Acknowledging that its Business Support System (BSS) is not performing satisfactorily, Ericsson announced a further restructuring that will result in revisions to its BSS product and contract portfolio, as well as an associated headcount reduction.
Ericsson said its launch of a next-generation BSS platform, the full-stack Revenue Manager, has not been successful and to date, the full-stack Revenue Manager has not generated any revenues. Customer demand for a full-stack pre-integrated BSS solution has not materialized, and delays in product and feature development have also made the full-stack Revenue Manager less competitive. R&D resources in BSS have been focused on full-stack Revenue Manager, causing further delays in product releases of the established platform. In addition, certain complex transformation projects experienced delays and cost overruns. Ericsson said its strategy now is to focus on its established platform, Ericsson Digital BSS, and refocusing the full-stack Revenue Manager to fulfilling existing customer commitments only.
Ericsson said the restructuring will negatively impact operating income in Q4 2018 by SEK 6.1 billion (US$690 million), mainly impacting gross margin. Out of this amount, SEK 3.1 billion (US$350 million), is treated as restructuring charges. Further restructuring charges related to the planned measures, including related headcount reductions, estimated to SEK 1.5 b. are anticipated in 2019.
