In 1998 Berkshire Hathaway acquired a reinsurance company called General Re. “The only significant staff change that followed the merger was the elimination of General Re’s investment unit. Some 150 people had been in charge of deciding where to invest the company’s funds; they were replaced with just one individual – Warren Buffett.”
Robert G. Hagstrom in, “The Warren Buffett Way.”
Buffett was able to replace 150 people, and significantly outperform them, because they were conducting (relatively) small value, high volume transactions and he did the exact opposite.
Compare this with Gemini Waghmare’s thoughts on BSS, “It used to be that operators differentiated by pricing. Complex bundles, friends and family plans, rollover minutes and megabytes were used as ways to win over consumers. This drove significant investment into charging platforms and product catalogs. The internet economy runs on one-click purchases and a recurring flat rate. Roaming and overages are going away and transactional VOD (video on-demand) makes way for subscription VOD.
It’s not uncommon for operators to have 10,000 price plans while Netflix has three. Facebook and Google make billions of dollars without charging a cent.
Operators would do well to deprecate the value of their charging systems and invest instead in cloud and flat-rate billing with added focus on collecting, normalizing and monetizing user data. By simplifying subscription models with lightweight billing platforms, the scale and cost of BSS will drop dramatically. After all, there is no differentiation left in out-bundling competitors,” quoted here on Inform. There are some brilliant insights in this link, so I recommend you taking a closer look BTW.
10,000+ pricing plans definitely sounds like the equivalent to General Re before Buffett arrived. Having only 3 pricing plans would be more like the Buffett approach, change the dynamic of BSS tools and the size of the teams that use them! Having only 3 pricing plans would certainly change the dynamic for OSS too. The number of variants we’d be asked to handle would diminish, making it much easier to build and operate our OSS. Due to all the down-stream inefficiencies, you could actually argue that there is only negative-differentiation left in out-bundling competitors.
As an aside… Interesting comment that, “Facebook and Google make billions of dollars without charging a cent.” I’d beg to differ. Whilst consumers of the service aren’t billed, advertisers certainly are, which I assume still needs a billing engine… one that probably has quite a bit of algorithmic complexity.Read the Passionate About OSS Blog for more or Subscribe to the Passionate About OSS Blog by Email