November 2016

SDP Investments Drivers

The vast majority of SDP deployments (nearly 80%) surveyed by Moriana have been justified by delivering new services in a time and cost-efficient way. 65% of CSPs have identified the SDP as the only viable solution to reduce OPEX and CAPEX for new services. One, common service architecture can avoid the expenses of developing and operating services in “stove pipes” including the high costs of integrating each new service into legacy platforms and the high OPEX caused by annual maintenance fees on proprietary software and hardware components.

The cost of launching a new “stove-pipe” often exceeds the cost of an SDP and perpetuates vendor lock-in situation. By acknowledging this reality, one in three SDP projects capitalized on the opportunity window opened when a legacy service platform reached its end-of-life.

Not surprisingly then, SDP investments are often perceived as pure “technology push”: within this window of opportunity the SDP is a replacement of obsolete technology; outside this window, an SDP is a new architecture for the services layer meant to future proof against changes in network technologies. 23% of responders in the Moriana SDP Market survey confessed that their SDP investments were a pure “technology push” while 48% stated that their SDP investments were not driven by any concrete business case.

The strategic character of the SDP investment became obvious in the case of leading global MNO organizations such as Vodafone, Orange, T-Mobile, Telenor, 3, as well as regional MNOs such as Mobilkom or Singtel. These operators, running multiple networks, could truly benefit from adopting one harmonized SDP platform across thewhole group. However, in many cases, internal company politics, local interests and market demands combined with technological challenges related to the variety of legacy IT and service platforms deployed across the operator groups, made such SDP deployment decision very difficult if not impossible. Nevertheless, there are good examples of successful SDP deployments on group-wise bases such as Vodafone Live, Orange SNE and MDSP or, on smaller scale, Mobilkom Austria who successfully deployed one SDP platform across the whole group of seven MNOs in Central Europe.

Innovative Tier2/3 operators took a more pragmatic approach adopting service specific SDPs to generate immediate revenue and guarantee quick ROI. The success of mobile messaging and content delivery platforms is proved by a good 10% and sometimes even 25% of the overall ARPU in mature markets, for example the revenue from mobile content in Japan and South Korea. These SDP investments enabled the CSPs to build successful and profitable business models, attracting

Third Party content and service providers in each specific market. In the area of next generation voice services, including VoIP, most of the SDP investments made by Tier 2/3 operators have been based on concrete business cases and this resulted in quicker ROI from these services.