Dataquest Insight: Operations Support System Market Overview and Strategic Scorecard for Vendors, 2009

The tough economic climate in much of the world has forced CSPs to reduce operational expenditure, but also to emphasize customer focus, the customer experience and faster time-to-market. Consequently, CSPs are looking for incremental improvements in processes and the quality of services, based on proven return on investment (ROI). Implementing changes to networks and IT is perceived as the key way to ensure future competitiveness. This requires much new equipment, new IT systems (including OSSs) and new services. However, most CSPs continue to experience difficulties in the complex administration of multiple legacy systems organized in silos throughout their operations. Revised OSS infrastructures have to enable convergent services across different technologies and network environments. This situation inhibits the fast deployment of new products and services, while not maintaining data integrity and consistency across redundant solutions. Hence, despite the tight economic conditions, CSPs are investing amply in more flexible OSS architectures to improve the efficiency of the creation, management and delivery of new services, in order to shorten their time-to-market. Simultaneously, CSPs need to keep an eye on operating expenditure and reduce spending wherever possible. On the other hand, competitive pressure is forcing CSPs to invest heavily in OSSs that deliver evident improvements in the customer experience. As a result, we see quite strong investment activity in service and performance management, order management, provisioning and activation systems, as well as in integrated inventory solution segments.

As the complexity of new converged and composite services increases, the goal of achieving greater operational agility for the rollout of new services requires an end-to-end operational view. This implies a shift to process-driven end-to-end solutions, with a clear, congruent view of business and system processes. Hence CSPs are gradually shifting to a cohesive view beyond OSSs, one that embraces adjacent areas such as CRM, BSSs and SDPs. As a consequence of this end-to-end evolution, CSPs need to take the lead in defining their own end-to-end architecture and position vendors within that framework.

CSPs' sourcing behavior remains characterized to a great extent by a best-of breed sourcing mode. However, we observe a trend in the market according to which CSPs refine from point solutions and move toward end-to-end solution processes. CSPs will refine their list of preferred suppliers even more aggressively, to a few key strategic vendor partners.

CSPs were initially doubtful about whether to hand over control of two or even more of the above mentioned strategic IT areas to a single vendor. Traditionally, CSPs have selected one best-in-class vendor for fulfillment and another for services assurance in the OSS area, often to support a particular type of service or technology. But increasingly we see implementations of end-to-end OSS solutions in discrete areas, such as mobility and broadband.

Eventually, we expect to see cases of CSPs buy all their OSSs and BSSs from one vendor. The trend toward this applies not only to startups, mobile virtual network operators (MVNOs) and some CSPs in emerging markets, but increasingly also to Tier 1 and Tier 2 CSPs. These developments are gradually reshaping the OSS vendor landscape in favor of suite vendors, which offer standardized, modularized, pre-integrated end-to-end solutions.

We also see remote management and software-as-a-service (SaaS) offerings for OSSs emerging gradually.

The worldwide OSS market consists of many global and local players competing for market share in various regional markets. However, as a consequence of the end-to-end evolution, we observe a strong trend toward greater concentration in all OSS markets. We will see continuing market consolidation, driven especially by larger players picking up smaller point-solution players to complete end-to-end solutions. The current market consists of a few large global vendors that offer end-to-end OSS solutions, and a number of smaller vendors that offer highly specialized point solutions and products. At the same time, we see a number of smaller vendors addressing evolving CSP solution needs in the context of the management of new operational complexities. We see many innovative startups, which frequently fill gaps in the offerings of established vendors — for example, in the order management, service creation, fulfillment and product catalog management sectors.

In addition to ISVs, we score large NEPs, since they are playing an increasingly important role in the OSS market. We observe significantly growing interest from NEPs to offer extended OSS capabilities. Many NEPs already have a wide range of OSS ISV capabilities and are seeking to widen their product capabilities — for example, through acquisitions. The most prominent example is NEC's acquisition of NetCracker Technology. NEPs' customers require more than just pure network infrastructure supply. CSPs' most urgent need is for operational management support for the equipment delivered by NEPs. Moreover, NEPs have strong potential to penetrate existing customer accounts with stand-alone multivendor OSS solutions. Strong growth in the OSS market is also welcome as NEPs move higher up the value chain and into the services layer to offset squeezed margins in the traditional network equipment business.

This market overview and strategic scorecard study supplies CSPs with information that will help them evaluate the leading OSS ISVs and make informed sourcing decisions. To be included, vendors had to meet the following criteria:

Criteria for Inclusion

ISVs — only software publishers are included. NEPs with their own extensive OSS product portfolios are included in this category.
Functionality — the software suite has to provide the full range of OSS functions, in either service assurance, service fulfillment or both.

Criterion for Exclusion

SIs that do not have their own software suite are excluded.

Criterion for Inclusion

The solution has to address both fixed and mobile CSPs.

Criterion for Exclusion

Solutions that address only cable providers or ISPs are excluded.

Criterion for Inclusion

Vendors must be present in at least two geographies, one of which must be North America or Western Europe.

Criterion for Exclusion

Vendors with no presence in North America or Western Europe are excluded.

To be included in this scorecard, vendors had to meet all of the above criteria. They also had to have a significant market share or be gaining significant market momentum.

As defined by Gartner, the OSS market includes the following modules:

Inventory management.
Provisioning and activation.
Network management.
Planning and engineering.
Workforce management.

The overall outlook for the global OSS market is characterized by continuing strong performance, despite the difficult economic conditions. CSPs still have enormous opportunities to reduce costs in relation to existing, monolithic OSS environments, which are largely organized in silos. There is a huge requirement for integration, customization and transformation services.

Simultaneously, OSS products continue to evolve toward pre-integrated and modular product suites that support evolving CSPs' business models worldwide. This evolution is happening in anticipation of the above-mentioned requirement for an end-to-end view of integration. In this context, we observe a gradual shift toward a stronger out-of-the-box software approach, in order to eliminate heavy customization costs wherever possible. Interestingly, leading vendors reflect this shift in the realignment of their internal organizations. The pure SI-type players are beefing up their productized organization and strategies; equally, the software players are increasingly investing in their own professional services capabilities, instead of purely relying on partners. However, we expect to see both approaches coexist at least until 2012.

Apart from product performance and scalability, the main differentiators are the ability to integrate with new and legacy systems, enhanced functionality for cross-domain networks and services, and reductions in time-to-market. Many vendors distinguish themselves by providing OSS product suites in conjunction with consultative services on a holistic basis, as well as taking coherent account of IT, network and business decisions. OSS product suites have become far more robust, with improved performance, reliability and scalability, extending into multiple networks and services management. An extensive technology partner "ecosystem" will be vital to fill in strategic solution gaps.

Many suppliers have at least a decade of experience, which gives them an in-depth understanding of their customers' requirements. Most continue to evolve their product architectures in anticipation of future CSP requirements for new multi-service and multi-technology OSS products.

Many of the vendors profiled in this scorecard have been going through numerous merger and acquisition activities. This has resulted in increased market concentration for a few large OSS vendors. In most cases, efforts to integrate all acquired assets have taken longer than initially anticipated. However, the majority of these vendors have now started to leverage the first integration synergies from consolidated assets. Nevertheless, we recommended a cautious assessment of vendors' progress in integrating underlying OSS assets as a result of these mergers and acquisitions.

We expect that the consolidation of new entrants and established OSS single-product and product-suite suppliers will continue in 2010. This may change products and solutions, depending on the firms acquired and the strategies and market focus of the acquiring companies. Moreover, some product suites might not combine the best components for the market, or may not comply with required standards and emerging technologies such as the IP Multimedia Subsystem (IMS) and SDPs; also, some may lack an open architecture.

Most vendors' sales and market strategies continue to depend on global and local SIs to implement and support product suites. This is understandable, considering the competition and the demands for global reach. ISVs will need to cooperate with SIs and NEPs, who often take the project leadership role in the implementation and management of large, complex OSS transformation projects. NEPs are well positioned to expand their OSS integration, as well as their managed services and SaaS offerings.

Vendors are scored for seven standard criteria used in Gartner deliverables on a scale from 1 to 5, with 1 being the highest and 5 being the lowest. Each of the criteria is weighted, with the weightings being 1.0, 1.5, 2.0 and 2.5.

Criterion 1: Product and Service
- Description: Core goods and services offered by the vendor that compete in/serve the defined market. This includes current product/service capabilities, quality, feature sets, skills, and so on, whether offered natively or through original equipment manufacturer (OEM) agreements/partnerships.
- Weight: 2.0
Criterion 2: Offering (Product) Strategy
- Description: The vendor's approach to product development and delivery that emphasizes differentiation, functionality, methodology and feature set as they map to current and future requirements.
- Weight: 2.5
Criterion 3: Market Understanding
- Description: The vendor's ability to understand buyers' wants and needs and to translate those into innovative products and services. Vendors that show the highest degree of vision listen and understand buyers' wants and needs, and can shape or enhance them with their added vision.
- Weight: 1.5
Criterion 4: Geographic Strategy
- Description: The vendor's strategy to direct resources, skills and offerings to meet the specific needs of geographies outside the "home" or native region, either directly or through partners, channels and subsidiaries, as appropriate for that geography and market.
- Weight: 1.0
Criterion 5: Sales Strategy
- Description: The strategy for selling products that uses an appropriate network of direct and indirect sales, marketing, service and communication affiliates to extend the scope and depth of market reach, skills, expertise, technologies, services and the customer base.
- Weight: 2.0
Criterion 6: Market Responsiveness and Track Record
- Description: Ability to respond, change direction, be flexible and achieve competitive success as opportunities develop, and as customer needs evolve and market dynamics change. This criterion also considers the vendor's history of responsiveness.
- Weight: 2.0
Criterion 7: Overall Viability (Business Unit, Financial, Strategy, Organization)
- Description: Viability includes an assessment of the overall organization's financial health, the financial and practical success of the business unit, and the likelihood of the individual business unit continuing to invest in the product, offer the product and advance the product within the organization's product portfolio.
- Weight: 1.0

The overall scores are defined as follows:

Very Strong: Vendor is a leading provider of strategic products, services or solutions.
Strong: Vendor demonstrates strength or even leadership in specific areas.
Stable: Vendor has strengths and weaknesses in roughly equal measure.
Some Risk: Vendor faces challenges in one or more areas.
High Risk: Vendor has difficulty responding to problems in multiple areas.

Based on the criteria outlined above, a comparison of the vendors that participated in this study gives the results shown in Figure 1.

The OSS suppliers surveyed in this report all receive overall scores of "very strong," "strong" or "stable." Most have strong product offerings and a good track record, sales strategy and market understanding. The overall high scores reflect the fact that we selected mostly the global industry leaders and did not include the smaller, emerging vendors. In addition, the trend toward further concentration based on OSS vendor consolidation elucidates the strong performance of the selected vendors.

Overall, these scores reflect the maturity and ongoing growth of the OSS market and imply strong CSP investment in this area. They show that vendors have developed solid solutions and are likely to pursue a strategy of functional and technological expansion to supplement their product suites and of geographic growth to anticipate further growth opportunities in this market.

Alcatel-Lucent provides a comprehensive telecom operations management solution portfolio, with particular strength in OSS service assurance. Alcatel-Lucent's assets include a broad pre-integrated OSS solution portfolio spanning wireline, wireless, cable and all-IP segments. However, the majority of its OSS products consist of best-of-breed partner ISV/SI products. Alcatel-Lucent has particularly strong strategic partnerships with Amdocs in the fulfillment domain and IBM in the service assurance domain. The company's core markets are Western Europe and North America, and it has increasingly good traction in emerging markets.

Alcatel-Lucent is pioneering a consolidated domain view of OSS/BSSs and SDPs under the umbrella of a holistic Service Delivery Framework (SDF), which is in compliance with the TM Forum's work in this space. This compelling vision anticipates future requirements of CSP operations by aligning the creation, management and delivery of new services in multi-vendor environments with the end-to-end assurance and fulfillment of IT and networks. Alcatel-Lucent's product strategy and market approach reveals its extensive understanding of end-to-end fulfillment and service assurance processes by applying a consolidated view of IT, content, devices and network infrastructure.

Alcatel-Lucent's road map comprises a next-generation SDP blueprint, with offerings around Internet Protocol television (IPTV), IMS and fixed-mobile convergence (FMC), which aims at tackling the delivery of new services and business models comprising IT and network infrastructure. The company's service-oriented architecture (SOA)-based OSS products are positioned as an integral part of its Service Delivery Environment blueprint. This pre-integrated, holistic setup allows OSS applications to cooperate efficiently with network-based (operational) enablers, such as real-time applications, which is crucial (for example) for high-volume self-service capabilities. The focus on common enablers used in new blended services and exposure of OSS processes to support third-party content creation is a differentiating capability among the leading NEPs. Moreover, we expect that the SDE blueprint, in conjunction with OSS/BSS/SDP integration capabilities supported by long-term migration process guidance, will provide opportunities for Alcatel-Lucent to get involved in more CSP transformation projects. However, this will require more transformation experience and extensive partnerships. Alcatel-Lucent has done well with fixed transformation so far and should try to capitalize on those experiences in the mobile domain.

As a unified vendor of telecom equipment and services, Alcatel-Lucent has realigned its strategy and organization to place more emphasis on services and applications. Almost three years after the merger, it has almost completed its portfolio consolidation and a strategic alignment for its CSP business. However, Alcatel-Lucent still needs to overcome thresholds of financial viability in a CSP market that is currently characterized by cautious spending patterns. Accordingly, Alcatel-Lucent's ratings for viability, sales strategy and market responsiveness in the OSS market specifically are rated as "stable." CSPs should ensure that partner products embraced in Alcatel-Lucent solutions meet their requirements and ask for business case verification that indicates the ROI of a given solution.

As Figure 2 shows, Alcatel-Lucent receives an overall rating of "strong" in the OSS domain.

Amdocs was the first suite vendor to introduce an end-to-end solution spanning OSS, billing and CRM suites. Amdocs CES 7.5 is a genuine OSS, BSS and CRM software suite centered on improving the quality of the customer experience. Over the past six years, Amdocs has invested over $900 million in developing its software. The OSS suite comprises service fulfillment, network and service management, workforce management, inventory management, as well as planning and engineering tools. The company's reach spans any type of CSP, service and technology (for example, fixed, wireless, IP, bus, voice over IP [VoIP] and cable).

Amdocs accommodates particularly the needs of large CSPs that want to deal with a limited number of strategic suppliers. This $3 billion company is the preferred best-in-class billing vendor for many leading CSPs around the world. The vendor's strategy is to repeat its success as a preferred billing vendor in the OSS space. Previous acquisitions of Cramer Systems and Jacobs Rimell were important strategic moves to fill solution gaps in the OSS fulfillment/inventory space. Amdocs' dedicated OSS road map elaborates on continuous amalgamation of those assets, in order to create more flexible, modular, out-of-the box, next-generation network (NGN) and service fulfillment solutions. The recent acquisition of jNetX further complements its customer experience management portfolio.

Possessing an extensive professional services operation, Amdocs is able to make money from the huge legacy transformation needs of CSPs worldwide. Moreover, the modular, end-to-end approach, which implies that CSPs can choose to grow into a larger solution a phase at a time, is gaining momentum in the market. However, most CSPs are seeking to avoid heavy customization. Instead, they prefer to source increasingly standardized and out-of-the-box OSS software. Amdocs is responding to this shift with a 30% increase in head count in its OSS software business.

Amdocs is involved in some of the largest OSS transformation programs, including those for Telstra, KPN and BT. In anticipation of CSPs' goal of reducing total cost of ownership (TCO), Amdocs has worked on refining its approaches to reduce upfront integration costs. In this context, Amdocs's also gains significant business through strategic partnership with players such as IBM, HP and Alcatel-Lucent.

R&D efforts focus on an extension of planning and engineering capabilities, which will allow for more proactive inventory and network capacity management, as well as service assurance and customer experience management solutions. Development efforts increasingly center on prepackaged Operational Product Packs that shorten deployment times in CSP environments for processes to support specific services or technologies, such as broadband fulfillment. Road map features include a network factory and out-of-the-box support for capacity planning, and rollout and upgrade of fiber (FTTx) networks. Moreover, an OSS studio serves as a foundation for the consolidation and upgrade of existing Amdocs products. In addition, the Amdocs Enterprise Product Catalog (EPC), which works together with its Service Catalog to provide a SID-compliant hub for an integrated BSS-OSS, has started to gain traction. Its service factory principle implies more flexible and rapid service introduction, driven by the Service Catalog.

At present, the company attracts half its business through partner SIs in all geographies. However, the fact that Amdocs has a comprehensive system integration services portfolio could limit its opportunity to grow further business through partner SIs. Moreover, if the company should put stronger emphasis on direct sales and less focus on channel partner work following the overall Amdocs business model, it could limit the company's ability to expand rapidly.

While its full OSS solution mainly addresses large CSPs, and smaller CSPs may find it too expensive to implement and maintain, the modular nature of Amdocs OSS offerings shows that the company has continued to target smaller CSPs since the acquisition of Cramer. Although some customers might still be concerned about how much control of their IT/network applications and services environments they should give to one vendor, we expect Amdocs to benefit from CSPs' growing need for an end-to-end integration view to ensure operational efficiency.

As Figure 3 shows, Amdocs receives ratings of "strong" or "very strong" in all categories. Its overall rating is "very strong."

Clarity was established in 1994 and is headquartered in Sydney, Australia. This ISV offers a fundamentally complete, pre-integrated suite of OSS solutions, providing support for multi-service operations and multi-network technologies, both NGN IP and legacy. Its offering comprises a standardized, modular, end-to-end software platform spanning the entire OSS service assurance and service fulfillment value chain. Functionality comprises inventory management, configuration management, order management, provisioning, fault management, trouble ticketing, performance management, service-level agreement (SLA) management, workforce management and wholesale customer management.

The light, modular and flexible functionality makes this solution particularly attractive to startup CSPs, MVNOs, Tier 2 and 3 CSPs, which aim to monetize new market opportunities swiftly. However, Clarity's proposition has gained equally strong traction with Tier 1 CSPs looking for a fast implementation time and a moderate TCO. These characteristics predetermine Clarity's role as strategic partner for numerous CSPs, especially in emerging markets in the Asia/Pacific region. Clients include TelstraClear New Zealand and other incumbent Tier 1 CSPs such as Flag UK, PT Telekomunikasi Indonesia and Bharat Sanchar Nigam Ltd (BSNL) India.

The company has also focused its attention on the Middle East and Africa region for growth outside Asia/Pacific, and has secured some early wins with midsize CSPs in this region.

Clarity has also acquired some assets of Dot Communications, a wholesale service delivery platform company. The acquisition is expected to strengthen Clarity's ability to deliver customer self-service and wholesale IP provisioning capability.

Typically, the company works with SI partners to implement its solutions in its home market. However, to increase its global footprint, Clarity needs to further expand its geographic partnership network outside the Asia/Pacific region, especially in Western Europe and North America. This network should be based on a mix of technology partners, global and local SIs' integration and channel partners. In a bid to achieve its goal, the company has formed partnerships with vendors like Tech Mahindra that provide off-the-shelf skills and services around Clarity products. Clarity's hybrid out-of-the box approach, which allows for necessary customization, anticipates CSPs' main "pain points" by mitigating the risks and cost of OSS implementations while still preparing for new revenue sources.

Having started out as an emerging-market OSS vendor, Clarity is now seeking to extend its achievement into mature markets. To succeed in this endeavor, Clarity needs to amend to an approach that endorses more complex and advanced application requirements in order to support rather low-volume, yet highly complex next-generation services and architectures, such as IPTV and IMS. Clarity scores highly with regards to its core inventory solution, but needs to enhance its autodiscovery, planning and engineering capabilities.

In November 2009, Clarity's owner, Powerlan, announced the purchase of the remaining 49% of shares in Omnix Software, which is a player in the Western European market for OSS planning and engineering. We expect to see synergies in the integration of joint Clarity and Omnix assets, from an R&D product development and customer implementation perspective. More importantly, both companies will be able to cross-leverage their existing geographic customer base and hence enhance their global footprint and increase overall market share.

Clarity receives a rating of "strong" for its comprehensive product and service proposition. However, after the completion and execution of the merger, Clarity is likely to receive a higher rating regarding, for example, product strategy.

The overall rating is "stable," as shown in Figure 4.

This Polish multi-industry IT business solutions provider generated $164 million of revenue in 2008. Telecoms is one of the key vertical markets for Comarch, accounting for approximately 21% of the company's total sales in 2008.

Comarch offers both pure OSS installations and OSS modules, which are provided in conjunction with BSS installations. Comarch's OSS suite includes service assurance, inventory and provisioning, among other things. Based on the shift in requirements toward holistic IT/network management, Comarch has continued to re-bundle its product suite. The center of this refocus has been the addition of process modeling functionality to its suite, which is offered as process-driven inventory management and next-generation service assurance integrated products. Further development efforts focus on the service layer, such as the introduction of a customer-centric network and service inventory.

Comarch is pursuing an OSS/BSS end-to-end suite approach and is still working on OSS/BSS product integration. The company has invested to augment its portfolio with capabilities enabling it to provide customer-centric network management functionality, which comprises the alignment of network and service inventory with assurance and next-generation SDP functionality.

Being located in a low-cost country, Comarch can compete on price. The Comarch OSS solution is attractive for small and midsize CSPs, as well as startups and MVNOs, which are looking for integrated end-to-end solutions from a single supplier in order to capitalize quickly on market opportunities. However, the company has become equally attractive to larger CSPs, especially some of the pan-European CSP groups. The majority of 2009's business derived from judicious enhancements to existing customer deals.

Comarch gets most of its OSS business from its home market of Eastern Europe. It also competes in Western Europe and is gradually expanding into the Middle East and the Americas. The company is facing tough competition from the leading, global Tier 1 vendors, especially outside Eastern Europe. Hence, Comarch will need to build stronger channel partnerships to facilitate growth outside its home market, in order to achieve more global traction. On the other hand, Comarch's pre-integrated, modularized OSS suite approach accentuates out-of-the box features and yet allows for customization. This proposition, in conjunction with managed services offerings, hits the spot for CSPs looking to mitigate OSS risks and costs. However, Comarch's geographic focus is greatly concentrated on Eastern and Western Europe.

Figure 5 shows Comarch's overall score as "strong."

Comptel is a specialist provider of end-to-end integrated solutions for fulfillment, mediation, charging and policy control. Fulfillment includes provisioning and activation, inventory, order management and active catalog solutions. These span services and configurations in both traditional convergent networks and IP networks. However, it lacks an offering in the OSS service assurance space.

The company reported revenue of around €84.8 million in 2008, compared with €82.4 million in 2007. Comptel has high market penetration in the mobile domain, and around 280 customers of all tiers and types (fixed, mobile, broadband and so on), across the globe. The company also offers an integrated inventory solution, comprising physical and logical inventory and geographic information system (GIS), which is attractive for imminent FTTx requirements in mature markets.

Following the acquisition of Axiom Systems in 2008, Comptel now offers an end-to-end automated fulfillment solution for broadband, mobile and next-generation IP networks. Its fulfillment suite covers the complete process of service creation and fulfillment, with specialization in IP and Ethernet. The solution comprises building blocks (operational modules and pre-configured components) which can be combined to solve the operational problems of service delivery and the technical problems of designing and creating new services.

Although Comptel is well positioned in the emerging all-IP-network-based, fixed-mobile convergent telecom industry, the company has struggled to gain new OSS business, especially in mature markets.

Currently, Comptel anticipates the most prosperous revenue opportunities will occur in the IP-based fulfillment segment, especially in emerging markets.

Important strategic customers include T-Mobile, Brasil Telecom, Vodafone, Bharti and O2. Comptel has strategic relationships with a number of SIs, which run Comptel competence centers. For example, T-Systems and IBM are long-term partners of Comptel, playing a key role in delivering complex projects to Deutsche Telekom and Bharti in India. Comptel should pursue further global alliance agreements with integration partners to expand its footprint in other regions. Sales via partners account for around 30% of its overall revenue.

We maintain that Comptel will be able to compensate for the slight drop in OSS revenue, since it is reasonably well positioned to guide CSPs toward a next-generation, convergent fulfillment architecture. However, Comptel should move swiftly to complete the integration and streamlining of acquired assets, and place more emphasis on a standardized, out-of-the box approach that steers away from costly customizations wherever possible. Moreover, the company will need to facilitate stronger channel partnerships in order to fully exploit the revenue potential.

Figure 6 shows Comptel's overall score as "stable."

Ericsson is one of the leading suppliers of telecom network equipment, software and services, with particular strengths in the wireless space. It provides element management and network management solutions for mobile, broadband, IP, softswitch and optical networking equipment. Most of its back-office solutions reside close to the network. However, it has increased its focus on the service layer through a number of acquisitions and developments during the past year.

In the 1990s Ericsson introduced an integrated OSS/BSS modular product concept to the market, going back to a joint venture between HP and Ericsson, Ericsson Hewlett-Packard Telecommunications (EHPT). At that time the market was not ready for the "end-to-end story." However, most of the OSS/BSS assets were merged into Ericsson, as Ericsson wholly acquired EHPT in 2001. Those former EHPT assets are now distributed throughout Ericsson.

As a leading NEP, Ericsson is expected to provide a comprehensive service assurance portfolio. This primarily features OSS systems close to the network, which provide operational insight into the network by reporting on usage trends, issuing alerts on service degradation and providing data input for SLAs. Given its leading position in the wireless equipment market, Ericsson's provisioning and fulfillment solution has gained traction worldwide. It automates end-to-end provisioning and activation processes, encompassing subscribers, content and devices. Other fulfillment products, including order management and inventory, are offered through an extensive network of strategic partnerships. However, the bulk of current OSS revenue is still derived from maintenance and upgrades of legacy OSSs, as well as expanding network contracts.

On the other hand, much of CSPs' new demand for Ericsson OSS solutions reflects the company's prominent position in the emerging market for next-generation SDP solutions. OSS capabilities, in conjunction with adjacent BSS capabilities such as end-to-end revenue management, with convergent charging and postpaid billing, ensure a critical end-to-end view of operations management. Ericsson's software business is complemented by system and network integration and consulting capabilities through its extensive Global Services resources worldwide. We expect that these integrated capabilities will have a positive impact on CSPs' demand for Ericsson OSS solutions as they tend to narrow their list of preferred suppliers to a few strategic vendors.

Although Ericsson has realigned its internal organizational structures to embrace all professional services and system integration capabilities, we have yet to see the company take prime position in many major CSP transformation programs. However, the recent Sprint outsourcing deal shows the strong potential for Ericsson to take over the non-strategic OSS tasks of a CSP, such as fault/performance management and SLAs. Moreover, the company needs to pursue further investments in the service layer and content enablement domain, in order to accelerate connectivity between network and services, enabled by strong OSS capabilities. This is essential for Ericsson to support emerging CSPs' business models for new communications services and content.

Figure 7 shows Ericsson's overall position as "strong."

HP has a comprehensive portfolio spanning telco hardware, software, services and IT infrastructure solutions for the telecom industry. Over the years, HP has re-invigorated its OSS product portfolio, addressing particularly convergence and integration requirements. HP continues to center its efforts on integration across its portfolio in order to link OSS-specific products and solutions with obtainable IT management solutions to meet CSPs' prime network and IT convergence requirements.

HP has a comprehensive OSS portfolio, including products that address life cycle management, planning and engineering, fulfillment and assurance. However, a large chunk of HP's overall OSS revenue, including legacy and maintenance contracts, derives from its network and service assurance management business. This includes products such as HP Communications, Media and Entertainment (CME) Service Quality Management, HP TeMIP for Fault Management and the HP Performance Management solution, which has been enhanced to support off-the-shelf report packs for different technologies (Internet Protocol/Multiprotocol Label Switching [IP/MPLS], for example).

The next-generation OSS Integrated Service Solutions (ISS) initiative comprises specific pre-integrated product bundles spanning fulfillment, assurance and billing, and which are tailored to distinct technology areas such as IPTV, IMS and MPLS. Moreover, a focus on IP service assurance capabilities — such as HP's fault and event management and trouble ticketing solution — addresses CSPs' evolving need to manage all-IP networks. Reinvestment, particularly in TeMIP and HP Service Activator, has been assigned, thanks to new sales. HP is traditionally strong in the activation space, while other key fulfillment domains such as inventory and order management and product catalog are covered via partnerships. Provisioning appears to be less of a focus than before.

HP Solution Consulting Services (SCS) is proving to be an important element in the company's portfolio. It empowers conjunct OSS and business transformation results, comprising process management, architectural guidance and financial evaluation.

HP has a large global customer base, with emphasis on the wireless, wireline and broadband markets, and some presence in the cable industry. It has a strong offering for CSPs and service providers looking for solutions to address convergence, triple-play, value-added services and the complete life cycle to the service desk environment. HP's Next Generation Operations Support System (NGOSS) is a framework solution that leverages HP software and partners to create solutions. HP selects key strategic partners that can be delivered by HP services. For non-strategic partners, customers will need to be actively involved in the partner and associated product selection, validation, functional and technical processes to ensure solutions meet the requirements and specifications of their IT and business models. HP also delivers or "OEMs" its OSS products through leading NEPs such as Ericsson, Nokia Siemens Networks (NSN) and Huawei.

HP's overall rating is "strong," as shown in Figure 8.

IBM's service assurance management strategy is to provide comprehensive solutions, across both IT and operations, that enable CSPs to speed time to market, ensure quality of service and reduce operational costs. IBM's Tivoli, combined with the acquired assets of Micromuse's Netcool and Vallent's wireless service and performance management products, forms a powerful and comprehensive suite of end-to-end service assurance functionality across network domains and discrete network environments.

The IBM solution embraces real-time and event-based, customer-centric service assurance for fixed-line and IP markets, as well as strong wireless functionality. With over 300 installations worldwide, Vallent has been formed from numerous mergers and acquisitions, including those of WatchMark, Comnitel Technologies and ADC Metrica. This consolidated offering provides the breadth and depth of functionality for CSPs to manage their networks and infrastructures holistically throughout the enterprise. Moreover, IBM has developed a new solution for real-time and proactive customer experience management that simultaneously and holistically processes network, customer billing and OSS data. With this development IBM filled an important gap, to form the industry's most comprehensive service assurance portfolio.

IBM's flagship products Tivoli Netcool and Maximo accompany event and performance management with vital adjunct OSS tasks, such as trouble ticketing, configuration management and provisioning. In addition, IBM Global Services is engaged in process framework consulting based on the enhanced Telecom Operations Map (eTOM), which covers the entire service fulfillment transformation stack. This enables end-to-end OSS process management and transformation. Other best-of-breed service fulfillment product functionalities are sourced through strategic partnerships, such as the fruitful, long-term relationship with Amdocs.

IBM transformation solutions include WebSphere Business Services Fabric (WBSF) and Telco Operations Content Pack (TOCP) to enable the assembly of existing and new IT assets into business process management (BPM) and SOA-based, reusable, components.

Customers should ensure that partner products and selection processes meet their standards and requirements. Tivoli invests heavily to provide integrated solutions through a program including over 300 partners. We expect IBM to continue leveraging its professional services and process framework expertise to take a primary role in large OSS transformation projects worldwide. In this context, IBM benefits from its extensive change management and strategy practice around processes, systems and organizations within IBM Global Business Services. IBM continues to invest in greater integration within its product brands (Tivoli, Information Management, Rational and WebSphere), in conjunction with SOAs and in alignment with its Service Provider Delivery Environment (SPDE).

Moreover, we expect IBM to further cultivate its strong stake in emerging markets. IBM's consultative framework approach, which revolves around operational and business process expertise, and which is filled with best-in-class products, makes IBM a leader in the OSS space.

The company's overall rating is "very strong," as shown in Figure 9.

This Waltham, Massachusetts-based company was acquired by NEC for $300 million in October 2008. It has about 800 employees globally, and generated around $112 million in revenue in 2008. The company has registered consistently strong, double-digit revenue growth in recent years.

NetCracker provides a complete end-to-end service fulfillment product suite centered on network resource management. At the heart of its fulfillment offering resides its end-to-end inventory-centric offering, which embraces logical and physical network inventory as well as service inventory functionality, in conjunction with its service catalog as a competitive differentiator. In contrast to its competitors, NetCracker aims to address systematic problems at the service layer (fulfillment, provisioning and service inventory), managing underlying inter-dependencies between services and the network, which facilitates faster rollout of complex, next-generation services. Recent product developments focus on content service enablement, service assurance and business intelligence. In late 2009, NetCracker introduced a telecom-specific Workforce Management (WFM) module as a part of its 8.0 release. The workforce management capability leverages NetCracker's existing understanding of network, outside plant and other assets, with optimization, control and management of human skills, when deploying or operating a network. Chorus, Telecom New Zealand's network business, has selected the WFM module for deployment.

Rather than integrating with other applications and relying on other on SIs to deliver solutions, NetCracker's success can be associated somewhat with direct ownership of the customer relationship. However, over the years, NetCracker has recognized the importance of fostering an extensive partner channel network to overcome the revenue constrains of its previous go-it-alone approach. Nevertheless, despite its strong growth and partnerships, NetCracker realized the limitations of its expansion potential and further reassessed forms of industry co-operation. As a result, NetCracker has untapped business opportunities with existing customers of its parent company, NEC. Moreover, joint software development and integration plans, spanning OSS, BSS and content management solutions, are in the pipeline with NEC. On the other hand, the acquisition of NetCracker will enable NEC to move up into the service layer and the business layer as major areas for strategic investment.

Throughout 2009 NetCracker and NEC focused on areas of joint synergy. They have announced a number of joint solutions covering device management, wireless broadband and SaaS. NetCracker and NEC also announced their first joint win, with NTT DoCoMo.

Other major accounts include Sprint, MTS, Swisscom, Telus, UPC Europe, Telecom New Zealand and Telstra. NetCracker is the strategic fulfillment supplier for France Telecom, providing multi-technology inventory, provisioning and order management solutions for the NEXT program across the entire CSP group of 136 operating companies. The customer reference list above reflects NetCracker's market position as a preferred strategic fulfillment supplier, with proven scalability and the product breadth, depth and experience required for Tier 1 CSP transformation initiatives. Over the past year, NetCracker managed to penetrate further, especially in those existing accounts, and added a handful of new strategic wins, including Maxis in Malaysia, Mobinil in the Middle East and Intelsat in the U.S. In contrast to many of its competitors, which have made numerous acquisitions resulting in re-engineering of their product suites, NetCracker has coherently developed a pre-integrated, highly configurable, modular fulfillment suite, which is based on one multi-service, multi-technology and network core platform. Spanning the network and IT from Layer 1 to 7, it provides prerequisites for building out infrastructures of any kind, by leveraging architectural openness and Web-based, Java Platform, Enterprise Edition (Java EE) capabilities.

NetCracker scores strongly in almost all scorecard criteria. Its scores for the sales strategy became "strong" after completion of the acquisition. Although NetCracker is expected to act as an independent company, customers need to be reassured that NetCracker products will continue and that the combined solution meets their requirements. We also expect that NetCracker will be able to leverage its success into NEC's strongest regions, such as Asia, Japan and Latin America. Moreover, we expect to see some joint software development and integration projects to incorporate the OSS, BSS and content management solution assets of both companies. The dedicated investment by NEC justifies a "very strong" rating for viability.

NetCracker's overall rating is "strong," as shown in Figure 10.

The combined Nokia and Siemens entity, completed at the beginning of 2008, demonstrates overall a fairly good execution capability to leverage synergies in the equipment and related OSS business.

Historically, Nokia's strength has been the mobile market, while Siemens has predominantly competed in the wireline arena. Nokia traditionally had a strong multi-vendor OSS offering combined with a growing CSP services business based on OSS system integration and consulting services. Siemens brought additional strong professional services expertise.

OSS is a fundamental part of NSN's overall value proposition to CSPs. Hence it is of strategic importance to NSN, both in conjunction with its network equipment business and as a stand-alone business. The NSN OSS portfolio comprises service assurance, network and element management, as well as device and customer experience management capabilities. NSN's OSS product portfolio is largely centered on its NetAct platform, which has been deployed in around 400 installations in major markets worldwide. Its functionality has been continuously enhanced since the merger — with service monitoring and customer impact analysis, for example. The customer insights provide intelligence to monitor and manage end-user interactions and the customer experience proactively.

NetAct provides network and domain management for Nokia's mobile network equipment, and provides proven multi-vendor capabilities for numerous other network equipments. The NetAct product is frequently used to plan and manage OSS transformation or optimization in conjunction with network transformation. However, it is also implemented as a stand-alone transformation tool that enables consolidation and modernization of an end-to-end service assurance legacy environment encompassing network and service layer, even spanning multiple CSP entities.

NSN collaborates with a wide range of major technology providers and SIs in all OSS markets worldwide. The company has further grown its own business consulting and SI divisions, based on a strong need for system integration services in the context of CSPs' ongoing transformation activities.

NSN needs to position itself more as a player in the OSS market for IP and other non-traditional services. To change market perception, more fundamental changes might be required in terms of NSN's product offering and organizational structure, either through its own developments or acquisitions.

Figure 11 shows Nokia's overall rating as "strong," although it is a follower in some categories.

The Oracle Communications suite comprises numerous applications, most of which have been acquired over the past three years. The company's holistic proposition amalgamates former MetaSolv OSS assets with Oracle's BSS/CRM solution, integrated with essential service delivery, middleware and database management system (DBMS) components.

Oracle's OSS capability is focused on service fulfillment, comprising order management, service and network inventory, and service activation, together with a single integrated design tool complemented by prebuilt domain behavior for faster and lower-risk deployments.

In 2006, Oracle became one of the first vendors to launch a complete end-to-end suite offering, creating a strong message in the market. Ongoing integration and re-engineering will gradually merge acquired components with the rest of Oracle's communications portfolio, leveraging its holistic Application Integration Architecture (AIA). Some OSS integration challenges remain, however, Oracle continues to invest in pre-integrating service fulfillment components with the BSS/CRM solution to bring an end-to-end order-to-activate solution to the market.

Oracle's recent acquisition of BEA Systems further strengthens its middleware capabilities, in addition to Oracle Fusion Middleware. Oracle Fusion Middleware has been sustained as the initial integrated offering, originating partly from BEA Systems (including BEA's AcquaLogic) and partly from Oracle portfolios. It is still unclear how Sun assets can be leveraged in the telecom operations management system space.

With a stated intention to provide packaged applications to the communications market, Oracle's strategy relies on a large SI and partner network. Oracle's business model as a product company implies that its success depends heavily on the integration and consulting expertise of its partners. To ensure the success of this model, Oracle has expanded its own professional services organization in order to ensure adequate knowledge transfer and more hands-on integration and consulting involvement in implementation projects. However, the partnership model still inherits risk in relation to how much customization work partners will be pushing, which might escalate costs. Moreover, in ongoing SI relationships, Oracle needs to communicate product road map features more succinctly, helping them anticipate expectations correctly — something at which Oracle has made progress over the past year.

Oracle is benefiting from the evolution of the CSP market toward more standardized, out-of-the box product functionality in order to diminish customization efforts, where feasible. The company has gained momentum in terms of providing productized, pre-integrated OSS application modules with some core functionality, which allow for further enhancements and customization if required. Currently, Oracle's product and service catalog capabilities reside in the BSS and OSS space respectively, integrated by AIA. We believe customers would benefit from even greater alignment between OSS and BSS functionality, such as a shared product catalog.

Oracle has continued to leverage its extensive channel partners and worldwide sales network to grow revenues from its accumulated OSS assets. Predominantly, Oracle succeeds in selling the OSS suite components either together with Siebel and Billing and Revenue Management (BRM) or into existing Siebel and BRM accounts. This differentiates Oracle from other OSS vendors which position themselves as strategic vendors exclusively to cater to the end-to-end OSS fulfillment and/or service assurance domains.

Figure 12 shows Oracle's overall rating as "very strong."

Headquartered in Piscataway in the U.S., Telcordia is one of the world's largest suppliers of OSS solutions and services, providing a comprehensive suite of planning and engineering, service fulfillment, and assurance solutions. Telcordia has a strong telecommunications industry and engineering tradition, reaching back to the split from AT&T in 1984. Telcordia has been owned by Warburg Pincus and Providence Equity Partners since 2005.

Telcordia's solution portfolio spans the end-to-end OSS fulfillment and service assurance domains, along with application server, real-time charging, interconnection, number portability Solutions, and research and consulting services. Telcordia managed to leverage assets from the Granite Systems acquisition well, and is one of the leading inventory and fulfillment players. It also offers an Integrated Inventory solution that spans geospatial physical inventory and logical circuit/service inventory, with automation of assignments across both domains. Telcordia has been evolving its product portfolio to meet changing customer and markets needs. Its complementary new features and functionality help CSPs to increase operational efficiency and accelerate revenue. Recent product enhancements in the service assurance domain center on holistic, near-real-time service management — adding end-user devices and application servers to the traditional network model, especially to improve broadband and the mobile customer experience. It has also added a centralized service catalog that can be leveraged by the rest of its next-generation OSS.

Telcordia's business strategy makes individual components available as stand-alone products, enables integration with non-Telcordia OSSs, ensures coexistence in a legacy as well as in a multi-vendor OSS environment, and fully supports the federation of data and supporting business processes. The approach is open, flexible and adaptable, and addresses CSPs' evolving need for next-generation OSS architectures.

The company has sustained growth momentum in key segments, such as FTTx, carrier Ethernet, wireless backhaul, mobile data and time division multiplexing (TDM) to IP migration. Gradually, Telcordia is managing to compensate for the decline of its legacy business by leveraging the success in its home market as well as in other geographic regions, such as Central and Latin America, Asia/Pacific, and Europe, the Middle East and Africa. Revenues have started to pick up in next-generation and other strategic areas mentioned above.

In FY09 Telcordia grew its revenue by 8%, its first year-over-year revenue increase in eight years. Forty-five percent of this business derives from traditional regional Bell operating company (RBOC) customers in the U.S. International business accounts for 20% of overall revenue.

Besides leveraging existing customer relationships, Telcordia has expanded its geographical presence and extended its partnerships with local consultancies and SIs in emerging markets. However, the company needs to further increase visibility with a viable go-to-market strategy and regional support to successfully expand into new markets and geographies. Moreover, Telcordia has not fully capitalized on its potential as a distinctive legacy player in conjunction with providing long-term guidance for CSPs migrating to next-generation business and operations. The company needs to compensate for gradually declining legacy revenues with next-generation revenues in order to remain on the list of top OSS vendors.