Collecting from the cloud

Enterprises want to "escape the box" to attain ubiquitous availability, flexibility in charging, and instant access to leading-edge applications and tools at lower operating costs.

Whether a need for CPUs and storage delivered over networks (infrastructure as a service), or a need for tools and programming for rapid creation of applications (platform as a service), or  "shrink-wrapped" applications accessible by a variety of devices (software as a service), or even hybrid solutions that combine elements of private servers with public clouds, it's obvious cloud computing's elastic management of computing power and resources could presents huge revenue opportunities for service providers... that is, if they figure out how to bill for cloud services.

The desire for such services is driving leading CSPs (particularly Tier 1s) to send out an unprecedented number of RFIs and RFPs about enterprise billing. According to Amdocs, cloud currently fulfills only 5% of its current market potential of $16 billion. With huge potential for generating revenues, CSPs are evaluating their billing, charging and settlement capabilities.

"What happens is business folks go to IT saying 'we want to resell cloud services,' and IT says 'Okay, maybe in 2012," says Metratech CTO Douglas Zone. "The business folks then look elsewhere, because IT is stuck supporting and enhancing older systems, as getting money for proactive, next-gen systems is hard to come by."

But if IDC predictions this summer hold true, worldwide telecom cloud billing investments could grow to $350 million in 2013 (up from $15 million in 2008).

It seems logical at first glance that telcos would think themselves well positioned to be a one-stop shop for the services businesses want. "For the past 15 years, they have hashed out creative bundling, charging models, monthly pricing plans, prepayments, contracts, bonuses and complex discounting, not to mention security, privacy, settlement and dispute resolution," points out Anthony Behan, global OSS/BSS solution owner for IBM.

Reality check

Despite the expertise and assets they can leverage, CSPs remain cautions about upgrading and integrating existing billing, charging and settlement or BSS revenue management tied to provisioning and partner settlement. They are first considering the business case, as well as the challenges of governance, security, performance and commoditization. Some are starting out with SaaS models (a possible $16 billion market by 2013, according to Gartner), though with loosely coupled partnerships that do not force painful integration or upgrades of BSS components.

How CSPs go about that will depend on their mentality and culture. Service providers historically take a pragmatic approach to anything new. "CSPs aren't known for taking giant leaps of faith, so cloud might be a 'slow burner' that becomes part of a 'wider drift' toward  SOA," according to IBM's Behan.

How slow a burn will depend on many factors. For one, how far can CSPs really stretch the capabilities of existing billing and management systems.

Most agree, however, that manual assets currently used for enterprise billing and black-boxed billing assets for voice services will not be feasible if cloud computing is to be a viable line of business for CSPs.

"For one, the ad hoc processes in these systems will not work, and the fact many CSPs have unified their billing on residential platforms means they won't accommodate wholesale/retail environments or the characteristics of settlement and dispute processes, which are very different in business lines than in residential voice, where standardized invoice adjustments or negotiated contracts can be manually managed," notes Zone. He contends more open billing platforms are going to be a necessity.

For "dynamic" or "service-based" concepts to come to fruition in billing, the systems and approaches popular in the 1990s and early 2000s - those made up of embedded business logic or hard coding - will ultimately have to give way to open, dynamic billing.

Either CSPs will bite the bullet and make the changes to their systems, or they may end up looking to cloud providers that can bill on their behalf. For example, wrote its own billing software and markets its ability to do billing for cloud services for gaming companies and other content players. It's also possible the existing generation of billing vendors will do billing on behalf of the CSPs in a hosted manner.

Another model would be one where CSPs adopt open, dynamic billing that they can then offer on a hosted basis to cloud providers. While most cloud providers understand they have to work with network operators to successfully syndicate services, it will be interesting to see how network operators embrace retailing bandwidth to cloud providers.

"If cloud becomes a valuable product line, service providers will need open billing systems that accommodate different units of measure, such as CPU, storage capacity and QoS, as well as different product catalogs and policy management, as well as partner settlement," notes Guy Hilton, product marketing manager for Amdoc's revenue management division.

To get to more open, dynamic billing, a change of mindset is necessary, says Elisabeth Rainge, IDC's director of NGN operations and telecom software. "Billing has to move away from the IT mentality that the cost of fiber, servers, storage and software will be recouped by charges levied against a user; it's now about the experience as we move from a product-driven philosophy to a service-driven philosophy."

Making it happen

The concepts of "dynamic business modeling" or "service-based applications" basically mean billing systems will change as they need to. Essential processes, services and billing should be open to accommodate, for example, a new definition for a recurring charge, or a re-definition of what a dispute process is, or a rejection or acceptance of any business services that the billing platform provides.

Today, truly dynamic, usage-based pricing doesn't really exist, but there is movement in that direction. "The work that started with VM Ware and Amazon revolve around virtualization and elastic computing involving a 'cloud instance,' into which you can put services. That is a starting point for developing clouds," says Simo Isomäki, VP of Comptel's dynamic OSS solutions.

The business models are static in that you pay per instance, or per hour of usage. But Isomäki is optimistic that once the fulfillment side of the operator processes as well as mediation, charging and billing processes are more closely integrated, CSPs will move to dynamically allocate resources based on real-time usage information.

The next phase of cloud billing will be enabling enterprises to pay for only the usage they use, which means on-demand or use-capacity charging/billing where customers are charged exactly for the usage through per-second charging.

"You could get to one-tenth of a cent per second of usage with cloud infrastructure, and you can pay a premium to dynamically change through a 'turbo button capacity' where extra capacity is allotted for the time necessary by finding the resources to make that happen," says Isomäki, who has been working on billing and fulfillment for such capabilities through TM Forum's Catalyst Program. "Once you put an actual service in the cloud, you enrich fulfillment if you connect it with the charging or billing principles. You want it tightly coupled in terms of what an SP would want to offer. You also want real-time monitoring for enterprises to get capacity as they need it and to remove it when they don't."

Today, prepaid charging can be deeply integrated in telecom equipment. Real-time, online charging involves active charging/billing functions, but today, they are not designed for accommodating the SaaS or cloud charging principles. The network signaling and proprietary interfaces to the telecom domain are simply not equipped for the cloud world.

According to Isomi, traditional charging (network charging based on IN) is distinct from modern-day applications that are more software based and real-time in nature. "There are a lot of vendors like us that have built software that extends from mediation for convergent charging, which will enable real-time and online capabilities, to be combined with batch into one software piece," he believes.

There used to be a strong silo between pre- and postpaid biz models in telecom, and there still exists debate about how charging should be implemented for the cloud. Many CSPs have strategies for convergent charging that involve intelligent networks with prepaid elements, whereas others come to convergence from the postpaid billing side.

Isomi says both are "difficult paths" for flexibility. He believes mediation environments are the ideal place for integrating data to any system. "It's second nature to mediation systems at this point and so cloud is a natural for mediation systems to foster the necessary flexibility."

Another important factor will be recognition of network, load and balance management - all of which connect directly to revenue in cloud services. "In the past, those elements had no bearing on what would be charged; that changes with the cloud," notes Behan. "If a person downloading a movie or playing an MMOG will use a disproportionate amount of bandwidth than someone reading an online newspaper, you want to charge more for the CPU-intensive services in the cloud."

For these reasons, multi-dimensional rating will be necessary to understand multiple parameters at one time, as traffic passes through servers.

"Information about the number of users and CPU power being consumed can all come to play in one event. Amdocs' Hilton agrees that mediation will, therefore, have a more important role.

"It will sit directly in the network to extract information from the cloud and pass it to billing (i.e., information about QoS analysis during a session or information about resources utilized and resources not utilized, or usage times and volumes to billing systems)."

Other formidable challenges will be moving applications smoothly between service provider infrastructure and that of third parties like Amazon's EC2. Policy management will be a major factor, as will tying it to rating and data discovery functions that meet cloud computing demands. Additionally, contracts and settlement capabilities, and dispute resolution will be a different beast altogether.

The needs for real-time usage monitoring and real-time policy management, metering, bundling, discounting and management of cross-product discounting will give CSPs no choice but to adopt a unified approach to BSS, which will sit firmly in the network - to the level of call/session control.

Cloud services defined

In a new report entitled "Seeing Through the Clouds," TM Forum's managing director of Insights Research, Rob Rich, defines cloud computing as a model for on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services).

"These computing resources are rapidly provisioned and released with minimal management effort or service provider interaction."

According to input from service providers and cloud computing vendors alike, Rich contends there are five essential characteristics cloud computing environments should possess: on-demand self-service; broad network access; resource pooling; rapid elasticity for rapid provisioning; and measured service for automatic control and optimization of resources through metering capabilities.