Reviving the old

Jessica Figueras/Ovum
12 Mar 2008

At the Mobile World Congress (MWC) this year, Amdocs launched its new Advertising, Commerce and Entertainment (ACE) business unit. Targeted at service providers, the new division brings together all of Amdocs' digital commerce, search and advertising products, along with a specialist team of consultants.

It will offer technology solutions, but a major focus for ACE will be working in partnership with customers on explicitly commercial issues - a consulting and commercial services proposition, in other words.

The launch of ACE is a bit like Amdocs wearing vintage to a thoroughly modern party. One of the most interesting assets it will have is none other than its oldest and least-publicized business - yellow pages.

Amdocs has long been an important supplier of software and services to yellow pages providers worldwide, including business process outsourcing, and acting as an aggregator between publishers and advertisers - or, in other words, value chain enablement.

This insight into the world of advertising and commerce is clearly of great relevance to the new telecom industry that we glimpsed at this year's MWC. Amdocs' old clothes, retrieved from the attic at just the right time, now look surprisingly fashionable. ACE can also enable Amdocs to overcome the market positioning challenge it has faced as a result of the rise of Oracle in the telecom software market.

The fact is that Oracle's message is now extremely attractive to many telcos. It is using exactly the right language to an increasingly receptive IT audience: Products, not custom-build; a free choice of systems integrator, not lock-in to your main supplier; pre-integration and configuration; cutting the cost of ownership; a transparent product roadmap.

But although the Amdocs-Oracle comparison is easily made, it is not a fair one since the two vendors have quite different value propositions in telecoms. Oracle is explicitly a product company, whereas 95% of Amdocs' revenues come from services rather than software, since it does much of its own implementation work. Amdocs has a tougher marketing challenge than Oracle, partly because its business model is more complex.

The typical criticism of Amdocs is that its products are not products at all but custom-build engagements. This is often unfair, based on what and how customers chose to buy in the past, as opposed to the packaged products that Amdocs now offers.

Amdocs has been defensive to this charge, lacking any sense of advocacy for its own unique approach. Instead, the company talks about themes that many other vendors are also promoting, such as the customer experience. This is important, but not a differentiator for Amdocs.

In fact, it is a thoroughly good thing that customers have a choice not only of vendor, but of approach. Every telco needs to consider this when making IT buying decisions. It is not only the strength of the product that counts, but also the vendor's alignment to your strategy and internal resource profile. Not all telcos are the same.

What the launch of ACE demonstrates is that Amdocs can turn its differences into a virtue. Rather than being embarrassed about the fact that it is not fundamentally a product company, it can now boast about its wealth of services in an area where specialist domain expertise really counts.

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