Mobile Operators are in a time of incredible flux and transition in both the technical and business aspects of their operations. In the past, a majority of service revenue was derived from voice services, with a small amount of revenue generated from low-bandwidth data services such as phone-based Internet browsing. However, due to the development of interactive mobile applications, enhancements in access network technologies such as 3.5/3.75G and overall increased customer expectations, the demand for mobile data services has skyrocketed. Most industry insiders agree... it will be cost-effective, interactive services such as video calling, mobile gaming, presence and pod/iPhone-casting that will set operators apart in the coming years.
Introducing these services is no easy task, however, as the multi-service networks required to deliver them are much more complicated than legacy voice-only networks. This new world of converged mobile networks and mobile data services has greatly expanded the role of network troubleshooting and monitoring tools. In essence, they have transitioned from being a ‘necessary evil' to maintain the network, to a key business enabler, allowing operators to expand their service portfolios and at the same time reduce operating expenses.
As an example, there are new OSS/troubleshooting tools on the market that gives an operator visibility into services from a customer-centric view. While this might sound 'fluffy', it is actually a pretty neat thing. A few of these tools even have the ability to correlate data collected from the network, from services, from users, and even from devices themselves. This allows operators to better manage the actual services, and also gives new visibility into how the users are using/not using/abusing the services as well. Thus what was once just a monitoring and troubleshooting tool has now become a great source of intelligence for the marketing and strategy departments.
There are still many challenges to be overcome in the fight for dominance in the mobile data services arena, but I truly believe that the tools and resources available are as good as they have ever been, and will continue to make their way into the core strategic thought process of the operator.
Software-as-a-Service (SaaS) as a market has been heating up for the past three years. Whether SaaS is a reincarnation of the Hosted Services (or Application Service Provider – ASP) or centralized computing – that was pioneered during the mainframe era – the trend is gaining momentum. Media coverage on this buzz is plenty, whether that is general press, specialized magazines or online portals. Examples are: Wall Street Journal talking about the SaaS as a savior, KM World Magazine listing SaaS applications as trend setters of the year, coverage on Google (GOOG) acquiring Postini to augment their expanding SaaS portfolio or Microsoft (MSFT) going against Salesforce.com for the small & medium business (SMB) market with the Live CRM product.
The question one has to ask is whether this trend shakes down the Independent Software Vendors (ISV) and their long-survived grip on perpetual licensing based revenue model? Will it drive the flexibility and agility (and not to mention, cost efficiency) that businesses have been striving to attain from IT in general and software in particular?
The world-wide packaged software market is huge, about $230B in 2006, with a healthy Compound Average Growth Rate (CAGR) of about 8% for next five years (Source: IDC). At the same time, the SaaS market is expected to grow from $3.9B to $14.5B, a CAGR of about 30%. Whether the buzz stays or not, the SaaS market is not expected to be more than 5% of the overall software market in five years. Even if it is assumed that the same high growth rate will continue for next ten years – which is an over optimistic assumption by any means - expected dent on overall software market from SaaS will not be more than 10%.
Why? Firstly, pure-play SaaS will be restricted to a few areas of software for foreseeable future. Examples of these areas are HR Applications, Customer Relationship Management (CRM), Security from the Cloud, and Supply Chain Management (SCM). Even in these areas, there are fundamental architectural issues like multi-tenancy and security that the SaaS vendors have to address before gaining wide adoption. As many of them have learned the hard way SaaS enabling of an existing software product is often time consuming, costly and in many cases technically impossible. SaaS has limited play in software segments like systems software, infrastructure management or end-point security - altogether about 65 -70% of the overall market. Not that these software cannot be served as a services; they surely can be, but only as part of an outsourced IT infrastructure (not just software) service setup. In other words, SaaS has to become part of Infrastructure-as-a-Service or IT Managed Service.
Which takes us to the second point, that is, a more comprehensive value proposition, with flexibility, agility and efficiency as critical drivers, can be provided to a customer - whether they are large enterprises or SMB - when SaaS is delivered as part of a larger outsourced IT infrastructure framework; a framework that includes network, systems, applications, security and business processes. Centrally hosted, shared software becomes a critical component of the overall business service that the provider is offering.
The subscription based pricing and customer friendly contract models already in existence in managed services setup for a decade or more now, aligns well with the SaaS pricing and revenue model. As a managed services setup can have a mix of SaaS and other shared/unshared infrastructure if architectured well (whether it is through Service Oriented Architecture or Service Delivery Platform framework), can provide an excellent vehicle for transitioning internal enterprise IT infrastructure (including software) to an outsourced external infrastructure backed by Service Level Agreements (SLA). In other words, Saas becomes part of a larger IT journey that the enterprises have been taking for a number of years. Of course, on a number of fronts on the IT value chain, technologies, service delivery frameworks and business processes have to continue to mature for reaping full benefits from that journey.
As MSPs have started to focus more and more (finally!) on the SMB IT market (which is as big as the large enterprise market per Forrester), the synergies between SaaS and managed services are more than ever before. From the SaaS vendors’ perspective, the MSPs, if they cannot be one themselves, become a new channel to push their products into the market. Note that MSP market has large pull through power, in terms of size and growth (worldwide: $145B in 2006; 13-15% CAGR for next five years; sources: TelecomWeb, Gartner, IDC). The SaaS vendors have much to gain from aligning well with that market. And, without that alignment SaaS will continue to be a fringe play in the software marketplace.
1 - If SaaS is less disruptive than as predicted by the pundits, why are a number of ISVs closely watching it like a hurricane? Their revenue streams are not going to dry out overnight and there are no compelling market forces overturning their revenue model that is built on perpetual licensing and maintenance contracts. The answer is that most of them have learned a lesson from the past – the emergence of Web 2.0 dominants who came from nowhere and started to deliver on a business model that is more customer centric than any of them could imagine. The last thing they want to do is playing a second fiddle to the next Google. There are parallels here. Look how a number of the legacy telecom service providers struggled/struggling during the Internet era to be more than dumb pipe providers.(An earlier version of this analysis appeared as a blog by the author titled, “SaaS will lose steam without the fire from Managed Services”, on the GLG Expert Network. Opinions expressed here are solely that of the author and by no means represent that of his employer.)
Venu Venugopal, PhD, is the VP of Solutions Marketing at CA (Computer Associates) with responsibility for leading CA’s solutions strategy and marketing efforts into the Communications, Media and Entertainment industry. Previously he was the Director of Product Management for Security Software solutions at CA. Prior to joining CA in 2004 he was a Senior Manager for Product Management and Marketing at Sprint, where he founded and directed Sprint’s IP Virtual Private Networking and Managed Security Services, a portfolio of twelve global services. His tenure at Sprint also included positions as Senior Manager for Network Security Services and Principal Program Manager for Managed Network Services.
Prior to his eight years at Sprint, he was a Research Faculty at the University of Pennsylvania, Philadelphia, and a Senior Software Engineer at Wipro, Bangalore, India. He is a graduate of the Indian Institute of Technology, Madras and the University of Maryland, College Park, US, and holds a PhD in Electrical Engineering and an MBA in Marketing. He has over 35 publications and conference presentation to his credit.
Over the past year, I have made the most significant shift in role that one can fathom, from being responsible for the overall Enterprise Architecture and Strategic Direction to owning the Global Network Operations Center. Some might call this a sadistic form of punishment, but I relish in the opportunity to fully understand the operational complexities and consequences of Architecture and Implementation decisions.
I will tell you this, now that I am a fully certified operations guy (grin!), I believe the most complex challenge our industry will face in the future is End-to-End Service Management. What does this mean? The ability to look at the service from a customer’s perspective and aggregate away the complexities of multiple network layers and software layers to truly understand that individual customer’s service experience. Wow!
From a Service Providers perspective, what this starts to look like is a blending of Network and IT, where the service is delivered riding over a combination of things that look like network elements and things that look like IT application servers. Together, all of these assets create the total Customer Experience. This means that in the future, it will not be good enough to have a Network Operations Center; we will require Service Operations Centers.
Within TMF, the Board of Directors has been spending considerable energy on understanding future Supply Chain directions and this issue of End-to-End Service Management. I believe TMF is on the cusp of defining a whole new set of standards areas and definitions that will establish the new focus for our future ability to not only deliver new and exciting converged services efficiently, but just as importantly, the ability to manage them at Service Provider quality.
If you have been giving this some thought and want to discuss, I would be happy to hear form you.
Mark Francis is Vice President, Global Network Operations Center, AT&T
Mark’s responsibilities include management of AT&T’s Global Network Operations Center (GNOC), the most sophisticated command-and-control center of its kind in the world. The GNOC provides incident command, network risk management, performance reporting, regulatory compliance reporting, National Security Emergency Preparedness, and executive notification for the AT&T Global Network. Proactive network management and command oversight of network infrastructure, network technology elements, operational support applications/systems, work centers, and data centers across multiple AT&T business units and lines of business. In addition, Mark manages and communicates the “Ask Yourself” process, which is a documented approach ensuring the project management and quality assurance of all planned work on AT&T's World Wide Network uses a global change management discipline. In addition, Mark is responsible for network continuity, contingency planning, and disaster recovery of AT&T Network Services infrastructure worldwide including voice, data services, and humanitarian relief deployments for wireline and wireless networks.
I have always felt in my association with TM Forum, one clear trend – this body adopts itself to align with the industry dynamics. The way the membership has grown, and the increasing demand from more and more players in the ever expanding value chain, has been quite impressive. And now we see Convergence as another such area that’s caught both TM Forum and Industry’s attention…
Industry convergence with a common theme of Content, is really an evolution of the past convergence that Telcos have been already doing in one form or another – convergent billing, bundling and so on. Why are Media companies like Disney conscious of carrying their own content, Google, with their one on one advertising model, and Microsoft chasing Yahoo? All this is a sign of sufficient openness to work in each other’s turfs, and surely necessity drives new implementation schemes to allow business models to succeed.
At this time, there is an absolute need for someone to set frameworks to the "Magic Cube" of multiple business models that hit the news channel, but with speed, else its always going to be too late. TM Forum has been developing guidance frameworks, benchmarks, and standards for the value chain of Service Providers – Traditional Telcos, Cable, Media, VNOs, ISPs, Systems Integrators and Suppliers. Its important to have a means to connect within this Community. "Prosspero" initiative that was launched several months by TM Forum, is giving a tool to facilitate the same. With a Systems Integrator hat on, we see every entity in the value chain playing a key role to make the Revenue Model succeed since Customer needs can only be met when all cooperate. Its at this time, we see Organizations like TM Forum, allow for the right platform for the CIO/ CTOs globally to guide the developments.
Alpna J Doshi is Vice President, Satyam Computer Services Ltd, Board Member with TM Forum, and Chair of the Systems Integrator Committee. She has had 19 years experience in working with Telecom, Media and Entertainment industry. She has been a Speaker at various International Events, and a key contributor to guiding Industry trends during her professional life with Verizon, Deloitte and Touche Management Consulting, Telcordia Technologies and Satyam Computer Services Ltd ( Present ).
Telstra is a fully integrated telco which provides a diverse range of services to its customers. In the NGN space I believe the industry has a major challenge to face in respect to application performance and end to end customer experience. Traditionally the suppliers and telco alarm the technology infrastructure and in the past where the product has resided predominantly on the same technology this has been adequate. The NGN environment however brings a new dimension for the industry to work with.
Customer services in an NGN environment are provided from a multitude of access environment through Ethernet aggregation points and into an IP Core, services are then delivered either by the telco or through a third party. Understanding the customer experience in this new environment and the multitude of applications performance end to end is a huge challenge for the industry.
We need to think about the way we obtain the application and customer experience information in a different way. No longer can we rely on the operator having to pull information from the respective technology boxes, we now need the technology, the application and the customers CPE to be sending information to north bound interfaces so that the customer experience can be assessed. This of course would only be done by exception (when something is wrong) otherwise the volume of data would be too great.
So if you have any thoughts on how the industry can break through here I would like to here from you.
RegardsMichael Lawrey
Commenced employment with the Post Master General in 1970 as a Technician in Training and progressed through the technical areas to become a Manager in 1989. During that time Michael worked in areas such as Construction (both metro and country), Operations and Support. Michael’s first management role was in the Internal Plant area for Corporate Customer Division in Perth and he went on to be the Manager for telephone provisioning having a wide range of responsibilities including sales and PABX installation.
In 1992 Michael moved to the role of Network Operations Manager for Country Division in Western Australia and was later seconded to Melbourne in late 1993 to be part of the Operation and Maintenance review of the then Telecom Australia’s network. As part of this review Michael worked in the United States for a short period with Pacific Bell and USWest. For the next two years Michael’s work involved industrial negotiations and development of a new Operations and Maintenance Organisation.
In 1995 Michael was appointed as the as the Regional Manager Network Operations Western Australia and in 1996 became the Regional Network Manager Western Region (WA/SA/NT). In 1998 Michael moved to Commercial &Consumer Service as the Regional General Manager for Western Australia. From here he moved back to Melbourne where he took on the Role of General Manager Global Operations and in August 2001 became the Executive General Manager Network Operations responsible for the operations of all Telstra’s infrastructure platforms both domestically and globally. In August 2002 he was appointed to the position of Head of Network Services in Telstra and set a challenge of bringing together not just the operational aspects of the Telstra network business but also the service management.
Over the last five years his focus has been in evolving the business model of operations in Telstra to meet the needs of the business and our customers in a rapidly developing environment. Michael is currently the Executive Director of Network Services a role he has held for the last five years.
In addition to the day job Michael is also proactively involved in the industry and holds the following positions.
- Director on the board of the Telemanagement Forum- Co-chair of the Services Network Operations Forum ITU-T United Nations- Director on the board of the Telecommunications industry Ombudsman
Michael’s personal interests are kayaking, bush walking, swimming and bike riding.
One of the key transformations in the communications industry over the past five years is the convergence of communications, media and entertainment (CME) markets. With this, content and customer centricity became the primary business focus and internet protocol (IP) became the technology norm. The later and the emergence of the Internet as a distribution channel and World Wide Web as the customer interface point have had significant implications on the CME value chain from a security perspective.
Look at the typical content creators like filmed entertainment companies or television studios. In the case of movies, most content is created in weeks now, compared to months a few years back. As these go-to-market timeframe gets compressed, a number of steps in the creation process are being done in parallel. For example, film directors nowadays send in content shot in off-site locations on a daily basis to a central repository, so that stakeholders like special effects teams and editors can work on the content as it is created. This adds enormous complexity, as content gets distributed in pieces, often over a public IP network, and a number of users access, manipulate and augment the content in parallel. Even small pieces of the content reaching unauthorized users can result in millions of dollars in terms of business loss, besides legal ramifications, brand dilution, etc. Role and policy based access control, encryption of data, single sign-on with stringent authentication, authorization, and auditing, etc., become key prerequisite in the implementation.
Another challenge in the filmed entertainment industry is the disparate number of applications in use in the content creation process itself – as most of the studios have grown over a series of mergers and acquisitions and various units are different stages in transformation to a fully digital environment. As one studio executive in charge of IT strategy remarked to me the other day, “One of my primary challenges is that we have hundreds of applications in use to manage the content creation process and associated value chain. Providing a centralized access control into these applications, based on user roles and in line with corporate policies, is a critical need for us to transform ourselves as a leader in the digital world.”
There are similar security challenges in taking the content to the end users, once the creation process is complete. In the case of filmed content, an increasing number of theaters are becoming digital and hence the content is more and more getting distributed digitally to those consumption end points. Ensuring that the content is only received by an authorized end-point with adequate protections against unauthorized use and copying (like digital rights management) are extremely critical. In the case of TV programmes and music content - whether it is Desperate Housewives downloaded from ABC’s website or American Idol performers’ albums on iTunes - the internet and world-wide-web are the final frontiers in getting content to end-consumers quickly, cost effectively and (more importantly) as, when and where the consumer wants it. Ensuring digital rights and secure distribution again becomes a key need in these scenarios.
These needs are not any different when similar content is pushed through a distributor network, instead of the Internet, like the cable service provider, as Video on Demand (VoD). As Robert Iger, CEO of Walt Disney noted in his keynote at the first TelecomNext event in 2006, "Without content protection, investment in content can't be supported. We need secure distribution.” In fact, that is exactly what industry forums like the TM Forum will have to tackle and already investing in, from standards and technology frameworks perspective, as the converged world of communications, media and entertainment become more and more digital and customer centric.
As we journey together along the yellow-brick road to the exciting land of next-generation networks and services (NGN), we are all asking ourselves the same question : what exactly will it look like and how will we know when we have arrived ! If you were to step back in time to even 5 years ago in the early days of WAP and looked at today's mobile internet of users accessing fascinating Second Life services over HSPA networks approaching 14Mb/s, you would definitely feel that we had arrived in NGN land :)
In truth, the NGN transformation is already well underway and each of us as users are finally seeing the reality of the NGN vision of seamlessly accessing a wide range of complex multimedia services over any access technology through convergent smart devices interacting with a powerful ecosystem of users and content. While intense competitive forces in the telecom infrastructure market together with increasingly sophisticated user requirements will continue to drive innovation in access technologies such as WiMax, LTE, fixed-mobile convergence and smart multi-mode devices, perhaps the most profound NGN-enabling change of all is the separation of the service and control layers from the underlying telecom infrastructure. A leading service provider once described this evolution to me as akin to having open-heart surgery without an anaesthetic! Not only does this comparison go to the heart of the complexity of IP Multimedia System (IMS) and Service Delivery Platform (SDP) deployments but also highlights the profound business model challenges the NGN world presents to the various players in the eco-system particularly the established service providers. Service innovation, the ability to bundle high-value services and customer experience will inevitably decide the winners and losers in the NGN world. While everyone asks the questions such as "won't the existing telcos just become dumb pipes?" and "it's only a matter of time before the media & content players emerge as the large long-term winners of wallet-share", the reality is that it's going to be a lot more complicated than this with existing service providers utilising their incumbency, retail networks, triple-play/quad-play bundling and customer intimacy to repel the boarders on the castle walls!
One factor that will influence the NGN ecosystem is both the openness and interoperability both within and between the value-chain components. Technology evolution has always been and will continue to be a fine balance between commercial advantage and the reality of making new technologies work in the existing environment. While many would love to see convergence of NGN standards such as WiMax and LTE, what ultimately is more important is the interoperability between our NGN technologies needed to enable the seamless anytime, anywhere experience. While the telecoms ecosystem see the benefits of plug-and-play standards such as USB and HDMI in the consumer electronics world, commercial realities and telecom technology complexity will continue to make plug-and-play challenging in the NGN world.
The TeleManagement Forum has made great strides in recent times on addressing this critical interoperability. The inclusion of both the cable and content/media sectors have been critical decisions to enabling the TMF play a key role in the success of the NGN world. Tough challenges will continue to lie ahead and we all in our respective positions in the value-chain will have key responsibilities in ultimately enabling an exciting NGN world that will see our billions of citizens and many more billions of machines connected in manners that will simply take our breath away!
Kieran is an experienced Telecommunications industry executive with an outstanding track record over his 16 year career in the network equipment and OSS/BSS sectors. Kieran is recognised as a leading visionary in the telecommunications OSS/BSS software industry and has pioneered the customer-centric management of telecommunications networks. After a very successful 8 years in Motorola’s wireless infrastructure group, Kieran co-founded Comnitel, a wireless service management company in 1999 and led the company as CEO from initial start-up through a 30 million-dollar series of fundraising with leading international venture capitalists. Over the period 2003 – 2007 Kieran had a strong track record as Chief Technology Officer for Vallent ( a combination of 3 telecoms OSS/BSS companies Comnitel, Metrica and WatchMark ) driving the company’s product and go-to-market strategy. Since the acquisition of Vallent by IBM in February 2007, Kieran has taken on the role of Vice President and CTO for Telecoms for the IBM Tivoli division and has taken on a visionary role for IBM’s overall telecoms business worldwide. Kieran is an advisor on the TMF board and is a frequent speaker at telecommunications conferences & contributor to telecommunications publications worldwide.