Where to from here for OSS growth?

Entrepreneurs and their small enterprises are responsible for almost all the economic growth in the United States.”
Ronald Reagan
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Speaking with many of the large OSS vendors, it seems that the tier-one Telco and Utility market is still their prime sales and marketing focus, not to mention their product development focus.

Interestingly, I wonder whether this is the ideal market to be targeting, for the following reasons:

  1. Tier ones already have significant suites of OSS so vendors will tend to fight for only sub-sets of the customer’s total OSS when the opportunity arises
  2. Having large suites of OSS tools means that integration is more of a challenge
  3. The same is true for data and processes
  4. Most other vendors are also targeting this market, so they are almost all either looking to beat you to signing a new contract or scheming to usurp you from your existing contract
  5. Tier-one revenue streams are diminishing, as is their ability to fund mega-OSS-projects (refer to “Eroding profitability“)
  6. Tier-one carriers are in a war with OTT providers, so the carriers are looking to their OSS to make them nimble enough to compete. This leads to significant expectations that are difficult to live up to on large OSS projects due to the integration, data, process and people constraints listed above
  7. Tier-one operators tend to have a wealth of experience working on OSS, so they are more sophisticated in their dealings. This is a double-edged sword. They can definitely be more helpful when assisting OSS integrations (eg data migration, data mapping, data collection, process mapping, etc) but that knowledge can also become pedantic and slow a project down (eg requirement capture, specifying / approving contracts, document approvals, etc)

Naturally each carrier and vendor has different strategic advantages and capabilities within their segments of the market so I’m acknowledging a very generalist view above.

There is another segment of the OSS market that is barely serviced by traditional OSS providers because the price points are too high. I spoke about it in an earlier post entitled “Scarce Resources.”

As more small to medium to large enterprises become e-businesses, a correspondingly greater number have a heavy dependence on their IT and networks for revenue. This implies that they also have a much greater incentive to monitor and manage their IT and networks. Combine this with technology trends in virtualisation of IT and networks leading to greater proliferation and potential for change and you have a much bigger market opening up for OSS toolsets.

The problem for most traditional OSS providers is they don’t have the pricing models or business models to support the smaller end of town. In many cases, these customers choose open-source or enterprise tools that don’t necessarily provide the level of support and/or functionality that they are seeking.

It’s definitely the long-tail model of OSS sales, but I can envisage a greater amount of innovation and growth from this segment of the OSS market.

I also envisage the following as key requirements for this type of customer:

  • A single vendor / product for the whole of the organisation’s estate (ie alarms, performance, configuration, inventory, etc) rather than having to integrate a suite of products
  • Ruthlessly simpler, cut-down functionality rather than all the bells and whistles. Afterall, these types of networks are probably run from customer spreadsheets currently, so any consolidated OSS toolset is an improvement
  • Programmatic interfaces to provide the flexibility for customers to adapt their OSS to their custom needs if they can justify their own set of cost benefits
  • Easy access to training programs
  • Easy access to documentation
  • User communities / forums to self-support
  • Price-points that start very low and scale significantly
  • Easy access to support services
  • Possibly based on cloud infrastructure so that the organisations don’t have to own and support their own infrastructure
  • Market segment diversification means support for a larger number of industries and languages (refer also to “The OSS world moves Eastwards“)
  • The networks under management are more likely to be IT in nature (ie Ethernet, virtualisation, VoIP, etc) as opposed to traditional Telco technologies (ie SDH, TDM, etc)
  • Unlike the carriers that have assets spread across large geographies, these customers are likely to have a smaller number of locations, but may need three-dimensional spatial representation of their assets (ie multiple levels within a building or row-racks within a data centre space)

Oh. Perhaps a couple of interesting caveats too though. I’m not saying that all tier-one OSS investments will dry up. I’m just not expecting as significant growth as from blue-ocean strategies. The following are just two examples of where major OSS spend will be necessary:

  1. We are reaching a Massive Inflection Point that I believe will soon turn many existing OSS into legacy / obsolete technologies. If so, the carriers will need to invest heavily to install next-generation OSS. Even if not, some of these big network changes will bring about the need to invest in OSS upgrades
  2. Services and customer-service will become differentiators amongst telcos, but being more nimble in these areas will also help to combat the OTT threat, so big OSS investments are likely to occur here from carriers.
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