Amdocs Overhauls Its Marketing

Amdocs' Profile

Amdocs (NASDAQ: DOX), is a leading provider of billing systems, customer care, and support for the communications industry in North America, Europe, and the rest of the world. A global company with revenue of about $1.8 billion (USD) in fiscal 2004, Amdocs employs over 9,500 IT professionals and serves customers in more than 40 countries around the world.

Headquartered in Ra'anana, Israel, Amdocs has long been the leader in the world of telecommunications billing, by long supplying operations support software (OSS) used by telecommunications service providers to deliver voice, data, and wireless services to their customers. OSS is a generic term for a suite of software programs that enable an enterprise to monitor, analyze, and manage a network system. The term was originally applied to communications service providers (CSP), referring to a management system that controlled telephone and computer networks. However, the term has since been applied to the business world in general to mean a system that supports an organization's network operations. To that end, Amdocs' software includes modules for customer service, billing, sales, and audits, while it also offers sales and publishing software for developing print and on-line directories. It is a technology company that engages in the provision of product-driven information system solutions to major telecommunications companies.

The company's product offerings now include a library of OSS, whose core elements include customer resource management (CRM), order management, call rating, invoice calculation, bill formatting, collections, fraud management and directory publishing services, while its managed services include information technology (IT) outsourcing, application outsourcing, and business process outsourcing (BPO), particularly for customer service and data center operations. In fact, a large proportion of Amdocs' 2004 revenue came from managed services, where the company saw continued strength in its directory services business and enhanced relationships with important existing customers. For instance, following the completed acquisition of Certen from Bell Canada in mid-2003, Amdocs took over the managed services responsibilities for Bell, Existing managed services agreement with Bell extends through December 2010. Amdocs has also continued to develop an integrated billing platform to replace legacy systems built on a product-by-product basis. Thus it has further contributing to Bell's productivity improvement goals and enabling Bell to deliver on its one integrated bill commitment to its customers.

This is Part One of a three-part note.

Part Two will discuss market strategy.

Part Three will cover alliances, challenges and make user recommendations.

Amdocs Products

Amdocs Ensemble suite of products encompasses several key customer care, billing and order management systems (CC&B systems) application areas, such as customer care; order management; event processing; invoicing; and fraud management. Moreover, through the acquisition of a former CRM leader Clarify in 2001 (see Clarity of Vision: Clarify Sold to Amdocs by Nortel), Amdocs also became a noteworthy player in the CRM and call center areas, so that, in terms of the OSS side of a communication customer or a CSP, most data of any effect is captured and managed by an Amdocs solution. To that end, Amdocs ClarifyCRM product offers solutions that help companies better perform and manage selling processes across multiple sales channels. The major suite, Amdocs ClarifyCRM Service and Support, offers solutions spanning support centers, contact centers, and self-service solutions, although the product offers certain marketing and analytics capabilities too.

Another related product, Amdocs Enabler, provides flexible, real time rating and billing for all voice, data, content, and commerce services, by offering integrated on-line and off-line charging. It also provides a single product to support both prepaid-postpaid convergence and wire-line and wireless convergence. Enabler is pre-integrated with Amdocs ClarifyCRM, which will coordinate the integration of future product upgrades, since Enabler's functionality can be extended through pre-integration with value-added Amdocs products.

In 2003, Amdocs launched major releases of its flagship products. These releases introduced out-of-the-box, productized billing and CRM integration, enabling easier implementation of the products as well as with third-party and legacy applications. This functionality has provided customers with the potential to achieve integrated customer management regardless of their current operating environment, and these releases also provided additional functionality that allows Amdocs' customers to drive profitability within their businesses. For example, Enabler 5 supports new revenue streams and business models with advanced on-line charging capabilities and it supports multi-market and multi-national operations, all on a single platform. On the other hand, ClarifyCRM 12 introduced advanced user interface (UI) technology that delivers more real time, relevant, and actionable customer information to the service agent's desktop, thereby transforming a high-volume call center into a more efficient and effective multi-channel customer contact center.

Amdocs further evolved its CRM offering in 2003 with the acquisition of the technology assets the bankrupt Exchange Applications Inc. (Xchange, see Xchange Adds to the List of CRM Point Solutions' Casualties). Now re-branded as part of the Amdocs ClarifyCRM suite of applications, the campaign management and real time decision-making capabilities obtained through this acquisition complemented Amdocs' traditional strengths in operational CRM, thereby delivering a more complete, closed-loop customer management.

Even during 2002, while battling to secure new finances, Xchange surprisingly managed to build a real time engine to deliver targeted promotions-based capability to detect important customer events and behaviors from transactional data throughout multiple marketing channels within an enterprise. In early 2003 the company announced the release of its former Xchange 9 browser-based suite that enables marketers to automatically trigger an appropriate communication to the customer immediately after they exhibit a behavior representing a cross-sell, up-sell, or retention opportunity, thus answering the question "when" to initiate a marketing interaction.

Further, the Xchange 9 EDM (Event Driven Marketing) Option allowed users to observe data from multiple sources within the enterprise, look for changes to the "state" of the customer, and change direct marketing via the Xchange 9 platform. This development is in sharp contrast to using traditional data mining tools or writing complex structured query language -based (SQL) queries to leverage historical information and to produce predictive models long after the marketing opportunity has past. Nevertheless, the former Xchange applications have since hardly promoted Amdocs as an integrated OSS for CSPs. The reason being that within the marketing automation (MA) market, Amdoc's capabilities have, at best been, described as only "adequate", not "exciting" or "leading".

Amdocs Product Group

Principal among Amdocs' product highlights in 2004 was the formation of the Amdocs Products Group. This is a new department that should bring a more cohesive approach to developing and managing Amdoc's product portfolio and build greater integration into the software. Efforts planned for fiscal 2005 in product development and management will be another major step in enhancing the company's ability to help its customers implement their own integrated customer management strategy.

It appears that the Amdocs' acquisitions have been paying dividends as the company now intends to go to market with a more holistic message dubbed Integrated Customer Management (ICM). What appears to be a new corporate personality actually represents a fundamental shift in the Amdocs strategy. It is moving away from positioning itself as a vendor providing best-in-class CSP billing systems with a CRM suite on the side. Now the company offers an integrated business processes with the customer as the focal point.

Its portfolio now offers an appealing proposition with the built-in ability to help service providers move toward the ICM vision—one product at a time or all at once. With the acquisition of XACCT Technologies in 2004, Amdocs was able to add network data management capabilities to its product offering. By adding XACCT mediation system to pre-integrated components such as self-service, billing, CRM, order management, and partner relationship management (PRM), Amdocs owns possibly the most comprehensive portfolio currently available to telecommunications companies.

With increased investment in research and development (R&D) to $126.4 million (USD) in 2004 versus $119.3 million (USD) spent in 2003, 2004 product launches included new versions of

• Amdocs ClarifyCRM, which offers improved performance, scalability and availability, as demonstrated through recent benchmark tests using the HP-UNIX and BEA WebLogic platforms.
  
  
• Amdocs PRM, which enables CSPs to (relatively) cost-effectively deliver a selection of new products and services and to reduce the cost of managing multiple content and commerce partners in order to differentiate themselves in the marketplace and to promote new revenue streams.
  
  
• Amdocs Commerce Payments, which now has more advanced features to allow providers to monetize third-party content and commerce services and increase end user satisfaction and loyalty.

By delivering this comprehensive portfolio of software and services that spans the customer life cycle (target, sell, deliver, bill and support), Amdocs hopes to enable these service companies to deliver an "intentional customer experience", which typically results in stronger, more profitable customer relationships. These service providers should also benefit from a more rapid return on investment (ROI), lower total cost of ownership (TCO) and improved operational efficiencies.

Amdocs believes its ICM strategy resonates with its customers, who, facing increased competition and price commoditization, realize that they need to differentiate customers' experiences from the competition, creating one that enhances customer loyalty and increases profitability with each transaction. Meeting this need, in turn, requires the alignment of people, processes, and systems, and agility to deliver new services and to respond to market changes quickly. It also demands a steady focus on the customer in all aspects of business planning and administration. Moreover, as consolidation narrows the ranks of wireless players in North America and as landline providers attempt to regain their leadership in communications through voice and video services over Internet protocol (VOIP), distinctive billing and customer care concerns are emerging. Hence, new technologies and new ways of doing business are needed, as CSPs must define a unique, value-rich customer experience, and then deliver it better than anyone else.

This concludes Part One of a three-part note.

Part Two will discuss market strategy.

Part Three will cover alliances, challenges, and make user recommendations.