Closing the OSS Buyer / Seller chasm – Solutions (part 4)

This is the fourth of the “buyer / seller” chasm articles (pt1, pt2, pt3). We’ve already highlighted the issues, the pain points, the sources of friction and more about getting Buyers and Sellers together to build better telcos. But in today’s article we’ll explore some possibilities for how to overcome those challenges by building bridges across the Buyer / Seller chasm.

Love them or loathe them, the poster-children of the modern business model are solutions like Uber and Airbnb. These are platforms that reduce the amount of friction between buyer and seller. Now it’s completely obvious to anyone reading this that getting an OSS buyer and seller solution together is far, far more complex than hiring a room for the night or to get a lift between point A and point B.

However, the point of this whole series is that there’s a massive chasm between buyer and seller that MUST be resolved (or lessened significantly) to allow the whole telco industry to not just survive, but thrive.

There are many different threads in relation to closing this chasm, so we’ll explore the following methods to reduce the size of the chasm:

  1. A trusted SI with a PE/VC mindset, taking on risk and skills
  2. A “Better-than-Gartner” model
  3. Sub-brand company model (volume business vs managed services)
  4. A whole-of-industry match-making service
  5. Affiliate leads / sales programs
  6. Premium telco services (demand outstrips supply)
  7. An exponentially better OSS
  8. Low-code / No-code glue

In doing so, it will bring telcos from their current state to a much more effective future state.

But this is just the list that I’ve been thinking about. I’m sure you’ll have much better ideas to add to the conversation. If so, I’d love to hear all about your additional thoughts in the comments below.

A trusted SI with a PE/VC mindset, taking on risk and skills (SIPE model)

As we’ve discussed in part 2 of the series, a major chasm exists between buyer and seller across many different factors, but the three key ones are:

  • Trust
  • Risk
  • Confidence / Skill-set

This is one of the main reasons why network operators engage System or Solution Integrators (SIs) to help lessen the burden and reduce the gap.

Whereas a typical telco may only undergo massive OSS transformation every few years (or perhaps undergo constant transformation), SIs and OSS vendors are constantly working on these projects around the world. This places the SIs in an important role of bringing buyer and seller together. In theory, it should improve the three chasm-factors:

  • Trust – The buyers are engaging their trusted / preferred SIs to handle the transformation. The SIs are engaged to act on behalf of the buyers and should be acting in the best interests of the buyers
  • Risk – SIs are experienced with performing complex transformation projects, which should reduce the risk for the buyers. It should also simplify the interactions with the sellers because the SIs have worked with the same or similar vendors in the past, giving insights into how the projects should be implemented
  • Confidence / Skill-set – The SIs often have large pools of resources with skills and experiences honed from many past OSS transformations

That all sounds pretty good right? Well yes, that’s true, but there are two significant impediments still.

In a large number of cases, the SIs don’t want to take on any risk. Most prefer to work on a time and materials (T&M) basis, which effectively pushes much of the risk back onto the buyers. The risk of complexity, project delays, etc are all borne by the buyer in terms of additional time-related costs from the SIs if the project deviates from plan. You could even argue that SIs are incentivised to make the implementations take longer, become more complex, become more entangled in red tape, etc. All of these “side-effects” are detrimental for the buyer, but beneficial for any SI that’s on a T&M contract.

The second factor is trust. The SIs are placed in a position of representing the best interests of the buyer. For the most part this is true (in terms of the SI being the facilitator of best outcomes for buyer over seller). However, when you boil it down, the SIs are still operating in the best interests of the SI, especially when considering the T&M contracts mentioned above. It’s generally in the best interests of the SI for a transformation project to go forever, morphing from project to ongoing operations.

SIs will of course argue that many of their contracts are outcome based and they do have “skin in the game.” That’s certainly a good start. I’d encourage more of that.

However, I’d also like to propose a new approach to this SI glue. That is a new model that combines SI with PE (SIPE). That is, the SI takes on an appetite for risk like a Private Equity company does. The PE benefits from the risk / reward model, but is incentivised to get the project done as quickly and efficiently as possible, with as optimal outcomes as possible. A SIPE is incentivised to maintain the most highly skilled OSS integration team available to expedite completion and beneficial outcomes, rather than just providing warm bodies that still earn coins under T&M contracts that meander towards completion.

The SIPE model would be rewarded on true outcomes of the transformation, the improved efficiency of the buyer’s operations, not just delivery of a technical solution. This incentivises the SIPE to take true accountability for massive improvements in the to-be solution in addition to the speed of implementation.

 

A better-than-Gartner Model

The Gartner Magic Quadrant for OSS has been a very useful tool for OSS buyers over the years. However, it is only a partially complete proxy to help overcome the buyer / seller chasm.

Many years ago I had a couple of customers who needed help to transform their OSS directed me to, “get me the top-right corner of the Gartner Quadrant.” I found it frustrating for a number of reasons. As great as the solutions are from the companies in the Gartner Quadrant, those sellers just aren’t always a good fit for all buyers (nor the buyers being a good fit for many of those sellers, especially for the smaller buyers).

The question to ask then is why are buyers asking to look at those vendors? It again comes down to reducing the size of the chasm via the same three factors – trust, risk and confidence / skill-set.

  • Risk – Just as there’s a saying that nobody got fired for hiring IBM, there’s a similar perception around the big-name brands in the OSS industry. The fact that an independent third-party has suggested those brands only reinforces the perception of low risk to engage them
  • Trust – With Gartner being a third-party with no particular preference of which vendor wins any given buyer’s RFP process, there’s an element of trust in the Gartner findings
  • Confidence / Skill-set – Those carriers didn’t feel confident that they had adequate skills to properly analyse the broader vendor market, nor evaluate it in such a way to determine true best-fit

But again, there’s a problem with this approach. The Gartner Quadrant is an incomplete proxy for helping buyers across the trust / risk / skill-set chasm to find the best-fit sellers. It’s one step towards crossing the chasm, but certainly not bridging the entire span.

Gartner’s Magic Quadrant is effectively a one-size-fits-all evaluation. It doesn’t consider the many, many nuances that make up a best-fit solution for any given buyer. An identical seller solution might be a perfect fit for one buyer but a horrible fit for another similar buyer.

The MQ doesn’t take into account so many factors, including budget (initial and ongoing), required features, out-of-the-box capabilities, ability to customise, network to integrate with, types of service running over that network, etc, etc, etc.

More importantly, it only considers around 10-20 of the hundreds of vendor solutions that are available for buyers to choose from.

Despite these drawbacks, the success of the Gartner Quadrant and the reason it’s still asked about today is that it does narrow the buyer / seller chasm…. Slightly.

Buyers are clearly looking for mechanisms to help make the right choice more efficiently. We created the Blue Book OSS/BSS Vendor Directory to help reduce the chasm. It provides listings for every OSS/BSS (that we’re aware of, but new ones are constantly being added – there are 600+ listings at the time of writing, but please let us know if there are any we’ve missed). It’s independent in that we don’t charge any fees for any of the vendors to be listed. It considers the capabilities of each vendor against 14 key functional blocks that we refer to as the Simplified TAM. We also offer personalised services to help buyers find their best-fit short-list using a set of filters as well as even more customised advisory services.

We also assist buyers to connect with the sellers that are most interesting and allow buyers to broadcast their RFPs to any vendor that wishes to respond. This is the match-making service we discuss further below.

It’s still far from a perfect solution to bridge the gap between buyer and seller so we’d welcome your suggestions for how our Directory and/or other approaches could help further. There’s clearly a need for a trust / risk / skill-set bridge for buyers. We use our Directory to take you part-way there but there’s still a significant human involvement in the evaluation and decision-making process after the initial filters are applied. How would you suggest that this could be done better?

Do you think it could be possible to significantly streamline this process of connecting buyers with sellers in much the same way that Airbnb and Uber have done?

 

Sub-brand company model (volume business vs managed services)

One of the major contributors to operational inefficiency is complexity, what I refer to as the variant tree. Complexity contributes to the trust / risk / skill-set gap.

It in turn contributes to the F = ma principle. When a telco organisation (and/or OSS stack and/or bureaucracy and/or complexity, product catalogue, etc within a telco) is massive, then it takes an enormous force to gain any form of acceleration. Therefore, there’s an opportunity to work with a far less massive entity to deliver greater efficiency. This is especially true for high-volume, low margin product offerings.

This is where the sub-brand telco model, such as the ones in the table below, could help show a pattern for delivering lower complexity, higher-efficiency offerings and narrow the chasm in doing so.

Parent Brand (Carrier) Sub-Brand/Partner Telco
Sprint (USA) Boost Mobile
Tele2 (Sweden) Comviq
Deutsche Telekom (Germany) Congstar
AT&T (USA) Cricket
T-Mobile US (USA) Metro
KPN (Netherlands) Simyo (also with Orange in Spain)
Telefonica (Spain) Tuenti
Verizon (USA) Visible
Telstra (Australia) Belong
Rogers Communications (Canada) Fido, Chatr
Bell (Canada) Virgin Mobile
Telus (Canada) Koodo
Three (UK) Smarty
Vodafone (UK) Voxi
A1 Telekom Austria (Austria) yesss!
Proximus Group (Belgium) Proximus

 

The sub-brands are primarily used for testing (eg service bundles, channels, segments, pricing strategies, etc), to potentially feed the primary brand. Their OSS/BSS stacks tend to be nimble (to facilitate experimentation) and are mostly unencumbered by legacy offerings / networks. This makes them ideal to build the “unlimited supply” offerings. Why is “unlimited supply” important?

Competitive dynamics and near ubiquity / saturation of telco services mean that we’re probably not likely to move the revenue side of the profitability needle a huge amount (unless a premium telco service appears soon). That leaves the cost-side of the profitability equation to focus on. As always, I look at this through the lens of OSS. Therefore, I’m looking squarely at using OSS tools to drastically improve operational efficiency (as per part 3 of this series).

It’s a supply and demand thing. In the past, telco services were somewhat constrained (ie less supply than demand). But now that there’s massive competition, near ubiquity / saturation of telco services and networks that are being constantly expanded for “unlimited” capacity, we’re now in a phase where supply always exceeds demand (if supply is heading towards unlimited / infinity, we can never drive enough demand)

If supply is infinite, then demand can never outstrip supply. This is true of most telco services, especially for residential and small/medium businesses, where there’s not a large amount of product differentiation available.

This allows the primary brands to focus on offerings where there are constraints, where demand does outstrip supply and premium pricing can be applied. A prime example here is managed services for larger and mid-market companies that want a custom support and offerings. The genuine constraints here are in the human resources required to deliver a personalised solution.

The sub-brands can also act as feeders to the primary brand in this case. It may impact top-line (revenue) KPIs, but at least this approach should enable OPEX reduction to ensure greater profitability. But I’m getting a bit off-track here, sorry.

The key here is that when there is smaller mass and bureaucracy, this should also ensure more nimble buyer / seller partnerships without the encumbrances of large-brand procurement controls (ie monster RFPs). It typically takes far less time for smaller brands (buyers) to form partnerships / alliances with sellers.

 

A whole-of-industry match-making service

We’ve briefly touched on the concept of Airbnb and Uber bringing buyers and sellers together. At this stage there is no real mechanism to do this in the OSS industry.

Buyers are often aware that they need a new solution long before any seller becomes aware of it. Buyers may reach out to the sellers they know and/or start performing their own research on the seller market. They might reach out to their incumbent providers. They might even throw their requirements out to the market via an open RFI.

The problems with this approach include:

  • The Buyers generally only have a sub-set of Sellers that they’re aware of, so they might be oblivious to many of the great solutions and miss out on finding the truly best-fit solution
  • Conversely, if they do consider the full set of Sellers or a large proportion of them, it can be extremely time-consuming to consider all of the options
  • Most Sellers are never aware of the Buyer being on the look-out for a new solution unless they maintain a strong relationship with the Seller on a regular basis (eg have an Account Manager permanently assigned to the Buyer)
  • Account Managers at Sellers need to spend an awfully long time waiting for the whale to surface (ie maintaining the relationship with a Buyer, often for years, waiting until when the Buyer is next ready to invest in an OSS transformation project)
  • The cost of Account Managers being paid whilst waiting for the whale to surface (and/or coaxing the whale to surface) ends up being an overhead that needs to be absorbed into the costs of the Seller, thus pushing up the cost of OSS implementations. It’s important to note that it’s not just the cost of sale of the winning bidder that must be absorbed by the telco industry, but the cost-of-sales of all bidders (even losing ones) that effectively gets amortised across the industry

As you can see, there’s clearly significant inefficiency in the current process. There needs to be a better way (or ways) of overcoming the costs, risks, expenses and inefficiencies of this whole process of getting right-fit Buyers and Sellers together.

This again is part of the thinking behind The Blue Book OSS/BSS Vendor Directory. Our Directory aims to shine a light on the many awesome Sellers and their products. It currently has over 600 listings and is structured so that we can quickly match-make and rule vendors in or out for deeper analysis by Buyers.

However, this approach only goes part-way to solving all the issues mentioned above. There’s an opportunity to streamline the match-making process much further. If you’re a Buyer and need help finding the best-fit Sellers then we’d be delighted to take your call. We’d also love to hear from you if you have other ideas on how to make a better match-making service and close the chasm further.

If you compare the headings with the original list of proposed solutions above, you’ll notice we still haven’t got to the following. We’ll cover the other solutions in the next article in the series:

  • Affiliate leads / sales programs
  • Premium telco services (demand outstrips supply)
  • An exponentially better OSS
  • Low-code / No-code glue

As always, we don’t have all the answers. We’d love to hear from you if you have new or better ideas to share.

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