Network Optimization

Next year will be a good one for operations support systems. Depending on the analyst you still believe, as much as $40 billion will be spent. Unfortunately, many an entrepreneur will be back earning a regular paycheck next year as consolidation runs rampant among private and public software companies.

With more than 60 suppliers of service assurance software in Europe and North America, consolidation is certain, according to RHK analyst Patrick Kelly. And despite the allure of a mouthwatering $40 billion pie upon which to feast, many of the surviving companies will be fighting for a slice that's just big enough to keep them from starving. There are simply too many needs to address, too many technologies to support and too much uncertainty.

Carriers will continue to spend on products that help reduce churn, speed service delivery, ensure revenue and, most of all, save money. But if Morgan Stanley Dean Witter is right, and spending in support of local and long-distance networks grows by only 1%, then 2003 will not be the year for the wholesale re-engineering required to bring about the back office heydays of the late 1990s. But evidence suggests those days will start to come back in 2004, and by the end of 2006, we'll hardly recognize the networks or the systems supporting them.

Here's why: While CFOs have had their hands tied by the economy and their bosses have been tripping over their market miscalculations, technology officers have been taking advantage of an unprecedented and advantageous timetable for evaluating new technologies.

Test equipment companies, for example, have continued to pump money into R&D. New companies such as Elematics, which during a boom period might not have been given the time of day, have gained access to service providers' labs to test their new concepts. SIP is as ready as a debutante and needs an OSS escort. And companies like IBM are beginning to change the way service providers think about their back offices.

We may not see all these innovations implemented in 2003, but we will start hearing a lot more about what has been happening behind the scenes.

We will hear more about real auto-discovery and more intelligent network elements. We will hear more about Linux and OSS-J and less about CORBA and EDI. We will hear about service-centric network management. And we will hear more about customer self-care and will likely see and hear more about customer self-provisioning.

For better or worse, we will hear more about outsourcing, but less about Americans providing it. We will hear much more about data and less about voice, except, perhaps, when we hear about the quality of voice as we turn it into data. But most of all, we will hear about wireless, and wireless data in particular.

The Yankee Group puts worldwide OSS spending next year at $6.9 billion, a modest but welcome boost from this year's $6 billion. However, the following year, spending will increase to $7.96 billion and to $9.6 billion by 2005. And most important will be solutions that measure, enhance or ensure performance.

Yes, the OSS market will be a good place to be as infrastructure spending cuts make way for software providers to do their thing. However, companies that develop and sell software won't be the big winners, even in their own space. It will be the system integrators that hoard the biggest slice of that $40 billion pie. No surprise there. Using revenue assurance solutions as an example, The Yankee Group reported only 20% to 30% of the money spent on the problem went to software. The rest was spent on “consultative services.”

While the system integrators manage the big end-to-end projects, though, there will still be room for stand-alone solutions. Cost cutting is not over, and now that service providers have neared the limit of acceptable jobs cuts from a public relations perspective, they really do have to look for solutions to make them more efficient.