Business and Finance - 'End-to-End'--Just the Beginning?

Posted 01/15//2001

Business and Finance

'End-to-End'--Just the Beginning?
Complete OSS Solution: 'Holy Grail' or 'White Elephant'?
By Becky Bracken

Much like the rest of the telecommunications industry, the OSS vendor space is being forced to reinvent itself right along with its service provider customers. A highly fragmented OSS market, and the need for more ubiquitous and easily upgraded solutions have driven many OSS vendors to merge, partner with and acquire other vendors to provide what is being touted as the Holy Grail of OSS: the "end-to-end solution." But while end-to-end makes sense in some instances, it may not be the panacea for carriers that many are betting it will be.

In recent months, there have been some sizeable mergers of OSS vendors. For instance, Agilent Technologies Inc. (www.agilent.com) recently acquired Objective Systems Integrators Inc. (OSI, www.osi.com), a provider of next-generation OSS software for communications service providers. Spirent plc (www.spirent.com), which provides telecommunications testing systems and network products, has acquired Hekimian Laboratories Inc. (www.hekimian.com) for approximately $1.6 billion in a move to offer an end-to-end solution. And Accenture (www.accenture.com), the former Accenture (www.accenture.com), and Amdocs Ltd. (www.amdocs.com) have teamed up to bring service providers integrated billing and customer care solutions. Too, Yankee Group's (www.yankeegroup.com) David Hawley notes that in an effort to enter into the higher-growth software market, Lucent over the past couple of years has been acquiring OSS vendors--most notably billing vendor Kenan--to provide an end-to-end solution for communications service providers.

These companies are betting that by pooling their respective strengths, they can offer at least a large portion of the back-office systems for carriers, cutting down on the number of vendors they are forced to deal with.

Of course, this charge toward end-to-end offerings is relatively new in the OSS industry. Small boutique vendors offering "best of breed" technologies have dominated this space for years. Now these smaller companies are looking to consolidate to better serve the needs of customers. The growing need to upgrade back-office systems to coincide with network upgrades has caused service providers to look for an easier answer, and these newly formed, larger firms believe that they will be in the best position to meet those integration and upgrade needs.

"If you take a look at what's happening to OSS vendors, they're all scrambling to get to that next-generation view, an end-to-end view," says Keith Miller, vice president and general manager at Agilent. "No one has achieved critical mass yet. There are still many niche players and there's not any one dominating force within the market overall. If you look at the players, many are $20 to $40 million in their revenues. Bringing [Agilent and OSI] together takes us to an order of magnitude larger than that."

But relying on one vendor for all or a large chunk of back-office functions may not provide enough added customer value. Abandoning a best-of-breed approach can leave service providers without a true way to differentiate their products from their competitors'. That's risky. As Insight Research Corp.'s (www.insight-corp.com) recently released report "Operations Support Systems" points out, OSSs have really begun to be the link between the carrier and the customer.

"Traditional OSSs managed the network; new OSSs respond to and (in many cases) manage the service provider's total relationship with the customer," according to the report. Now, more than ever, OSS software is a mission-critical aspect of the carrier's business. The need for competent, reliable, OSS vendors that understand the most intimate details of the customer's business is growing more acute.

But Jason Briggs, senior analyst with The Yankee Group, counters that many carriers are going to be apprehensive about turning over such a significant part of their business to one vendor.

"I think a lot of carriers are very afraid to put their eggs in one basket. Especially when you have your whole system in the hands of one vendor. Carriers are nervous," Briggs says.

Still, with money evaporating from capital markets, providers are looking to streamline their business. One way that OSS vendors are trying to accommodate this and save carriers time and money is by being a "one-stop shop." Having fewer vendors is especially important at a time when carriers are scrambling to react to the major shift in the market from voice-centric to data networks.

"Now you have to have a very flexible, easily integrated OSS to be able to deal with massive changes in traffic in a matter of weeks and months, whereas it used to be years," Agilent's Miller says. "I think that's the killer for most OSSs. If you look at the boutique players, the small niche players, their problem is they have to be integrated with maybe a half a dozen other players. So every time you try to do something new, launch new services, or cope with sudden changes in the needs of your network, you've got to upgrade all the pieces and try to get them all to go together at the same time. Logistically that's very difficult, and many of these vendors being very small, they don't have the finances to be able to keep up. That's the beauty of Agilent and OSI coming together, is that we put a lot of financial muscle behind the problem and we already have a very strong, very fast-growing suite of applications. We can provide a solution that will be able to solve a large chunk of the problem."

David Gellerman, vice president of technology and corporate development at Hekimian, says the consolidation within the OSS market is mirroring much of what is happening within the service provider market and even the telecommunications industry as a whole.

"Our customers are consolidating like mad," and carriers can realize that economies of scale are better leveraged by dealing with fewer suppliers, he says. "Any of the large service providers will tell you that, over the last few years, they have been very aggressively reducing the number of suppliers they have from thousands to hundreds, and if you can't be a broad enough supplier--they're going to drop you."

But while a larger OSS vendor may be a quick answer for startup CLECs, as carriers become larger and more experienced, they are going to have to build solutions in-house that meet specific business needs. Says Robert Taylor, president and CEO of Focal Communications Corp. (www.focal.com), it's difficult to communicate individual business needs and then sit and wait and hope the software vendor understands.

Taylor's experience in the industry has shown him that in the long term, any CLEC will have to be an integrator. While Focal does use some vendors, he says that maintaining control in-house at both the development phase, as well as the implementation, is critical.

"I don't think there are any OSSs that have demonstrated they can scale," Taylor says. "You don't have to do it all, but if you're going to grow, you have to drive that process rather than be driven by an OSS vendor. Service specs are a hard thing to agree on."

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