A Lavastorm at Martin Dawes
In July 2005 Martin Dawes Systems, a provider of customer care and billing systems, acquired US revenue assurance expert LavaStorm. The acquisition brought together the complementary strengths of both entities to create a company determined to meet the needs of mobile operators, as their networks and reporting systems get ever more complex. Keith Dyer spoke to Dewi Thomas, Managing Director of Martin Dawes Systems, and Drew Rockwell, CEO of Lavastorm, about the benefits of the merger, their plans for the future and the business needs of their mobile operator customers.
Mobile Europe: Dewi, the acquisition of LavaStorm is just the latest development in a long history for Martin Dawes Systems...
Dewi Thomas: Yes, Martin Dawes Systems has been in billing and customer care for nearly twenty years, at first as a mobile service provider for Vodafone, in what was then the brand new world of cellular communications. In terms of billing and customer care there was not much out there, so we set about developing our own solution. Over the years that developed into something pretty powerful which other telcos became interested in and we set about bringing it to market. When we sold the service provider business in 1999 (to BT Cellnet for £130 million) we felt we needed to do something with the billing and customer care solution, which we held on to as a separate business.
Our first customer was BTCellnet (O2) because it retained our solution. Then we built up relationships with most of the other networks in the UK and started reaching across Europe and internationally.
ME: So, from that position, what were the reasons for the acquisition of LavaStorm? Was it their revenue assurance focus?
Dewi Thomas: We have always sought to enhance our offering to the industry, both in terms of our product set and geographically. We identified revenue assurance as a high business growth area for our customers and began evaluating our strategy and options to address the need.
An independent study by the Yankee Group, commissioned to examine the revenue assurance market, substantiated our understanding.
We also looked at the American market because of the region's growing interest in the MVNO model and market opportunities. We work with a number of companies to support their MVNO activity and they are typically strong brands which want to focus on their core business. They don't want the billing and customer care function to sit in-house, they just want it to enable their offerings. Our managed service approach to that function means we can work as a MVNO enabler, targeting that market.
We were introduced to Lavastorm, which had had a very strong 2004, and delivered the twin benefits of extending our geographical and product set in line with market demand. From a business point of view the acquisition was straightforward -- there is no great overlap between the companies; we have revenue assurance in our portfolio and, of course, vice versa -- Lavastorm now has billing and customer care. And they [Lavastorm] looked at it in a similar way. They wanted to be part of something bigger and the proof of the success of the deal is that, within a few days of the deal, we had won a major account in Asia.
ME: So how have the two parts of the business come together in terms of your proposition to customers?
Dewi Thomas: Martin Dawes Systems is very much the senior partner in turnover and employees. We will keep the Lavastorm management structure intact, leveraging off our project network in Europe and Asia and offering the professional services skills we have. That will help them grow in Europe and Asia.
The acquisition also adds value to our customers who had raised the question of revenue assurance. We have had meetings with every one of them and it is a hot topic; service providers are suffering huge leakage. In terms of product integration there is no dramatic issue, other than educating our staff so people can get used to both products to maximise the joint benefits.
Drew Rockwell: A way to think of our proposition is as a data analytic platform. We grab data from the CRM system, network elements and billing platforms and capture and compare very complex business logic, looking for discrepancies that have meaning. So really we are an analytical layer that interacts with the operational processes. What's quite interesting is combining our capabilities with Martin Dawes Systems. We are complementary from a value proposition point of view. When we talk to MVNOs they are interested in doing business with a company with their operational expertise and the analytic capabilities of Lavastorm.
ME: You both think the MVNO market offers significant potential for a company with the combination of your professional services approach and revenue assurance expertise?
Drew Rockwell: In the US, the interest level is really high. Brands themselves don't have the expertise to be in the mobility business, so Martin Dawes Systems' value proposition to an MVNO operation resonates very powerfully over here. Their fear is the operational unknown and we can now take that unknown off the table.
An MVNO is by nature full of interfaces -- to networks, equipment vendors, content providers. It is an aggregator of those capabilities for its users, but also a point of vulnerability. Is all that being processed right, accurately invoiced and mapped well to user bills? So a big part of being an MVNO -- indeed the difference between success or failure -- is the accuracy of that cost control. And compliance to business logic is an important part of the operation.
Martin Dawes Systems is about the cost effective management of customer interaction, and Lavastorm is about validating and making sure your people and processes and suppliers are complying.
Dewi Thomas: And the interest in Europe is there too, if you look at the recent story in France with Orange France and Virgin and Carphone Warehouse. We are talking to a number of players in Europe specifically on MVNO solutions.
ME: In terms of competition, who else do you think can offer this mix of process and technology at the tier one, tier two level at which you operate?
Dewi Thomas: I am not sure I can name anyone. We see Amdocs, Convergys and sometimes Portal in competitive circumstances, but they are very much product based and less service based. Our service solution is tailored to customer needs -- and then we run it. Amdocs is about high level customisation and charging high service fees. I'm not sure I can name anybody who can do what we do!
For example, we had won a contract with Project Telecom, a UK business service provider purchased by Vodafone. We were concerned that our customer care operation would be rolled up with Vodafone's platform, but the company has kept with Martin Dawes Systems for its cost effectiveness and flexibility. We cover the bases for the B2B activity of our customers, which equals a higher level of demand on the customer service side. Once you are into that level you need additional layers of complexity, which is where we are with O2 and Vodafone.
ME: And Drew, does Lavastorm offer that similar differentiation in the market? What would make your business different from other revenue assurance players in the market?
Drew Rockwell: The answer is our technical asset, which we believe incorporates two unique pieces. One is how we go about acquiring data. You need to be able to acquire data from up to 100 different sources and transform and normalise that so you can get comparisons between different sources.
We can take data in any format and rather than write APIs to tell a source to give us data in this or that particular format, we say, "Give us the raw data and we will transform it". It means we can address a much broader range of data sources.
Second, and perhaps even more important for European wireless carriers, is about the capture and codification of business rules and logic. We have a third generation programming language and object-orientated library to drive data flow monitoring -- capturing data not in cycles but continually. As the world gets more complex the conditional logic that applies, and the ability to capture that, becomes more and more important.
ME: Apart from the growth of the MVNO model, what other business needs of your customers do you believe the merged company is best placed to satisfy?
Dewi Thomas: Revenue assurance is moving up the agenda for carriers -- we have already received a great deal of interest from customers about the acquisition and opportunities arising from it. Addressing operators' revenue assurance challenges was a key driver in pursuing the deal.
Lavastorm's data integrity platform will run alongside our billing and CRM solutions, as it will with any billing and operating system. Lavastorm's platform fits very well with what we do, and will be offered as a separate product set.
Drew Rockwell: Although our experience has been in North America, mainly within the fixed line and cable space, the amount of change in mobile and fixed businesses is similar. These networks are making the technical changes from circuit switched to packet switched, from narrow to broadband and from 2G to 3G with content and applications being very strongly delivered. That provides a lot of opportunity for us because the processes are unstable, being led by marketing and competitive offers. It's very dynamic and, in those environments, assurance risks are heightened and can lead to revenue leakage.
We can identify and understand the financial impact and root cause, so carriers can fix it and manage that loss on a systemic basis. And we do that continually like a heart monitor. That's very valuable in a time of significant OSS sector and marketing-driven change. In the US our typical ROI is 400-600%, say typically $40-50 million of findings, which is very enticing, but the real value is continuous monitoring of the operating environment.
ME: And if you meet these needs, what kind of business do you think you could become?
Drew Rockwell: Martin Dawes Systems has unique wireless experience. Lavastorm's background in the wireline and cable space means there is a very nice complement in domain knowledge. It makes for a very strong company because of the blend of strong operational and analytical products, of combined domain expertise and geographic centres. So with all these assets we are ambitious to scale the business quite meaningfully.
Dewi Thomas: We've dealt with people steeped in the mobile business, and in the fixed line world. Now, with MVNOs, we are seeing people who are new to the industry. That's a very exciting challenge. But customer management remains the same whatever you provide or whoever's providing it.
It is a great part of an operator's business to be in and we recognise the value of that and how we can strengthen the proposition they offer -- for instance, innovations such as support for convergent services can bring great value.
The combined company has a global reach from which to meet increasing customer demand for cost effective business solutions with low implementation and operation costs, rapid deployment and ease of use.
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