Didn’t Ericsson just decide to buy Telcordia? Now we have Amdocs, the other giant in the OSS/BSS space buying policy-management player Bridgewater. On the surface, just like with Telcordia, this seems one of those enormous yawns. After all, Bridgewater makes policy stuff for mobile/IMS applications, and we all know what Amdocs does. But what makes this not only interesting but potentially earth-shaking is that OSS/BSS activities are SERVICE MANAGEMENT, and Bridgewater makes components for SERVICE LOGIC.

I’ve been saying for some time that in the new network, we need to combine these functions in some way, and I noted with the Ericsson/Telcordia deal that Ericsson just might have its eye on the converged service management space. Operators are telling me that they need a single conception of the service layer that integrates logic and operations functions seamlessly. They wanted the network vendors to provide it through a service-layer architecture. The OSS/BSS guys may now have their eye on the prize. Amdocs may also have its eye on becoming the next guy to be picked up by a big network vendor, too.

So does this mean Ericsson was dumb, and that this acquisition is simply a step on the slide of OSS/BSS into strategic irrelevancy? The answer to both questions is “Maybe, but then again, maybe not!” It’s true that there is little in all of networking as boring as an OSS/BSS. It’s true that OSS/BSS gives glaciers a run for their money in terms of inertia. It’s true that the OSS/BSS beat is where reporters go if they don’t believe in hell.

But it is also true that OSS/BSS is the business heart of service providers worldwide. It’s like demand deposit accounting for banks; you have to have it or you’re not a bank any more. So while the evolution of the OSS/BSS process has been agonizing, it’s probably still going to happen, which is what Ericsson might see here.

Ericsson more than any other “network vendor” doesn’t want to be a network vendor. It wants to be a professional services company. The task of upgrading back office telecom processes is certainly a major professional services opportunity, and Telcordia is certainly a repository of expertise in that area with a built-in fan base among the OSS/BSS types at least.

Furthermore, it’s a lot easier to spin a profitable professional services deal for OSS/BSS migration if you have the software components of the new systems. Any product is good because it can be sold multiple times; services are always one-offs. By blending the two, Ericsson can make good deals on OSS/BSS migration for the customer and still have a lot to carry to the bank.

So if this is a good deal, how will it impact the market dynamic? Well, you can divide the Ericsson competitors into two classes, those who can only spell “OSS/BSS” and those who actually have a practice in that area. In the former category you have Cisco and Juniper, and in the latter you have Alcatel-Lucent and NSN. The move impacts these groups differently.

For Alcatel-Lucent and NSN, this spells very significant competition in back-office integration services.  Alcatel-Lucent, which has been more services-oriented in this space all along, may now find itself looking for some M&As in the OSS/BSS space, and right now it really doesn’t need the distraction of absorbing something. NSN has decent OSS/BSS elements and credentials, so it’s risk is competition—not so much from Ericsson (which may be the only company in the space that NSN can stand against in marketing excitement) but because the new market dynamic may require positioning and excitement, something NSN has had problems with from the first. And of course with rumors that Nokia wants to sell off its NSN stake, this isn’t a good time for singing.

For Cisco and Juniper the problem is that neither company wants to think about OSS/BSS at all. Cisco has always considered it a bastion of the Evil Empire of Telephony, an interesting factoid given that Cisco more than any other company might have been the genesis of the TMF, the Church of OSS/BSS. Juniper flirted with the evolution of management in its sponsorship of the IPsphere Forum, and that was finally absorbed into the TMF, but Juniper has been steadily disengaging from that activity and has no relevant position in the space at all. Both companies could now find that occasionally blowing kisses in the OSS/BSS direction won’t keep operators happy.

Everyone has been infatuated by the notion of cloud computing as anointing the small and destroying the strong—it’s been a kind of populist theme that’s evolved in parallel with the whole Internet revolution.  The problem is that it’s not a practical vision of the market. The big money in cloud computing comes from two sources—PaaS-based offloading of SOA app components from enterprise data centers for backup and overflow work, and SaaS opportunities to SMBs and even some enterprises. The big money’s still out there, and Verizon wants it.

AT&T is moving in this area too, and one interesting development there is that the company is working on the issue of asset creation/exploitation and not just the issue of APIs or cloud architecture. AT&T is looking at how to take legacy assets in the OSS/BSS space and make them available as APIs for integration into higher-level services (by developers and, we’re told, by internal service architects). It also wants to integrate its smart appliances into its content services, not only as elements in a multi-screen strategy but as controlling tools to manage media and the experience. Finally, AT&T hopes to formulate a general-purpose HTML5-based architecture for its proto-smart-device GUI so that applications will run across the full range of stuff that’s rolling out.

The survey cited the explosion in the number of relationships rather than the number of customers, and saw the need for partnering with others versus walled gardens as critical. We believe that the mobile broadband challenges have finally tipped the decision process from passive to active mode, and that there will be real change in the service provider business model.

Most of that change is likely to come in 2H10 because if the normal inertia of providers, however, and because players like Amdocs are not well-positioned to drive the change themselves. OSS/BSS providers have actually lost credibility even in their core management space according to our latest survey.

There’s a moral here; the telcos that already have support organizations could turn their support offerings into a profit center by making them efficient through the use of proper tools. More significantly, they could weld supportability into new services in a way that Google and other over-the-top (OTT) players can’t match. Yet despite all of this, we find that vendors of all types are still in the dark ages of OSS/BSS instead of in the modern age of composable service automation.

Do you smell opportunity as strongly as we do? Apparently, not everyone does.

IBM has had what it calls the Service Provider Delivery Environment (SPDE) for some time, but the product has been indifferently promoted, according to our surveys. Apparently that’s going to change because IBM has opened more service provider development centers in Asia and added resources to a key solutions center in France.

Despite this, IBM’s SPDE is nothing revolutionary according to operators in our survey. It’s a combination of service delivery platform (SDP) tools and OSS/BSS tools rather than a new approach.

We have heard unconfirmed rumors that Juniper, an IBM partner, is in discussions with IBM about partnership with IBM’s service-layer technology and that Juniper will be using some of the resources of the solution centers. We’ve also heard that Oracle has plans to ramp up in this space. The question now is whether software players like IBM and Oracle can use their assets to get a leg up on the equipment vendors. It’s an odd race so far because operators are clear in saying that all of the competitors are running with their legs tied together in terms of functionality and direction.

The NetQoS deal gives CA the latter, and CA has assets in the systems management area that might be at least turned toward service application fulfillment. This space is gaining momentum quickly but there’s also probably a broader push than the real opportunity justifies.

Some later players will likely get burned here, and there are sure to be a lot of superfluous announcements too.