Fix telco CPQ to accelerate B2B expansion

The telco industry is finally beginning to see the benefits of years of digital transformation in B2B‑focused operations.

Unfortunately, when it comes to the commercially critical workflow of enterprise customer quoting and deal management, they remain “in a world of pain”, according to Greg Tilton, VP for Quote & Order at SaaS platform provider CSG, in discussion with TelcoTitans.

Financial structuring of B2B contracts has traditionally involved manual processes due to the complexity involved in creating detailed, intricate service agreements with multiple moving parts. The advent of configure, price, and quote (CPQ) systems, which came on the telco radar around 15 years ago, was expected to simplify and automate complex processes and shorten the timeline between quote and cash.

The sector’s journey with the technology has not proven to be a smooth one, however, and many implementations have failed to live up to the initial promise.

Tilton understands the disillusionment this has engendered, but also believes he knows what is at the heart of it, and how this can be addressed. “The foundations of too much telco CPQ remain generic, and that has held them back”, he explains, with many standard applications proving useful for consumer or SME uses, but not up to the job for enterprise.

This has led to many operators, which may now have implemented two, or even three, CPQ systems over this period, falling back on manual processes across the ordering process, particularly for higher-complexity, higher-value services.

“There’s a belief that enterprise pricing and quoting is an unsolvable problem still, because of that earlier experience. To prove otherwise can be a major undertaking.” 

Tilton.

CSG is ready to put in this work, with Tilton arguing that tackling the need for greater automation in CPQ is not a challenge that can be avoided, especially as delivery of enterprise services is only likely to get more complicated and important as operators seek to drive B2B revenue growth through added-value services. The rise of AI increases this need to move faster.

Tilton also highlights the value of acting now, listing a series of benefits that come with an effective CPQ system, bringing flexibility, speed, and accuracy to the order process. These benefits have clear direct financial impact that can translate into gains of tens and even hundreds of millions of dollars for operators, and he has the case studies to prove this.

The multi‑million dollar cost of pricing guesswork

For many telcos, Tilton considers inaccurate quoting to be a source of significant revenue and margin leakage.

Underlying costs are often much higher than anticipated in commercial agreements when elements of a solution are not fully configured. “Too often, there’s too much simplification, and a risk that a quote is based on a guess”, he warns. Problems with a quote can be exacerbated when changes are made during the quoting and fulfilment cycles, which have a meaningful knock‑on effect and leave telcos having to absorb increased delivery costs.

“We’ve seen some pretty big examples where tens of millions of dollars of revenue have been lost through the cycle.” 

Tilton.

The revenue boost from addressing these leaks can in some instances be large enough to justify the entire business case for deploying telco‑focused CPQ.

In one example, CSG is instrumental in a transformation programme at a tier-one European operator where savings of €200m are targeted solely from flow-through fulfilment that starts with accurate configuration, quoting, and ordering at the business layer, and includes flow-through to network management.

Revenue leakage is a little discussed or acknowledged problem across the telco sector that can lie undiscovered for a long time.

Tilton highlights how an audit of an Australian operator by KPMG identified AUD $30m ($20m) in unbilled services that had arisen from changes made during the fulfilment cycle that were not agreed and recognised on commercial terms. “We were able to completely close that off for them”, he says.

“We are able to close gaps between the commercial agreement and service delivery, and give the transparency that operators need to ensure that each deal that they do is profitable.” 

Tilton.

Re-assuring the CFO when complex deals inevitably evolve

Getting to a position where an operator has an effective structure on quoting can also deliver clear benefits for the finance function, according to Tilton.

Changes to contracts involving complex networks and solutions for sophisticated enterprises are inevitable, and providing transparency has significant value. A CPQ system that brings a greater level of clarity on evolving contracts also supports clearer final terms and smoother sign-off.

“When you have an understanding not just of the ‘price’, but also the underlying ‘cost’ of a contract, you have absolute margin transparency that can be validated.” 

Tilton.

CSG provides a way to manage approvals using structured data, which minimises the need for coding and opens the way for telcos to simply revise parameters around deal clearance or levels of approval needed to ensure that oversight meets business needs.

“Any sort of discounting may go through an approval process that can be triggered by a number of parameters. The most common one is margin, and if the margin falls below a certain level, approval may be escalated, and often at the highest levels of discount it’s going to the CFO themselves to sign off. We can really put them in control.”

Tilton.

Finance teams appreciate the speed an effective CPQ can bring to the order process. “If you can accurately configure a quote, then you can drive your fulfilment processes end‑to‑end, and that integrity translates into being able to get a quote out the door very quickly”, he says. This responsiveness can also have significant uplift on the likelihood that a prospective client will sign on the line.

Tilton is acutely aware of the challenge of managing legacy systems and ‘tech debt’ within the telco sector. While he advocates for the benefits of significant change within the business layer, he further highlights how CSG solutions can work with, and help manage, the lifecycle of different generations of networks and systems already in place. This enables operators to modernise fulfilment while still leveraging prior investment.

“Operators often have different generations of network equipment and different operational systems on top of each of these different generations. Now, if an operator can expose the services that they deliver on each respective generation of equipment through northbound APIs, then CSG can provide a business layer to pull it all together… You don’t necessarily need to replace the systems that are directly managing the network, and we’ve got a whole lot of capabilities that make that a reality.” 

Tilton.

M&A can mean portfolio consolidation (and simpler means smarter)

Telcos often evolve through mergers and acquisitions, further increasing the complexity of internal systems and leading to product portfolios sprawled across the customer base.

This presents a significant obstacle to creating a manageable catalog that facilitates smooth enterprise order management and fulfilment, but also one that Tilton asserts can be addressed through the right CPQ system.

Tilton references Australian fibre operator Vocus, which came together through acquisitions of 15 businesses that had in turn also been built up through earlier acquisitions. This led to a scenario where there were 60,000 products available at the time a CSG solution was onboarded.

To create a viable catalog that is compatible with Vocus’s new CPQ system from day one, the operator undertook a major discovery and rationalisation exercise that reduced the total to just 208 products. Tilton stresses that this was not just a rationalisation exercise taking out operational cost, but also opened future optionality within the portfolio.

The CSG catalog‑driven approach features multiple configurable elements within a product that are related to different levels of functionality and involves a “looser coupling between the product and the price”. With pricing that flexes based on how the product is configured, Tilton says operators can offer “a smarter product” minimising the need for — and costs related to — a larger portfolio that is less flexible and less responsive to changes in customer requirements.

“When you’re not terminating a product and replacing it with another to meet a new customer requirement, but instead just changing the configuration of the product they’ve got, you make it way easier to manage change going forward. Telcos can get a lot of cost out of their business with this sort of product simplification.” 

Tilton.

CPQ done right: springboard to value-added services growth

Tilton sees a huge opportunity for operators in the B2B sector that can be tapped into should they successfully address challenges around constructing and fulfilling offers.

He cites cybersecurity, managed Wi‑Fi services, SaaS, and IoT as among the areas that interplay with underlying connectivity and can be integrated into telco offerings more simply with the right CPQ system in place. “Having it all as part of the offer, and having all those dependencies managed in the way it’s fulfilled, is a really big opportunity for telcos to mean a lot more than just ‘connectivity’ for B2B”, he asserts.

Tilton’s ambitions for what operators could be doing for enterprise customers is considerable. “There is a lot of potential for a telco once they solve that foundational problem of being able to put out connectivity solutions really seamlessly across all of their markets”, he says, with services then able to be enriched with IT-value.

“I think the objective of a telco should be to get their enterprise customers to the point where they don’t need an IT department. The telcos have got the opportunity to eat a lot of IT’s lunch and grow their enterprise businesses.” 

Tilton.