Market Insight: Next-Generation Service Delivery Platform Market Overview and Strategic Scorecard for Vendors, 2012

Next-generation service delivery platform (NG SDP) initiatives focus predominantly on new revenue generation, and improving service delivery efficiency and user experience. As communications service providers (CSPs) transform their operational environment, main investment areas include application development, network and service exposure, API programs, cloud and integrating next-generation intelligent networks (INs). NG SDPs enable the business case for converged services and mitigate legacy investment in telecom networks and IT.

The promise of NG SDPs is to evolve toward a common, horizontal enabler platform that embraces management commonality among different functions spanning all service and product silos. Only a very few single-source vendors can deliver a comprehensive SDP environment, that integrates SDP with adjacent operations support systems (OSSs) and business support systems (BSSs) by coalescing implementation services leadership. This research evaluates and benchmarks leading product and service vendors in the NG SDP market, according to a set of defined parameters.

Key Findings

• NG SDP has to evolve as an architectural principle (rather than merely a set of products) that, filled with best-of-breed NG SDP components, can facilitate the CSP's role as an enabler for new, compelling services based on open business models.
• Sourcing decisions have become a C-level matter. NG SDP systems are being leveraged more holistically, expanding beyond network, engineering and operations into commercial constituencies such as marketing. Enterprise and consumer divisions increasingly drive NG SDP requirements.
• NG SDP vendors have to beef up corresponding end-to-end IT, telecom network application integration and enablement capabilities. Changing business models require integration with legacy networks and IN systems, as well as adjacent BSSs and OSSs.
• Network equipment providers (NEPs) will help CSPs to enhance established telco service revenue. However, CSPs' focus will gradually shift to IT-related issues such as telco-Web 2.0 mashups and network enablers. Moving forward, it is vital to have skills on both fronts as joint-network-centric and IT value-added services (VAS) gain prominence over time.

Recommendations

CSPs:

• Invest swiftly in a more agile service creation and delivery environment. NG SDPs represent a significant opportunity for streamlining operations and superior customer experience. Postponing vital modernization too long will mean a failure to attract new subscribers and maintain profitability in the next five years.
• Transform silo-based service infrastructures into an open, standards-based NG SDP architecture that still allows reuse of legacy service components. Explore leveraging cloud technology: either for internal efficiency improvements, network and service exposure, or to create new cloud-based revenue streams.
• Center immediate efforts on pragmatic enhancements to existing telco services, to leverage legacy assets in new composite services. IT matters (such as Web 2.0, service exposure and device enablers, and application stores) as well as improvements to the user experience, will be imperative moving forward.

NG SDP Vendors:

• Be prepared to address the expectations of CSPs' line of business leaders and C-level executives to provide tangible key performance indicator (KPI) improvements, compelling new services, partnering strategies and commercial models — with the primary goal of helping CSPs to enhance future revenue streams.
• NG SDPs are deployed as modularized "evolutionary" enhancements of existing infrastructures, which consist of numerous, interoperable SDPs across technology and services silos. Vendors need to provide strong consulting services, business process management and integration skills to assist CSPs in their transformation of the NG SDP toward an open, strategic business platform that enables sustained innovation.
• Keep in mind that telecom- and IT/Internet-specific capabilities become equally crucial. Exposure of network enablers to third parties, and embracing the vast range of applications and innovations available through the Internet, becomes imperative. The resulting mashups of telecom and Web-based services have increased the number of services and potential business models.

Market Overview

Today's marketplace offers customers ever-increasing content and application opportunities "over the top." For CSPs to avoid degradation to a dumb bit pipe provider, and customers bypassing them, NG SDPs represent an imperative opportunity to take the role of service enabler in an extended value chain.

Predominantly this requires CSPs to:

• Leverage existing network/IT assets smartly.
• Invest in a best-of-breed IT infrastructure with NG SDP at its heart.
• Engage in premeditated partnerships.

To achieve this goal, however, CSPs need to redefine their market vision and business models so that they open up their delivery infrastructure to third-party developers, third-party content and service providers, and other key partners.

SDPs as Business and VAS Enabler

Foremost NG SDPs will become a key business enabler, as focus shifts toward new business models that entail third-party participation, revenue generation and improvements in customer experience. CSPs' immediate focus is to migrate current revenue-generating services, such as INs, to new platforms that are more cost-effective and flexible. The main emphasis is on how to get more out of existing services, and simultaneously find new sources of revenue and offer an improved end-user experience. In this context, we need to pay tribute to the fact that SDPs will increasingly become an enabler of VAS. VAS implies the amalgamation of network-centric and IT-centric assets, which may partially embrace third-party and over-the-top (OTT) provider content services. Although VAS will still represent a small revenue fraction during the coming one or two years, the strategic nature of VAS will allow for competitive differentiation and will help retain customers.

NG SDP vendors are now challenged to evolve their offerings to more comprehensive end-to-end service creation, exposure, charging and product life cycle management solution suites. NG SDP is now moving from a platform, toward an environment which closely interacts with adjacent OSS, BSS, network policy management, subscriber data and analytics functionality.

Third Generation of SDP Deployments

As a result of these competitive dynamics, the worldwide market for NG SDP products and services has significantly evolved during the past 18 months. Most CSPs around the world have already been through first and second generation SDP deployments. They are now leveraging their expertise to the next level, by focusing their next-generation service delivery architectures on reuse of components and enablers for new services.

In the light of increasing competition by OTT providers, CSPs are looking for ways to remain relevant to their customers. Among the major focus areas are the exposure of core network and IT assets to third parties and developers — in order to provide an infrastructure that facilitates new composite services.

CSPs can achieve differentiation from OTT providers through faster time-to-market, quality and reliability of core telco services, but also the simplicity of business models and the clarity and accuracy of charging for bundles and subscriptions. The role of an SDP centers on improving the agility of the user interface to the storefront, offers and devices.

New SDP Buying Centers

A major change we observe is that NG SDP services requirements are increasingly driven by the CSP's consumer and enterprise departments and product management, often with revenue-generating sales targets assigned for particular classes of services. Consequently, the way that CSPs source, implement and leverage SDPs is changing: increasingly aligning initiatives with individual classes of service, such as mobile content, Internet Protocol (IP), machine to machine (M2M) and cloud.

Strategic Scorecard for NG SDP Vendors, 2012

Scope and Methodology of the Study

We observe a separation in the market: on the one hand, there are a few, large, advanced, convergent players looking for standards-based, modular, multinetwork SDP; on the other, we see the emergence of smaller players that are seeking more partial or niche solutions to content delivery, innovation and third-party access.

This report evaluates the capabilities of the leading NG SDP vendors worldwide. We estimate that the vendors included account for at least 80% of the NG SDPs deployed so far.

This worldwide SDP market analysis intends to help CSPs make informed sourcing decisions and enable vendors to compare their capabilities with those of the competition.

The evaluation is based on a dedicated survey, which explores key industry issues related to each of the seven SDP scorecard criteria:

• Product and Service.
• Market Understanding.
• Product Strategy.
• Sales Strategy.
• Geographic Strategy.
• Market Responsiveness.
• Viability.

For details of these criteria and their weightings, refer to the Scorecard Criteria section.

We map research insights on overall CSP transformation and NG SDP requirements, with information from NG SDP-specific workshops, vendor briefings and enquiries with CSP clients.

The inclusion criteria for this document are based on the top nine vendors providing products and services in the NG SDP market, according to "Market Share: Telecom Operations Management Systems (BSS, OSS and SDP), Worldwide, 2009-2010," Other inclusion or exclusion criteria are as follows:

Inclusion:

• Players need to have a strong position in the OSS and BSS market (by revenue) to be able to cater to evolving NG SDP requirements.
• To be included, vendors also had to have a strong geographical footprint (presence in at least two world regions).

Exclusion:

• Pure services companies without product capabilities are excluded.
• Enterprise-focused solutions, such as content management, are excluded.

Definition

The term SDP can be referred to as an environment or system architecture which is uniquely built and designed according to CSPs' specific prerequisites, in order to allow the swift creation, deployment, execution and orchestration of services independent of underlying technologies. The SDP architecture has to be harmonized with a CSP's individual technology and market strategy.

This scorecard takes into account the following NG SDPs product components:

• Service creation environments.
• Service execution environments.
• Service orchestration (convergent apps server, service broker)
• Common enablers, such as those relating to presence and location.
• Network and service exposure.
• OSS/BSS gateways.
• Third-party abstraction.
• App stores.

Scorecard Criteria

Vendors were scored on seven criteria using a scale of 1 to 5, with 1 being the highest and 5 the lowest. Each criterion was given a low or high weighting.

• Product and service:
  • Core goods, services and skills offered by the vendor in relation to NG SDPs.
  • Weight: High.
• Market understanding:
  • The vendor's ability to understand buyers' wants and needs, and to translate that knowledge into products and services.
  • Weight: High.
• Offering (product) strategy:
  • The vendor's approach to product development and delivery, with an emphasis on differentiation, functionality, methodology and features in relation to current and, in particular, future requirements.
  • Weight: High.
• Geographic strategy:
  • The vendor's strategy in directing resources, skills and offerings to meet the needs of customers around the world, either directly or through partners, channels and subsidiaries.
  • Weight: Low
• Sales strategy:
  • Completeness of the vendor's go-to-market model as expanded by partnerships.
  • Weight: High.
• Market responsiveness and track record:
  • Number and extent of deployments so far.
  • Weight: High.
• Overall viability (business unit, financial, strategy, organization):
  • Includes assessment of: the overall organization's financial health; the success — financial and otherwise — of the business unit concerned with NG SDPs; the likelihood that the business unit will continue to offer the product, invest in it, and advance the state of the art within its product portfolio.
  • Weight: Low.

Overall Evaluation of NG SDP Vendors, 2012

This section summarizes Gartner's assessment of the portrayed NG SDP vendors for each of the criteria mentioned in the Scorecard Criteria section. The evaluation is mapped to current market conditions and most important changes to CSP requirements in the NG SDP market, which are also discussed below. Please see Figure 1 at the end of this section for a graphical representation of all the vendor ratings.

Market Conditions

NG SDP remains the fastest growing segment in the overall OSS, BSS, SDP market. Despite economic turmoil, the market has been characterized by relatively strong growth rates, with 11% growth worldwide in 2011 and a forecast compound annual growth rate (CAGR) of 8% for 2011 through 2015. (For details, see "Forecast: Telecom Market, Worldwide, 2008-2015, 4Q11 Update.")

This continuing growth mirrors the nature of NG SDP investments, which are usually pursued as part of a wider, ongoing transformation process in close alignment with adjacent OSS, BSS and CRM. Implementations span many years and often involve multiple vendors, leveraging incremental piecemeal approaches and, ideally, starting with the definition of architectural principles and then having each step driven by a concrete business case for a service or application.

Most vendors have adjusted their offerings to suit CSPs' preference for a gradual approach to implementing NG SDPs. We also see the most established vendors working on continuous improvements to their offerings to support CSPs' evolving business models. Vendors have encroached on adjacent domains, such as app stores, marketing and advertising, to fill solution gaps and provide more comprehensive offerings. Generally, market concentration is increasing as the leading players in the NG SDP market continue to gain market share through organic growth as well as acquisitions.

The Most Important Changes in the NG SDP Market in 2012

Recognition as Business Model Facilitator

CSPs increasingly recognize the role of NG SDPs as a platform or infrastructure through which they can anticipate a wider content value chain and, therefore, roll out more compelling services. By opening up their telco assets to third parties, CSPs can develop innovative services that leverage their existing infrastructure. Instead of merely being a technological decision, NG SDP sourcing decisions are based on the proven ROI impact on a CSP's business.

Eventually, business constituencies drive requirements regarding business models and which third-party service, application and content providers to engage with. Because of the paramount impact that the sourcing decision may have on CSPs' future success, it is not surprising that NG SDPs are becoming more of a key business decision, often made by C-level executives. Consequently, proficient vendors in this market need to engage with a different clientele within the CSP's organization and offer business process consulting, as well as providing strategic end-user comprehension.

Conversion Toward B2B Platforms Requires Integration

CSPs such as Telefonica, Orange and Verizon are currently experimenting with the adoption of various business models, but adoption itself is advancing at a different pace. This is mainly because it requires network and IT transformation to actually put these business models into action. For example, leveraging SDPs as B2B platforms requires tighter integration of OSS and BSS, as well as exposure of network assets. CSPs' OSSs and BSSs will address wider business goals. Business models which require third-party integration mean that product and launch requirements will change. It will be of paramount importance that OSSs and BSSs are fully flexible and tightly integrated to facilitate execution of those new multisided complex business models.

In practice, CSPs are pursuing an incremental, evolutionary integration of NG SDP modules with adjacent OSS/BSS functions, especially convergent charging and user profile data management, service assurance and analytics. This means that CSPs' behavior is shifting from sourcing discrete SDPs, to applying a wider service delivery environment/service delivery framework type of thinking — that also takes other operational domains into account.

Leveraging Core Voice/Data Assets

Existing services still represent the largest revenue source and the main focus is on further leveraging legacy services. CSPs' legacy evolution is still a major theme in the context of NG SDP investments. NG SDP solutions need to address how to architect existing SDPs so that the current services layer interacts seamlessly with the evolving underlying mobile and fixed IN networks.

Ultimately, the most significant driver for NG SDPs is associated with new services and revenue generation in conjunction with the monetization of existing network assets. NG SDPs are increasingly seen as an enabler for CSPs to participate in new value chains. Partners, third-party content providers, Internet providers and advertisers require CSPs to open up and expose their network assets, providing open network APIs for third-party developers and app stores.

Creating Hype Around New Revenue Streams From App Stores

Network and service exposure and the commercialization of API programs rank among the top priorities, because CSPs are especially interested in getting third-party developers to develop applications on top of their networks and systems. New sources of revenue require pursuing the upstream business model by monetizing third-party application and content providers, and making the third party's products and services available to the CSP's downstream customers. The prerequisite, however, is an open, standards-based service exposure platform, together with an app store strategy obtaining content delivery and storefront platforms — as well as adjacent charging, advertising and partner settlement.

Emergence of Cloud

Cloud represents one of the most revolutionary business opportunities for CSPs. The most common scenario is that CSPs are increasingly virtualizing internal data centers and are providing virtualized SDP applications on their internal or private cloud. However, cloud also allows for the delivery of NG SDP functionality by vendors through the cloud as a "hosted" alternative to the traditional deployments at the CSP premises. Finally, cloud computing is seen as an evolutionary business opportunity, for example, to increase market share in the growing enterprise and ICT market. CSPs worldwide see this as a chance — in anticipation of cloud as a new line of business — to offset the declining traditional voice and data revenue.

Product or Service

Most CSPs will deploy NG SDPs in modules, based on a long-term migration path, usually in alignment with predefined target architecture leveraging existing legacy assets. Usually, CSPs will deploy multisource best-of-breed SDPs — leveraging a few strategic partners.

Most vendors score positively when one considers all the different product capabilities required to build an NG SDP, such as: network, third-party and OSS/BSS abstraction; service creation, orchestration and execution; common enablers; network and service exposure; and identity management. Over time, however, requirements shift toward enabling new business models, which implies a focus on enrichments of management functionality around APIs and maximizing customer monetization based on user profiling, analytics and policy management.

We see a lot of hype connected with the enablement of application stores, as well as alternative delivery models for NG SDP such as software as a service (SaaS), platform as a service (PaaS) and cloud, although these still represent a relatively small source of revenue at present. The overall NG SDP market structure continues to evolve in such a way that vendors are working on a tighter integration of their service delivery environment with the overall IT architecture. Particular emphasis is placed on revenue generation and enablement of new business models; for example, through the availability of pre-configured app stores, and improvements in the commercial management capabilities of exposure platforms.

The vendors included in this scorecard have caught up significantly in terms of the breadth and depth of their portfolio, frequently through acquisitions to fill any functionality gaps. Most of the surveyed companies now have a broad, advanced SDP product portfolio, coupled with strong system integration (SI), process and NG services consulting expertise. That said, vendors approach the market from different angles and with different focus areas:

• Multiservice and technology SDP vendors. IBM's offering will basically fit any kind of vendor and represents the most comprehensive end-to-end offering: ranging across traditional telco, Internet Protocol (IP) and IT, cloud and enterprise disciplines.
• Niche SDP vendors. Amdocs and Telcordia focus on a specific niche segment, offering partial solutions.
• Network SDP vendors. NEPs have a more network-centric solution portfolio.
• IT-centric SDP vendors. Oracle approaches the market with strong IT assets.
• Enterprise-focused SDP vendors. HP decided to pull out of the consumer market and assemble all its NG SDP assets to cater to lucrative enterprise markets — providing mobility application development and deployment.

Market Understanding

CSPs' increasing focus on new revenue generation, in conjunction with monetizing existing network and IT assets, has been driving the evolution of NG SDP architecture. Hence, service execution and convergent telecom application servers and service brokers — as well as network and service exposure capabilities — will be of paramount importance moving forward. Enterprise stores and M2M, cloud, analytics and policy control are also areas where CSPs needs to invest to gain market traction over the existing and emerging OTT players.

All vendors surveyed have proven that they have a solid understanding of the market, which is reflected in the way they respond to its needs. They appreciate the real-world issues their customers are facing. All these companies understand CSPs' NG SDP requirements with respect to NG services, business and operational processes, and architectural issues.

Most vendors surveyed in this report achieved a score of "strong" for product strategy; only two were rated "very strong." This means that a strong or very strong vision for the future of this market underpins their product development and delivery plans.

• IBM stand out because of its strong professional services, SI and process re-engineering capabilities, pulling together world-class partner independent software vendor (ISV) solutions into an NG SDP framework. Having pursued numerous acquisitions over the past years, IBM has stayed at the forefront of innovative foresight — being prepared to inject more IT principles into the telco NG SDP value chain (for example, data center, cloud, M2M).
• IBM can also capitalize on its consulting capabilities in other industries, which is valuable for the two-sided, Web 2.0 business model that is becoming a focus for CSPs.
• Ericsson has a solid understanding of the NG SDP market based on multifaceted telco projects worldwide — ranging from managed and hosted operations, BSS transformation, business modeling and data center projects.

Geographic Strategy

Our evaluation of vendors' geographic strategy is based on how many resources they allocate to specific regions outside their home region to support customers' NG SDP requirements.

• Oracle, HP, Nokia Siemens Networks (NSN) and Alcatel-Lucent all have good geographic traction and commitments in all regions.
• IBM and Ericsson are outstanding in terms of geographic presence, having high levels of investment worldwide, especially in emerging markets. All these vendors have test labs, partner support and their own integration capabilities in all geographic regions.
• Huawei's success in this market still resides mainly in Asia/Pacific and the Middle East and Africa; Telcordia still has very limited traction in EMEA.

Sales Strategy

This criterion concerns a vendor's go-to-market strategy. Most vendors have improved their sales strategy since Gartner's 2010 scorecard and have received a "strong" rating regarding their go-to-market and sales strategy. These vendors have continued to build an appropriate network of direct and indirect sales channels that can increase the scope and depth of their reach. Most other vendors have well-segmented and targeted go-to-market strategies, and networks of partners that span the globe.

Vendors with a score of "stable" for sales strategy have a sufficient network of partners or channels. Alcatel-Lucent and Amdocs sell mainly through their own sales channels, instead of working with partners; Telcordia is still working on widening its partner network.

Market Responsiveness and Track Record

Ericsson and Huawei have the most extensive NG SDP implementations in terms of revenue. We therefore rate them as "very strong" in this regard. Huawei and IBM have large and complex implementations, while Oracle continues to succeed in selling modules into its existing accounts as well as into new accounts. These companies stand out for their ability to respond to market requirements and execute on their vision.

As the scope of, and requirement for, NG SDP deployments continues to mutate, those vendors who swiftly design viable solution offerings — in the light of CSPs' changing business models and OTT competition — will continue to raise their market share in the coming year. Companies such as IBM and Oracle will continue to capitalize on their strong end-to-end product strategy. Others might need to revise their strategy, positioning and overall product strategy as well as market communication.

Overall Viability

For this criterion, we considered NG SDP vendors' revenue in this market, overall organizational setup, financials and commitment to NG SDP investments. We also assessed the likelihood that they would continue to develop their NG SDP capabilities. We considered most vendors portrayed in this scorecard as "strong" regarding viability. NSN, Amdocs and Telcordia receive a "stable" rating (see Figure 1).

*Business Unit, Financial, Strategy and Organization
S = strong; ST = stable; VS = very strong

Source: Gartner (February 2012)

Detailed Analysis of Individual Vendors' NG SDP Products and Services, 2012

Alcatel-Lucent

Since the last iteration of this scorecard, Alcatel-Lucent has fundamentally revised its NG SDP strategy. Principally, Alcatel-Lucent decided to redefine all its efforts in this space around network APIs and service exposure and composition. Instead of pursuing a blueprint approach for a complete NG SDP architecture filled with partner software, Alcatel-Lucent now offers the Open API Platform, which is end-to-end API management and optimization software designed to provide a single interface. Alcatel-Lucent is focused on ensuring that service providers can participate in new business models and new third-party distribution channels, in order to facilitate the creation of new services that are developed and delivered to market faster, at lower cost and at scale. The Open API Platform has modular components and can fill capability gaps within the network or sit on top of existing SDPs.

The Open API Platform represents a single exposure layer, which acts as a network-as-a-service platform that provides unified management and access control. It provides common interfaces and orchestration between multiple internal (legacy) and/or external SDPs.

Alcatel-Lucent's reorientation in this space is underpinned by organizational realignment. The Open API Platform resides in the application enablement group, which has dedicated product development, consulting and professional services resources. Naturally, this setup supports Alcatel-Lucent's focal points — around new business models and exposure of APIs to enable new innovative content embracing third-party resources.

In order to stay at the forefront of ongoing application innovation, Alcatel-Lucent acquired ProgrammableWeb in June 2010. This acquisition underpins Alcatel-Lucent's application enablement strategy: in an effort to help build a relevant application enablement ecosystem that helps CSPs to capitalize on the value of network APIs. ProgrammableWeb provides reach to developers worldwide, based on an extensive library of third-party APIs. It offers centralized API data, reports, analytics, tools, services and consulting to Internet companies globally. This acquisition also helps Alcatel-Lucent to strengthen its business consulting capabilities related to API realization and monetization.

Alcatel-Lucent is taking a stance in the evolution of major standards initiatives such as the Open Mobile Alliance, Third Generation Partnership Project, European Telecommunications Standards Institute and Internet Engineering Task Force. For instance, active involvement in the exposure area includes the OMA ParlayREST and OMA RESTful network API efforts. However, the success of these initiatives heavily depends on clarity around business processes and models, which requires more consultancy advice from the Alcatel-Lucent side as well.

Being a new initiative, Alcatel-Lucent's revenue for the Open API Platform remains limited compared with the leading SDP vendors in this scorecard; though the company has landed a first hosted Open API Platform implementation in the cloud. The company's footprint is now shifting from previous SDP successes (primarily in the fixed line CSP domain) to now accentuating the pain points of mobile CSPs.

A vendors' success in the current NG SDP market perilously depends on the level of integration with adjacent support systems, hence the inclination to evolve toward a "one-stop-shop." Alcatel-Lucent has the strong advantage of its professional services capabilities to ensure the required integration. Conversely, Alcatel-Lucent heavily relies on strategic partnerships with IT solution providers and ISVs for vital functions such as service-oriented architecture (SOA) analytics/orchestration middleware and IT OSS/BSS software systems.

Overall, Alcatel-Lucent merits a rating of "strong" (see Figure 2).

*Business Unit, Financial, Strategy and Organization
S = strong; ST = stable

Source: Gartner (February 2012)

Amdocs

Amdocs entered the market in 2009 through its acquisition of U.S.-based jNetX for $50 million in cash. The recent takeover of Bridgewater Systems' policy management assets, together with previous acquisitions of Qpass (digital commerce) and ChangingWorlds (mobile content), were important strategic milestones for Amdocs to fill the solution gaps in its solution portfolio and be able to offer an end-to-end solution spanning an OSS, BSS, SDP and CRM suite. Like other players, Amdocs entered the SDP market by evolving customer needs that center on an approach in which end-user experience, service enablement and monetization are the main drivers. This encompasses exposure of both telecom and IP components in the network to offer convergent network, IT and Web-based services.

The core of Amdocs' NG SDP offering consists of network abstraction, a service execution environment (Java-based application server), and exposure of network services capabilities across legacy and NG INs. Its assets also comprise a service broker as well as vital gateway capabilities to integrate with app stores. Amdocs is now determined to amalgamate those SDP assets with other existing charging and payments, partner management and policy management assets. The goal is to streamline CSPs relevant end-to-end revenue management processes — spanning across the consumption, notification and data monetization — in order to enhance operational efficiency and thereby positively impact user experience.

Amdocs' convergent charging solution is a vital component in the context of increasing charging complexity for rich communication services. However, we have yet to see integration with Amdocs' adjacent OSS service fulfillment components, as the service orchestration, configuration and activation for SDPs become mission-critical to ensure operational agility.

We expect that Amdocs' approach to gaining SDP market share — selling into existing OSS/BSS customers by packing more end-to-end solutions — will work, especially with large Tier 1 CSPs and multinational CSP groups. Also, the fact that Amdocs is already involved in numerous large telecom operations management systems transformation projects should help it increase its footprint in the NG SDP market. On the other hand, the end-to-end service creation, delivery and revenue monetization proposition might also be interesting for smaller CSPs. However, it requires attractive business and pricing models that lower implementation and maintenance cost for the solution to become attractive to this target group.

Amdocs does not intend to build an end-to-end SDP ecosystem, but is bundling the acquired SDP assets with revenue management components. The company claims it is not directly competing in the NG SDP market any more. Amdocs lacks coherent positioning and unambiguous communication of its strategy to the NG SDP market. The fact that the previously mentioned NG SDP solution assets are not labeled as SDP industry technology terminology creates confusion regarding Amdocs' role in the this market. There is a risk that Amdocs might not appear on the radar screen of some of the CSPs shortlisting for NG SDP solutions.

Amdocs' convergent application/NG-IN-driven approach might obstruct previously strong jNetX relationships with NEPs, because they usually have their own IN solutions.

Amdocs scores an overall rating of "stable," (see Figure 3).

*Business Unit, Financial, Strategy and Organization
S = strong; ST = stable

Source: Gartner (February 2012)

Ericsson

Ericsson is one of the most advanced vendors in the NG SDP market. The company is well positioned in the market, based on its track record, strong SI and consulting capabilities, and an end-to-end SDP offering that relies solely on the company's own product capabilities.

Thus far, Ericsson has managed to capitalized on its position as a mobile infrastructure leader to succeed in the market for NG SDPs. CSPs' efforts have emphasized the monetization of existing network assets, integration with IN and the evolution of existing services. Ericsson has invested more resources in NG SDPs than any other NEP, and its development efforts continue to focus on improving the integration of its NG SDP portfolio. With the introduction of the fifth generation of its Multiservice Delivery Platform in 2011, Ericsson takes its offering into the new realm of managing user experience for any kind of digital screen. On the front end it provides a fundamental toolbox to accelerate growth with revenue generating services and content (such as Android); on the back end it allows partner settlements and service management and integration to external systems.

Ericsson was the first vendor to introduce Ericsson Composition Engine (ECE), which allows CSPs to easily create and combine new and existing VAS applications, regardless of vendor and access technology. The platform enables creation, orchestration and serving of both new and existing applications. The included Service Exposure feature enables a CSP to expose its network assets in an efficient way and supports totally new revenue streams. It allows CSPs to safely open their networks to third-party service providers, bridging the telecom and IT domains. Ericsson Composition Engine can be used as a Service Capability Interaction Manager (SCIM) or Service Broker, allowing composition of new applications out of existing service components. Ericsson Service Integration Gateway (SIG) for service exposure has now been integrated into the Ericsson Composition Engine.

Ericsson is also among the pioneers in being able to offer a ready-made app store software platform, facilitating prebuild services. Ericsson's eStore can be seen as a content syndication marketplace, where CSPs, businesses, developers, advertisers and brands meet, engage and do business. Ericsson's eStore is a SaaS offering hosted and managed by Ericsson, offered to multiple customers in multiple countries and already sharing a catalog of content and applications. It comprises an onboarding, revenue sharing, charging and partner management mechanism related to developers. Ericsson's eStore is prominent as a CSP groupwide app store, or as an evolutionary enhancement to locally-deployed Mobile Service Delivery Platform (MSDP) — by filling the local store with global applications.

As an extension to the core SDP, Multiservice Proxy provides the link between the telco domain and the Internet, and is an evolution of a Wireless Application Protocol (WAP) gateway. The aim is to monetize off-portal traffic with, for example, ad insertion, parental control and URL filtering, as well as optimizing data and video traffic while securing an optimal user experience.

Ericsson is very strong in IP Multimedia Subsystem (IMS), network and traditional telco services, but for new telco 2.0 services that require collaboration (for example, with Internet providers) the company will need to continue to widen content partnerships beyond Ericsson Mobility World — the mobile-focused external developer ecosystem. Ericsson needs to augment its SDP offering to anticipate new cloud service revenue, such as enterprise app stores. Moreover, we have yet to see more advanced endeavors to augment OSS/BSS functions — especially service assurance, product catalog and analytics, and policy management — into its SDP offering. The announced closure of the Telcordia acquisition will provide complementary SDP network exposure, service execution and orchestration assets.

Ericsson merits a rating of "very strong" overall (see Figure 4).

*Business Unit, Financial, Strategy and Organization
VS = very strong; S = strong

Source: Gartner (February 2012)

HP

In 2011, HP announced a major strategic shift: moving away from consumer apps toward catering primarily for enterprise mobility application development and deployment. HP's mission is to assist CSPs to insert themselves into the enterprise value chain, by providing enterprise app stores for mobility and enabling enterprises to provide enterprise apps to leading Android and Apple iOS smartphone and tablet devices. The organizational changes mirror this shift in positioning: SDP assets have been moved into the Enterprise Services division, which is closely aligned with the Applications and Cloud Enablement group.

HP positions itself as partner to CSPs in the enterprise business, providing telco fundamentals such as SLAs and one-stop shopping for voice/data services, and offering a complete end-to-end enterprise apps services business comprising enterprise service exposure and enablement. Since 2011, the HP SDP software comprises HP's own products for service abstraction and enablers, service orchestration and enterprise service bus, service governance and authentication, authorization and accounting (AAA), and storefront platform with full partner relationship management.

The HP SDP and mobility apps infrastructure is a turnkey, end-to-end solution, which does not rely on third-party software, except the database. The solution provides an extensive catalog of SMS, Multimedia Messaging Service, WAP Push, Unstructured Supplementary Service Data, location, charging, payment, settlement, CRM, API service, unified user profile, and media platform service enablers, that can plug directly into the CSP's network and IT systems. These enablers are abstracted to Web services and can be orchestrated into mashups and new VAS through the HP Service Orchestration Manager and Enterprise Service Bus. These new, compound IT/network services can then be exposed to internal and external application developers, with full governance, AAA, monetization and self-service, and service management through the HP Service Governance Framework. The presentation layer and the extensive partner onboarding and partner relationship management functions are delivered through the HP SDP storefront platform — along with service monetization.

The newly launched Mobility Apps storefront allows HP to provide catalogs of enterprise apps that can be managed for various enterprise constituents, which are supported through Android and iOS connectors, and connected into the telco's network (messaging, location, voice services) and IT network (CRM, billing/charging, activation, device management) via HP's SDP back-end solution.

Enterprises represents a significant, high growth segment for CSPs, and HP's efforts to carve out this NG SDP market segment for itself makes sense — considering the company's long-standing affiliation with enterprises worldwide. We expect the company to benefit from its strong IT infrastructure play, as parts of SDP evolve into a shared service and need optimization expertise in the connectivity, storage and process areas. HP will also be able to address OSS SI and deep network equipment and network enabler issues, as part of evolutionary, large-scale NG SDP future implementations. However, HP will face fierce competition from some of the major players, namely IBM.

HP merits a rating of "strong" overall (see Figure 5).

*Business Unit, Financial, Strategy and Organization
S = strong; ST = stable

Source: Gartner (February 2012)

Huawei

Huawei is ranked among the fastest growing NG SDP companies worldwide. It has been particularly successful in developing regions such as Asia/Pacific, China, Africa and Latin America. Huawei has also gained SDP market share with global CSP groups headquartered in Europe. For example, Huawei implemented an SDP solution across multiple national divisions of one of the largest CSP groups. The U.S. market, however, remains more challenging for Huawei to enter.

Huawei increasingly resorts to solution-based NG SDP selling (with a larger professional services constituent), to accommodate CSPs' evolving needs for business model consulting, service deployment, operational support and hosting. The company offers an end-to-end NG SDP platform comprising components such as network integration adaptors, APIs and templates for service innovation, a portal for convergent presentation, and a business processor with BSS/OSS. Along with the platform, Huawei offers applications for entertainment, digital media, communication, business and everyday-life applications.

The offering also includes a preconfigured app store software structure — the Digital Shopping Mall — which is either delivered as a hosted SaaS model by Huawei or inbuilt as a content aggregator in the CSP's SDP infrastructure.

The company focuses on alleviating the automation of the business processes that are required for the exposure of telco network assets to third parties, and necessary to cultivate the creation and product life cycle management of composite, innovative services. This includes management capabilities around recruiting, certification and onboarding, and adjacent revenue sharing of third-party content partners and developers.

Huawei's NG SDP is mostly composed of Huawei's own products, and specifically includes:

• A management framework to manage business resources and policies.
• Service Broker for real-time service orchestration.
• Access gateways for network abstraction.
• Service access gateways for API exposure to third parties based on Parlay X, Web Services and REST.
• Service Creation Environment.
• Service Execution Environment and SOA Suite for service orchestration and business orchestration, for partners such as Oracle.

Huawei's offering includes Web and on-device portals, common enablers such as content, and M2M device management support.

The challenge for Huawei is to grow its third-party relationships to combat the perception of vendor lock-in by CSPs. Despite the launch of Huawei's inTouch partnership program, other leading NG SDP vendors have already moved further ahead — as far as application developer ecosystems and content owner relationships are concerned. On the other hand, we expect Huawei to replicate its success for cloud-enabled services — such as its "wireless city" for China Mobile — especially in addressing enterprise and M2M revenue opportunities.

Despite being strong on the execution side, Huawei needs to position its comprehensive solution assets more clearly, and communicate a cohesive SDP story to the market — one which embraces OSS/BSS as part of a wider end-to-end SDP product strategy.

As CSPs shift focus onto revenue outcome and business KPI improvements directly linked to their SDP investments, the requirement for a more tightly orchestrated exposure of OSS/BSS capabilities becomes even more critical.

Huawei merits a rating of "strong" overall (see Figure 6).

*Business Unit, Financial, Strategy and Organization
VS = very strong; S = strong; ST = stable

Source: Gartner (February 2012)

IBM

IBM is one of the leaders in the NG SDP market, mainly because of its robust architectural and business-process-driven approach — utilizing its Service Provider Delivery Environment (SPDE) to drive services innovation. It has had a solid track record of continuous investment in NG SDP product development for a decade. IBM is the prime contractor for many complex SDP SI and architectural transformation projects worldwide. Recent enhancements of SPDE 4.0 encompass capabilities in the areas of cloud-based services, real-time analytics, B2B functions, enterprise marketing and fourth generation Long Term Evolution service management. IBM has expanded these capabilities through a number of acquisitions in 2011, namely Cast Iron Systems (cloud software and services), Lombardi (business process management), Sterling Commerce (e-commerce), Coremetrics (analytics) and Unica (enterprise marketing).

IBM has the most complete product range and skill set in the NG SDP market, spanning the IT service plane and complemented by integration, maintenance and consulting services. Its product portfolio covers service and application creation, delivery, management, execution, maintenance and integration, as well as network, OSS and third-party abstraction. At the heart of IBM's offering is its WebSphere middleware. The offering also extends into network abstraction and service exposure layers, preintegration of OSSs and BSSs, application storefront and networking enablers, and advanced analytics through the company's Netcool and Cognos assets. The launch of its Cloud Service Provider Platform (CSP2) provides an out-of-the box integrated service management platform for CSPs looking to offer cloud-based services across heterogeneous multivendor environments.

IBM's product portfolio breadth and depth can address the business imperatives of virtually any kind of CSP; it has, therefore, received a "very strong" rating for product or service.

IBM's approach to NG SDPs is led by business and integration processes, with a focus on how technology is used in transformation efforts. IBM Global Services has a strong methodology and adequate resources to support complex, enterprisewide SDP implementations. Moreover, IBM has extensive global SDP solution labs that support development and delivery, and a strong footing in emerging markets.

Rather than offer applications of its own, IBM focuses on providing an enabling environment in which ISV partners can deliver services to end users. As such, IBM depends on strong partnerships, especially in the content management and applications/services arena. As IBM is not an applications company, it makes a "safe" partner for ISVs.

As a traditional IT player, IBM does not have as much proficiency with CSP networks as the leading NEPs. However, IBM has been investing in hardware, labs and skills to improve its capabilities and has established strategic partnerships with leading NEPs. However, as NEPs increasingly want to compete in the SI market, there might be overlaps.

CSPs may perceive IBM's solutions as being expensive and its solution as monolithic. On the other hand, IBM faces great challenges to pull together all its strengths across CSPs' organizational units as well as to preintegrate all acquired assets for a modular solution approach.

IBM merits a rating of "very strong" overall (see Figure 7).

*Business Unit, Financial, Strategy and Organization
VS = very strong; S = strong

Source: Gartner (February 2012)

Nokia Siemens Networks

NSN continues to pursue a predefined, business-process-led, end-to-end NG SDP solution blueprint, filled with a blend of own and partner products. The company's own SDP comprises network abstraction, service creation and execution, service broker and OSS/BSS gateways, complemented by prevalent OSS and BSS capabilities and enablers. It uses partners such as OpenCloud for service brokerage, Tecnotree for content delivery, and IBM/Oracle for service orchestration and governance and enterprise service bus.

NSN positions itself as an NG SDP transformation partner particularly focused on evolution strategies for CSPs, comprising Signaling System 7 (SS7); IN services including prepaid support, content applications and content management; NG applications complementing/replacing IN systems; multimedia applications and advertising.

Moreover, NSN has significantly invigorated its SDP architecture to meet essential evolutionary CSP requirements for innovative service and content creation, embracing third-party and Internet services. Creatary is a cloud-based (PaaS) developer/partner ecosystem platform which allows CSPs to open up their network APIs to third-party developers, fostering the adoption of new business models and also providing critical partner management and revenue sharing mechanisms.

Being closely coupled with its Customer Experience Management and Liquid Networks, NSN's SDP vision is all about enabling new value chains by leveraging CSPs core telco assets such as subscriber data, charging and location. By embedding vital IT assets (such as cloud and various middleware), NSN addresses CSPs' current main concerns around optimal cost positions and business models for cooperation between CSP and OTT provider.

NSN has gained traction across all major geographies: mature, and emerging markets such as Eastern Europe, Latin America and North America.

NSN has succeeded in evolving its product strategy in a coherent fashion, pulling together a compelling mix of open IT middleware, as well as its own — and partner — IT and network-related assets.

The NSN blueprint comprises a range of convergent applications, ranging from legacy and NG INs to enterprise solutions, consumer multimedia and third-party content. NSN has expanded its solution scope with the launch of Creatary, which aims to give CSPs access to an ecosystem of different players: to maximize the innovation capabilities of Internet players, billing solutions and smartphone platforms over the cloud.

In November 2011, NSN announced that it might look for an exit strategy for its BSS and charging assets, which are highly relevant at the current stage of the market because CSPs consider them to be important enablers for SDP. A vital own product component would then be missing. On the other hand, CSPs' foremost goal is to drive service delivery evolution, which primarily requires a strong services component to pursue the integration with existing billing environments. However, the announcement leaves some question marks regarding NSN's viability as far as the overall organization and strategy impact is concerned. Though NSN's NG SDP strategy touches upon major CSP pain points, and has even extended the scope of its SDP proposition, NSN still needs to live up to the execution of this vision to the full revenue potential it could achieve with its strong market positioning.

NSN merits a rating of "strong" overall (see Figure 8).

*Business Unit, Financial, Strategy and Organization
S = strong; ST = stable

Source: Gartner (February 2012)

Oracle

Over the past few years, Oracle has built significant presence in the SDP arena through strategic acquisitions, and has simultaneously undertaken major R&D efforts to evolve those acquired assets to achieve organic growth.

Enhancements include Oracle Communications Service Controller, Oracle Communications Policy Controller, Oracle Communications Online Mediation Controller, Oracle Communications Virtual Private Network and Oracle Communications Social Voice Communicator — all internally developed products based on the Convergin assets. Moreover, as an evolution of its Sun Microsystems assets, Oracle also added the Oracle Communications Digital Store (OCDS) to its SDP product portfolio. This product is a key component needed to complete the Network Enabled Application Store solution, consisting of the service exposure gateway, marketing and advertising and now an app store. OCDS enables a CSP to support content retailing through app stores accessed via the Web, mobile or other devices.

Oracle's SDP solution consists of the Oracle Communications Service Delivery product family, telecom-industry-specific software products, and horizontal software products from the Oracle Fusion Middleware product family: such as Oracle SOA Suite, Oracle Business Process Management Suite, Oracle WebCenter Suite (including Oracle WebLogic Portal), Oracle Identity Management and Oracle WebLogic Suite.

Its portfolio includes: service creation, execution and management capabilities for IMS and IN legacy networks; service composition; orchestration; mobile marketing and advertising as well as service exposure capabilities; also, SS7-IP service broker mediation and orchestration for NG IN, online charging and service capability interaction management (SCIM) functionalities.

At the heart of the Oracle Communications Service Delivery Product family sit the Oracle Communications Converged Application Server (OCCAS) and the Oracle Communications Services Gatekeeper (OCSG), complemented by Oracle Communications Marketing and Advertising (OCMA) — a mobile marketing and advertising campaign management solution.

The Sun acquisition also comprises the Sun Java Communications Suite, which has been renamed Oracle Communications Unified Communications Suite. On the end-user service side, Oracle offers over 250 individual applications, such as VPN, messaging, conferencing, local number portability, callback, calendar and contact lists.

Oracle has augmented the CSP-focused offerings (eServGlobal), acquired from BEA Systems and Convergin, with its non-CSP-focused SOA middleware products — including Sun — which has helped to increase its telecom and SDP customer base and to widen its application partner ecosystem.

Oracle faces a challenge to fully integrate and cross-sell all acquired products and product evolutions — both applications and platforms. Oracle focuses on the service layer, with connection and abstraction of the network layer. It has a strong service layer product portfolio and, with the addition of Sun, strong credentials in the area of "cloud." Oracle has yet to prove a more coherent communication and execution of its competences in this field, in order to capitalize on the longer-term promise of cloud as a crucial revenue source for CSPs.

Oracle relies largely on partners for overall system and network integration work in the SDP space. This implies that its success depends heavily on the successful deployment of its projects, many of which are delivered by its partners. There is a risk of increased project customization by partners, which might increase costs. However, Oracle has its own consulting and services organization to ensure standardized implementation and to provide project governance for Oracle software.

As a software and hardware product company with an IT-centric SDP proposition, Oracle has to work with the SI arms of all the major NEPs, including Ericsson and NSN. Oracle must continue to strike a balance between partnership and competition, because its partners also want to become enablers of the new telco IT value chain — yet face pressure from the customer to have the software vendor take on more prime responsibility.

Oracle also needs to combat CSPs' perceptions of vendor lock-in. Oracle receives a "strong" rating regarding product strategy. We have yet to see the results of ongoing efforts to pull together a multitude of SDP components and build a more clearly communicated and compelling NG SDP story that includes cloud.

Oracle merits a rating of "very strong" overall (see Figure 9).

*Business Unit, Financial, Strategy and Organization
VS = very strong; S = strong

Source: Gartner (February 2012)

Telcordia

Telcordia offers components of an end-to-end NG SDP, using its core skills in the contiguous OSS/BSS domains to complement the offerings of other technology providers. Telcordia's NG SDP portfolio centers on a programmable telecom application server and toolset on which its portfolio of purpose-built applications and CSP-built applications are enabled. Purpose-built applications include new interactive applications, such as interactive TV services, as well as more traditional converged services such as number translation, VPNs and call control. The common framework enables real-time service creation and execution, service control, policy control and real-time charging, and its wider service delivery framework proposition enables order management, provisioning, activation and service assurance. It is based on an integrated, modular and convergent architecture.

The Telcordia Converged Application Server sits at the heart of the company's NG SDP environment. In 2011, Telcordia launched a new release (4.1) of its Converged Application Server. The new programmable Java-based Telecom Application Server and the Application Studio contains a next-generation toolkit combining a standards-based Java service-creation environment with Telcordia's existing Space service creation environment. This helps CSPs accelerate service innovation, facilitating rapid development and deployment of real-time, interactive and personalized services in conjunction with third-party partners. Moreover, Telcordia has added life cycle management capability to its SDPs by introducing the concept of a Service Delivery Broker.

The entire solution now enables service innovation with real-time network exposure, service execution, orchestration/brokering, Web services exposure, enablers, and service creation functionality. Based on modular building blocks, the pre-integrated suite allows evolutionary, incremental extensions to other Telcordia application-server-powered products, such as Real-time Charging, Broadband Charging or Bandwidth Manager.

Telcordia is gradually gaining traction outside the U.S., especially in emerging markets in Asia/Pacific, Latin America, and in Europe.

As a leading OSS vendor with a significant focus on developing NG SDPs, Telcordia is well positioned even though its SDP strategy tends to take a network-centric approach: spanning its converged application server, charging and large-scale in-memory subscriber data systems and service brokerage. Compared with other leading players, it lacks a strong focus on IT and Web services. Many deals are IN-led, addressing one of the current CSP pain points — as legacy IN platforms are facing end-of-life and driving SDP investments.

So far, Telcordia's international go-to-market expansion for the SDP products has relied heavily on direct sales to Tier 1 operators in India, Brazil and North America. The recently announced completion of Ericsson's acquisition of Telcordia will significantly expand its international sales reach. Ericsson's acquisition of the company will, potentially, create a win-win situation for both parties in terms of ecosystem comprehensiveness, joint product engineering and development, as well as go-to-market strategy.

Telcordia merits an overall rating of "strong" (see Figure 10).

*Business Unit, Financial, Strategy and Organization
S = strong; ST = stable

Source: Gartner (February 2012)