Quiet erosion of CSP margins

“Enterprises able to successfully innovate at a breakthrough level are far more likely to dominate and prosper in the new markets they create”
From a recent survey conducted by Accenture

In the survey discussed above 93% of executive respondents indicated their long-term success relied on innovation. However only one-third felt their organisation were well placed to innovate.

This blog has discussed previously what a threat the OTT providers were to traditional CSPs. I am also increasingly wondering whether OSSaaS (OSS as a Service) Providers are also quietly stealing a march on the CSPs.

In the OSS space, the really large CSPs often find it very difficult to make changes due to the complexity of their suite of products and related integrations. This allows OSSaaS providers to offer innovations to the CSPs under an aircraft carrier model, which they can then roll out to their customers more quickly.

This is exciting for the CSPs because it overcomes some of their problems, but does this increasingly weaken their own position with every new cloud service partnership seeing more revenues handed over to their partners? Similarly, does each new innovation from the partner see the potential erosion of profit margins away from a CSP that isn’t innovating itself?