Redknee buys Orga and the killing of billing

Written by on June 24, 2015 in BillingViews, Opinion with 3 Comments

Crime SceneRedknee CEO, Lucas Skoczkowski is a brave man. Highly respected in Canada, his acquisition of NSN’s BSS assets in late 2012 was seen as brave, for sure, but there were questions. NSN had 130 communications service providers as customers, including half of the top mobile operators in the world. The problem was that the technology was not, to be kind, leading edge. There were also questions about the level of debt Redknee took on as a result of that manoeuvre. There were some in the industry that believed the answer to be ‘too much, way too much.’ As our own Ed Finegold said at the time, “how fast can you chew, Lukas?”

Orga Systems had the opposite problem to Redknee. It had software that was very much leading edge. Those that implemented it, loved it, but like Metratech before it, it had lost its focus. Why? Because it could support almost any business model that required real-time responsiveness combined with a recurring revenue model. Like Metratech, Orga sold its solutions to utility companies, smart metering companies and cities and, therefore, lost focus with its traditional telco market.

Analysts, too, were often left wondering exactly what Orga did. Its massive marketing budget showed it in the best light at trade shows but it was not always clear what message Orga was trying to send out. Maybe those millions of euros in marketing helped its demise into insolvency? That and offices in Europe, Middle East, Africa, the Americas and Asia-Pacific with over 500 staff may have been contributing factors, but even with turnover of 60 million euros, and recurring revenues of over 45 percent, it couldn’t keep going.

Does Redknee buying what was left of Orga make sense? Absolutely, it makes more sense, in software and software engineering terms than the NSN purchase that essentially brought a mass of customers either transforming their BSS or planning to. Now Redknee has the customers and some advanced software that is very much worth selling to them. It also positions the company well to address the non-telco markets that Orga was capturing, albeit unprofitably.

Orga’s customers, including companies as diverse as BMW, America Moviles, Astelit, Avea, Telecom Italia Group and Meralco Philippines, should be well pleased that Redknee has stepped in. One stand-out after its acquisition of NSN was the effort made to talk to each and every existing customer assuring them of Redknee’s commitment to them – mostly by Skoczkowski personally.

The underlying issue with the recent spate of mergers, acquisitions and insolvencies is that the BSS sector, particularly billing, is under extreme pressure. Billing companies, once the proud bastions of the ‘crown jewels’ of every telco are becoming anything but ‘billing’ companies.

I remember introducing Amdocs at an event years ago as a leading billing company and being rebuked soundly by its marketing people as it tried, eventually successfully, to shed that mantle. Even Redknee, in its press release announcing the Orga acquisition, calls itself “a leading provider of real-time monetization and subscriber management software.”

Real-time or online charging has replaced billing, monetization is the catch-all phrase, and they are often coupled with policy management, CRM, order management, carrier billing and service delivery so vendors can offer a holistic ‘BSS’ environment to potential customers. Billing may not be dead, yet, but it sure is taking a hammering.

It begs the question of what may befall the myriad of smaller billing vendors and new players in the carrier billing and charging space. Getting new tier one and even tier two business will surely be a tall order for them. Will they survive with their existing customer base and new small customers and hold on for acquisition or will they be trampled by what is developing into a small group of very large players intent on market domination.

Those that have been around this industry for more than fifteen years will see similarities to past market activity. The formation of big oligopolies encouraged new, smaller, innovative players to emerge in the early days of convergent billing. Today we have four or five big players – the likes of Netcracker, Amdocs, Ericsson, Redknee and Oracle – trying to dominate. Will there be space for others? Time will tell.

Read our interview with Lucas Skoczkowski on his plans for Orga/Redknee.

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About the Author

About the Author: Tony is a freelance writer, regular speaker, MC and chairman for the telecoms and digital services industries worldwide. He has founded and managed software and services companies, acts a market strategist and is now Editor of DisruptiveViews. In June 2011, Tony was recognized as one of the 25 most influential people in telecom software worldwide. .

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  1. Andy Tiller says:

    Four or five big players? But can any of the ones you mention compete with the Chinese vendors?

    • Tony Poulos says:

      Of course we could Andy, but we were referring here to players offering a full or close to full BSS stack. Keep an eye out for an upcoming piece on ‘best of breed’ vs ‘full stack’ we are working on.

  2. Cato says:

    Hey Tony,
    Interesting. (full stop)
    Monetisation the current catch phrase.
    Firstly; Monetising what? Traffic? Suggests infrastructure business, that are all about capital and scale.
    Everyone is talking about digital economy. That is products and services, premium price and market share.
    My question is not whether Orga is a good acquisition or not, but if Redknee can muster their staff to address different culture.

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