2006 and early 2007 saw a range of major acquisitions made in the oss market. Is this a sign of a market struggling for scale and liquidity, or an inevitable reaction to operators’ needs for convergent, packaged OSS Solutions. Keith Dyer takes a look at the market movers
OSS consolidation is not a new topic, there have been companies merging with other companies in the area of telecoms software for years. It’s only natural. But the past few months to a year have seen something else happening, the convergence upon a central goal by major players from different sectors, swallowing up point players (themselves often the result of several prior mergers) as they go.
In this race, what we’ve seen is players approach the end game of packaged, end to end software to support the creation, provision, fulfilment and management of next generation communications services. The relatively atomised world of telecoms software is now beginning to follow the paths mapped out for it on analysts powerpoint slides. From the billing sector, Amdocs has in the past year added payments management specialists Qpass, and inventory player Cramer. OSS giant Telcordia has already long- added and integrated inventory specialist Granite, and has also long worked on integrating partners tightly into its product strategy.
From the CRM side comes Oracle, getting itself an entry in April last year into the billing world, with the acquisition of Portal Software, and into fulfilment with MetaSolv.
Curtis Holmes, president and CEO of MetaSolv, said in announcing the acquisition by Oracle that the deal was a necessary competitive move. While network operators worldwide are pursuing OSS transformation projects, he said, carrier consolidation and generally soft spending have made it difficult for a large number of companies to effectively compete. “The deal is great timing as the industry goes through a massive transformation,” Holmes said. “This deal will allow us to accelerate our strategic mission. We’re really able to expand our profile in the global marketplace.
”These acquisitions, along with Oracle’s renowned database management suites would give it “and end to end packaged software platform for BSS/ OSS/ SDP and enterprise applications”, the software giant said.
Then, as if that was not enough, here comes IBM, bringing its strong systems integration business and hitching that to first Micromuse, and then Vallent, to really give it some heft in service performance management and monitoring.
And where these companies see competitive benefits in partnering, they will. Amdocs and IBM are working together to plug the respective gaps in their portfolio – Amdocs being perhaps weaker in service management and IBM in billing and inventory management.
As Telcordia’s Senior Vice President, Global Solutions, Michael Anderson, once told this writer, now is the time for scale. “I had a nightmare one night – I dreamt I woke up and I was working for a $10 million a year software company,” he said.
The driver for all this change, of course, is the move from linear process (or silos, stovepipes, call them what you will) into more horizontal processes that offer a single view of a subscriber.
Up until now, the script goes, there has been a gap not just between different service areas, but between the network and the subscriber. And it has been up to dedicated integration and software teams within carriers to stitch all of that together (or not).
Amdoc’s Seth Nesbitt to Mobile Europe that now the aim of this consolidation is to take some of that pain away from operators.
“The most commonly quoted goal for network transformation projects is reduced time to market for new services and products – especially in OSS where there have been fragmented legacy systems, siloed systems per service which are real barriers to the market.
“Well, service providers don’t have to stitch this together any more. It’s been great business for systems integrators up to now to do so, but it’s not an efficient way to manage customer interactions,” he said.
Even away from the mega players, there has been continued activity. Billing player Subex Azure has announced plans to acquire Syndesis for $163.5 million, another instance of the accelerating pace of OSS M&A. For Subex Azure the acquisition takes it outside its current area of revenue assurance and fraud into the highly competitive service fulfilment area. Industry watchers have indicated that Subez Azure may yet be about to add a service assurance capability to its offering.
We’ve also just seen network services player Syniverse add the wireless business unit of BSG for $290 million.
“The proposed acquisition of BSG’s Wireless business will allow us to better serve the demands of our clients; further develop our global operations and customer base in Europe, Asia and the Middle East; and allow us to continue to be a leading service provider to GSM operators worldwide,” said Tony Holcombe, President and CEO of Syniverse. “The acquisition also brings to Syniverse a number of new services, including a best-in-class financial clearing platform, several new wireless services and additional product development expertise that will position us to better serve the increasingly complex needs of our global wireless customers.”
So there can be little doubt that what we are witnessing is a strategy being followed from different areas within the BSS/OSS sphere, to reach a point where the areas of CRM, ERP, Billing and OSS are offered in an integrated, or as-integrated, way.
One company which has followed this pre-integrated way of doing business, with a collection of OSS elements is Clarity. This Australian company has a range of contracts with PTT and Tier1 customers in AsiaPacific, supporting about 90 million subscribers.
Although only about a fifth of Clarity’s customers are in the wireless space at present, founder Tony Kalcina says that the company is well positioned to take wireless operators through the same transitions that it has taken Asian PTTs through. His point is that by offering a whole suite of pre-integrated software products, the vendor can take the integration pain away, and support the development of new services as the operator wants to introduce them.
Amdocs too is publicly down this packaged software route. It even describes its Amdocs 7 as the first such product truly aimed at the telecoms market.
Yet are there potential drawbacks. Telcordia’s Anderson sounds a note of caution about the supposed miracle cure. “I tell you, we’ve seen the disasters that have happened when some CTO has got too excited and tried to change out his OSS overnight, and we’ve been brought in to clear up the mess. It’s not pretty.” Anderson’s view is that the industry is better off looking at transformation and consolidation projects as five year jobs.
Another potential barrier to this market view is that the network element vendors themselves are increasingly talking up their OSS games. Nokia, Ericsson and Alcatel-Lucent have all made greater play recently of their service control and management software capabilities, and have signed up to various open OSS initiatives that they say will make the management of the network itself more interoperable.
Nokia has a dedicated OSS division that has been targeted for growth this year, and its target is firmly on the OSS middleware layer of network management, designed support converging network systems.
Again, Anderson has his doubts that these equipment vendors really have the scope to play in the OSS world. “Suppose I said that I was going to start making switches and base stations and routers,” he said, “what would a Nokia or Alcatel-Lucent have to say about that.
A further barrier may be that operators don’t mirror these market moves in their buying patterns. Much of the NGOSS thinking came about through the mega projects such as One Vodafone that are now drawing to a close. With operators now looking to convergent platforms for service control across multiple networks, though, the software vendors’ bet is that the customer view, rather than a merely per network or per service view, will become essential.
It seems inevitable that there will be further consolidation in this market, as gaps in portfolios are plugged to meet operator demand.