Ericsson to Acquire MetraTech - Internet of

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Ericsson to Acquire MetraTech – Internet of Billable
Things Heats Up
What You Need To Know
Earlier this week, Ericsson announced its planned acquisition of MetraTech, a Boston-based
AT A GLANCE
billing and settlement solutions provider who services a diverse customer base including the
likes of Accor Group, Concur, DTCC, LifeLock, Microsoft, O’Hare International Airport, PGi, and
Ericsson announced its
Telus. The acquisition, set to close by the end of Q3, makes a lot of sense as companies look to
acquisition of MetraTech on
get a jump on the Internet of Billable Things™ (IoBT). It provides Ericsson with a flexible
July 29, 2014. It’s looks like a
solution that can adapt alongside still-developing business models and customer relationships,
strong fit because:
and plays well with their fast-growing OSS/BSS business. It also lines up well with trends we’ve

The Internet of Billable
seen developing in platform-based innovation, particularly in light of PTC’s acquisition of
Things introduces
ThingWorx.
complexity similar to
subscription and
Why It Makes Sense
Ericsson already occupies a strong position as a service provider in the telecom and networking
usage-based billing

early development
space, including managed service relationships with both Sprint and T-Mobile. MetraTech
brings with it several high-profile US-based customers, further expanding Ericsson’s footprint in
The market is still in its

Flexibility will be key to
the region. Though they’ve recently quashed speculation that they were in talks to manage
supporting billing models
AT&T’s and Verizon’s networks, this isn’t the only option. The starting point, here, is the
as they evolve
complex and high-volume environment of telecom and network billing. That’s a piece of the
This continues the trend of
managed services puzzle that Ericsson already provides as part of its existing portfolio. While
platform and revenue cycle
we’ve argued in the past that companies that are already able to handle these environments
development focused on
seem well-positioned to support the volumes and types of transactions foreseeable as the
supporting an “anything
Internet of Things converges with billable events, there’s always a build-versus-buy decision to
as-a-service” economy.
be made.
MetraTech’s calling card is in providing flexibility when it comes to structuring billing
relationships. That’s built on the “metadata-based” approach highlighted in the recent
announcement. Rather than being tied to a specific industry’s requirements, it aims to
accommodate any number of arrangements under the umbrella of “Agreements-Based Billing”
by allowing for customer-focused customization through configuration. This is a logical
approach to take if there is uncertainty over exactly how relationships will be structured. In the
context of the Internet of Billable Things, that’s exactly what we’re dealing with. This area of the
technology market is still in its nascent state, and while we can guess at how things may play
out, there is no set, reliable model upon which to build a more prescriptive solution. In the
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absence of certainty, a flexible, configurable approach is the best bet to keep up with changing
tides.
What It Means
Looking at the current landscape of billing providers who support high-volume, complex
environments (like the metered usage and dynamic provisioning common in “as-a-service”
offerings), there are still active players like Amdocs, Comverse, Monexa, and NetCracker. At this
point, there is no reason to believe that MetraTech will back away from competing directly in
this space or from continuing to expand its non-telco, cross-vertical B2B footprint. What does
seem likely is that its technology will fuel two different strategies: one focused on continuing the
same pre-acquisition line of business, and another on leveraging the underlying technology as
the basis for future solutions outside of Ericsson’s OSS/BSS area of expertise. That matches well
with the observation that end user companies increasingly seek more direct access to carrier
OSS/BSS systems to optimize inventories and usage and provide real-time support. They’re
always looking to push further and improve operations – IoBT is a big step in that direction.
Image provided courtesy of Ericsson
We’ve seen other developments in this area as well. In mid-June, the Internet of Things was a big
part of story at PTC Live Global 2014. As we said at the time, their December 2013 acquisition of
ThingWorx opened up some incredibly interesting opportunities for connected devices,
automated decision-making, and the billable events that this could entail. The idea there was
that the platform is the thing that begins to open up myriad other opportunities, and billing
seems like a logical fit as a point of extension.
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Ericsson’s focus on support services (with accompanying software) looks a lot like the creation
of an underlying platform to support their clients’ service-oriented businesses. While that may
be predominantly landlines and broadband today, the smart play is to look ahead to supporting
other, still-developing markets. In addition to simply be positioned for new opportunities, it’s
important to look at where those opportunities might come from. Here, the existing client base
creates and manages the broad infrastructure that connects consumers and businesses through
multiple channels. Their businesses have changed as well, with the proliferation of wireless and
VoIP technologies in the not-so-distant past. In this regard, maintaining a flexible approach to
support puts Ericsson in a stronger position to retain customers as their needs change, while
also opening the doors for new business relationships.
Wrap Up
The Internet of Things has garnered a lot of attention. What it means in the long-term is very
much a matter of debate, but it is clear that companies are acting aggressively to stay out in
front of the curve. This means building platforms to connect devices, and as evidenced by the
Ericsson/MetraTech acquisition, it also means being mindful of (and prepared for) the
implications these developments might have on the nature of services offered to the market.
That’s where the technology of IoT creates the new market of the Internet of Billable Things. We
have seen, and will likely continue to see, partnership and acquisition activity in this area as
companies look to stake a claim and position themselves for the next generation of
service-based business.
Author: Scott Pezza, Principal Analyst, [email protected]
Published: August 2014
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