SOFTWARE:SOFTWARE VENDORS: WHO'S THE OSS?

Independents face an uphill battle as top suppliers reign supreme

The year 2004 could be do-or-die for some independent software vendors of operations support systems. Even as internal development within the Tier 1 service providers subsides and the cost-conscious carriers start spending as much as 40% of their back-office budgets in the commercial market rather than with their own development teams, the majority of that will go to the top suppliers of OSSs.

Billing providers—which have weathered the storm better than most niche players and are the largest OSS vendors by far, with more than $2.5 billion in revenue just among the top three—are still being cautious with their 2004 guidance. This could be due in part to projections for the customer care sides of their houses—like one from Insight Research that indicates “another year or two of sluggish gains” for the customer relationship management and customer care services market.

Still, if it reaches the $101 billion point over the next four years through a compound annual growth rate of 11.3 %, that's better than a sharp stick in the eye. There also could be some turmoil in this space as offshore outsourcing gets political.

Overall, Probe Research is projecting a CAGR of 9.7 % over the next five years for the global OSS market. Anyone with service management capabilities in their portfolio has a shot at getting a healthy slice of that.

The battle for business will be between the billing and test and measurement behemoths that continue to expand their product portfolios and Telcordia Technologies. Telcordia is the company perhaps best positioned (but with no guarantees) to provide the migration from legacy to next-generation OSSs by virtue of its pole position in incumbent carrier organizations and its new set of next generation solutions. For the smaller players, the ability to work with any of these bigger players will be the keys to their continued success in the Tier 1 market.

The ability to bill, collect, measure, ensure, provision, activate and deliver wireless data services using IP could be an important asset over the next two years. However, the ability to reverse the trend of shrinking revenue from packet data will ensure a place in the market.

If the projection from analysis group OSS Observer is true—that by 2014, all legacy services will be consumed by IP—then 2004 could be the shotgun start for the biggest, most complete back office transformation the industry has ever seen. For those vendors that got out in front of the packet revolution and have survived its fits and starts, the golden era of OSS may still lie ahead.