Stop looking for exciting new features for your OSS

The iPhone disrupted the handset business, but has not disrupted the cellular network operators at all, though many people were convinced that it would. For all that’s changed, the same companies still have the same business model and the same customers that they did in 2006. Online flight booking doesn’t disrupt airlines much, but it was hugely disruptive to travel agents. Online booking (for the sake of argument) was sustaining innovation for airlines and disruptive innovation for travel agents.
Meanwhile, the people who are first to bring the disruption to market may not be the people who end up benefiting from it, and indeed the people who win from the disruption may actually be doing something different – they may be in a different part of the value chain. Apple pioneered PCs but lost the PC market, and the big winners were not even other PC companies. Rather, most of the profits went to Microsoft and Intel, which both operated at different layers of the stack. PCs themselves became a low-margin commodity with fierce competition, but PC CPUs and operating systems (and productivity software) turned out to have very strong winner-takes-all effects
.”
Ben Evans
on his blog about Tesla.

As usual, Ben makes some thought-provoking points. The ones above have coaxed me into thinking about OSS from a slightly perspective.

I’d tended to look at OSS as a product to be consumed by network operators (and further downstream by the customers of those network operators). I figured that if our OSS delivered benefit to the downstream customers, the network operators would thrive and would therefore be prepared to invest more into OSS projects. In a way, it’s a bit like a sell-through model.

But the ideas above give some alternatives for OSS providers to reduce dependence on network operator budgets.

Traditional OSS fit within a value-chain that’s driven by customers that wish to communicate. In the past, the telephone network was perceived as the most valuable part of that value-chain. These days, digitisation and competition has meant that the perceived value of the network has dropped to being a low-margin commodity in most cases. We’re generally not prepared to pay a premium for a network service. The Microsofts and Intels of the communications value-chain is far more diverse. It’s the Googles, Facebooks, Instagrams, YouTubes, etc that are perceived to deliver most value to end customers today.

If I were looking for a disruptive OSS business model, I wouldn’t be looking to add exciting new features within the existing OSS model. In fact, I’d be looking to avoid our current revenue dependence on network operators (ie the commoditising aspects of the communications value-chain). Instead I’d be looking for ways to contribute to the most valuable aspects of the chain (eg apps, content, etc). Or even better, to engineer a more exceptional comms value-chain than we enjoy today, with an entirely new type of OSS.

Chasing the big OSS waves

The diagram below attempts to show how the entire market (whether that’s the supplier-side or the buyer-side) will absorb a given new feature.

The leaders pick up the concept at T0 and then it takes another few years before the laggards implement it.
OSS Buyer Developer Curve

Most of us in the OSS implementation world crave to be at the leading edge of change. The right-side of the curve is definitely the sexier side to be on. I know I do. It’s part of the reason this blog exists – to stay abreast of the exciting new ideas, projects and technologies that are coming through in OSS. Funnily enough, there’s probably even people within most of the laggards who are already excited about a new concept not long after T0, but are just unable to implement it until much later.

Supplier sales-pitches also tend to focus on the right side of the curve. That’s where the buzz is. That’s where the premiums are, the rewards for being first to market. It’s the customers on the right-side of the curve that are most attractive as sales targets for many suppliers.

But I also wonder whether the increasing proliferation of tech options within OSS means there’s also increasing inefficiency for suppliers (and possibly buyers) on the right side of the curve? Do we focus all our development efforts on ONAP or [insert any of millions of other alternative platforms, technologies, ideas, etc] today? What if the mass-market goes down an alternate path to the one you’ve chosen? How long before you identify a divergence from the mass-market trend? What’s the impact of changing direction (or not)? Are you bound to spill some blood by playing on the bleeding edge?

The left side of the graph is arguably more predictable. You can already see where the market is trending. Has the whole concept just been hype or has this new thing really made a difference for customers? Most of the implementation hurdles are likely to have already been resolved. Products have matured. More integrations, reports, etc have been developed. Waters have already been chartered.

I don’t have the numbers to back this up, but I also have a suspicion that there’s less supplier competition for the business of laggard or follower customers. I’ve seen some companies that have thrived on this model. They get a nice unimpeded ride on the back of the wave whilst everyone else is fighting to catch the front-edge of it.

Chasing the left side of the curve might seem counter-intuitive because it clearly represents a falling market. But there’s always the next wave to jump onto, each with similar predictability and reduced competition.

Not only that, but a majority of the the most important OSS use-cases have been around for many years. It’s increasingly difficult to find new functionality that delivers tangible benefits. Whilst other suppliers have jumped off to chase the next big thing, the followers can keep refining their solutions for what matters most.

Let me pose the question this way – Can you think of a single OSS product that is so refined that it can’t do the basics any better than it already does? Nope??

Shifting a problem to the left using OSS

Interesting table below in relation to the customer satisfaction and costs of delivering various styles of customer assurance activities:

Proactive Fix Self-help L1/2/3 Assurance Field Operations
Customer Satisfaction Very High High Medium Low
Expense Low Medium High Very High

The ambition for any organisation is to perform a shift to the left on this table. In other words, to introduce assurance mechanisms that increase the likelihood of an event being captured towards the left of the table (ie before becoming a field operations issue to solve). In theory, every shift left results in greater customer satisfaction and reduced cost to the operator.

Of course it’s a generic table (eg some proactive assurance programs can be higher than a “low” cost classification), but it does tell a story.

Our OSS cover the full scope of this table. Our OSS don’t perform L1/2/3 assurance or Field Ops, but they certainly help to coordinate and manage those activities.

If you were to use this table to classify your operational costs, what does the cost profile look like? Is it heavily weighted to the right side of the table? Does your operational cost profile justify further investment in your OSS to shift some of those costs to the left?

This post from sysaid has some further shift-left concepts as they relate to service management within IT.

If your partners don’t have to talk to you then you win

If your partners don’t have to talk to you then you win.”
Guy Lupo
.

Put another way, the best form of customer service is no customer service (ie your customers and/or partners are so delighted with your automated offerings that they have no reason to contact you). They don’t want to contact you anyway (generally speaking). They just want to consume a perfectly functional and reliable solution.

In the deep, distant past, our comms networks required operators. But then we developed automated dialling / switching. In theory, the network looked after itself and people made billions of calls per year unassisted.

Something happened in the meantime though. Telco operators the world over started receiving lots of calls about their platform and products. You could say that they’re unwanted calls. The telcos even have an acronym called CVR – Call Volume Reduction – that describes their ambitions to reduce the number of customer calls that reach contact centre agents. Tools such as chatbots and IVR have sprung up to reduce the number of calls that an operator fields.

Network as a Service (NaaS), the context within Guy’s comment above, represents the next new tool that will aim to drive CVR (amongst a raft of other benefits). NaaS theoretically allows customers to interact with network operators via impersonal contracts (in the form of APIs). The challenge will be in the reliability – ensuring that nothing falls between the cracks in any of the layers / platforms that combine to form the NaaS.

In the world of NaaS creation, Guy is exactly right – “If your partners [and customers] don’t have to talk to you then you win.” As always, it’s complexity that leads to gaps. The more complex the NaaS stack, the less likely you are to achieve CVR.

New OSS functionality or speed and scale?

We all know that revenue per bit (of data transferred across comms networks) is trending lower. How could we not? It’s posited as one of the reasons for declining profitability of the industry. The challenge for telcos is how to engineer an environment of low revenue per bit but still be cost viable.

I’m sure there are differentiated comms products out there in the global market. However, for the many products that aren’t differentiated, there’s a risk of commoditisation. Customers of our OSS are increasingly moving into a paradigm of commoditisation, which in turn impacts the form our OSS must mould themselves to.

The OSS we deliver can either be the bane or the saviour. They can be a differentiator where otherwise there is none. For example, getting each customer’s order ready for service (RFS) faster than competitors. Or by processing orders at scale, yet at a lower cost-base through efficiencies / repeatability such as streamlined products, processes and automations.

OSS exist to improve efficiency at scale of course, but I wonder whether we lose sight of that sometimes? I’ve noticed that we have a tendency to focus on functionality (ie delivering new features) rather than scale.

This isn’t just the OSS vendors or implementation teams either by the way. It’s often apparent in customer requirements too. If you’ve been lucky enough to be involved with any OSS procurement processes, which side of the continuum was the focus – on introducing a raft of features, or narrowing the field of view down to doing the few really important things at scale and speed?

The OSS co-op business model

A co-operative is a member-owned business structure with at least five members, all of whom have equal voting rights regardless of their level of involvement or investment. All members are expected to help run the cooperative.”
Small Business WA.

The co-op business model has fascinated me since doing some tech projects in the dairy industry in the deep distant past. The dairy co-ops empower collaboration of dairy farmers where the might of the collective outweighs that of each individually. As the collective, they’ve been able to establish massive processing plants, distribution lines, bargaining power, etc. The dairy co-ops are a sell-side collaboration.

By contrast open source projects like ONAP represent an interesting hybrid – part buy-side collaboration (ie the service providers acquiring software to run their organisations) and part sell-side (ie the vendors contributing code to the project alongside the service providers).

I’ve long been intrigued by the potential for a pure sell-side co-operative in OSS.

As we all know, the OSS market is highly fragmented (just look the number of vendors / products on this page), which means inefficiency because of the duplicated effort across vendors. A level of market efficiency comes from mergers and acquisitions. In addition, some comes from vendors forming partnerships to offer more complete solutions to a given customer requirement list.

But the key to a true sell-side OSS co-operative would be in the definition above – “at least five members.” Perhaps it’s an open-source project that brings them together. Perhaps it’s an extended partnership.

As Tom Nolle stated in an article that prompted the writing of today’s post, “On the vendor side, commoditization tends to force consolidation. A vendor who doesn’t have a nice market share has little to hope for but slow decline. A couple such vendors (like Infinera and Coriant, recently) can combine with the hope that the combination will be more survivable than the individual companies were likely to be. Consolidation weeds out industry inefficiencies like parallel costly operations structures, and so makes the remaining players stronger.

Imagine for a moment if instead of having developers spread across 100 alarm management tools, that same developer pool can take a consolidated 5 alarm management products forward? Do you think we’d get better, more innovative, more complete products faster?

Having said that, co-ops have their weaknesses too.

What do you think? Could such a model work? Would it be a disaster?

There is no differentiation left in out-bundling competitors

In 1998 Berkshire Hathaway acquired a reinsurance company called General Re. “The only significant staff change that followed the merger was the elimination of General Re’s investment unit. Some 150 people had been in charge of deciding where to invest the company’s funds; they were replaced with just one individual – Warren Buffett.
Robert G. Hagstrom
in, “The Warren Buffett Way.”

Buffett was able to replace 150 people, and significantly outperform them, because they were conducting (relatively) small value, high volume transactions and he did the exact opposite.

Compare this with Gemini Waghmare’s thoughts on BSS, “It used to be that operators differentiated by pricing. Complex bundles, friends and family plans, rollover minutes and megabytes were used as ways to win over consumers. This drove significant investment into charging platforms and product catalogs. The internet economy runs on one-click purchases and a recurring flat rate. Roaming and overages are going away and transactional VOD (video on-demand) makes way for subscription VOD.
It’s not uncommon for operators to have 10,000 price plans while Netflix has three. Facebook and Google make billions of dollars without charging a cent.
Operators would do well to deprecate the value of their charging systems and invest instead in cloud and flat-rate billing with added focus on collecting, normalizing and monetizing user data. By simplifying subscription models with lightweight billing platforms, the scale and cost of BSS will drop dramatically. After all, there is no differentiation left in out-bundling competitors
,” quoted here on Inform. There are some brilliant insights in this link, so I recommend you taking a closer look BTW.

10,000+ pricing plans definitely sounds like the equivalent to General Re before Buffett arrived. Having only 3 pricing plans would be more like the Buffett approach, change the dynamic of BSS tools and the size of the teams that use them! Having only 3 pricing plans would certainly change the dynamic for OSS too. The number of variants we’d be asked to handle would diminish, making it much easier to build and operate our OSS. Due to all the down-stream inefficiencies, you could actually argue that there is only negative-differentiation left in out-bundling competitors.

As an aside… Interesting comment that, “Facebook and Google make billions of dollars without charging a cent.” I’d beg to differ. Whilst consumers of the service aren’t billed, advertisers certainly are, which I assume still needs a billing engine… one that probably has quite a bit of algorithmic complexity.

Are OSS business tools or technical tools?

I’d like to get your opinion on this question – are OSS business tools or technical tools?

We can say that BSS are as the name implies – business support systems.
We can say that NMS / EMS / NEMS are network management tools – technical tools.

The OSS layer fits between those two layers . It’s where the business and technology worlds combine (collide??).
BSS_OSS_NMS_EMS_NE_abstract_connect

If we use the word Operations / Operational to represent the “O” in OSS, it might imply that they exist to help operate technology. Many people in the industry undoubtedly see OSS as technical, operational tools. If I look back to when I first started on OSS, I probably had this same perception – I primarily faced the OSS / NMS interface in the early days.

But change the “O” to operationalisation and it changes the perspective slightly. It encourages you to see that the technology / network is the means via which business models can be implemented. It’s our OSS that allow operationalisation to happen.

So, let me re-ask the question – are OSS business tools or technical tools?

They’re both right? And therefore as OSS operators / developers / implementers, we need to expand our vision of what OSS do and who they service… which helps us get to Simon Sinek’s Why for OSS.

OSS of the past probably tended to be the point of collision and friction between business and tech groups within an organisation. Some modern OSS architectures give me the impression of being meet-in-the-middle tools, which will hopefully bring more collaboration between fiefdoms. Time will tell.

A rarely-used twist on cost-out OSS business cases

How many OSS business cases have you seen that are built around cost reduction? Most of them??

Now let me ask the same question, but with one extra word included and see whether it completely inverts your answer. How many OSS business cases have you seen that are built on capital cost reduction? None of them?? Almost every “cost-out” business case is built on operational cost reduction (eg head-count reduction) – OPEX, not CAPEX – right?

So, you may ask, what does a CAPEX-reduction business case get built around? The benefits tend to be a little more obscure, but let’s see if they might work for you.

  1. The first is probably also the most obvious – speed and cost of deployment. Not of the OSS itself, but all of the projects and micro-projects that the OSS helps to manage. If your OSS can systematically reduce deployment time and/or cost, then you get significant cost out
  2. Asset utilisation – if you can find better ways to spread the load across your assets, then there’s less to spend on asset augmentation
  3. Asset identification – you might be surprised at how many assets go missing and not necessarily through pilfering. I advised on a project where the payback period on a complete OSS was only a couple of months because the customer found a few very expensive pieces of equipment that were purchased, tested, physically connected (and having maintenance paid on) but never had services activated through them. The customer was just about to order a few more of the same devices to augment the network, but didn’t need to (a slightly different example of #2 above)
  4. Cost justification of assets – to use historical and projected information to optimise new build (ie equipment purchase, deployment time, etc)
  5. Life-cycle optimisation – better management of spares and equipment / network lifespans
  6. Leakage identification – another slightly different twist on #2, whereby leakage reduction allows delays in CAPEX allocation

Now, in the unlikely event that this has opened up a new line of thinking for you, what other examples of CAPEX-out measures can you think of in your OSS / network?

Shooting the OSS messenger

NPS, or Net Promoter Score, has become commonly used in the telecoms industry in recent years. In effect, it is a metric that measures friction in the business. If NPS is high, the business runs more smoothly. Customers are happy with the service and want to buy more of it. They’re happy with the service so they don’t need to contact the business. If NPS is low, it’s harder to make sales and there’s the additional cost of time dealing with customer complaints, etc (until the customer goes away of course).

NPS can be easy to measure via survey, but a little more challenging as a near-real-time metric. What if we used customer contacts (via all channels such as phone, IVR, email, website, live-chat, etc) as a measure of friction? But more importantly, how does any of this relate to OSS / BSS? We’ll get to that shortly (I hope).

BSS (billing, customer relationship management, etc) and OSS (service health, network performance, etc) tend to be the final touchpoints of a workflow before reaching a customer. When the millions of workflows through a carrier are completing without customer contact, then friction is low. When there are problems, calls go up and friction / inefficiency is also going up. When there are problems, the people (or systems) dealing with the calls (eg contact centre operators) tend to start with OSS / BSS tools and then work their way back up the funnel to identify the cause of friction and attempt to resolve it.

The problem is that the OSS / BSS tools are often seen as the culprit because that’s where the issue first becomes apparent. It’s easier to log an issue against the OSS than to keep tracking back to the real source of the problem. Many times, it’s a case of shooting the messenger. Not only that, but if we’re not actually identifying the source of the problem then it becomes systemic (ie the poor customer experience perpetuates).

Maybe there’s a case for us to get better at tracking the friction caused further upstream of our OSS / BSS and to give more granular investigative tools to the call takers. Even if we do, our OSS / BSS are still the ones delivering the message.

Market for orchestration to triple from 2018 to 2023… but…

CSPs’ needs in orchestration are evolving in parallel on several dimensions. These can be considered hierarchically. At the highest level is software that has an end-to-end service role, as is the case in the ONAP project. This software generally supports a service life-cycle perspective, containing functions from design and service creation, to provisioning and activation, to operations management, analysis, upgrade and evolution.
Beneath this tier, in a resource-facing sense, is software that simplifies deployment and operation of virtual system infrastructures in cloud-native applications, NFV, vco/CORD and MEC. This carries the overall tag of MANO and incorporates the domains of NFV (with NFVO, for deployment and operation of virtualized network functions) and virtualized infrastructure management (or VIM, for automating deployment and operation of virtual system infrastructures). Open source developments are significant at each of these layers of orchestration, and each contains a significant portion of the overall orchestration TAM.
In parallel is the functionality for managing hybrid virtual and physical infrastructures, which is the reality in most CSP environments. This can be thought of as a lateral branch to MANO for virtualized infrastructures in the orchestration stack.
Together these categories make up the TAM [Total Addressable Market] for orchestration solutions with CSPs. This is a high-priority area of focus for CSPs and is one of the highest growth areas of software innovation and development in support of their service delivery needs. We expect the TAM for orchestration software to triple from 2018 through 2023 at a CAGR of 32.5%. This is partially because of the nascent level of the offerings at the current time, as well as the high priority that CSPs and their vendor suppliers are placing on the domain
.”
Succeeding on an Open Field: The Impact of Open Source Technologies on the Communication Service Provider Ecosystem,” an ACG Research Report.

Whilst the title of this blog is just one of the headline numbers in this report by ACG Research, there are a number of other interesting call-outs, so it’s well worth having a closer read of the report.

The research has been funded by the Linux Foundation, so it naturally has a focus on open-source solutions for network operators (CSPs). Here’s another quote from the report relating to open-source, “The main motivations behind the push for open source solutions in CSP operations are not simply focused on cost reduction as a goal. CSPs are thinking strategically and globally. There is a realization that the competitive landscape for communication and information services is changing rapidly, and it includes global, webscale service providers and over-the-top solutions.
Leading CSPs want industry collaboration and cooperation to solve common challenges…
Their top three motivations are:
• Unifying multiple service providers around a common approach
• Avoiding vendor lock-in and dependencies on a single vendor
• Accessing a broader talent pool than your own organization or any one vendor could provide

The first bullet-point is where the CSPs diverge from the likes of AWS and Google. Whilst the CSPs, each with their local geographical reach, seek global unification through standardisation (ie to ensure simpler interconnection), AWS and Google appear to be seeking global reach and global domination (making unification efforts irrelevant for them).

Just curious though. What if global domination does come to pass in the next few years? Will there be a three-fold increase in the orchestration market or complete decimation? Check out this earlier post that describes an OSS doomsday scenario.

Global CSPs have significant revenue streams that won’t disappear by 2023 and will be certain to put up a fight against becoming obsolescent under that doomsday scenario. It seems that open source and orchestration are key weapons in this global battle, so we’re bound to see some big investments in this space.

3 categories of OSS investment justification

Insurer IAG has modelled the financial cost that a data breach or ransomware attack would have on its business, in part to understand how much proposed infosec investments might offset its losses.
Head of cybersecurity and governance Ian Cameron told IBM Think 2018 in Sydney that the “value-at-risk modelling” project called upon the company’s actuarial expertise to put numbers on different types and levels of security threats.
“Because we’re an insurance company, we can use actuarial methods to price or model what the costs of a loss event would be,” Cameron said.
“If we have a major data breach or a major ransomware attack, we’ve done some really great work in the past 12 months to model the net cost of losses to our organisation in terms of the loss of productivity, the cost of advertising to address the concerns of our customers, the legal costs, and the costs of regulatory oversight.
“We’ve been able to work out the distribution of loss from a small event to a very big event
.”
Ry Crozier
on IT News.

There are really only three main categories of benefit that an OSS can be built around:

  • Cost reduction
  • Revenue generation / increase
  • Brand value (ie insurance of the brand, via protection of customer perception of the brand)

The last on the list is rarely used (in my experience) to justify OSS/BSS investment. The IAG experience of costing out infosec risk to operations and brand is an interesting one. It’s also one that has some strong parallels for the OSS/BSS of network operators.

Many people in the telecoms industry treat OSS/BSS as an afterthought and/or an expensive cost centre. Those people fail to recognise that the OSS/BSS are the operationalisation engines that allow customers to use the network assets.

Just as IAG was able to do through actuarial analysis, a telco’s OSS/BSS team could “work out the distribution of loss from a small event to (be) a very big event” (for the telco’s brand value). Consider the loss of repute during sustained network outages. Consider the impact of negative word-of-mouth from billing mistakes. Consider how revenue leakage analysis and predictive network health management might offset losses.

Can the IAG approach work for justifying your investment in OSS/BSS?

Do you use any other major categories for justifying OSS/BSS spend?

An OSS doomsday scenario

If I start talking about doomsday scenarios where the global OSS job industry is decimated, most people will immediately jump to the conclusion that I’m predicting an artificial intelligence (AI) takeover. AI could have a role to play, but is not a key facet of the scenario I’m most worried about.
OSS doomsday scenario

You’d think that OSS would be quite a niche industry, but there must be thousands of OSS practitioners in my home town of Melbourne alone. That’s partly due to large projects currently being run in Australia by major telcos such as nbn, Telstra, SingTel-Optus and Vodafone, not to mention all the smaller operators. Some of these projects are likely to scale back in coming months / years, meaning less seats in a game of OSS musical chairs. But this isn’t the doomsday scenario I’m hinting at in the title either. There will still be many roles at the telcos and the vendors / integrators that support them.

There are hundreds of OSS vendors in the market now, with no single dominant player. It’s a really fragmented market that would appear to be ripe for M&A (mergers and acquisitions). Ripe for consolidation, but massive consolidation is still not the doomsday scenario because there would still be many OSS roles in that situation.

The doomsday scenario I’m talking about is one where only one OSS gains domination globally. But how?

Most traditional telcos have a local geographic footprint with partners/subsidiaries in other parts of the world, but are constrained by the costs and regulations of a wired or cellular footprint to be able to reach all corners of the globe. All that uniqueness currently leads to the diversity of OSS offerings we see today. The doomsday scenario arises if one single network operator usurps all the traditional telcos and their legacy network / OSS / BSS stacks in one technological fell swoop.

How could a disruption of that magnitude happen? I’m not going to predict, but a satellite constellation such as the one proposed by Starlink has some of the hallmarks of such a scenario. By using low-earth orbit (LEO) satellites (ie lower latency than geostationary satellite solutions), point-to-point laser interconnects between them and peering / caching of data in the sky, it could fundamentally change the world of communications and OSS.

It has global reach, no need for carrier interconnect (hence no complex contract negotiations or OSS/BSS integration for that matter), no complicated lead-in negotiations or reinstatements, no long-haul terrestrial or submarine cable systems. None of the traditional factors that cost so much time and money to get customers connected and keep them connected (only the complication of getting and keeping the constellation of birds in the sky – but we’ll put that to the side for now). It would be hard for traditional telcos to compete.

I’m not suggesting that Starlink can or will be THE ubiquitous global communications network. What if Google, AWS or Microsoft added this sort of capability to their strengths in hosting / data? Such a model introduces a new, consistent network stack without the telcos’ tech debt burdens discussed here. The streamlined network model means the variant tree is millions of times simpler. And if the variant tree is that much simpler, so is the operations model and so is the OSS… with one distinct contradiction. It would need to scale for billions of customers rather than millions and trillions of events.

You might be wondering about all the enterprise OSS. Won’t they survive? Probably not. Comms networks are generally just an important means-to-an-end for enterprises. If the one global network provider were to service every organisation with local or global WANs, as well as all the hosting they would need, and hosted zero-touch network operations like Google is already pre-empting, would organisation have a need to build or own an on-premises OSS?

One ubiquitous global network, with a single pared back but hyperscaled OSS, most likely purpose-built with self-healing and/or AI as core constructs (not afterthoughts / retrofits like for existing OSS). How many OSS roles would survive that doomsday scenario?

Do you have an alternative OSS doomsday scenario that you’d like to share?

Hat tip again to Jay Fenton for pointing out what Starlink has been up to.

The OSS farm equipment analogy

OSS End of Financial Year
It’s an interesting season as we come up to the EOFY (end of financial year – on 30 June). Budget cycles are coming to an end. At organisations that don’t carry un-spent budgets into the next financial year, the looming EOFY triggers a use-it-or-lose-it mindset.

In some cases, organisations are almost forced to allocate funds on OSS investments even if they haven’t always had the time to identify requirements and / or model detailed return projections. That’s normally anathema to me because an OSS‘ reputation is determined by the demonstrable value it creates for years to come. However, I can completely understand a client’s short-term objectives. The challenge we face is to minimise any risk of short-term spend conflicting with long-term objectives.

I take the perspective of allocating funds to build the most generally useful asset (BTW, I like Robert Kiyosaki’s simple definition of an asset as, “in reality, an asset is only something that puts money in your pocket,”) In the case of OSS, putting money in one’s pocket needs to consider earnings [or cost reductions] that exceed outgoings such as maintenance, licensing, operations, etc as well as cost of capital. Not a trivial task!

So this is where the farm equipment analogy comes in.

If we haven’t had the chance to conduct demand estimation (eg does the telco’s market want the equivalent of wheat, rice, stone fruit, etc) or product mix modelling (ie which mix of those products will bear optimal returns) then it becomes hard to predict what type of machinery is best fit for our future crops. If we haven’t confirmed that we’ll focus efforts on wheat, then it could be a gamble to invest big in a combine harvester (yet). We probably also don’t want to invest capital and ongoing maintenance on a fruit tree shaker if our trees won’t begin bearing fruit for another few years.

Therefore, a safer investment recommendation would be on a general-purpose machine that is most likely to be useful for any type of crop (eg a tractor).

In OSS terminology, if you’re not sure if your product mix will provision 100 customers a day or 100,000 then it could be a little risky to invest in an off-the-shelf orchestration / provisioning engine. Still potentially risky, but less so, would be to invest in a resource and service inventory solution (if you have a lot of network assets), alarm management tools (if you process a lot of alarms), service order entry, workforce management, etc.

Having said that, a lot of operators already have a strong gut-feel for where they intend to get returns on their investment. They may not have done the numbers extensively, but they know their market roadmap. If wheat is your specialty, go ahead and get the combine harvester.

I’d love to get your take on this analogy. How do you invest capital in your OSS without being sure of the projections (given that we’re never sure on projections becoming reality)?

1.045 Trillion reasons to re-consider your OSS strategy

The global Internet of Things (IoT) market will be worth $1.1 trillion in revenue by 2025 as market value shifts from connectivity to platforms, applications and services. By that point, there will be more than 25 billion IoT connections (cellular and non-cellular), driven largely by growth in the industrial IoT market. The Asia Pacific region is forecast to become the largest global IoT region in terms of both connections and revenue.
Although connectivity revenue will grow over the period, it will only account for 5 per cent of the total IoT revenue opportunity by 2025, underscoring the need for operators to expand their capabilities beyond connectivity in order to capture a greater share of market value
.”
GSMA Intelligence
, referred to here.

Let’s look at these projected numbers. The GSMA Intelligence report forecasts only 5 cents in every dollar of IoT spend (of a $1.1T market opportunity) will be allocated to connectivity. That leaves $1.045T on the table if network operators just focus on connectivity.

Traditional OSS tend to focus on managing connectivity – less so on managing marketplaces, customer-facing platforms and applications. Does that headline number – $1.045T – provide you with an incentive to re-consider what your OSS manages and future use cases?

IoT OSS market opportunity

IoT requires slightly different OSS thinking:

  • Rather than integrating to a (relatively) small number of device types, IoT will have an almost infinite number of sensor types from a huge range of suppliers.
  • Rather than managing devices individually, their sheer volume means that devices will need to be increasingly managed in cohorts via policy controls.
  • Rather than a fairly narrow set of network-comms based services, functionality explodes into diverse areas like metering, vehicle fleets, health-care, manufacturing, asset controls, etc, etc so IoT controllers will need to be developed by a much longer-tail of suppliers (meaning open development platforms and/or scalable certification processes to integrate into the IoT controller platforms).
  • There are undoubtedly many, many additional differences.

Caveat: I haven’t evaluated the claims / numbers in the GSMA Intelligence report. This blog is just to prompt a thought-experiment around hypothetical projections.

How economies of unscale change the OSS landscape

For more than a century, economies of scale made the corporation an ideal engine of business. But now, a flurry of important new technologies, accelerated by artificial intelligence (AI), is turning economies of scale inside out. Business in the century ahead will be driven by economies of unscale, in which the traditional competitive advantages of size are turned on their head.
Economies of unscale are enabled by two complementary market forces: the emergence of platforms and technologies that can be rented as needed. These developments have eroded the powerful inverse relationship between fixed costs and output that defined economies of scale. Now, small, unscaled companies can pursue niche markets and successfully challenge large companies that are weighed down by decades of investment in scale — in mass production, distribution, and marketing
.”
Hemant Taneja with Kevin Maney
in their Sloan Review article, “The End of Scale.”

There are two pathways I can envisage OSS playing a part in the economies of unscale indicated in the Sloan Review quote above.

The first is the changing way of working towards smaller, more nimble organisations, which includes increasing freelancing. There are already many modularised activities managed within an OSS, such as field work, designs, third-party service bundling, where unscale is potentially an advantage. OSS natively manages all these modules with existing tools, whether that’s ticketing, orchestration, provisioning, design, billing, contract management, etc.

Add smart contract management and John Reilly’s value fabric will undoubtedly increase in prevalence. John states that a value fabric is a mesh of interwoven, cooperating organizations and individuals, called parties, who directly or indirectly deliver value to customers. It gives the large, traditional network operators the chance to be more creative in their use of third parties when they look beyond their “Not Invented Here” syndrome of the past. It also provides the opportunity to develop innovative supply and procurement chains (meshes) that can generate strategic competitive advantage.

The second comes with an increasing openness to using third-party platforms and open-source OSS tools within operator environments. The OSS market is already highly fragmented, from multi-billion dollar companies (by market capitalisation) through to niche, even hobby, projects. However, there tended to be barriers to entry for the small or hobbyist OSS provider – they either couldn’t scale their infrastructure or they didn’t hold the credibility mandated by risk averse network operators.

As-a-Service platforms have changed the scale dynamic because they now allow OSS developers to rent infrastructure on a pay-as-you-eat model. In other words, the more their customers consume, the more infrastructure an OSS supplier can afford to rent from platforms such as AWS. More importantly, this become a possibility because operators are now increasingly open to renting third-party services on shared (but compartmentalised / virtualised) infrastructure. BTW. When I say “infrastructure” here, I’m not just talking about compute / network / storage but also virtualisation, containerisation, databases, AI, etc, etc.

Similarly, the credibility barrier-to-entry is being pulled down like the Berlin Wall as operators are increasingly investing in open-source projects. There are large open-source OSS projects / platforms being driven by the carriers themselves (eg ONAP, OpenStack, OPNFV, etc) that are accommodative of smaller plug-in modules. Unlike the proprietary, monolithic OSS/BSS stacks of the past, these platforms are designed with collaboration and integration being front-of-mind.

However, there’s an element of “potential” in these economies of unscale. Andreas Hegers likens open-source to the wild west, as many settlers seek to claim their patch of real-estate in an uncharted map. Andreas states further, “In theory, vendor interoperability from open source should be convenient — even harmonious — with innovations being shared like recipes. Unfortunately for many, the system has not lived up to this reality.”

Where do you sit on the potential of economies of unscale and open-source OSS?

A new phenomenon for IT

In the past, business-oriented groups have had ideas about what they want to do and then they come to us… Now, they want to know what technology can bring to the table and then they’ll work on the business plan.
So there’s a big gap here. It’s a phenomenon that’s been happening in the last year and it’s an uncomfortable place for IT. We’re not used to having to lead in that way. We have been more in the order-taker business.

Veenod Kurup
, Liberty Global, Group CIO.

That’s a really thought-provoking insight from Veenod isn’t it? Technology driving the business rather than business driving the technology. Technology as the business advantage.

I’ll be honest here – I never thought I’d see that day although I… guess… as e-business increases, the dependency on tech increases in lockstep. I’m passionate about tech, but also of the opinion that the tech is only a means to an end.

So if what Veenod says is reflective of a macro-trend across all industry then he’s right in saying that we’re going to have some very uncomfortable situations for some tech experts. Many will have to widen their field of view from a tech-only vision to a business vision.

Maybe instead the business-oriented groups could just come to the OSS / BSS department and speak with our valuable tripods. After all, we own and run the information and systems where business (BSS) meets technology (OSS) right? Or as previously reiterated on this blog, we have the opportunity to take the initiative and demonstrate the business value within our OSS / BSS.

PS. hat-tip to Dawn Bushaus for unearthing the quote from Veenod in her article on Inform.

Reducing the lumps with OSS services

As promised in yesterday’s post about lumpy revenues for OSS product companies, today we’ll discuss OSS professional services revenues and the contrasting mindset compared with products.

Professional services revenues are a great way of smoothing out the lumpy revenue streams of traditional OSS product companies. There’s just one problem though. Of all the vendors I’ve worked with, I’ve found that they always have a predilection – they either have a product mindset or a services mindset and struggle to do both well because the mindsets are quite different.

Not only that but we can break professional services into two categories:

  1. Product-related services – the installation and commissioning of products; and
  2. Consultancy-based services – the value-add services that drive business value from the OSS / BSS

Product companies provide product-related services, naturally. I can’t help but think that if we as an industry provided more of the consultancy-based services, we’d have more justification for greater spend on OSS / BSS (and smoother revenue streams in the process).

Having said that, PAOSS specialises in consultancy-based services (as well as install / commission / delivery services), so we’re always happy to help organisations that need assistance in this space!!

It’s all a bit lumpy

Being an OSS product supplier to telecom operators is a tough business. There is a constant stream of outgoings on developer costs, cost of sale, general overheads, etc. Unfortunately revenue streams are rarely so smooth. In fact, they tend to be decidedly lumpy – unpredictable (in terms of timelines when forecasting inflows years in advance) but large spikes of income stemming from customer implementations.

Not only that, but the risks are high due to the complexity and unknowns of OSS implementation projects as well as the lack of repeatability that was discussed in yesterday’s post.

Enduringly valuable businesses achieve their status through predictable, diversified, recurring (and preferably growing) revenue streams, so they need to be objectives of our OSS business models.

Annual maintenance fees (usually in the order of 20-22% of up-front list prices) is the most common recurring revenue model used by OSS product suppliers. Transaction-based pricing is another common model.

Cloud subscription (consumption) based models are also becoming more common, although there are always challenges around convincing carriers of the security and sovereignty of such important tools and data being hosted off-site.

I’m fascinated with the platform-plays, like Salesforce, which is a mushrooming form of the subscription model because there’s an ecosystem (or marketplace) of sellers contributing to transaction volumes. OSS and BSS are the perfect platform play but I haven’t seen any built around this style of revenue model yet. [Please let me know if I’ve missed any].

It has also been interesting to observe Cisco’s market success on the back of a perceived revenue shift towards more software and services.

Whenever considering alternate revenue models, I refer back to this great image from Ross Dawson:
Revenue Models
Do any apply to your OSS? Can any apply to your OSS?

Tomorrow we’ll discuss OSS professional services revenues and the contrasting mindset compared with products.

Have I got an OSS deal for you!?!

Tending to be a low-volume, high-customisation, high-uniqueness product, OSS has a significantly different selling proposition than most “box drop” products.

Can you imagine if OSS salespeople used any of these “great deal” propositions (as described by Gary Halbert)?
“I’m going out of business.”
“I just had a fire and I’m having a fire sale.”
“I’m crazy.” (all used car dealers)
“I owe taxes and I’ve got to raise money fast to pay them.”
“I’ve lost my lease and I’ve got to sell this merchandise right away before it gets thrown into the sheet.”
“I’ve got to make space for some new merchandise that is arriving soon so I will sell you what I have on hand real cheap.”

Did the image of an OSS salesperson saying any of those, especially the first, bring a smile to your face?

Anyway, Gary’s article also goes on to say, “…I wrote: “and if you can find a way to use it, you can dramatically increase your sales volume.”
Now, compare that to this: “and if you can find a way to use it, you can make yourself a bushel of money!”
Isn’t that a lot more powerful? You bet! The words “dramatically increase your sales volume” do not even begin to conjure up the visual imagery of “a bushel of money
.””

From what I’ve experienced on the client side of the buying equation, OSS selling propositions seem to be driven by functionality. I call it the functionality arms-race, where vendors compete on functionality rather than efficacy. In a way, it’s the “sales volume” variant mentioned by Gary above.

The other approach that does align more closely with the “bushel of money” variant is the cost-out discussion. It’s the, “if you implement this OSS, you’ll be able to reduce head-count in your operations team,” argument. That’s definitely important for any operator that sees their OSS as a cost-centre. However, it’s a “save a bushel of money” argument rather than the more powerful “make a bushel of money” argument.

In reply to a recent post, James Crawshaw of Light Reading wrote, “OSS/BSS represents around 2-3% of revenue and takes up around 10% of capex.” I initially read this as OSS/BSS contributing 2-3% of revenue (ie the higher the percentage the better). However, James clarified that our IT/OSS/BSS tend to consume 2-3% of revenue (ie the lower the percentage the better).

Can you imagine how these tiny wording/perspective differences could change the credibility of the whole OSS/BSS industry? As soon as our OSS make a bushel of money, then the selling proposition becomes a whole lot stronger.