Market Insight: Service Delivery Platform Market Overview and Strategic Scorecard for Vendors, 2013

31 May 2013 ID:G00248626
Analyst(s): Martina Kurth

VIEW SUMMARY

Driven by an Internet-oriented service experience, service delivery platforms are evolving toward architectures that enable service innovation and improve customer experience. This report offers the CxOs of communications service providers guidance on their strategic sourcing decisions for SDPs.

Overview

Key Findings

  • CSPs' investment drivers for SDPs have shifted from enabling VAS consumer applications to service innovation. This is happening outside the telco domain through small or midsize businesses, content providers and individual developers.
  • To tap into new business models for connected digital services and remain relevant for their customers, CSPs must expose their network and IT capabilities and better manage partner relationships.
  • SDP solutions provide the mechanisms to bridge the gap between legacy and new technologies and digital channels; allowing exposure, brokering, composition and orchestration of composite services. This comprises external resource and service components such as INs, IP, LTE, Web-based services and third-party content.
  • Few single-source vendors can cater to the evolving end-to-end SDP requirements.

Recommendations

  • Invest in a best-of-breed, IT-centric SDP infrastructure on top of existing legacy (network) SDPs, then gradually retire legacy SDPs. Transform silo-based service infrastructures into an open, standards-based SDP architecture.
  • Explore leveraging cloud technology for internal efficiency improvements, network and service exposure, or to create new cloud-based revenue streams.
  • Use SDPs to collaborate rather than compete with OTT providers. Exposing resilient, carrier grade OSS/BSS capabilities to OTT providers allows CSPs to add value where OTT providers lack skills.
  • Focus on the evolution of existing telco assets to create new composite services. Center immediate efforts on open exposure of telco network assets. IT matters like customer profiling and contextual analytics will be imperative to managing customer experience.

Table of Contents

Contents
Figures

Analysis

Strategic Scorecard for SDP Vendors, 2013

In light of competitive pressure and cost constraints, communications service providers (CSPs) can no longer sustain their traditional network-centric approach to service delivery. CxOs of CSPs who postpone vital service delivery platform (SDP) infrastructure modernization too long will risk a failure to reduce churn and maintain profitability during the next five years.

The CSP's approach has to shift toward more IT-centric SDPs. The proliferation of Internet Protocol (IP), Long-Term Evolution (LTE), mobile broadband and advanced multiscreen devices drives the adoption of SDPs. The concept of an SDP now moves beyond the network and service layer into customer-facing resources (CRM, self-service) to enable an end-to-end process orchestration that ensures adequate customer experience through any digital interaction channel.

As CSPs transform their operational environments, main investment areas include service creation, management and execution, network and service exposure platforms, service orchestration and composition as well as cloud enablement. CSPs are looking for ways to capitalize on new business models, such as business-to-consumer (B2C) and business-to-business-to-consumer (B2B2C) strategies and emerging machine-to-machine (M2M) opportunities. Moreover, they are starting to explore where and how to integrate pertinent technologies such as Web Real-Time Communication (WebRTC), software-defined networking (SDN), and converged over-the-top (OTT) IP applications.

Scope and Methodology of the Study

The SDP market is moving closer to a common, horizontal-enabler platform environment that embraces management commonality among different functions spanning all service and product silos. However, there is only a handful of large, single-source SDP players providing comprehensive, modular, best-of-suite solutions comprising service creation, orchestration, composition, delivery and exposure that are agnostic to any type of network technology, service and device. Those top vendors differentiate themselves by enabling new business models through bundling an SDP with adjacent, preintegrated operations support system (OSS)/business support system (BSS) capabilities, analytics, customer experience management (CEM), policy, charging, self-service and digital commerce.

This research evaluates and benchmarks leading product and service vendors in the SDP market according to a set of defined parameters. This SDP strategic scorecard intends to help CSPs make informed sourcing decisions.

Definition

The term SDP can mean an environment or architecture (comprising a set of systems, data and processes) that is uniquely built and designed according to a CSP's specific prerequisites to allow the swift creation, deployment, execution and orchestration of services, regardless of underlying technologies or where the service runs and is delivered to. Telco's value-added services (VAS) and digital services may include IP connectivity and services, third-party content, and application and information VAS.

For evaluation and comparison purposes, this scorecard takes into account the following core SDP product components and capabilities:

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

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 SDPs.
    • Weighting — high.
  • Market understanding:
    • The vendor's ability to understand buyers' wants and needs and to translate that knowledge into products and services.
    • Weighting — 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.
    • Weighting — 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.
    • Weighting — low.
  • Sales strategy:
    • Completeness of the vendor's go-to-market model as expanded by partnerships.
    • Weighting — high.
  • Market responsiveness and track record:
    • Number and extent of deployments so far.
    • Weighting — high.
  • Overall viability (business unit, financial, strategy and organization):
    • Includes assessment of the overall organization's financial health; the success (financial and otherwise) of the business unit concerned with SDPs; and 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.
    • Weighting — low.

Overall Evaluation of SDP Vendors, 2013

This section summarizes Gartner's assessment of the portrayed SDP vendors for each of the criteria mentioned in the Scorecard Criteria section. Figure 1 provides a graphical representation of all the vendor ratings. Detailed analysis of each vendor's score is given under the Detailed Analysis of Individual Vendors' SDP Products and Services, 2013 section.

Figure 1. Strategic Scorecard for Vendors of Next-Generation Service Delivery Platforms, 2013
Figure 1.Strategic Scorecard for Vendors of Next-Generation Service Delivery Platforms, 2013

* Business unit, financial, strategy and organization
VS = very strong; S = strong; ST = stable

Source: Gartner (May 2013)

Market Conditions

SDPs remain among the fastest-growing segment in the overall OSS, BSS and SDP market. The SDP is considered a critical enabler for new revenue streams, which explains its relatively strong growth rates: 9.2% growth worldwide in 2012 and a forecast compound annual growth rate (CAGR) of 5.6% for 2013 through 2017 (for details, see "Forecast: Telecom Market, Worldwide, 1Q13 Update").

The continuing growth mirrors the increasing magnitude of SDP investments as part of a wider, ongoing transformation process that may embrace network and IT SDP capabilities and management of end-customer experience, as well as business partners and third parties.

  • Previously, SDP projects involved multiple vendors with each of them assigned to solving a technology case for a service or application in a discrete area.
  • Today, the role of an SDP vendor has shifted toward a strategic partner for both technology and business — spanning the digital value chain.

Market consolidation is increasing as the leading players in the SDP market continue to gain market share through organic growth as well as acquisition. The evolution toward larger and more complex deals and the widening scope of an SDP environment reflects the ongoing vendor market consolidation (for example, Ericsson-Telcordia and Oracle-Acme). The most established vendors extend their traditional SDP offerings into adjacent domains, such as analytics, policy control and management, M2M, connected enterprise solutions, self-care marketing and advertising, digital commerce, or WebRTC solutions, to cater to evolving CSP business models.

The Most Important Changes in the SDP Market for 2013

Recognition as Business Model and Technology Facilitator

CSPs increasingly recognize the role of SDPs as a platform or infrastructure through which they can participate in a wider content and technology value chain and, therefore, roll out more compelling services. SDPs can serve as a service orchestration layer whereby many new service offerings can be delivered through business rules, Web services and APIs.

New sources of revenue require monetizing third-party applications and settling with content providers, as well as making the third party's products and services available to the CSP's customers. SDPs enable various forms of new services or business models, which may involve the amalgamation of network-centric and IT-centric assets or embrace third-party and OTT provider content services. The prerequisite is an open, standards-based service exposure platform together with an app store strategy of obtaining content delivery and storefront platforms — as well as adjacent charging, advertising and partner settlement.

Integrated self-service, policy management and charging capabilities, adjacent to core service creation and delivery, will be vital to monetize new business models such as in the area of mobile broadband. Instead of merely being a technological decision, CSPs tend to base SDP sourcing on the proven ROI effect on their business.

From 2013, an agile SDP infrastructure becomes even more crucial in terms of monetizing revenue from new technology investments, such as IP, LTE and voice over LTE (VoLTE), by enabling innovative services (data services). Considering CSPs' deployments of LTE 4G networks worldwide, IP communication becomes even more relevant to SDPs. SDPs are evolving to embrace the legacy networks and services and preparing for the future by aligning with the latest IP networks. Service brokers, Session Initiation Protocol application servers and composition engines are instrumental in the evolution of legacy networks. These will help in migrating existing services onto a next generation network, or will consolidate multiple networks to provide a single face to the subscribers. For example, CSPs may augment their SDP investment with service brokers to mitigate the gap between IP/IT and VoLTE/IP Multimedia Subsystem (IMS).

Exposing Core Voice/Data Assets

One of the core themes for CSPs remains how to stimulate innovation around core telco assets such as messaging, mobile data and location. SDP solutions help CSPs to architect existing operations infrastructures so that the current services layer interacts seamlessly with the evolving underlying mobile and fixed intelligent network (IN).

Network and service exposure management platforms 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. Simultaneously, 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.

Depending on the level of API integration, CSPs can offer third-party services through preintegrated clients (just enrich core services or deeply integrate back-end services). We also anticipate more focused exposure of CSPs' OSSs/BSSs to OTT providers, which may require various levels of integration. For example, VF performs charging for Google services (bill-to-charge service). The strategic nature and blend of these integrated or composite services will allow for competitive differentiation and will help retain customers.

Conversion Toward B2B Platforms Requires Integration

CSPs such as Telefonica, Orange and Verizon are currently experimenting with the adoption of various business models such as M2M and enterprise and consumer analytics. The main reason why CSPs invest in SDPs is their potential as a catalyst for new business models. The enterprise market in particular represents major revenue potential for CSPs to increase market share, because mainly IT and Internet providers cater to this segment and it remains virtually untapped for CSPs.

The adoption of new business models and markets is advancing at a different pace to the CSPs' transformation of their SDPs. The main reason is that SDP transformation on the network, service and customer layers is lagging. Primarily, exposure of OSSs/BSSs through SDP to upstream customers is necessary to allow third-party services to add innovation to telco services (profile, mobile payments, network policies). Yet those business models, which require third-party integration, impose new product and launch requirements on the OSS/BSS side of operations. It will, therefore, be of paramount importance that OSSs and BSSs are fully flexible and tightly integrated with the core SDP to facilitate the execution of those new multisided complex business models.

Manage Unified Customer Experience Across all Interaction Channels

Traditional SDP drivers comprised basic metrics such as service quality, time to market and dropped calls. We observe a paradigm shift toward measuring SDP investments in relation to their effect on customer experience. Application and business innovation can be directly associated with the customer experience. However, application and business innovation happens, to a large extent, outside the telco world today. Currently, the goal to improve the customer's perceived quality of experience spans multiple digital interaction channels, retailers, and CSPs' CRM and self-service, for example. SDP solutions play a role in facilitating more tailored service offerings and a more personalized experience to CSP subscribers over digital interaction channels (Web, Wireless Application Protocol, app and API).

Emergence of Cloud

Cloud represents one of the most revolutionary business opportunities for CSPs. The most common scenario is that CSPs increasingly virtualize internal data centers and are providing virtualized SDP applications on their internal or private cloud. This scenario also helps to improve business cases for cloud investment. However, cloud also allows for the delivery of SDP functionality 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 to, for example, increase market share in the growing enterprise and ICT market. CSPs worldwide see this as a chance and a necessity — in anticipation of cloud as a new line of business — to offset declining traditional voice and data revenue. SDP infrastructures are a critical asset to help justify and drive the cloud business case as part of ongoing cloud evolution. SDP infrastructures, such as service composition, creation and fulfillment, provide vital functionality to create and enable new cloud service revenue streams — delivered as platform as a service (PaaS) and software as a service (SaaS), for example.

Finally, as cloud advances toward a mechanism to create SDN, we will see a tighter integration between SDPs and SDN to provide a cloud-based services layer for applications to reside in and scale. SDPs can also be leveraged to create and deliver network as a service, where both exposure and services consolidation are the focus — moving toward a cloud-enabled system infrastructure. In the context of network function virtualization, analytics performed on the SDN control plane can be leveraged to tune network functions.

Summary of the Scoring Criteria

Product or Service Offering

CSPs tend to refrain from investing in large end-to-end implementations in the SDP area. Instead, they are implementing discrete components of SDP (such as network exposure or service composition), which allow them to deliver new services cost-effectively. This trend will continue as CSPs expand into B2C and B2B2C strategies and wish to capitalize on emerging M2M opportunities.

Thus, vendors are required to provide preintegrated modular solutions that allow CSPs to start in one area — such as network exposure or cloud — then allow them to expand their implementations incrementally. CSPs are looking for a long-term strategic partner to guide them through their long-term evolutionary SDP path.

All vendors score as strong or very strong regarding the evaluation criteria of SDP product or service. Vendors included in this scorecard have caught up significantly in terms of the breadth and depth of their product and service — frequently through acquisition to fill any functionality gaps. They have a broad, advanced SDP product portfolio, coupled with strong system integration (SI), process and services consulting expertise, as well as a robust software road map. Vendors are working on a tighter integration of their service delivery environments with the overall network and IT architecture.

Network equipment providers (NEPs) need to venture into more IT-centric, open and standards-based architectures, while IT vendors will continue to pursue investments in assets that bridge the gap toward the network.

  • Network SDP vendors. NEPs such as Ericsson, Nokia Siemens Networks, Alcatel-Lucent and Huawei have a more network-centric solution portfolio.
  • IT-centric SDP vendors. Oracle and IBM approach the market with strong IT assets.
  • Enterprise-focused SDP vendors. HP decided to pull out of the consumer market and assemble all its SDP assets to cater to lucrative enterprise markets — providing mobility application development and deployment.

Since the last iteration, we have seen further signs of market consolidation and concentration — giving more market power to a few leading players. Niche players, such as Telcordia, become part of the wider offerings of larger players.

CSPs expect large vendors to evolve toward multiservice and multitechnology shops, which fit any type of CSP and represent comprehensive end-to-end offerings that range across traditional telcos, IP and IT, cloud and enterprise disciplines.

Market Understanding

CSPs' increasing focus on new revenue generation, in conjunction with monetizing existing network and IT assets, has been driving the evolution of SDP architecture; in order to support new business models and for CSPs to take new roles in the revenue and content delivery value chain. CSPs therefore need agile SDPs able to provide dynamic business flows that can be tightly integrated to service flows in run time. Hence, service execution and convergent telecom application servers and service brokers — as well as network abstraction and service exposure capabilities — will be of paramount importance in the future. Enterprise stores and M2M, cloud, analytics and policy control are also areas where CSPs needs to invest to gain market traction over, or mechanisms to join forces with, the existing and emerging OTT players.

Thorough market understanding is essential to address the expectations of CSPs' line-of-business leaders and C-level executives and 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.

All vendors surveyed have proven that they have a solid understanding of the market. Huawei is better suited to address the needs of developing markets, while Ericsson has more market traction in mature markets. All these companies understand CSPs' SDP requirements with respect to new digital and composite content delivery/VAS, corresponding business and operational processes, and architectural issues.

Geographic Strategy

We base our evaluation of vendors' geographic strategy on how many resources they allocate to specific regions outside their home region in support of their customers' SDP requirements.

  • Oracle, HP, Nokia Siemens Networks and Alcatel-Lucent all have good geographic traction and commitments in all regions.
  • IBM, Ericsson and Oracle stand out 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 is still mainly in the Asia/Pacific and the Middle East and Africa regions.
Sales Strategy

This criterion concerns a vendor's go-to-market strategy. All vendors in Gartner's 2013 scorecard have an appropriate network of direct and indirect sales channels that can increase the scope and depth of their reach. The SDP vendors portrayed have well-segmented and targeted go-to-market strategies, and networks of partners that span the globe.

The IT-focused SDP vendors such as IBM and Oracle tend to engage in partnerships with NEPs such as Huawei, Alcatel-Lucent and Nokia Siemens Networks to be able to best complement all of the CSPs' evolutionary needs.

Market Responsiveness and Track Record

The results of this survey show that particular emphasis is being placed on revenue generation and enablement of new business models and technologies, such as exposure platforms and management, IN brokerage, LTE, cloud, M2M and payments. We see less demand for preconfigured app stores than before; the challenge is more about embracing existing apps in the marketplace.

Huawei and Ericsson have the most extensive SDP implementations in terms of revenue and number of deals. 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, SDP deployments continues to evolve, those vendors that swiftly adjust to changing market requirements — in the light of CSPs' changing business models and OTT competition — prolong their ability to grow their market share. Companies such as Ericsson, IBM and Oracle continue to capitalize on their strong end-to-end product strategies.

Overall Viability

For this criterion, we considered SDP vendors' revenue in this market, overall organizational setup, financials and proven commitment to SDP investments. We also assessed the likelihood that they would continue to develop their SDP capabilities.

Detailed Analysis of Individual Vendors' SDP Products and Services, 2013

Alcatel-Lucent

Instead of pursuing a blueprint approach for a complete SDP architecture filled with partner software, as it does in the OSS/BSS area, Alcatel-Lucent redefined its Application Enablement strategy around network APIs and service exposure and composition.

Alcatel-Lucent's reorientation in this space is underpinned by an increased company focus on the core network. It has institutionalized applications enablement by building APIs into products and ensuring its software and hardware offerings are technology agnostic and will therefore work within the multivendor network environments that most service providers have deployed today. For example, the company announced the launch of its Conversation APIs to rapidly build compelling mobile broadband services on 4G LTE networks for consumers and businesses; basically allowing the transformation of IMS into Web 2.0. Moreover, the Nuage Networks Virtualized Services Platform leverages APIs to drive connectivity within data center networks to enable programmability and scalability, and allows smother integration with existing OSS/BSS environments.

Alcatel-Lucent is also taking a stance in the evolution of major standards initiatives such as the Open Mobile Alliance (OMA), embracing 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.

Alcatel-Lucent's footprint in the area of SDP/application enablement has yet to grow, considering recent organizational and solution alignments. However, we anticipate that new assets such as Cloudband will help CSPs to create new cloud revenue streams beyond traditional offers.

Alcatel-Lucent relies heavily on strategic partnerships, with IT solution providers and independent software vendors (ISVs), for vital functions such as service-oriented architecture (SOA) analytics/orchestration middleware and IT OSS/BSS software systems that are vital assets in the context of CSPs' transformation endeavors.

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

Figure 2. Strategic Scorecard for Alcatel-Lucent as a Next-Generation Service Delivery Platform Vendor, 2013
Figure 2.Strategic Scorecard for Alcatel-Lucent as a Next-Generation Service Delivery Platform Vendor, 2013

* Business unit, financial, strategy and organization
S = strong; ST = stable

Source: Gartner (May 2013)

Ericsson

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

Ericsson's SDP provides a transformation solution "on top of" the legacy SDP environment, which enables gradual evolution of new functionality and helps mitigate the risk of phasing out legacy assets. Ericsson also works on a tighter integration of SDP and its service-enablement offerings with OSSs/BSSs. The company launched its new Multiscreen Self-care offering in 2012, a vital component for a credible positioning in the customer experience management area.

Ericsson's Service Enablement Platform offers a common foundation for flexible service creation, execution, composition and exposure as well as dynamic digital channel management with a personalized consumer experience. The offering consists of two main product platforms: Multiservice Delivery Platform (MSDP) and the Ericsson Composition Engine (ECE).

The Ericsson MSDP 5.1 delivers services and manages user experience through 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, revenue sharing and service management as well as integration to external systems. The latest enhancement contains a prepackaged solution for self-care, with embedded charging and network policy exposure of the operator's mobile broadband offerings.

The ECE is a competitive differentiator for Ericsson that 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 new revenue streams. It allows CSPs to safely open their networks to third-party service providers, bridging the telecom and IT domains. ECE can be used as a Service Capability Interaction Manager (SCIM) or service broker, allowing composition of new applications out of existing service components. Previous Telcordia service broker and convergent apps server products have now been integrated into the ECE.

Ericsson gained strong traction with its ready-made app store software platform, facilitating prebuild services. Ericsson's eStore is a content syndication marketplace, where CSPs, businesses, developers, advertisers and brands meet, engage and do business. The SaaS-based, hosted offering comprises an onboarding, revenue sharing, charging and partner management mechanism related to developers.

The eStore has now been evolved into a connected devices cloud; a platform built on MSDP and run on Amazon. Ericsson recently landed an MSDP deal with Volvo to provide cloud-enabled digital services, opening up resources to other players in the automotive ecosystem. It provides a single contact point through which internal and external factors can communicate with the car.

Ericsson has yet to present a clear road map strategy on the augmentation of the acquired Telcordia assets as part of its wider support solutions offering. In the SDP domain, Ericsson needs to emphasize its role as innovator for convergent services bridging the gap between traditional circuit-switched network infrastructure, IP and Web services, and also in the light of LTE/VoLTE deployments.

Ericsson merits a rating of "very strong" overall (see Figure 3).

Figure 3. Strategic Scorecard for Ericsson as a Next-Generation Service Delivery Platform Vendor, 2013
Figure 3.Strategic Scorecard for Ericsson as a Next-Generation Service Delivery Platform Vendor, 2013

* Business unit, financial, strategy and organization
VS = very strong; S = strong

Source: Gartner (May 2013)

HP

HP's strategy centers on enabling new enterprise business models (B2B and B2B2C). The HP SDP represents a framework for the creation, proliferation and delivery of services, whether they are generated internally or come from third-party developers or other nontraditional developers.

Innovation is driven by the enterprise sector, where apps providers, developers and other Web storefronts dominate because the "walled garden" service delivery approach is taken over by third-party portals. HP's mission is, therefore, to assist CSPs in inserting themselves into the enterprise value chain, enabling enterprises to provide apps for leading Android and Apple iOS smartphone and tablet devices. The major challenge CSPs are facing in this context relates to the customization of CSPs' IT — such as authentication, billing, security support for Android and iPhone apps — in order to support enterprise requirements. This is a major pain point for CSPs and a vast opportunity for HP.

The HP SDP software comprises HP's own products for service abstraction and enablers, service orchestration, service governance, and authentication, authorization and accounting (AAA); also, a storefront platform with full partner relationship management. The latest evolution of Enterprise Mobility Platform (EMP) ensures tighter links with the SDP/EMP storefront, Enterprise Mobility Gateway and new HP products for an integrated development environment/HTML5.

The HP Storefront platform is based on the premise that innovation service mashups predominantly stem from external Web 2.0 development. It encompasses an application developer portal and storefront for discovering APIs, registering and providing feedback on APIs, building apps, registering apps on the storefront, app approval and life cycle management — all used for enterprise and consumer applications.

HP Service Enablers Storage Operations Manager (SOM) connectors provide integration 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.

The enterprise market represents a significant high-growth segment for CSPs, and HP's efforts to carve out this SDP market segment for itself make 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 the SDP evolve into a shared service and need optimization expertise in the connectivity, storage and process areas. HP's opportunity is also to exploit the bring-your-own-device enterprise mobility market. The HP Enterprise Mobility Gateway facilitates back-end integration functions to ERP and CRM systems, as well as smart caching for iOS and Android applications and security functions — thus embracing the consumerization of IT with Android and iOS devices.

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

Figure 4. Strategic Scorecard for HP as a Next-Generation Service Delivery Platform Vendor, 2013
Figure 4.Strategic Scorecard for HP as a Next-Generation Service Delivery Platform Vendor, 2013

* Business unit, financial, strategy and organization
S = strong; ST = stable

Source: Gartner (May 2013)

Huawei

Huawei gets over 70% of its SDP revenue from markets in Asia/Pacific (China), Africa and the Middle East. Huawei's main success in the SDP market centers on its capability in exposure of telco and IT assets to CSPs' partners in order to enable innovative services. Huawei's capability exposure platform enables CSPs to cooperate with third-party content enabler providers that want to expose their capabilities — along with CSP resources — on CSPs' SDPs. This exposure environment allows CSPs to participate in the two-sided business model and increase their revenue streams. Huawei's reference customers in the exposure area include group CSPs such as America Movil and Telefonica.

Huawei's exposure capabilities are important for CSPs to invigorate their core telco assets. Network abstraction hides the complexity of different networks and network elements (enablers), and encapsulates capability servers with integrated development environments (IDEs). Huawei's service exposure platform with open APIs is based on Parlay X, Web services and REST. It provides a secure dynamic mechanism for controlling the third parties' service access, allowing them to import their capabilities and expose them as APIs, and thus helps in orchestrating new service logics with third-party APIs and internal APIs. Moreover, Huawei's Service Creation Environment provides convergent IDE with software development kit (SDK) and "sandbox" capabilities; this allows API developers to import their capabilities and expose them as APIs — to expand their market reach without dealing with the complexity of back-end systems. Huawei's business management system provides complementary management capabilities around recruiting, certification and onboarding of developers, API life cycle and capability management, and adjacent revenue sharing and policy management toward third-party content partners and developers.

Huawei has also launched a new cloud-based offering, Central SDP. This is a digital marketplace ecosystem or VAS management platform for CSPs, developers, content providers and other partners, which leverages Huawei's global developer program InTouch. The success factor for such an application ecosystem is an Internet-like governance model that ensures revenue-sharing capabilities for involved value chain partners.

Huawei has a strong record of accomplishment in implementing large, high-volume SDP projects across multinational group CSPs. Such group CSPs share resources through a centralized open SDP with a single point of access, and unified management and billing capabilities. VAS transformation initiatives may encompass platform consolidation, business process re-engineering and setting up developer communities and aggregate developers of different industries and localized content/services.

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 and integration of OSS/BSS capabilities becomes even more critical. Huawei is lacking vital in-house OSS assets for differentiation.

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

Figure 5. Strategic Scorecard for Huawei as a Next-Generation Service Delivery Platform Vendor, 2013
Figure 5.Strategic Scorecard for Huawei as a Next-Generation Service Delivery Platform Vendor, 2013

* Business unit, financial, strategy and organization
VS = very strong; S = strong; ST = stable

Source: Gartner (May 2013)

IBM

IBM's offering centers on the Service Provider Delivery Environment (SPDE), a business-driven architectural framework based on CSPs' best practices for SDP implementations worldwide. Recent enhancements resonate with the needs of SDP line-of-business decision makers. The core Service Creation, Service Delivery and Service Execution Platforms, as well as cloud SDP, M2M, commerce and analytics solutions, leverage SPDE to support building out of the solution from various entry points — in favor of CSPs' incremental evolution needs.

IBM has had a very solid track record of continuous investment in SDP product development for a decade, including its latest acquisitions in the area of mobile service creation and digital customer experience. IBM is the prime contractor for many complex SDP SI and architectural transformation projects worldwide.

IBM has a very comprehensive product range and skill set in the 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 assets.

IBM is the most established vendor in the area of cloud service delivery. The building blocks of the IBM SmartCloud for Service Providers solution enable CSPs to use several different approaches to tap into the cloud services segment and create a dynamic ecosystem from which to source new services. IBM is also leveraging cloud computing to deliver SDP functionality remotely, providing consistent management of connected devices provisioning and interfaces with third parties. It also acts as an operations center for M2M services over the cloud, enabling CSPs to generate new revenue streams more quickly from their own and third parties' clouds, content and applications. In order to be able to monetize new M2M business models, CSPs are leveraging custom-made M2M SDP platforms that enhance their role as connectivity providers into third-party M2M devices and cloud-based applications and infrastructures. Additional integrated, bundled IBM solutions reside in the areas of connected home management, energy and utilities management, and smart city solutions.

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

IBM's approach to 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. IBM also operates and enhances SDP platforms under long-term contracts based on SLAs and commercial outcome-based payment structures.

While IBM offers some applications of its own, it focuses heavily on providing an enabling environment in which its ISV partners can deliver services to end users. As such, IBM depends on strong partnerships.

As a traditional IT player, IBM is required to complement proficiency on the network side of the business, as evidenced by joint go-to-market strategies with leading NEPs such as Huawei. However, as NEPs increasingly want to compete in the SI market, there might be some overlap.

IBM has one of the most comprehensive SDP solution sets available on the market, but smaller CSPs in particular may perceive IBM's solutions as being expensive and its solutions as monolithic. On the other hand, IBM also faces challenges to pull together all its strengths across CSPs' organizational units as well as to integrate numerous recently acquired assets to provide a modular solution.

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

Figure 6. Strategic Scorecard for IBM as a Next-Generation Service Delivery Platform Vendor, 2013
Figure 6.Strategic Scorecard for IBM as a Next-Generation Service Delivery Platform Vendor, 2013

* Business unit, financial, strategy and organization
VS = very strong; S = strong

Source: Gartner (May 2013)

Nokia Siemens Networks

Nokia Siemens Networks continues to pursue a predefined, business-process-led, end-to-end SDP solution blueprint, filled with a blend of its own and partner's 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, service execution and network abstraction; and IBM/Oracle for service orchestration and governance and enterprise service bus. The value proposition is to enable CSPs to build services on top of their existing infrastructure and move to an all-IP environment. The company's blueprint comprises a range of convergent applications, from legacy and next-generation INs to enterprise solutions, consumer multimedia and third-party content.

Like some of its competitors, Nokia Siemens Networks has shifted the priorities of its SDP value proposition to support multimedia applications enriching Rich Communications Suite (RCS), IMS, LTE/VoLTE. The company also endeavors to extend its vast CEM success into the SDP domain, providing multichannel campaigns and advertising complemented with analytics for CSPs' sales, marketing, operations and customer care constituents.

Being closely coupled with its Customer Experience Management and Liquid Networks, the company's SDP vision is 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), Nokia Siemens Networks addresses CSPs' current main concerns around optimal cost positions and business models for cooperation between the CSP and OTT provider. As part of its SDP framework, it offers a mix of vital partner and in-house enablers. Its own enablers include subscriber data management, policy, location and device management.

This company has gained well-balanced traction across all major geographies in both mature markets, and emerging markets such as Eastern Europe, Latin America, Asia/Pacific and the Middle East. It is particularly attractive for CSPs in developing markets, because it takes a business-driven, step-by-step evolutionary approach that allows the customer to start out in a discrete area and then extend the value of the solution on a larger scale.

In December 2012, Nokia Siemens Networks announced the sale of its BSS and charging assets to Redknee. Charging evolves as an important solution component for CSPs in order to create new revenue streams by exposing capabilities to OTT players and mobile broadband business models.

Nokia Siemens Networks needs to communicate more clearly with the market about its shift in strategic focus toward application- and partner-enabling solutions. As part of its core mobile broadband strategy it leverages Liquid Applications, in conjunction with partner solutions, to enable CSPs to participate in OTT value chains. By taking IT to the mobile edge, mobile edge computing technology — in conjunction with vital network data — will enable the CSP to create new, more context-aware applications. It will also help CSPs foster innovation through ecosystem environments consisting of developers and Internet players.

Nokia Siemens Networks merits a rating of "strong" overall (see Figure 7).

Figure 7. Strategic Scorecard for Nokia Siemens Networks as a Next-Generation Service Delivery Platform Vendor, 2013
Figure 7.Strategic Scorecard for Nokia Siemens Networks as a Next-Generation Service Delivery Platform Vendor, 2013

* Business unit, financial, strategy and organization
S = strong; ST = stable

Source: Gartner (May 2013)

Oracle

Over the past few years, Oracle has significantly widened its presence in the SDP arena through strategic acquisitions — including the recent announcements of its intention to acquire Acme Packet and Tekelec. The company also invests in internal R&D development to achieve organic growth. In particular, Oracle has augmented its CSP-focused offerings (from acquisitions such as Convergin and eServ) with its non-CSP-focused SOA middleware products (including those from Sun and BEA), which has helped to increase its telecom and SDP customer base and to widen its application partner ecosystem. The latest strategic realignments cater to CSPs' emerging requirements around WebRTC, SDN, charging and policy exposure, and converged OTT IP applications.

Oracle's SDP solution consists of the Oracle Communications Service Delivery Platform solutions suite, 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) and Oracle Identity Management.

Oracle's offering comprises converged service creation, execution and management capabilities, as well as service broker mediation and orchestration to bridge the gap between CSPs' legacy IN investments and LTE/IP and facilitate composite VAS services. It also offers service exposure capabilities, mobile marketing, and advertising and corresponding online charging and policy management and mechanisms to enable new business and service delivery models — in conjunction with OTT, M2M and cloud.

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.

Other key products include Oracle Communications Service Controller, Oracle Communications Policy Controller, Oracle Communications Virtual Private Network and Oracle Communications Social Voice Communicator — as well as Oracle Communications Digital Store (OCDS). OCDS enables a CSP to support content retailing through app stores accessed via the Web, mobile or other devices.

Oracle is taking a solution-oriented SDP approach. Integrating Oracle Communications Policy Controller and Oracle Communications Charging Systems, in conjunction with policy exposure through the OCSG, allows the CSP to enable the monetization of OTT network usage and foster collaboration with OTT providers.

The SDP paradigm shifts toward IT will continue to accelerate as cloud, WebRTC and SDN become more widely deployed. CSPs are integrating their SDPs into Web technologies to enable more real-time communications. Oracle's announced intention to acquire Acme is a strategic investment in WebRTC to drive its SDP offering into next-generation IP networks. We expect Oracle SDP solutions, such as OCCAS, to get a boost from this trend; WebRTC will complement Oracle's offering to bridge the gap between network- and IT-oriented SDPs. On the other hand, NEPs naturally hold a dominant position on the network-oriented SDP side, which requires a fine balance between partnership and cooperation (for example, NEPs leverage OCCAS products as part of their SDP solution blueprint).

Oracle relies largely on its partners for overall system and network integration work in the SDP space. This implies that its success depends heavily on the project delivery of these partners. There is also 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 best practices and to provide project governance for Oracle software.

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

Figure 8. Strategic Scorecard for Oracle as a Next-Generation Service Delivery Platform Vendor, 2013
Figure 8.Strategic Scorecard for Oracle as a Next-Generation Service Delivery Platform Vendor, 2013

* Business unit, financial, strategy and organization
VS = very strong; S = strong

Source: Gartner (May 2013)

Background and Context

Today's marketplace offers customers ever-increasing content and application opportunities "over the top." Because innovation is happening outside the CSP — often through startups and developers — CSPs need to invest in mechanisms that allow them to embrace this innovation through their offerings.

As CSPs augment investments in new network technologies, OTT traffic on top of new network technologies such as LTE is constantly rising. SDPs represent an imperative opportunity for CSPs to take the role of service enabler in an extended value chain — to capture some of this revenue and find new ways to stay relevant for their customers.

The proliferation of LTE 4G networks makes IP communications more relevant to SDPs. This evolution widens the scope for SDPs toward Layer 3 (the network layer) in order to support all IP-based services, including voice over IP, broadband IP and cloud. At the same time, the SDP shift toward IT will continue to accelerate as cloud, WebRTC and SDN become widely deployed.

The new generation of SDPs spans IP connectivity, content, applications, analytics, cloud and M2M, for example, regardless of where the service runs (network, service plane, third-party platforms or devices).

This evolution means that CSPs' CxOs need to:

  • Redefine their strategic market direction and business models.
  • Invest swiftly in a more agile service creation and delivery environment and not miss out on the opportunity to streamline operations as they adopt new technologies (IP, LTE) and as OTT traffic continues to increase.
  • Leverage existing network/IT assets smartly to remain relevant in the services value chain (customer demographics, behavior, preferences and location).
  • Invest in a best-of-breed IT-centric SDP infrastructure on top of existing legacy SDPs, and gradually retire legacy (network) SDPs.
  • Open up core telco capabilities to third-party developers, third-party content and service providers, but be aware that they need a carrier-grade, resilient and reliable SDP infrastructure that allows them to do this securely.

The Impact

Evolution of the SDP as Service Enabler

The role of SDPs is shifting toward that of a key business and services enabler in the context of the overall market evolution, as portrayed in Figure 9. The SDP takes a vital role in CSPs' operations as they place stronger emphasis on new business models that entail third-party participation, ecosystem enablement, revenue generation and improvements in customer experience.

Figure 9. Evolution of SDP as a Service Enabler
Figure 9.Evolution of SDP as a Service Enabler

B2B2C = business-to-business-to-consumer; capex = capital expenditure; opex = operating expenditure; SDP = service delivery platform; TCO = total cost of ownership

Source: Gartner (May 2013)

Most CSPs have already been through first-, second- or even third-generation SDP deployments. Usually, their SDP efforts have evolved based on defined, common architectural principals. They are now leveraging their expertise by focusing on reuse of components and enablers for new services. Alternatively, existing SDP platforms are being used as the foundation for an evolution toward M2M or cloud.

In the light of increasing competition from OTT providers, CSPs are looking for ways to remain relevant to their customers. Major focus areas include 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 and the quality and reliability of core telco services. In this context, the role of an SDP centers on improving the agility of the user interface to the storefront, offers and devices. To participate in the OTT revenue stream, CSPs have started providing capabilities such as location, network quality of service and charging in conjunction with policy management exposure to OTT players.

As depicted in Figure 9, in the future SDPs have to evolve toward a best-of breed infrastructure that cultivates innovation and minimizes integration cost, flexibility and the time it takes to roll out new composite services. The proliferation of new technologies such as mobile broadband, more sophisticated multiscreen devices, and the constantly rising expectations of the digitally literate consumer are leading to an elaborate SDP infrastructure that is end-to-end across entire service delivery value chains.

CSPs' immediate focus is to migrate current revenue-generating services (such as INs) to new platforms (such as IP and LTE) 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.

SDP as an Architectural Principle

SDP has to evolve as an architecture, rather than merely a set of products, closely linked and enabled by IT. This architecture blueprint needs to be filled with best-of-breed SDP components that can facilitate the CSP's role as an enabler for new and compelling services based on open business models.

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. SDP is being more tightly integrated with adjacent OSS, BSS, network policy management, subscriber data and analytics functionality.

New SDP Buying Centers

The way that CSPs source, implement and leverage SDPs is changing. CSPs' consumer and enterprise departments and product management increasingly drive CSP requirements, often linked to revenue-generating sales targets assigned for particular classes of services — such as mobile content, IP, M2M and cloud. Eventually, business constituencies drive requirements regarding business models and which third-party service, application and content providers to engage with. In some instances, the network and operations department takes more of an executing role, which caters to the needs of the commercial constituencies who then hold the budgets. Because of the increasing significance that SDP has as a key business decision, sourcing increasingly involves CxOs in its decision making.

Conclusion

The SDP market is moving closer toward a common, horizontal-enabler platform environment that embraces management commonality among different functions spanning all service and product silos. In the light of competitive pressure and cost constraints, CSPs' CxOs can no longer sustain the traditional network-centric approach to service delivery. Their approach has shifted toward more IT-centric SDPs. As they transform their operational environment, main investment areas include service creation, management and execution, network and service exposure platforms, service orchestration and composition, as well as cloud enablement. CSPs are starting to explore where and how to integrate pertinent technologies such as WebRTC, SDN, M2M and converged OTT IP applications. Currently, very few single-source vendors can cater to the evolving, comprehensive SDP solution requirements portrayed.

Evidence

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

We supplemented the survey with research insights obtained from SDP-specific workshops, vendor briefings and inquiries with CSP clients.

The main inclusion criteria for this scorecard is revenue from SDPs, as shown in "Market Share: Telecom Operations Management Systems (BSS, OSS and SDP), Worldwide, 2011-2012."

Additional inclusion or exclusion criteria are as follows:

Inclusion

  • SDP solution vendors with market share larger than $200 million in 2012.
  • Players need to have a strong position in the OSS and BSS market (by revenue) to be able to cater to evolving 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.