Partnership Pays Off for OSS Player

When New York broadband service provider Paetec Communications realized it needed to invest in some new IP service activation software to keep its customers happy, it didn't compose a request for proposal (RFP) document and analyse the OSS market. Instead, it turned to some of its key systems suppliers, including Cisco Systems Inc. (Nasdaq: CSCO) and Hewlett-Packard Co. (NYSE: HPQ), for advice.

The result was a shortlist of four software vendors, with MetaSolv Software Inc. (Nasdaq: MSLV) the final choice (see Paetec Activates With MetaSolv).

Paetec is a privately held company with annual revenues of about $360 million and about 1,000 on staff. It provides data services, mainly secure, high-speed Internet access and IP VPNs, to more than 10,000 medium-sized business, colleges, hospitals, and government organizations in 27 U.S. markets. It has been using activation software from now-defunct OSS vendor HarmonyCom, and without any updates and support the carrier's software team was doing about 25 percent of service implementation manually, says Sean Pflaging, VP of network services at Paetec.

Pflaging says Paetec needed to add more services, handle orders more quickly, cut its opex, and reduce the mistakes introduced by manual intervention. Activation is a key component in delivering and maintaining a service that will keep customers happy, he says.

So Pflaging turned to his major vendors, including HP, a Metasolv systems integration partner, and Cisco, which counts MetaSolv among the many OSS firms in its software "ecosystem."

Pflaging considered each software supplier, but Paetec was already using MetaSolv's order management and workflow software. "Going with a single software platform made it easier to integrate and manage," he says. Still, the IP activation system had to meet stringent requirements -- namely, it had to be scaleable.

While Pflaging won't name the other shortlisted firms, he has pflagged a well recognized player in the activation market: MetaSolv ranked fourth in the activation category of Heavy Reading's Fall 2003 OSS Market Perception Study in terms of carrier recognition. Lucent Technologies Inc. (NYSE: LU), Telcordia Technologies Inc., and ADC Telecommunications Inc. (Nasdaq: ADCT) ranked higher. Once price, performance, quality and reliability, and service and support rankings were taken into consideration, MetaSolv dropped to seventh overall, two places behind key IP activation system rival Syndesis Ltd.

Even so, OSS Observer analyst Larry Goldman reckons MetaSolv is "well positioned to win new business in IP service fulfillment because of its solid products and strong roster of existing clients," which includes a few new names (see MetaSolv Wins Telus Contract and Telefonica Brasil, Sprint Pick MetaSolv).

MetaSolv is also hoping to pick up business through a recently forged partnership with LM Ericsson (Nasdaq: ERICY) (see Ericsson Integrates MetaSolv) in an OSS sector set to expand this year. "IP service fulfillment is a growing area, driven by the growth in DSL and cable broadband, the value-added services offered over DSL and cable, increasing IP-based mobile services, and business data services such as IP-VPN," notes Goldman. But he adds that new deals for the likes of MetaSolv will likely not come from the Tier 1 service providers such as the RBOCs, which are more likely to "buy highly customizable tools and do a great deal of development themselves."

MetaSolv could do with winning some more new business. It's spent 2003 firefighting in a depressed market, and its third-quarter results, announced in October, saw its revenues fall to just over $17 million for the three months to the end of September, although it had also cut its losses considerably (see MetaSolv Reduces Q3 Loss).

The software vendor will announce its fourth-quarter and full-year financials in the next few weeks and is expecting to announce a sequential increase in revenues. Its current share price stands at $3.40, valuing the company at $130 million.

— Ray Le Maistre, International Editor, Boardwatch