Svyazinvest (Start)

Svyazinvest (implementation project of a billing system) - one of the largest implementations of the automated billing system (ABS) with clients in Russia. The project started in 2004. Originally the amount of implementation was estimated at $480 million. For the beginning of 2009 $309 million were invested in the project. The project is not complete.

Already made attempts to implement a single billing system for MRK Svyazinvest earlier. So, in 2002 the joint venture of Telekominvest and the German developer of billing TelesensKSCL was created. SZT had to become the first company on which network it was going to implement a product of the joint Russian-German venture. Further billing systems of this company were going to be implemented also in other Russian electrocommunications, however these plans were not fated to come true - the transaction broke

Solution and Contractor Selection

Participants of tender

Solutions more than 20 domestic and foreign suppliers were considered. At the final stage the tender committee on the basis of the developed criteria carried out the choice of ASR among solutions of the companies Amdocs Convergys, CSG Systems (the former Kenan Systems till March, 2002 entering c Lucent Technologies) and the choice of the general consultant and contractor among the companies Accenture A.T. Kearney Ernst&Young IBM KPMG.

The solution of the Tender committee of 3/15/2004 the offer of Amdocs company is announced by the winner, and the IBM Business Consulting Services company won tender at the choice of the general consultant for implementation of ASR.

Justification of the choice of the solution

In Russia from suppliers of billing systems serviced clients only of Amdocs which billing works in VimpelCom, and the CRM system — in MegaFon. The offer of Amdocs as much as possible meets all criteria shown by the Tender committee to future billing system and, being an average at the price among proposals of other contestants, it is the most preferable on a ratio of "quality/costs", it was said in the statement of Svyazinvest.

Justification of the choice of the contractor

The decision for benefit of IBM BCS was made owing to the best offer on implementation project organization, existence of considerable experience and resources for such project and also on the basis of a number of the following positive factors:

• the confirmed world and local experience by management of large projects in the field of implementation and transformation of management systems, development of IT strategy of the large companies;
• capability at the same time to keep several projects/programs;
• knowledge of the Russian conditions and legislation;
• the adjusted relationship with regional partners;
• the previous experience of IBM BCS as the general contractor acting as the uniform coordinator on management of all questions of conversions, developments and deliveries within the project in general;

Besides, presence at IBM of experience of cooperation with Amdocs was taken into account. In particular, the IBM company performed implementation of Amdocs technologies in such foreign telecommunication companies as Cegetel, Verizon, Japan Telecom, Telefonica. The fact that today there is a joint center of solutions of IBM and Amdocs is important - IBM Amdocs EMEA Customer Solution Center (IAECSC) located in France it was said in the statement of Svyazinvest. The center performs modeling and carrying out overload tests of solutions for customers.

The selected modules

For implementation in MRK and JSC Rostelecom by the Amdocs company offered the complex of the billing products Amdocs Billing Suite including the following modules:

• Billing Amdocs platform (Amdocs Billing Platform);
• Management of settlement with partners (Amdocs Inter-Connect Settlements/Partner Relationship Management);
• The integrated customer management (including management of work with clients (Amdocs Advanced Online Customer Management) and work with addresses and customer complaints (Amdocs Trouble Ticketing));
• Amdocs Order Management;
• Self-service of subscribers (AmdocseCare) (the specialized module for corporate and VIP clients will allow to manage online personal accounts and services).

Reaction of the losing party

"Our solution would be more profitable to Svyazinvest, but we respect the choice of the customer" — Doug Zoun managing on CSG Systems technologies for Europe, the Middle East and Africa says. The president of the Russian company CBOSS (his system of billing worked at that time in MTS company) Andrey Morozov regrets that Svyazinvest did not attract to the project of the Russian developers of billing systems. He assumed that domestic developments could cost to Svyazinvest cheaper.

Project Progress

2004

Results of Boards of Directors of seven interregional companies of telecommunication (MRK) and the longhaul trunk operator Rostelecom did not give surprises to the public – in November, 2004 the decision on implementation of the uniform automated billing system (ABS) based on the software of Amdocs company was made.

2005

The first project phase lasted all 2005 and consisted in adaptation of standard billing of Amdocs under tasks of Svyazinvest. After this Amdocs it was ready to product introduction in MRK and Rostelecom.

At the end of 2005 Svyazinvest especially for management of the billing project created child structure - JSC Informatsionnye tekhnologii svyazi (Svyazyintek).

In December, 2005 Boards of Directors seven MRK and Rostelecom approved works agreements with Svyazyintek company. Under these agreements of the company will transfer $100.9 million until the end of 2006, participants of Association on protection of the rights of investors (API) say. The main part of this amount will go for development of a master system of the billing solution, and a remaining balance — on a pilot project of billing in CenterTelecom, the director of the department of information support of Svyazinvest Oleg Mikhaylov told.

Till this time IBM was considered as the main contractor of the project. But it was a general contractor only on the first phase which came to the end in July, 2005, the public relations manager of IBM Galina Danilina specifies. The company analyzed customer requirements and developed the project plan. Now the general contractor became Svyazyintek.

2006

Valery Yashin in an interview of 4/5/2006: In 2006 we are going to complete the project on development of a master system and to begin operation of a system in one of regional branches "CenterTelecom". The project on implementation of a single billing system in the companies of the Svyazinvest group will be in the middle of 2008 fully completed.

In the spring of 2006 Svyazinvest decided to purchase not only the product Amdocs, but also billing systems of the Russian companies - "Petter Service" (product Peter-Service BIS) and the Infosfera groups (product "Start"). Local developers were involved with Svyazinvest within the alignments program of the existing billing systems. So the products "Petter Service" and "Infosfera" should act as "superstructure" on the existing billing programs, and already Amdocs will begin to interact with them. Thus, instead of reduction of quantity of billing systems Svyazinvest received their increase. However, now all programs will be controlled not separately, and on a centralized basis - using Amdocs.

2007

On the course of alignment of old billing systems in MRK Svyazinvest had problems with Amdocs. Valery Yashin reminded that it was initially supposed to implement and fulfill the Amdocs master system in CenterTelecom, and then to clone this product in all other MRK.

In June, 2007 in the press there was a statement of a source in JSC CenterTelecom which reported that as a pilot polygon for Amdocs implementation the company selected the Vladimir branch. "We made everything that depended on us, in particular - constructed call center, converted databases into the necessary format, laid necessary fiber lines, - tells a source in CenterTelecom. - The pilot product Amdocs in the Vladimir branch had to earn in October, 2006, but it is not handed over by the developer still". According to him, Amdocs had to carry out more than 600 different tests, but 50% from them did not take place yet. "If did not earn a pilot project in one region, then how it is possible to move further?" - the representative of CenterTelecom questions.

In response to this Amdocs exposes to the client the claims. "In CenterTelecom during the project the management several times changed, and these are broke implementation process a little. As a result of purchase of the necessary equipment were delayed, and the project which was initially starting in the Yaroslavl branch it was decided to transfer to Vladimir, and we had to start works almost from scratch, complain in Amdocs.

Despite contradictions, partners in implementation of billing in Svyazinvest already decided on the principle of global implementation. In all the MRK and Rostelecom using now various billing system products from "Petter Service" and Infosfera will begin to work, and Amdocs will become a managing and functional superstructure over the domestic systems.

2008

Svyazinvest decided to optimize costs for implementation of a billing system in MRK and employed for this purpose consulting company McKinsey. According to a number of sources, the project on implementation of billing of Amdocs for which the holding already spent $60-90 million is actually frozen. Having studied a situation with implementation of Amdocs in all MRK, McKinsey recommended to write off this amount of losses, told sources of the press.

The chief executive of Svyazinvest Anton Shchegolikhin confirmed that McKinsey helps holding to optimize costs for billing. However write-off of any amounts on losses, according to him, is not considered, and the project is successfully implemented: McKinsey recommended to continue implementation of single solutions on billing and CRM.

According to Shchegolikhin, within 1-2 more years billing of Amdocs will not be implemented into MRK, and the Russian systems "on the basis of methodology and using the separate modules Amdocs" will be installed. It is possible within the license agreement, the head of the Russian office Amdocs Isaak Mostov says.

2009

In a billing implementation project in Svyazinvest the stage "alignments" software - transition to a billing system, uniform within MRK, is completed. Six of seven MRK already completed transition.

Svyazyintek held negotiations with Amdocs company as a result of which was decided to refuse cross liabilities on a billing implementation project and also to suspend technical support of licenses in MRK. For the purpose of effective use of the purchased licenses Svyazinvest started implementation in MRK of the CRM system based on Amdocs software. But after the final decision on target structure of billing (it is expected in the middle of 2009), the decision and on use of other modules and the products Amdocs will be made.

At the end of 2008 the companies of Svyazinvest (except North-West Telecom and Dalsvyaz) made the decision to write off more than 1.08 billion rubles of the assets connected with the cost of technical support of licenses of a billing system Amdocs.

There were later official statements according to which in 2008 1.39 billion rubles of assets on Amdocs are written off (21% of their cost for the beginning of 2008). Write-off of programs of billing of Amdocs happened as, implementing it is software, the company capitalized a part of expenses on its technical support that is forbidden by international standards, the representative of Svyazinvest Igor Pshenichnikov explains. In addition business processes in MRK and the legislation changed and the performed works partially lost relevance, he says.

Difficulties of the project

In the course of work on the project it became clear that just to implement new billing from Amdocs will not leave: 160 separate billing programs which are already working in MRK and Rostelecom became a problem. "A problem even not in that quantity of billing systems which functioned in MRK to us, and that it is difficult to obtain data from them. Besides, not all IT specialists received us with open arms, they understood that to nobody, except them to master the old systems and after Amdocs comes, they should move", - representatives of Amdocs tell.

Implementation of such large-scale system as Amdocs, requires reorganization of all business processes, and it is difficult and expensive, the managing partner of AT Consulting Sergey Shilov considers, besides, the companies of Svyazinvest had no corresponding experience and the personnel. Billing of Amdocs was implemented irrationally, the independent director of Sibirtelecom and the deputy chief executive of Association for protection of the rights of investors/API/Igor Repin says: the price is overstated, the holding did not have enough qualified personnel. API opposed the transaction.

Compliance to terms and plan of the budget

Project deadlines

Proceeding from world and own experience of implementation of large projects, the IBM company offered implementation of the program in three stages. At the first stage it is supposed to carry out detailed requirement analysis and to develop the project implementation plan, on the second – to develop a master system for MRK, to carry out adaptation of the billing solution and implementation to JSC Rostelecom, on the third – to carry out replication of experience of the second stage to all MRK. Aggregate term of project implementation – 4-5 years.

Project cost

Investments into the project will make 3-4% of revenue of the companies of Svyazinvest, planned in the company.

Amdocs offered the unlimited and perpetual license on use of a complex of billing products for JSC Rostelecom and MRK on all communication services; participation of specialists of Amdocs on all phases of the program of implementation of ASR; long-term technical podderzhkudlya licensed products. The price of the perpetual and unlimited license for all MRK and JSC Rostelecom on software of Amdocs Billing Suite was about $200 million. Estimated cost of consulting services of IBM at the first stage had to be $25 million.

According to terms of the contract with IBM, MRK and JSC Rostelecom received 50% a percent discount for the collective license and payment by installments of payments for the collective license for a period of up to one and a half years.

After primary study by October, 2004 Svyazinvest reported that complete costs for system implementation of Amdocs will make $12 for one number ($5 for the license, as much - for implementation, plus taxes). Subsidiary companies of Svyazinvest service about 40 million numbers, thus, the total cost of uniform billing increased up to $480 million. $25 million more in a year of the company of holding will spend for service of this system.

More than a half make costs for implementation of $480 million, i.e. payments to integrator and purchase of the new equipment without which was not to do "heavy" Amdocs.

Attraction to the project in the spring of 2006 of Petter Service company and the Infosfera group also, according to market participants, demanded serious labor and financial resources.

For the beginning of 2009 of costs of Svyazinvest on purchase of licenses of Amdocs, their technical support and development of a new billing solution made about $309 million. Approximate costs for alignment of software based on the domestic systems - about $40 million.

Effect from Implementation

Kuznetsov Sergey, the First Deputy CEO of JSC Svyazinvest in the message of 8/13/2004: "Now in subsidiary companies of JSC Svyazinvest 186 different ASR are operated, and it means that there is no common information space, so necessary in the conditions of the holding company, and costs for maintenance of automated systems are high. Besides, without the adjusted system of communication with consumers in the conditions of the competition to our companies it is difficult to fight for loyalty of subscribers. Implementation of single solution of ASR will allow holding to standardize and unify business processes, to provide fast removal on the market and support of new communication services, to guarantee high-quality support of the multimillion customer base and transparency of carrying out key operations on customer service. By our calculations, project implementation will lead to annual average revenue growth of the companies of holding more than for $180 million and to annual average decrease in operating costs more than for $60 million. Finally, transition to world-class ASR will lead to growth of capitalization of the companies and will increase their competitiveness".

Sources

• JSC Svyazinvest made the decision on expediency of implementation of Amdocs company by uniform ASR
• JSC Svyazinvest: information message
• $225 million for accounting of subscribers. Svyazinvest buys the software again
• Billing of Svyazinvest will earn in 5 years
• Svyazinvest could not save on expensive billing
• Billing on the equator
• Interview of CNews with the CEO of JSC Svyazinvest Valery Yashin
• Billing and CRM in Svyazinvest: details of huge projects