Magic Quadrant for Operations Support Systems

This document was revised on 12 November 2012. The document you are viewing is the corrected version. For more information, see the Corrections page on gartner.com.

Operations support systems (OSSs) encompass software applications that facilitate communications service providers' (CSPs') back-office operations. OSSs consist of two major domains:

• Network/service assurance encompasses all the tools and procedures intended to optimize network and service performance, which have an impact on end users' perceived quality of experience with a given CSP.
• Service fulfillment encompasses all the actions and processes involved in implementing a service order and provisioning the service to the customer. This involves, for example, specifying the pieces of equipment and parts of the network that are needed for the service, and the allocation of bandwidth in the transport network.

OSS service fulfillment includes the following subsegments:

• Inventory/resource management
• Provisioning and activation
• Planning and engineering
• Workforce management

Source: Gartner (October 2012)

Vendor Strengths and Cautions

Alcatel-Lucent

Alcatel-Lucent's strategy in the OSS market is a service-led solution blueprint, which to a large extent is filled with preintegrated, best-of-breed partner software products, blending in service expertise that spans CSPs' networks and operations. Among its key partners are Amdocs and Comptel for fulfillment, and IBM and BMC Remedy in the OSS assurance domain. Apart from this, Alcatel-Lucent has revived its Motive assets to build a convergent, multitechnology service quality management solution, which enables multiple commercial and technical stakeholders within the CSP organization to manage service quality end to end.

Strengths

• Alcatel-Lucent has an extensive partnership network with various best-in-class OSS fulfillment and assurance vendors worldwide. It provides strong system integration capabilities and a data-driven architectural vision for its own OSSs, including partnership products.
• The company's strategy is to continue developing innovative, niche software product functionality, thereby rounding off its best-of-breed OSS products. By adding ancillary solutions, such as real-time analytics, aggregation, correlation, device and policy management, Alcatel-Lucent expects to gain greater wallet share with existing clients.
• Current efforts concentrate on creating preintegrated solutions for cloud, machine to machine and customer experience management (CEM).
• It has achieved similar market traction and coverage in all major geographies.

Cautions

• The company needs to expand its own product portfolio to grab important market share in the end-to-end OSS solution market.
• Alcatel-Lucent's current software portfolio does not meet the needs of CSPs that expect a one-stop shop. This is vital as CSPs' OSS environments become increasingly heterogeneous.
• Alcatel-Lucent has yet to live up to the full potential of its OSS vision, which addresses major CSP key pain points.

Amdocs

Amdocs is positioned among the leading end-to-end OSS, business support system (BSS), CRM and service delivery platform (SDP) solution providers worldwide, with its CES 8.1 product suite focusing on all aspects of the customer experience. The company provides its own software in conjunction with consulting, system integration and product implementation services. The Amdocs business model is set up to provide system integrator (SI) services for its own software products.

Strengths

• Amdocs addresses CSPs' evolving strategies, which are moving toward end-to-end integration across OSS constituents, to ensure operational efficiency and create new revenue streams. Amdocs' strong services approach and established best practices suit particularly those CSPs that are looking to transform their legacy OSSs to next-generation OSS multiservice and multitechnology environments, alongside new business models.
• The company accommodates the needs of larger CSPs that are seeking to work with a smaller number of strategic suppliers as part of an incremental migration.
• It is known for an aggressive sales and marketing strategy, and for delivery execution that is very customer-focused.
• Amdocs CES 8.1 is a genuine, stable, modular product suite, which is constantly evolving. Recent development efforts center on its prebuilt, preintegrated Operational Product Packs, which help speed up the fulfillment of certain technologies, such as Internet Protocol (IP), Long Term Evolution (LTE) and Ethernet.

Cautions

• Amdocs tends to control much of CSPs' IT/network application and service environment, without co-designing upfront requirements that let CSPs get sufficiently involved in the design process to ensure the fully desired outcome of the OSS project.
• It tends to be difficult for CSPs to estimate the overall total cost of ownership prior to project launch. Not all required modifications in CSPs' legacy environments, which are interrelated to the Amdocs implementation, may be visible upfront.
• Amdocs' solution partly lacks flexibility to suit the manifold delivery requirements of CSPs' increasingly complex multivendor environments.

Clarity

This Australian independent software vendor (ISV) offers a standardized, modular, end-to-end software suite that spans the entire OSS service assurance and service fulfillment value chain. It provides a viable and cost-competitive alternative for CSPs that are looking for an agile solution with a fast implementation timetable. Its merger with Omnix Software Solutions in 2010 further augmented its OSS suite with ERP. The company enjoys robust growth, mainly in emerging markets, and it has aspirations for further international expansion.

Clarity is one of the Visionaries in this market. It provides OSS solutions to address CSPs' operational pain points with an end-to-end solution — which can also be delivered as modules — that helps CSPs reduce costs and improve time to market.

Strengths

• Set up to minimize integration complexity, Clarity's hybrid out-of-the box approach is characterized by a high level of standardization, yet it allows for necessary customization. The architecturally unified solution framework helps, especially CSPs in emerging markets and Tier 2 to Tier 3 CSPs, to reduce integration tax and monetize new market opportunities swiftly. The solution supports multiservice operations and multinetwork technologies — both legacy and next-generation network IP.
• Clarity communicates its vision and product strategy clearly through its product road map.
• The company has been venturing into alternative software as a service (SaaS) and managed service business models for multitenancy OSS, which is particularly interesting for lower-tier CSPs looking for differentiation and economies of scale. This success story in the Asia/Pacific region and Australia could serve as a reference for other markets.

Cautions

• Customer service, support and service delivery are concentrated on its home markets in the Asia/Pacific region. So far, Clarity has had limited results in leveraging its success with its Fulfillment and Assurance suites in emerging markets into mature markets of Western Europe, where it has a base of customers through the Omnix acquisition.
• It has only recently begun deploying Tier 1 complex and advanced application requirements that support low-volume, yet highly complex, next-generation services, such as IP Multimedia Subsystem (IMS) and IPTV, to fulfill the requirements of CSPs in mature markets.

Comarch

Comarch is a multi-industry IT business solution provider, headquartered in Poland, with a particular focus on the telco vertical. The company has improved its position as a Challenger in this Magic Quadrant, and provides an end-to-end, modularized OSS/BSS suite, based on an open architecture and without the necessity of utilizing the whole stack. Its OSS products are based on the latest technologies, have been developed from scratch, are highly configurable and are easy to customize.

Strengths

• A strong framework approach and an open, flexible and modern architecture based on service-oriented and business process management principles ensure ample interoperability with legacy systems. The three-layer application architecture enables very flexible system data model changes and configuration, without requiring new custom developments.
• Among Comarch's differentiators is the intrinsic process modeling functionality of its suite, which is offered as process-driven, integrated inventory management and next-generation service assurance products.
• Initially catering to lower-tier CSPs, Comarch has also gained traction with larger companies, especially some of the Pan-European CSPs, such as T-Mobile and Vodafone. Comarch is seeking a strategic supplier position through incremental expansion of existing customer deals. A common competitive differentiator for European CSPs appears to be Comarch's nearshore presence.
• Pricing is competitive due to its headquarters in Poland.

Cautions

• Comarch mostly implements its own products. Because there are not many certified Comarch SIs, CSPs' choice of preferred SIs is limited. Considering the size of the company, this situation might limit Comarch's ability to grow its business.
• Comarch's main strength in the OSS area has been predominantly to deliver standardized, preintegrated service assurance solutions. Although Comarch has been gaining traction on the fulfillment side as well, such as resource and service inventory, some implementations have been developed merely based on the requirements of specific CSPs to be productized and marketed.

Ericsson

Ericsson is one of the leading network equipment and service providers, with particular strength in the wireless space. Large parts of its OSS product portfolio focus on network and performance management, and element management for Ericsson's own equipment, including, for example, LTE and self-organizing networks. Ericsson is also the overall OSS market share leader, with OSS revenue of $1.9 billion in 2011, including Telcordia — see "Market Share Analysis: Telecom Operations Management Systems (BSS, OSS and SDP), Worldwide, 2010-2011."

Ericsson's completed acquisition of Telcordia in 2012 was a vital step for the network equipment provider (NEP), not just to further increase its telecom operations management systems (TOMS) market share leadership position, but also to fill major solution gaps in its OSS portfolio, and to build a viable, network-independent, OSS multivendor practice. Through the acquisition of ConceptWave, Ericsson will complete yet another vital solution gap for order management. These endeavors have raised Ericsson's competitiveness with a strong product strategy and vision in the OSS market, which it needs to execute on moving forward. Ericsson now possesses a very comprehensive OSS service assurance and service fulfillment portfolio of its own products and corresponding support, consulting and system integration services.

Strengths

• Ericsson has added new capabilities with its Ericsson Network IQ (ENIQ) and OSS Navigator and Customer Experience Assurance (CEA) products, which enable CSPs to move from network to service assurance. This includes analysis and reporting on subscriber and service usage trends, alerts on service degradation, and the provision data inputs on SLAs. The company's future road map includes advanced real-time and event tracing and analytics correlation.
• Ericsson is a global company with local customer delivery and competencies in most geographies, empowering a decentralized customer delivery and support structure.
• The strength of its global services organization provides competitive differentiation regarding the extent of its consulting, managed service and system integration resources, coupled with advanced product management capabilities. In the OSS context, this setup enables Ericsson to leverage vital insights into CSPs' operations, and to address their pain points holistically across the network, IT and services, as well as corresponding business processes.

Cautions

• Ericsson faces vast product portfolio integration and evolution challenges lying ahead of it after the acquisition of Telcordia. Customers should diligently monitor Ericsson's expected investments in Telcordia Granite assets to grant improved inventory data management capabilities, encompassing network data extraction, data quality measurements, and management tools for a centralized view of physical and logical inventory data, as well as progress in the mobile CSP domain.
• Ericsson's product portfolio has not yet caught up with flexible, modern licensing models, which enable more concurrent transparency for users.
• Ericsson's integration, positioning and sales execution around its customer-centric, end-to-end, OSS service assurance solutions remain incomplete. As new functionalities (such as major event correlation and analytics, and multiservice capabilities) are added to those solutions, Ericsson has not yet realized the market potential available in the wider CEM space.

HP

HP has a comprehensive OSS portfolio, including products that address life cycle management, planning and engineering, activation and assurance. A large portion of HP's overall OSS revenue, including network legacy and maintenance contracts, is derived from its network and service management business. The goal for HP is to reach a healthy 40/60 ratio for product and service revenue.

Strengths

• HP's OSS offering comprises specific preintegrated product bundles that span OSS fulfillment and assurance. Products such as HP's CME Service Quality Management and TeMIP Fault Management, and the company's performance management solution, have been enhanced to support off-the-shelf report packs for different technologies (such as IPTV, IMS and Multiprotocol Label Switching).
• HP's Solution Consulting Services (SCS) is an important element in the company's portfolio. It provides corresponding OSS and business transformation capabilities, including process management, architectural guidance and financial evaluation. HP signed its first significant OSS transformation deal with Deutsche Telekom.
• HP has started to gain traction with its customer experience assurance strategy, which leverages OSS holistically across the service-layer stack and front-end, customer-facing constituencies — elaborating real-time, in-memory analytics from its Autonomy acquisition.

Cautions

• A large chunk of HP's overall OSS revenue, including legacy and maintenance contracts, still comes from its network business.
• As inventory and service assurance become more integrated, efforts need to center on strong partnerships (other than Telcordia, which was acquired by Ericsson) or fill solution gaps, such as resource, service inventory and order fulfillment.

Huawei

Huawei is positioned as a Niche Player in Gartner's OSS Magic Quadrant. Huawei's OSS software is embedded predominantly within its network equipment, comprising basic network and performance management, troubleshooting and provisioning. The predominant ratio of Huawei's OSS revenue is derived by OSS support for its own equipment. Huawei also provides customization and system integration services for third-party OSSs (namely HP, IBM and Clarity).The NEP integrates with most vendors in existing CSP environments without having formal partner agreements in place.

Strengths

• Huawei is among the world's leading wireless NEPs, with assets in IP, LTE and WiMAX, which it could leverage with its OSS business. Its stance with many top CSPs could open doors and represent new growth opportunities.
• Huawei has strong element and network management for its own network equipment, but doesn't have its own holistic OSS proposition.

Cautions

• Huawei's OSS business is dispersed across its organization. The company does not have a centralized organizational unit for OSS, because it usually provides OSS software as an add-on to network equipment sales. The fact that it doesn't have a separate price tag for OSS software hampers its market adoption as a stand-alone OSS player.
• It has not been able to execute its vision of a coherent product road map and architecture.
• Huawei has significant solution gaps and currently fills these gaps with third-party products.
• The company doesn't have its own holistic OSS proposition across multiple technology domains and services.

IBM

IBM is the leading worldwide OSS player in this Magic Quadrant, providing the most comprehensive product and service offering in the market. IBM has amalgamated its flagship product Tivoli with numerous acquired assets to create a comprehensive end-to-end OSS fulfillment and assurance suite across CSPs' operational network and IT domains. Tivoli Netcool and Maximo accompany performance and service management with adjunct fulfillment tasks, such as trouble ticketing, configuration management and provisioning. Over time, IBM has made numerous acquisitions to fill solution gaps (for example, in the areas of product catalog, cloud, analytics and digital commerce).

Complementary best-of-breed OSS product functionality is sourced through strategic partnerships, such as the company's relationship with Amdocs and Alcatel-Lucent.

Strengths

• IBM has the resources to act as an OSS one-stop shop for software and services, with an aligned road map anticipating CSPs' future challenges. It possesses a robust, well-integrated set of products.
• IBM's consultative framework approach revolves around operational and business process expertise, and provides a balance of best-in-class products and services from its own portfolio and those of its partners. This approach also enables IBM to leverage its assets to prime large end-to-end OSS process management and transformation projects.
• The Tivoli Netcool Technology Program is dedicated to ensuring interoperability and knowledge transfer for third-party OSS vendor products. The program also enables IBM to anticipate technology evolution, by embracing new technologies and services under management early in the life cycle of any OSS solution.
• Based on a single OSS architecture across fixed, mobile, broadband and data center environments, IBM addresses CSPs' needs for scalability, real-time throughput and openness, while allowing for legacy integration. The company continues to invest strongly in the evolution of its OSS assets. Recent supplements include service desk and workflow management capabilities derived from the Maximo portfolio, addressing data and content management and storage.

Cautions

• IBM's OSS solutions are monolithic and complex, with a licensing policy that lacks transparency. IBM's solution can be too expensive to maintain for smaller CSPs.
• IBM's Web-based performance analytics, correlation and reporting capabilities (for example, to correlate network events and the subsequent operational metrics) do not always match CSPs' operational CEM. However, CSPs that value having integrated network OSS and operational CEM solutions now have the option to extend their Netcool OSS with the new IBM Netcool Network Analytics.
• The OSS Netcool family would benefit from a further consolidation of software components (corresponding collapsing of data architecture and network collection).

NetCracker Technology

As NEC's independent software and solution arm, NetCracker Technology is ranked among the fastest-growing OSS/BSS companies, based on vast global proficiency with CSPs of all tiers worldwide. The company provides a complete, mature service fulfillment product suite, which is based on a modern architecture and has been developed from scratch. NetCracker's origins lie in its inventory management offering, which has evolved to cover a broader set of end-to-end functionality in the fulfillment domain, now embracing logical and physical network inventory, as well as product catalog and service inventory/service catalog, and end-to-end order management functionality. NetCracker possesses a worldwide resource service pool, partly available from its parent company NEC, to pursue associated implementations of its own software.

Strengths

• NetCracker has developed a preintegrated, highly configurable, modular fulfillment suite, which is based on one multiservice, multitechnology and network core platform, leveraging architectural openness and Web-based, Java EE capabilities. This flexible approach facilitates effortless customizations, supported by a transparent licensing model with no hidden cost for change requests or concurrent users.
• NetCracker's strength is to address systematic problems at the service layer (fulfillment, provisioning and service inventory). The service-to-resource topology enables underlying interdependencies between services and the network to be managed, which facilitates the faster rollout of complex, next-generation services.
• The company has a strong product road map, with a focus on innovation, service orientation and service representation in architecture and processes. It provides thought leadership guidance and expertise regarding front-end design and back-end integration and management of interfaces with adjacent OSSs/BSSs.

Cautions

• NetCracker enjoys strong recurring revenue through the further penetration of existing accounts (via cross-sell and upsell). Once that revenue source starts to decline, the company needs to find new sources of growth and win new customers.
• In light of ever-increasing requirements from CSPs for integration and interoperability, NetCracker may need to build a wider system integration and ISV partnership network to meet CSPs' evolving needs for multivendor technology services.
• NetCracker needs to further scale its professional services resources to meet CSPs' evolving project needs.

Nokia Siemens Networks

Nokia Siemens Networks' (NSN's) OSS product portfolio centers largely on its NetAct platform, which has been deployed in about 400 installations in major markets worldwide. NetAct is one of the most technically mature OSS suites in the market. It is a well-integrated, feature-rich, multiservice and multitechnology service assurance umbrella solution, as a result of continuous investment in vital functionality, such as service monitoring and customer impact analysis. The solution is based on an open and flexible architecture. Extensive off-the-shelf, plug-and-play content packages enable adequate multivendor focus. NetAct also provides a vital part of NSN's overall CEM product portfolio, which provides intelligence for proactively monitoring and managing end-user interactions and the customer experience across all three dimensions — network, service quality and customer actions.

Strengths

• NetAct comprises a wide-ranging application layer. The solution can be leveraged as a transformation tool that enables consolidation and modernization of end-to-end service assurance legacy environments that encompass network and service layers, even across multiple CSPs.
• NSN addresses CSPs' key pain points with a persuasive marketing message. The key driver is to deliver a personalized user experience through the abstraction of underlying data complexity and process automation, reducing costs and enabling new revenue streams.
• NSN is gaining traction with its CEM solution, which focuses on managing end-to-end network services and customers' perceived quality of experience, through the real-time correlation of commercial and technical key performance indicators (KPIs) across enterprise resources, including the network, OSSs, BSSs and CRM.
• NSN has the potential to increase its OSS-related revenue, especially in the areas of mobile broadband and 4G/LTE self-organizing networks and the cloud, which are among CSPs' current key pain points.

Cautions

• The company has yet to live up to its forefront vision and product strategy, and has not managed to fully capitalize on the distinctive OSS market opportunities outlined above.
• CSPs should insist on benefiting from an extensive international transfer of project management skills and pooling of knowledge and expertise, in order to complement local customer service support and project management, if required.

Oracle

Over the years, Oracle Communications has built a significant OSS presence and made strategic acquisitions of OSS software solutions (such as MetaSolv), predominantly in the fulfillment domain. Furthermore, Oracle has continuously evolved those acquired assets to achieve organic growth. The main pillars of its OSS strategy center on service catalog, end-to-end order management, service and network inventory, as well as service activation capabilities. The company's road map addresses the current market evolution toward more standardized, out-of-the box product functionality, to help CSPs drive down integration costs and eliminate customization efforts where feasible. The best-of-breed solution is based on a strong architectural foundation and a common design blueprint, as well as implementation best practices.

Strengths

• Oracle provides productized and preintegrated OSS application modules in the form of an agile service fulfillment framework that is fast to configure. Moreover, an increasing focus on standardized integration, interfaces and adapters helps to speed up implementation time by providing highly configurable products.
• Oracle continues to evolve, streamline and integrate its OSS solution portfolio to provide a more comprehensive software suite, extended by additional end-to-end features, such as analytics.
• Oracle Communications Consulting has developed a number of implementation packs and accelerators to speed the delivery of projects by providing standardized reference implementation tools and services.
• Oracle has an effective sales and marketing strategy, which focuses on cross-selling and upselling to extend its OSS offerings to existing Oracle customers to provide end-to-end order to activate solutions. Oracle continues to leverage its extensive global sales channel and partners to further increase the revenue of its OSS business.

Cautions

• The Oracle Application Integration Architecture for Communications needs to continue to mature to facilitate even greater OSS market growth. In this context, upgrades need to become easier from certain software versions in conjunction with Application Integration Architecture.
• Oracle's product-based business model implies that its success depends heavily on the successful deployment of its products — many of which are delivered by its partners, especially for multivendor integrations. Although Oracle Communications Consulting frequently gets involved in the implementation of the Oracle OSS stack, there is a risk of increased project customization by partners, which might increase costs.

Vendors Added or Dropped

We review and adjust our inclusion criteria for Magic Quadrants and MarketScopes as markets change. As a result of these adjustments, the mix of vendors in any Magic Quadrant or MarketScope may change over time. A vendor appearing in a Magic Quadrant or MarketScope one year and not the next does not necessarily indicate that we have changed our opinion of that vendor. This may be a reflection of a change in the market and, therefore, changed evaluation criteria, or a change of focus by a vendor.

Added

No vendors have been added.

Dropped

No vendors have been dropped; however, Ericsson acquired Telcordia.

Vendors included in this Magic Quadrant are those that offer multiservice and multitechnology, end-to-end solutions to the global market. These companies are ranked among the top 10 vendors featured in our annual TOMS market share report. We also include smaller vendors (in revenue terms) that offer agile and comprehensive end-to-end fulfillment and assurance solutions and, as such, have a significant impact on the market and represent a viable sourcing alternative to the market share leaders.

Inclusion Criteria

• Solution vendors: We include software and service vendors with their own software suites that earn significant revenue from both software and services related to this software. NEPs with extensive OSS product portfolios are also included in this category.
• Functionality: The software suite has to provide the full range of OSS functions, in either of the service assurance or service fulfillment areas, or in both.
• Market impact: We include only market share leaders, as well as smaller/midsize players that have a significant impact on the market.

Exclusion Criteria

• SIs that do not have their own software suites are excluded.
• This report covers only convergent solutions. Those that address only cable providers or ISPs are excluded.

Evaluation Criteria

Ability to Execute

Gartner analysts evaluate technology providers on the quality and efficacy of the processes, systems, methods or procedures that enable them to be competitive, efficient and effective, and that positively impact revenue, retention and reputation. Ultimately, technology providers are judged on their ability and success in capitalizing on their vision.

Source: Gartner (October 2012)

Completeness of Vision

Gartner analysts evaluate technology providers on their ability to convincingly articulate logical statements about current and future market direction, innovation, customer needs and competitive forces, and how well they map to the Gartner position. Ultimately, technology providers are rated on their understanding of how market forces can be exploited to create opportunities.

Source: Gartner (October 2012)

Quadrant Descriptions

Leaders

Leaders in this market have strong market presence and significant market share, most of them globally. All leading vendors portrayed in this Magic Quadrant have a comprehensive OSS offering and would still be Leaders even if they needed partners. They adopt a leading-edge position by offering comprehensive, preintegrated, modularized TOMS suites. Beyond OSSs, all leading vendors encroach into the adjacent BSS and SDP markets. Leaders are well-positioned with their current product and service portfolios and their strategies. They have a coherent vision that anticipates current and future requirements. Leaders may not offer the best solution for every type of CSP, depending on their business models and maturity. However, they have proven implementation viability, and can achieve and sustain high-quality, low-risk deployments.

Vendors in this quadrant are Amdocs, Ericsson, IBM, NetCracker Technology and Oracle.

Challengers

Challengers are technology providers with strong execution capabilities and high-quality products and services. They execute well for the most part and dominate large segments; however, they do not yet fully understand the direction of the market. Moreover, the breadth and depth of their products do not match the capabilities of Leaders in this market. Their vision is not as clear, and their strategy is not as compelling as those of the Leaders. Their overall solutions still have some gaps and do not quite have the same level of feature and functionality advancement and innovation as those of the Leaders.

Vendors in this quadrant are Comarch and HP.

Visionaries

Visionaries have put together a compelling OSS strategy in anticipation of CSPs' key pain points in the future, and which details how to address those pain points with innovative OSS products and services. Therefore, vendors in this category demonstrate a clear market understanding. Yet, they still lack certain skills in the area of execution to enable them to move into a leadership position. Either they have not yet fully expanded their sales and support capabilities, or they do not yet have the funding and scale, or the required solution assets, to execute at a leadership level.

The main characteristic of vendors in the Visionaries quadrant is that they are not as stable as the Leaders, nor are their execution capabilities as advanced. Visionaries are usually in the phases of transition. Some are about to move into a leadership position once they improve in one key area, such as beefing up their critical product or service capabilities. They could achieve this stable state by gaining market strength and scale, or simply by achieving wider adoption of their solution in the market.

Vendors in this quadrant are Alcatel-Lucent, Clarity and Nokia Siemens Networks.

Niche Players

Niche Players offer products and services that cover a subset of functionality or focus on a certain geography. They usually lack a well-defined strategy and a compelling vision moving forward. Niche Players are unfocused and do not out-innovate or outperform other vendors. To move in the Magic Quadrant, Niche Players need to fill vital solution gaps and work on preintegrating partners, or build their own service capabilities.

The only vendor in this quadrant is Huawei.

The overall market for OSSs has matured throughout the years, to the extent that numerous vendors offer preintegrated, modularized, out-of-the-box product functionality, with an increasing level of standardization and less customization. CSPs' requirements shift toward highly configurable OSS platforms that support multiple network technologies and manifold services. Technology itself is increasingly becoming a commodity. Differentiation is achieved through thought leadership in the areas of business consulting, service design and integration, and implementation services around OSS. This may include transformational leadership and new delivery models, such as hosted SaaS, platform as a service (PaaS) and cloud services.

The vendor landscape reflects changing OSS investment patterns, which are set to enable the transformation of major operational value chains. Driven by the requirement to improve operational efficiency, while creating new revenue sources and achieving competitive differentiation through improved end-user experience, CSPs are streamlining their back-office systems. A significant modernization of their entire OSSs' stack is indispensable in the light of new business models and technology investments in LTE, self-organizing network, IP, WiMAX and fiber, as well as third-party, value-added service chains. Lower-tier CSPs, in particular, are starting to build business cases for alternative hosted, cloud and managed services, providing multitenancy OSS and adjacent BSS application administration, amid desired reductions in operating expenditure (opex).

Vendors that are leading the current OSS market possess the following mix of skills and expertise:

• Best-in-class, out-of-the box, modularized, preintegrated product suites
• Adequate professional services, consulting, hosting and system integration capabilities
• Standardized configuration and easy, flexible customization capabilities (for example, Java EE interfaces)
• Adequate expertise to manage interfaces with adjacent TOMS

CSPs expect OSS vendors to supervise the entire evolution of processes, organization, network and IT operations from a holistic perspective. This involves a great deal of solution and process consulting, system integration and architectural guidance, as well as enabling third-party content creation and exposing OSS processes to partners.

Typically, CSPs have heterogeneous OSS environments, including a myriad of legacy solutions. As CSPs continue narrowing their list of strategic vendors, they need to take into account many commitments when investing in OSSs (in terms of architectural evolution, expected ROI, and the buy-in of numerous business and technical stakeholders), as they shortlist strategic OSS suppliers. They expect those trusted partners to engage with ample multivendor technology expertise to overcome challenges related to the integration with existing legacy OSSs (for example, how to operate interfaces).

A "helicopter perspective" of a CSP's overall OSS environment and transformation guidance, accompanied by strong multivendor skills, is now indispensable. Among the top sourcing priorities is to drive down integration cost, which necessitates that CSPs choose solutions with the following characteristics:

• High degree of out-of-the-box capabilities
• Highly configurable
• Providing internal users with flawless customization tools
• Transparent licensing that comprises standard customizations, if required
• Implementations of new OSSs should be prerequisites to any vital changes to existing ancillary OSSs

OSS vendors need to take a good look at the underlying premises of their product/service strategies:

• Smaller ISVs need to build a global and local system integration partnership network so they can grow to the next level.
• Simultaneously, if there is another OSS SI involved, the most successful OSS ISVs always build a strong, direct and hands-on relationship with customers to avoid the risk of failure and redundant product customizations.
• Large vendors with a service-led blueprint approach (that fill this blueprint mostly with partner products) should add their own product offerings. Increasingly, CSPs choose to work with one strategic OSS vendor to provide products and services, ensure implementation success, and avoid governance with yet another third party.
• To succeed, leaders in this market are generally inclined to provide a healthy balance between products and services.

Competitive and economic pressure is forcing CSPs to reduce their operational expenditure, but equally to focus on delivering superior customer experience and rapid time to market of new, complex services. OSSs are seen as strategic tools to provide competitive differentiation in terms of the quality perceived by customers and the speed of the service. CSPs are making incremental improvements to their fulfillment and assurance processes to improve the quality of their services and overall IT and network infrastructures.

Contemporary, revised OSS infrastructures have to enable convergent services across different technologies and network environments, such as fixed, mobile, broadband, IMS and IP. CSPs need to become more effective in the fulfillment and assurance of complex composite service bundles across various technologies. Technology convergence requires more proactive OSSs (for example, providing a network and service topology view that enables cohesive correlation between network technology and services). Solutions need to become more data-driven, providing a centralized, correlated view across network, service quality and customer dimensions. As a result, CSPs tend to exhibit careful judgment regarding OSS investments, often involving CTO, CIO and CMO levels, and usually basing their decisions on a proven ROI.

End-to-End Architecture Alignment Changes the Game

New converged and composite services are becoming more complex, and often are made up of telco networks and IT, as well as third-party content. This situation imposes the need for greater operational agility for the rollout of new services, and requires an end-to-end operational process view. Simultaneously, CSPs continue to experience difficulties in the complex administration of heterogeneous OSSs that are purchased from various vendors and organized into silos throughout their entire operations. This situation inhibits the fast deployment of new products and services, while failing to ensure the integrity and consistency of data across redundant solutions.

This need for greater operational efficiency to fulfill and assure services implies a shift toward more congruent business and process-driven, end-to-end OSS solutions, through which data is leveraged simultaneously across commercial and technical constituents in the CSP enterprise. Moreover, CSPs expect vendor expertise in adjacent areas, such as CRM, BSS, CEM 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 to position vendors within that framework.

Ample Investment in Modern OSSs

Because of these shifting requirements, we see CSPs worldwide investing in more flexible OSS architectures, which improve the efficiency of service creation, management and timely delivery, and enable them to proactively optimize customers' perceived quality of experience. Simultaneously, CSPs need to keep an eye on opex and capital expenditure (capex). Major OSS investment areas include order-to-fulfillment processes across logical inventory and adjacent product and service catalog domains, order management, configuration management, discovery and reconciliation, and policy management.

Overall, we expect the worldwide OSS market to grow from $25.3 billion in 2010 to $32.9 billion in 2015. The market consists of more than 10 leading vendors, each with revenue of more than $500 million. In addition, there are a number of vendors that have a considerable impact on the market because of their innovative or niche offerings, or because their OSS solutions are embedded in a wider telco software suite. Inventory is expected to grow at a compound annual growth rate (CAGR) of 5.9% through 2015. Network and service assurance (including customer experience initiatives) is expected to grow at a CAGR of 7.1%, and provisioning and activation at 6.2% worldwide.

Customer Experience Embraces OSS

We also see a major revitalization around service quality management and the corresponding network performance and capacity planning, which often revolve around enterprisewide CEM initiatives, by adding an additional analytics and data correlation layer. Previously, OSS data was used for isolated technical evaluation looking at operational KPIs independently of the customer-centric view. Now CSPs realize the need to transform and amend their OSS environments in alignment with customer and business requirements in order to make an impact in terms of financial metrics.

The service delivery chain for new complex services, which often include third-party KPIs, requires an extended view across network resources, service quality and customer interaction. Moreover, CSPs need to capture information from clients sitting on devices, probes, external SLAs and information from social media sites. To tap into their existing infrastructures, CSPs wrap an additional layer around existing OSS legacy systems to leverage essential operational insights, for example, from service and performance systems, which have a fundamental impact on customers' perceived quality of service.

Changing Sourcing Patterns

Based on the operational agility requirements outlined above, we see CSPs moving toward the sourcing of aligned end-to-end solutions, rather than best-of-breed models. This advance also points to a shift toward a larger proportion of out-of-the-box product functionality and fewer professional services to meet the major pain points in reducing integration and customization charges.

Moving forward, CSPs will limit their list of preferred suppliers even more aggressively to only a few key strategic partners. For example, instead of working with two strategic vendors on service assurance and service fulfillment, they may now consolidate to one OSS vendor. Even those two key OSS domains converge as CSPs become more experienced and move up the maturity curve. CSPs now expect vendors to cover the entire order-to-fulfill-to assure operational value chain as an incremental evolution path. CSPs will increasingly turn to one best-in-class vendor for multiservice or technology support. We see this happening despite CSPs' initial suspicion about handing over control to one single OSS vendor. Moreover, CSPs frequently report greater implementation success in cases where software vendors are being held responsible for the implementation of their own solutions.

These developments are gradually reshaping the OSS vendor landscape in favor of suite vendors, which offer standardized, modularized, preintegrated end-to-end solutions and services (as offered by the vendors in this Magic Quadrant).

Ongoing Consolidation of the OSS Vendor Landscape

As a consequence of the end-to-end evolution in the market, we can see a strong trend toward greater concentration of vendors. This trend will be sustained and motivated especially by larger companies picking up smaller point solution players to complete their end-to-end solutions. The 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 vibrant startup activity and emerging smaller vendors addressing evolving CSP solution needs in the context of managing new operational complexities. Niche vendors frequently fill the market gaps left by established vendors in, for example, order management, service creation, fulfillment and product catalog management.

OSS Business Is of Strategic Importance to NEPs

NEPs increasingly augment their offerings with OSSs as a means of strategic differentiation and to offset declining income in their core network equipment business. As a result, NEPs have to move higher up in the service-layer value chain, embracing the service and customer layers. The rationale behind this market shift is that customers require more than just the pure supply of network connectivity from NEPs. Conversely, NEPs are increasingly pulled in by their customers to solve problems at the service layer (particularly fulfillment, provisioning and network/service inventory) in conjunction with the network. With increasing technology and device maturity, vendors are even expected to close the loop and manage front-end customer experience and customer interactions. This holistic operational view is necessary to manage underlying interdependencies among networks, services and customer interactions, and in order to effectively facilitate the rollout of new, complex services.

The market expects NEPs not just to manage their own equipment, but also to sell OSSs as stand-alone, multivendor OSS solutions. Most NEPs already have a wide range of OSS ISV capabilities and are further seeking to widen their product capabilities — through acquisitions, for example. Ericsson's acquisition of Telcordia is the most prominent example in this context. However, the greatest challenge is to beef up multidomain vendor management and deliver proof points for viable multivendor expertise that can support CSPs' increasingly heterogeneous operations.

In the future, we expect NEPs to also seize new business opportunities related to providing a single operational layer that can be outsourced or managed, addressing various CSP maturity levels and business models.