How can we reduce the size of the OSS buyer-seller chasm? (part 2)

Our previous post highlighted a chasm between buyers and sellers. It has sparked quite a lot of conversation, which is exactly as intended.

In another earlier post about telco reaching its burning exchange moment, we wrote:

In a keynote speech at Mobile World Congress (MWC), Thierry Breton, the European Union’s internal market commissioner opined, “In the coming years, the whole industry will need to undergo a radical shift and revisit its business models. Some could describe it as a Schumpeterian moment. Industry will have to adapt to survive. Or, to put it more positively, adapt to succeed.”

Put simply, “Communications services have never been more important, but telco business models have never been more broken.”

Can you accept that the businesses that sustain your current career might not be around in a decade?

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.

What if we were to set ourselves a target of a 10x reduction in operational costs? Impossible? Maybe. But it certainly can’t be achieved through incremental thinking. It requires entirely new re-framing of the Ops Model. It generally follows that the only way to achieve 10x results in anything is to massively simplify (reducing the chasm) and embrace innovation.

Soooo…. what does that look like? How do we jump the chasm from the left to the right side, from old to new?

To build on the concept of the previous article – the buyers (carriers, ISPs, utilities) are on the left side of screen in their current state. We want to help find a way to a new operational state on the right.  The sellers (OSS vendors) are over on the right side of screen showing off the products that allow the buyers to attain the shiny new cities they so desperately desire.

The buyers (carriers) desperately need better tools.

The sellers (vendors) already have better tools, which they desperately want to sell.

But there’s a catch that prevents buyer and seller partnering efficiently. There’s a multi-faceted chasm between these two states.

Let’s list some of those facets out:

1. Cost – there’s certainly no arguing that the new world will cost a large amount (not helping the cost side of the profitability equation!!)
2. Complexity – there’s certainly no easy way to transform an old city into a new one
3. Risk – there are risks everywhere you look when transforming old to new, across people, process and technology
4. Uncertainty – there are so many unknowns about how to transform from old to new. There’s no single perfect solution. There’s no perfectly predictable colour-by-numbers guide to get to the desired outcome. There are many problems that will pop up and need to be solved along the way. Most people find it hard to make decisions without a clear map of all the steps along the journey (eg in the form of plans, architectures, user journeys, etc). Most find it hard to operate in a state of ambiguity
5. Skills-gap – the current set of skills will be quite different from the new set of skills required to operate in the new world. Developing the new skills can be time-consuming, costly and unpredictable
6. Confidence / Faith – in the ability to undertake and deliver on such a significant project with so many unknowns and the gaps mentioned above
7. Change – there are many sub-facets within this category alone. Organisational change, human-factors (like change avoidance, politics, etc), processes, operations models, etc
8. Trust – in the people and partners involved in the transformation (eg OSS vendors) to operate in your best interests (or even somewhere near your best interests)
9. Time – it’s not like a transformation of this sort will happen in a short period. There are many activities and decisions that need to be performed
10. Innovation – As mentioned above, the vastly improved (10x) improvement in operations actually requires much more than incremental change or incrementally better products. It needs total reframing and totally new approaches, which ties into point 4 – uncertainty / unknowns
11. Fear – The confused or fearful mind says no. There are a lot of factors above that could contribute to confusion or fear right??
12. Please highlight the many others that I’ve probably overlooked

It’s no wonder the gap between buyer and seller or old and new is so hard to cross. There’s friction and pain everywhere we look, so why would we even consider such an ambitious transformation?

Shall I remind you that around half of European telco CEOs don’t believe their organisation will exist in a decade?

Okay, so let’s refine the list above down to a more manageable set. When it comes to the buyer-seller chasm, the key contributors are:

• Risk
• Trust
• Confidence

Risk

Many buyers (ie telcos, utilities) are dividend businesses (as opposed to growth businesses like many of the tech companies). Simple, predictable, reliable returns is what their shareholders and board demands. They’re not designed to invest heavily into a risk/reward strategy. They know they desperately need to transform. But they know they have to do so with as little risk as possible.

I know the solution. Let’s run an RFP where we look to push all costs and risks off to vendors and suppliers. Perfect!

Just one problem. The suppliers desperately want to win the work. But they also feel aggrieved that they’re wearing an unfair share of cost and risk. So they’re immediately thinking about how to shift some of the risk back on the buyers.

From day 1 of the contract (or perhaps even before), we have a distinct risk of the following situation arising between buyer and seller:

Trust

With our “partners” now in a battle of Mortal Kombat, how can there be trust in each other operating in the other’s best interest?

But the trust equation goes back even further than that. At the time of writing, there are over 500 listings in our OSS/BSS vendor database. That means there’s a looooot of competition. The buyers don’t always trust the sellers’ claims do they?

From past experiences of OSS transformation projects and a healthy dose of skepticism that exists throughout our industry, I personally haven’t seen a huge percentage of trusted partnerships. More combatants than marriages let’s say.

This lack of trust (and awareness of risk), means buyers then tend to embark on lengthy, costly and very, very detailed product / vendor selection processes. As mentioned previously, “This approach takes forever to write, forever to respond to and forever to evaluate. Yep, that’s three forevers and we haven’t even gotten to the detailed evaluation phase yet. It costs a fortune in money and time to run a typical RFP process for buyers and sellers alike.” Ultimately, the cost of sale (of the winning bidder and unsuccessful bidders) has to be charged to the global collective of buyers. If the cost of sale were negligible, supplier overheads would be a lot lower and so would sticker-prices (I expect).

Due to the huge cost of running an RFP, sellers therefore attempt to circumvent the RFP process completely by having account managers assigned to key buyer organisations. I’m not seeking to denigrate account managers as they’re often the heroic rainmakers that facilitate a chasm-crossing project. But they also have to be factored into the cost of sale that gets amortised across the OSS buyer collective.

Confidence

This is something of a catch-all. Before commencing a massive transformation, the buyer needs to be confident in their ability to deliver. This means they must have confidence in:

1. Their own skills to run a complex transformation project and overcome the many obstacles that will appear along the way
2. Their own skills to find the best-fit partner (and then maintain the partnership)
3. Their own ability to develop the skills required to run the new model
4. Their own ability to morph the organisation to the new model

On an individual level, there’s a lot of confidence shown by many OSS experts who work within buyer organisations (sometimes even an over-confidence). But at the organisation / sponsor level, there’s often less confidence.

So how does it work now?

Let’s look at the ways the risk / trust / confidence chasm is currently crossed:

• Heroes / champions within the buyer (or a rainmaker seller) who can carefully construct all of the pieces of a pathway that crosses the chasm. This can be a really time-consuming process, but can also be successful.
• Lacking awareness of best-fit solutions, and to reduce an internal perception of risk, Buyers often resort to using (incomplete) proxies such as the Gartner Quadrant to find a short-list of suppliers to overcome the risk / trust / confidence barriers. There’s still the other more lengthy parts of the procurement cycle to run (see below). And unfortunately, in a large percentage of cases, the top-right corner of Gartner is not a good fit for either buyer or seller. A more targeted approach is required. Our OSS/BSS Vendor Database was intended to be a better approach but it’s certainly not the full solution
• Run a procurement event (eg RFP), where the buyer conducts a detailed evaluation to reduce the risk / trust / confidence hurdles. As we’ve touched on previously, these can take forever but still descend into Mortal Kombat. Well-run procurement events can be successful though
• Buyers engage solution integrators or consultants to take responsibility for the outcomes and overcome lack of self-confidence. This can be very beneficial to have a trusted third-party bridging the gap between buyer and seller. The only problem is that these parties tend to prefer time and materials contract models that avoid risk (thus leaving buyer and seller with the risks and with the third-parties with little “skin in the game”)
• Standards bodies like TM Forum and MEF are contributing to the body of knowledge that help with telco transformations. The widespread collaborations that these organisations facilitate also help to industrialise partnerships (to an extent) and thus reduce the risk / trust / confidence chasm

Note that there’s also the “build it yourself internally” model. However, I just treat this as an internal seller compared with an external seller because there’s still the risk / trust / confidence gap between sponsors within a buyer and their internal build / delivery teams.

So what do we do next?

As you can see, none of these models above efficiently and reliably overcome the pain and friction of crossing the chasm or delivering 10x better operational efficiency. We need to find better ways.

In the next article, we’ll propose a few novel approaches. But we should reiterate, we’re not proposing the perfect solutions, nor that Passionate About OSS is offering the perfect solutions.

No, this series of articles is entirely intended to stimulate conversation amongst the many brilliant minds in our industry so that we can find a better way… and can sustain our love for it for longer than the next decade!