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The OSS Identity Crisis

Heavy Lifting Analyst Notes
Heavy Lifting Analyst Notes
Heavy Lifting Analyst Notes
10/24/2003

From the outside, the world of telecom Operation Support Systems has long appeared to be a byzantine place steeped in menacing shadow, where mysterious entities engage in weird and arcane wizardry.

Turns out, that’s pretty much the view from inside the OSS world as well.

The chief takeaway from Heavy Reading’s Fall 2003 OSS Market Perception Study is that fragmentation is now the defining characteristic of the OSS market. In an invitation-only survey, 433 service provider and enterprise employees offered their perceptions of 160 different vendors in 12 OSS product categories. As the numbers from the survey were being crunched, it became apparent that most of those 160 OSS vendors have much work to do in building mindshare with prospective customers.

That work undoubtedly is worth doing. The OSS may be the most essential element in any service provider business – even pure resellers need robust back-office systems – and billions of dollars in telecom industry spending are at stake.

The brand awareness challenge isn’t limited to small-fry startups. Take the survey results from the Revenue Assurance and Fraud Management OSS category. That market sector includes some of the biggest names in the business: Agilent Technologies Inc. (NYSE: A), Alcatel SA (NYSE: ALA; Paris: CGEP:PA), LM Ericsson (Nasdaq: ERICY), Hewlett-Packard Co. (NYSE: HPQ), IBM Corp. (NYSE: IBM), and Lucent Technologies Inc. (NYSE: LU). Not a single one of these vendors was identified as a revenue assurance/fraud management OSS provider by even 50 percent of the respondents to this survey category.

A couple of points to keep in mind here. First, only those survey respondents who said they were familiar with vendors in the Revenue Assurance and Fraud Management product category answered questions about this market sector. That’s the way it is for ALL product categories in Heavy Reading market perception surveys: Only those survey takers with knowledge of a market sector are asked for their opinions on that sector.

Second, our survey form lists all companies that we know to offer products in a given category. For Revenue Assurance and Fraud Management, we listed a total of 34 companies. In other words, the survey doesn’t rely on respondents’ ability to recall vendor names from memory. All those names are listed.

The OSS brand awareness issue extends to more established segments as well. Retail Billing Systems are an old OSS standby. Yet of the 25 vendors we identified in that category, only one – ADC Telecommunications Inc. (Nasdaq: ADCT) – was identified by more than half of the survey respondents.

There are some obvious reasons for the lack of brand awareness in the OSS realm. Market fragmentation is at the top of the list. In many product categories, two dozen or more vendors are vying for attention.

Second, carriers typically change OSSs about as often as Cuba changes Presidentes. For vendors, being widely known in the field isn’t nearly as important as landing a few major accounts, because usually those customer wins mean a lucrative deal for years to come.

Third, the OSS market is populated by specialist companies that have not necessarily made brand awareness a priority. Companies like Amdocs Ltd. (NYSE: DOX), Convergys Corp. (NYSE: CVG), MetaSolv Software Inc. (Nasdaq: MSLV), and Micromuse Inc. (Nasdaq: MUSE) have been successfully peddling their OSS wares for years without calling much attention to themselves.

The problem that these companies now face is that the telecom OSS business is changing. After decades of slogging along with creaking legacy OSS applications, many incumbent carriers are now getting serious about upgrading their back offices with new technologies. The transition to convergent networks is adding to the impetus to finally replace OSSs that were designed for a circuit-switched world.

That’s where the big money lies in this market. Old-line OSS vendors understand this and are modernizing their product lines to fit the new market realities. But better products are only part of the battle – image and reputation will be more important as market stakes rise.

Some of the new OSS competitors are proving to be very successful at building mindshare. In Revenue Assurance and Fraud Management, Azure Solutions was recognized by 25.9% of survey respondents, putting it within striking range of the much bigger names in the field. What’s more, Azure beat all comers in that category for performance and service and support market leadership – an amazing result considering the august stature of Azure’s competition.

As the OSS market changes, vendors will find that they will have to change their ways of doing business as well. Dark shadows and wizards’ caps are out. It’s time to shine more light on the company logo.

— Dennis Mendyk, Editor at Large, Heavy Reading

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