Suppose a critical vendor of yours undergoes restructuring. What considerations would you need to make, and what scenarios should you prepare for? Perhaps more than you think. First, let’s talk about what can happen when your vendor experiences significant disruption.

Disruption to Mission-Critical Functions

Let’s consider software that handles QoS testing, revenue assurance, billing and settlement, steering, signaling and monitoring. These systems include:

• An intelligent steering system to optimize network selection for cost efficiency and QoS
• Proactive network testing that ensures seamless roaming experiences for subscribers
• A roaming settlement system that enables you to negotiate and settle international roaming agreements efficiently

 
Any disruption to these mission-critical systems could damage your reputation and financial performance. In extreme scenarios, your company’s very survival could be put at risk. There are two types of disruptions to consider:

• Operational and services disruption: Key software applications may become unavailable or perform poorly, disrupting business operations and network and signaling performance. For example, disruption to telco network testing software and services could result in:

  • Lack of network readiness: This could impede your ability to launch new services such as VoLTE and 5G services
  • Decline in roaming services quality: This can include a decline in voice quality or deteriorating data download speeds, which could then lead to revenue loss, customer churn and reputational damage

• Financial disruption: Disruption to critical software services could hurt your business’ bottom line. If your roaming settlement system fails to perform, it could result in:

  • Lost revenue arising from the incorrect billing of services rendered to partners
  • Unnecessary outpayments to partners, which could arise from disruptions in the automated reconciliation of incoming partner invoices

Loss of Product Support and Roadmap

When a software vendor undergoes restructuring, it may lead to sudden changes in priorities. That includes the products it supports—and potentially its products you’re using. What if the vendor reduces investment in those products? Or decides to sunset them altogether?

Generally speaking, reduced technical support and updates can create software vulnerabilities and performance issues, deteriorating your vendor’s product quality and reliability over time. You may find that urgent customer issues can no longer be resolved with timely bug fixes and software updates.

When it comes to telco software, however, reduced support presents rather specific hazards.

Financial impacts

Losing product support can cause similar cash flow issues to those described above—namely, those that arise from your inability to get timely and accurate payments from roaming partners. You would also need to factor in the costs associated with manual workarounds and, if it comes to it, finding and integrating a replacement software vendor.

Data security risks

If your vendor’s security measures lapse, prepare for your risk of data breaches to rise—especially if the vendor hosts data. If your vendor fails to comply with GSMA standards, you as the operator could primarily be held responsible by the partner operator. Data security lapses also expose your business to financial risks and legal complications. You may have to then navigate contract terminations and seek legal remedies that drain the organization.

Lagging behind industry standards

Consider the GSMA-mandated changes to standards and roaming procedures. These cover most aspects of the roaming business, including roaming steering, roaming testing and roaming settlement, to mention a few, and they can’t be implemented without committed, year-on-year financial investment in a product roadmap. What happens when your vendor can’t keep up and fails to implement these GSMA-standard changes?

• Damaged trust with international roaming partners (i.e., other operators in foreign countries)
• Inaccuracy in settlement that could result in unpredictable roaming costs/revenues (any manual overhead would make the partner settlements inefficient)
• Lack of visibility into roaming data, which could disadvantage you when it comes to negotiating profitable roaming agreements
• Exposure in internal and external audits, which can uncover non-compliance resulting from outdated or poor-quality software
• Difficulty leveraging new 5G/IoT use cases (e.g., the ones predicated on quality), resulting in failure to monetize new revenue streams
• Poor customer experience due to network quality issues arising from poor network testing
• Network performance issues and uncertainty resulting from poor-quality testing software

If This Seems Like a Lot to Consider, It’s Because It Is

As a telco business, you have enough change to worry about. You don’t want to be in the position of coming up with contingency plans for billing and settlement, roaming and other functions critical to your revenue and customer experience.

The unfortunate truth is, telco operators can and do end up in that position, scrambling to mitigate the fallout from a vendor’s legal or financial disruption that’s outside their control. But you can help prevent that by performing continued due diligence. First, take a hard look at your software vendor’s stability. And second, be willing to make changes if the risk you uncover is too great for your business to continue taking on. Make sure you understand these attributes of your vendor:

• Financial health

  • How does the vendor manage its cash flow and debt level?
  • Is the vendor publicly listed (which subjects it to additional regulations and periodic filings)?
  • How does it cope with market fluctuations and competitive pressures?
  • How transparent is it about its financial performance and outlook?

• Business continuity and risk management

  • How does the vendor ensure the security and privacy of its data and systems, and what are the protocols for reporting and resolving any breaches or incidents?
  • How does it monitor and mitigate the risks associated with its supply chain, subcontractors and third-party providers?
  • How much and how consistently does it invest in the R&D of the products you’re using?

• Legal and regulatory compliance

  • How closely does the vendor align with the GSMA standards and industry best practices?
  • How would the vendor deal with any disputes, claims or lawsuits that could arise from its software performance, quality or functionality?
  • How does it support you in meeting your own legal and regulatory obligations that its software’s processes touch?