Market Insight

Revenue management market looking up, grows 6 percent year over year

August 14, 2018

Stéphane Téral Stéphane Téral Executive Director – Research and Analysis, Mobile Infrastructure & Carrier Economics

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Highlights

  • Worldwide revenue management system revenue hit $11.8 billion in 2017, a year-over-year increase of 6 percent
  • Growth in the revenue management space is being driven by the acceleration of digital transformation; the ability to develop, create and launch services quickly; and the need to retire legacy systems and consolidate various functions and parts into agile platforms
  • Service revenue accounted for 52 percent of the total revenue management market in 2017
  • The global revenue management system market is forecast to grow at a compound annual growth rate (CAGR) of 2.6 percent to 2022, when it will reach $13.4 billion

Our Analysis

After more than a century of existence, the telecommunications industry has accumulated numerous network elements that have increased operational complexity a great deal, affecting its competitiveness against web-scale companies such as Alibaba, Amazon, Apple, Baidu, Facebook, Google, Microsoft and Tencent. Together, these companies make up over half of total telecom capital expenditures, and they have lean, agile business operations and no operation support system (OSS) or business support system (BSS) to worry about.

In contrast, service providers are trying to catch up by transforming the way they engage with their customers, including the way they mediate, charge, bill and collect -- all key functions of their revenue management system. Service providers have embarked on a long digital transformation journey on which they are aiming to become digital service providers.

Virtualization, cloud and big data are the key pillars of this digital transformation journey, and revenue management systems are becoming increasingly cloud based, driving demand for software products and services.

Virtualization: creating a need for more services than software

Even the BSS business, which has always been considered an inherent part of service providers’ IT domain, has been heavily software oriented with a portion of services. Nowadays, the mix is changing. To enable automated scalability and self-healing activities, revenue management systems are required to run in virtualized environments and interface with cloud or orchestration elements. The journey toward cloud-native applications is associated with microservices and the use of DevOps methodologies that change the way software versions are being delivered. To keep pace with digital operations, revenue management systems must offer continuous integration and delivery.

IHS Markit research reveals that the shift toward increased service revenue occurred back in 2015. (This revenue encompasses services associated with the integration of revenue management software into operator's environment and revenue derived from any managed service or cloud-based offerings provided by the vendor or integrator.) The portion of services revenue increased from 51 percent in 2016 to 52 percent in 2017, and it is anticipated to continue to grow through at least 2022.

Revenue Management Annual Market Report

Part of the IHS Markit Telecom Digital Transformation Intelligence Service, this report analyzes the revenue management component of business support systems operated by communications service providers, including cable and satellite operators, mobile and fixed telecom service providers (e.g., telcos), and virtual mobile operators.

Research by Market
Mobile & Telecom
Category
Mobile Networks
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