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SAP Billing and Revenue

Innovation Management

Monetizing M2M

15 November 2012

Why now ?

Falling costs, wider connectivity and maturing technologies


Regulatory mandates

A growing range of successful applications and business models


A maturing provider ecosystem
Rise of the cloud

Source: Economist Intelligence Unit, 1Q 2012


2012 SAP AG. All rights reserved.

Public

Value to the end user


Successful technology has two great attributes:

They are invisible to the customer and


they solve a fundamental human need
Martin Cooper, pioneer of cellular telephone

Connecting the physical world to the online;


your machines works for you

2012 SAP AG. All rights reserved.

Public

M2M market forecast

Source: Economist Intelligence Unit

M2M will contribute to >5% of global operator revenue by 2015 ~ $65B


Source: Informa & SAP, 02/2012
2012 SAP AG. All rights reserved.

Public

M2M = low ARPU?


Average monthly ARPU per SIM, US$, % of survey respondents
More than $9
Between $7 and $9
Between $5 and $7
Between $3 and $5
Less than $3
0

10

15

20

25

30

35

Source: Informa & SAP, 02/2012


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Public

Secure M2M profitability #1


Business Challenges and Billing Requirements

LOW ARPU

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LOW VALUE CONNECTIONS

Affordable and re-applicable low cost model

Low ongoing cost of platform ownership

Reduce operational cost

Automation

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Connected devices and M2M

Billion devices

30.0

22.5

15.0

7.5

2010

2012

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2014

2016

2018

2020

Sources: Machina Research,


GSM Association
Public

M2M connections and growth

16
14

Million Connections (end 2011)

12
10

YoY adds

8
6

4
2
0

Source: Berg Insight, April 2012


2012 SAP AG. All rights reserved.

Public

Secure M2M profitability #2


Business Challenges and Billing Requirements

MASSIVE SCALE
HUGE REAL-TIME TRANSACTION VOLUMES

Billing Platform to scale for high volume

High performance and high availability architecture

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Future value shift in M2M communications

2015
Service Enablement

Decision support, Reports and alerts,


Data collection storage and analytics,
Device monitoring and control,
Development toolkit and system
integration

Application Services

Vertical Industry specific


solutions and managed
services

Connectivity &
Hardware

2012

Communications services,
associated communications
hardware (modules, terminals,
devices)

M2M
revenue
distribution

Source: Informa/SAP (2012), Berg Insight (2012)


2012 SAP AG. All rights reserved.

Public

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Secure M2M success

Top 5 M2M operational


focus areas

CSP

Telecom
Telecom
Device,
equipment Integrator
software
module,
vendor
vendor / ISV chipset maker

End-to-end service mgmt

Partner mgmt

Flexible billing

Security & fraud

Network traffic
& signalling loads

Cloud
service
provider

Ordering & provisioning

Cross-border roaming

Business analytics

Source: Informa & SAP, 02/2012


2012 SAP AG. All rights reserved.

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Multi-sided Partner Revenue Sharing

Consumers
NW operators Module and Terminal
vendors
App developers

Specialized
communication providers

App/Service
Store

Specialized solution
providers

Service
Provider

Specialized service
providers

$
Corporate
Clients

System integrators

Resellers
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Secure M2M profitability #3


Business Challenges and Billing Requirements

CHANGING VALUE CHAIN/S


RAPID COMBINATIONS AND VERTICAL SPECIFICS
MANAGING AND MONETIZING COMPLEX PARTNER RELATIONSHIPS

Enable and drive smart partnership value generation,


including Multi Industry Billing support

Handle settlements & commission for global,


complex value chains

Analytics for service differentiation, and additional


end-user value

2012 SAP AG. All rights reserved.

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M2M focus and trends


CSPs target industries
Transport and

51,8%
46,4%
Automotive
27,3%
Financial services
20,0%
Health
20,0%
Operators / MVNOs
15,5%
Consumer
14,5%
Public safety
11,8%
Integrators
11,8%
Manufacturing / 10,9%
Oil and gas / mining
4,5%
Agriculture / food
2,7%
Military / defence
0,9%
Other
3,6%
Don't know /
12,7%
Utilities

=
Parcel
tracking & alerts

Patient
tracking & alerts

Felony
tracking & alerts

% of CSPs

Opportunities:
Seek horizontal scale of M2M services and apps
Focus is shifting to specific apps versus specific industries
Monetize the value that lays in the data
Source: Informa & SAP, 02/2012
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Revenue capture in the M2M value chain

CHANGE
AHEAD

Revenue share

App based

RUN IT

BUILD IT

USE IT

IaaS
Infrastructure as a Service

PaaS
Platform as a Service

SaaS
Software as a Service

2012 SAP AG. All rights reserved.

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Secure M2M profitability #4


Business Challenges and Billing Requirements

NEW BUSINESS MODELS

LONG-TERM EVOLVING MULTI-SERVICE CONTRACTS


CAPTURE VERTICALLY SPECIFIC ROI
RAPID TTM

Real-time and Convergent Charging & Billing; supporting a


mix of recurring and usage based micro payments

Flexibility and Agility for Pricing Innovation and flexible


multi-sided business models

Support retail and wholesale price models

Fast TTM; configure not program

2012 SAP AG. All rights reserved.

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Monetizing M2M - Billing requirements summary

LOW ARPU

MASSIVE SCALE

Low TCO;
Low cost footprint
Simplified operation

helps you to sustain the M2M


low value transactions

is needed to cope with the high


M2M transaction volumes

What is
needed ?

CHANGING VALUE CHAIN/S

NEW BUSINESS MODELS

Innovative pricing
Fast TTM

is key to support vertical differentiation


and abstract value vertically

2012 SAP AG. All rights reserved.

Scalability
Real-time
High performance

Fast recombination of offers


Vertical specific or horizontal
Complex partnerships

ensures flexible partner management


thus your success

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Thank You

Contact information:
Name: Christina Giraud
Email: christina.giraud@sap.com

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