Does your organisation have the culture to handle new OSS models?

We’ve recently talked about the two service provider business model extremes – OTT / DSP (Over the Top or DSP) versus REIT / TaaU (Telco as a Utility) are affecting OSS.

The fast-twitch OSS that services the OTT / DSP model is bringing about some fascinating changes in the way service providers procure “assets.” They’re no longer buying equipment (or software) outright, but buying as a managed service. This sees the vendor taking most of the capital risk and sharing in the rewards of the product offering whilst the service provider reduces risk and CAPEX outlay but still gets a return from the product. The more financially successful the product, the more the vendor stands to make.

I first saw this model with Unified Communications services being offered through the CSPs back in the 2000’s and was amazed at the audacity. It was effectively the selling of ice to the eskimos (selling carriers services to the carriers) but a very bold and clever approach that was successful for many reasons.

The software-defined era we’re currently embarking on increases the likelihood of third-party, performance-based, sell-through offerings on networks and network management. However, we’re already starting to see that this is causing some cultural friction occurring. Service Provider operations groups have traditionally thought of engineering their own solutions and allocating CAPEX for their implementation. This new model sees the design largely outsourced to vendors and an OPEX-based payment structure.

I mention the OPEX structure because operational teams typically get allocated a budget, but if a product becomes wildly successful then the pay-per-use pricing models mean the carrier is making lots of money, but the vendor is also expecting their share. Unfortunately the fixed budget thinking of carriers doesn’t accommodate the vendors easily. I’m sure this will work itself out as carriers evolve with these new models, but it can be a challenge in the short-term.

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