CONVERGYS SHIFTS STRATEGY TOWARD FLEXIBLE FUTURE

Despite recent contract wins at AT&T Wireless, Orange France and TeleCorp PCS, Convergys has completed a $100 million revamp of its architecture that will emphasize the ability to sell individual software modules in addition to complete systems.

The move is somewhat surprising given the company's enviable position as a billing provider with long-term, Tier 1 contracts. However, as company executives explained it, the decision to shift to a modular approach is part of a move to stay one strategic step ahead of the competition.

“Until now, when it came to clients [who were] not interested in a whole end-to-end solution, we had to walk away,” said Randy Mysliviec, senior vice president of marketing for Convergys. The new approach will mean Convergys can target any account — including those of its competitors — and sell individual solutions as well as help existing clients migrate to new technologies in piecemeal fashion. To that end, the company's first two modular products will be a mediation manager and a service activation module.

But the modular framework will require a level of openness uncommon for the company. “Convergys has had an issue with their architecture in the past,” said David Cooperstein, research director for Forrester Research. “It has been fairly rigorous and proprietary, but with the ability to modularize, they are able to break apart some of their proprietary nature.”

In addition to reconfiguring its own product, Convergys' new approach comes in part from the acquisition of Geneva Technology in April. “Geneva was a pretty open system to begin with, and they had a fairly strong strategy to integrate with a lot of other folks,” said Paul Hughes, director of billing and payment applications for The Yankee Group.

Integrating with other OSS vendors has proved difficult and expensive over the last few years despite more standards-based interfaces and better middleware solutions. As a result, Convergys will pre-integrate its new modules to work together internally and has designed the architecture to be open enough to interoperate with other systems or technologies that support extensible markup language interfaces.

Convergys also is not giving up on the outsourcing model on which it thrives, Mysliviec said. “But now with the ability to operate licenses as well as a modular approach to our product line, we're doing business the way our customers want to do business.”

In fact, Convergys expects current economic conditions to drive more customers to the outsourcing model. “We continue to believe that over time, the economic slowdown will stimulate accelerated movement toward outsourcing,” James Orr, chairman, president and CEO of Convergys, said during the company's latest earnings report.

And they're not the only ones. Attacking outsourcing opportunities is high on Amdocs' priority list as well. “We know in these days customers are looking for ways to delay expenses and modernize [while] streamlining the business,” Avi Naor, Amdocs CEO, said during the company's earnings call last week. He acknowledged some emphasis on more modular architectures but said it fell short of a trend.

Naor's New Jersey-based competitor does not agree — particularly when it comes to the global market. Customers in Europe lean toward modular solutions, said Steve Bernt, product management director for Lucent Technologies' billing and customer care.

“With all the mobile advancements, [European operators] need to push the limits of their billing systems faster,” Bernt said. Rather than revamp legacy systems, however, they are looking to upgrade only components directly related to those services, he added.

Lucent's Kenan Arbor/BP version 10.1 — made generally available last week — sports three new modules. The Threshold Server identifies revenue leakage, the Configurator allows customer configuration of new billing models and the Roaming module offers same-number contact internationally.

Carrier consolidation also is a factor in the trend toward modularity. “Today's wireline customer may be tomorrow's mobile customer, and the value we can give them is they can buy the roaming module as they need it,” said Nicole Beauregard, global product marketing manager for Lucent billing and customer care.