The current status of the applications managed services market is a product of the changes CSPs must make to their operating and business models. The move to all-IP and high-speed mobile broadband networks means that telecoms networks are dependent on frequent, automated software changes and fewer, long-term hardware rollouts and manual changes. The much-needed digital transformation of the CSPs’ organizational structure, channels, and delivery systems will also see more software, software-as-a-service (SaaS), and virtualized functions moving into the core network.
All these factors mean that telecoms software and IT systems will become more important as the platforms for growth and innovation.
The software and service-based operations of the 21st-century CSPs require faster service design, development, delivery, and tear-down; real-time data processing and insights; automated business processes; end-to-end service assurance and user experience management; and BSS systems that can keep pace with change.
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However, the CSPs’ overall infrastructure (including data centers) is still complex to maintain and develop. Legacy, manual, and proprietary systems from multiple vendors are mixed in with new, automated, and open or standards-based systems. Slow and inflexible BSS limits delivery of new services, but vendors can help CSPs manage their estates more effectively. CSPs can consider software and IT services companies with their broad business processes and services skills - such as Atos, IBM, Infosys, and TCS - which they can bring to bear on applications operations, applications development, and maintenance skills.
When Ovum last reviewed the BSS applications managed services market, there were network equipment providers (NEPs), specialist BSS software companies, systems integrators (SIs), and IT service companies competing. There’s been consolidation among the product-based software vendors, while software license revenues have reached a plateau. But the need for end-to-end solutions, managed by competent IT managed services providers with deep telecoms knowledge, is strong.
The CSPs want vendor-agnostic capabilities, which means they want managed services providers (MSPs) to deliver vendor- and technology-agnostic capabilities with the ability to leverage strong telecoms expertise. CSPs can look to their NEP partners and BSS specialists to extend their BSS products and use their platforms for greater support.
Companies such as IBM can provide greater IT expertise, while IT service companies and SIs can capitalize on the lack of clear standards for interoperability between systems from different vendors.
The product areas for BSS map directly on to the revenue opportunities for BSS managed services, and include billing and charging, mediation, partner management, ordering, CRM and, increasingly, self-service.
Managed services providers must be able to do more than operate and monitor billing, CRM products, and BSS platforms. They must develop and test applications that extend the capabilities of those platforms, and deliver overall business value such as improving customer experience and loyalty, and manage the customer lifecycle more effectively and efficiently.
Opportunities in the BSS stack
CSPs adopt applications managed services to reduce operating costs and improve business process efficiency. The benefits CSPs expect from their managed services agreements include: the ability to focus on the core business and free up their own internal resources; control operating costs via predictable cost structures; access expertise they do not have in-house; and become more agile in their market response.
Challenges include mitigating the commercial risk of sharing business plans and strategy, ensuring a well-managed transition process and transparent SLAs, and assuring the customer experience.
In the past, CSPs would outsource single components of their BSS stack and operations to a single vendor, but this approach now varies by CSP segment. Tier-2, -3, and -4 CSPs favor an integrated managed services solution model with a single vendor managing the entire BSS stack and operations. Tier-1 CSPs still like to manage certain aspects in-house and/or chose best-of-breed vendors for separate parts of the BSS stack. However, the Tier 1s are now also increasingly keen to have a prime or lead contractor responsible for the entire end-to-end operation.
While billing is business-critical, billing and mediation are areas that CSPs are most willing to outsource, followed by CRM and ordering. CSPs want to retain control of their customer-facing activities because they see these as key ways to differentiate their service offerings.