Development

OSS, SDP converge as vendors, providers shift business strategies

There are signs that the OSS world and the SDP world are converging, with the driver being a combination of the strategies of major vendors and the shift of service providers toward IT dominance of infrastructure projects.

Major players in the OSS space like Amdocs and Telcordia are becoming players in the SDP space, and vendors like Oracle who have SDP plans are now looking at whether they also must field a full OSS platform.

All of this is happening because the network operators, as part of their IP transformation strategies, are demanding more agile services at lower operating costs. Achieving that combination is not a network mission at all, but rather an OSS/SDP mission, or more broadly a mission of software and systems — IT.

We have noted before the growing momentum for change in the TMF, the only standards body that is taking up both OSS and SDP missions, and we believe that body has read the tea leaves and is positioning itself for maximum relevance in what is likely to be the major 2009 market trend in the carrier space.

IBM earnings point to SOA success

IBM reported exceptionally strong numbers, and so one of our critical data points for the future of tech has been obtained, and in a positive direction. IBM revenue growth accelerated to 13%, EPS grew by 28%, but the US sector was last among the major markets with only an 8% growth rate.

EMEA led with 20% and Asia showed 16% growth. The growth was in software and services (about 17% in each category); computer hardware grew at only 2% overall but systems grew at 10%.  IBM’s branded middleware grew at 21%, and WebSphere by 9%.

We believe the IBM numbers, particularly its service numbers, show that projects on SOA-driven modernization and the mashup process are pulling through software purchasing, thus creating the normal behavior for the IT cycle we believe to be driving the market at the moment.

We note that IBM’s information management tools expanded by 30%, showing that changes in IT directions are also changing the information content of worker experiences. All of this points to a positive data point for recovery of enterprise networking in 2009 and the need to prepare for this immediately. We believe that the strategic management changes by Cisco and Juniper are designed in part to prepare for the coming year’s changes in opportunity.

NEC buys NetCracker for OSS and SDP presence

NEC is buying OSS firm NetCracker, a move we think sends the clearest signal so far on the importance of operations software in the telecom space. NetCracker is known for a strong service delivery platform (SDP) software position, a class of operations and service feature strategies that focus on hosting features and operations elements on specialized platforms.

We believe that telco equipment vendors will generally beef up their OSS positions, but in particular will be beefing up their SDP positions, as consumer services and partnerships with higher-layer players change the nature of service provider revenue targets and infrastructure priorities.

NEC sees this as an entrée into the telco space, and they’re right. The price of playing in major deals in the future is going to include the ability to supply integrated operations solutions. If they’re your own, you have differentiation. If they’re someone else’s, you’re heading down the road to plumbing.

Vendors lag in TM Forum issues like SDPs

The TM Forum (TMF) meeting in Nice this year seemed to show that the body is becoming more relevant to key issues like service delivery platforms (SDPs), content, and even advertising, but that the vendors involved in the process are lagging in their productization of these advances. The product announcements at the meeting were pedestrian and vendors are often defensive in their role in working activity, demonstrating a desire to direct the processes to the benefit of their companies in the near term. We believe that the programs will win out, since both the survival of the body and the support of the network operators and service providers that buy the systems and software will depend on relevance to current market needs.

Oracle launches telco OSS initiative

Oracle is launching a major telco OSS initiative based on conformance with the Telemanagement Forum (TMF) SID data model and architecture. The move is an evolution of Oracle’s growing interest in the carrier market, but it also represents a key step in its competition with IBM and perhaps for the industry as well. The Oracle OSS model includes the ability to import information from other information systems, but it also integrates many of what would ordinarily be seen as enterprise applications, such as ERP. This increased focus on business applications for OSS processes is reflective of the TMF view but also tends to favor software players like Oracle against middleware/hardware players like IBM. For the industry the move likely means much greater service provider focus on OSS processes, since the giants of the industry are now contending with each other in that space and elevating their issues to be visible to senior management. We believe this will put additional pressure on network equipment vendors to take some stand in the OSS and service management space,or risk being marginalized under the software umbrella of others like Oracle.