The lesser-discussed points of service operations transformation
Change is underway in the order management market after years of stasis. TM Forum's principal analyst, Dean Ramsay, looks at what this could mean for vendors, as well as how the development of connectivity and IoT services might impact investment.
13 Jul 2021
The lesser-discussed points of service operations transformation
In the process of researching and writing the recently published report 'Order management at the heart of modern service operations' I spoke to a good number of operators about what ‘modern service management’ means to them. In the report we looked at the reoccurring themes and major concerns of the (communication service provider (CSP) community. These conversations also threw up some points which were not echoed elsewhere; here we examine those less-discussed topics of service operations evolution.
One IT strategy manager at a north American operator told me he thinks the vendor market for systems like order management (OM) is ripe for major disruption as the current group of large leading OSS vendors aren’t doing enough to drive towards cloud-native characteristics. He believes that the door is open for a new entrant to significantly shake up the market in the way that Salesforce disrupted CRM in the last decade, but perhaps more so. One interesting point is that this disruptor might not even be an IT vendor, it could be another CSP, a cloud service provider or a systems integrator. My opinion is that the OM market has been very static for years and is changing a great deal at the moment, with several new entrants taking market share, but I don’t think we will see anything too dramatic in the next 12 months. As the service operations piece becomes more important to the 5G story, however, it may become more attractive to new competitors with more cloud IT-centric backgrounds.
One of the key drivers for changing the way we do OM and indeed the whole service fulfilment process, is that new service models in areas like IoT have different characteristics to traditional telco connectivity services. So as CSPs speculatively launch new B2B service and product types, they are accessing those new models for profitability before scaling up their operational capabilities. The problem is that the majority of IoT type services are not the golden ticket that they may have first seemed to be as CSPs struggle to occupy the high-value parts of the value chain. As such, when these numbers are reported internally, securing management buy-in for large scale IT evolution can be difficult, placing operations departments in a catch 22 situation. As a result, we are seeing changes in the way that vendors present their commercial partnership offerings with performance-related shared success becoming more common, rather than a large up-front capex-heavy IT bill.
Industry dialog is constantly awash with talk of business diversification, but some CSPs are modernizing their operational stacks purely to be the best connectivity supplier that they can be, even if that is just a data pipe for OTTs. This is hardly surprising given the unique function of a CSP within society and that there must be a constant eye on defending around USD1.5 trillion of core business. When we look at connectivity solution evolution on the B2B side, service models like SD-WAN have genuine revenues flowing through them and are growth markets. But the nature of the delivery of these services in an overlay model means that legacy OM can have a hard time processing the orders in the slick automated way that CSPs are now looking for. So as connectivity is evolving, the supporting systems must track that with new configurations and capabilities. CSPs seldom shout about core revenues are they are invariably decreasing, but many believe that there is a way forward with revenue growth in connectivity if we make the right moves to improve those offerings.
Read the report.
Major disruption could be coming for the vendors
One IT strategy manager at a north American operator told me he thinks the vendor market for systems like order management (OM) is ripe for major disruption as the current group of large leading OSS vendors aren’t doing enough to drive towards cloud-native characteristics. He believes that the door is open for a new entrant to significantly shake up the market in the way that Salesforce disrupted CRM in the last decade, but perhaps more so. One interesting point is that this disruptor might not even be an IT vendor, it could be another CSP, a cloud service provider or a systems integrator. My opinion is that the OM market has been very static for years and is changing a great deal at the moment, with several new entrants taking market share, but I don’t think we will see anything too dramatic in the next 12 months. As the service operations piece becomes more important to the 5G story, however, it may become more attractive to new competitors with more cloud IT-centric backgrounds.
Poor new-service margins make it hard to secure internal investment
One of the key drivers for changing the way we do OM and indeed the whole service fulfilment process, is that new service models in areas like IoT have different characteristics to traditional telco connectivity services. So as CSPs speculatively launch new B2B service and product types, they are accessing those new models for profitability before scaling up their operational capabilities. The problem is that the majority of IoT type services are not the golden ticket that they may have first seemed to be as CSPs struggle to occupy the high-value parts of the value chain. As such, when these numbers are reported internally, securing management buy-in for large scale IT evolution can be difficult, placing operations departments in a catch 22 situation. As a result, we are seeing changes in the way that vendors present their commercial partnership offerings with performance-related shared success becoming more common, rather than a large up-front capex-heavy IT bill.
Being a best of breed connectivity supplier is still a major driver
Industry dialog is constantly awash with talk of business diversification, but some CSPs are modernizing their operational stacks purely to be the best connectivity supplier that they can be, even if that is just a data pipe for OTTs. This is hardly surprising given the unique function of a CSP within society and that there must be a constant eye on defending around USD1.5 trillion of core business. When we look at connectivity solution evolution on the B2B side, service models like SD-WAN have genuine revenues flowing through them and are growth markets. But the nature of the delivery of these services in an overlay model means that legacy OM can have a hard time processing the orders in the slick automated way that CSPs are now looking for. So as connectivity is evolving, the supporting systems must track that with new configurations and capabilities. CSPs seldom shout about core revenues are they are invariably decreasing, but many believe that there is a way forward with revenue growth in connectivity if we make the right moves to improve those offerings.
Read the report.
