E-Markets and Services - Outsourcing the OSS

Posted 01/15//2001

E-Markets and Services

Outsourcing the OSS
ASPs Tackle the Back Office
By Paula Bernier

The business of outsourcing back-office functions for communications services providers is making a comeback, this time under the title of OSS application service provider.

Many of the back-office outsourcers--which, until the popular new ASP acronym popped up, called themselves service bureaus--have never left. But it seems there's a new emphasis on this line of business as both startups and software suppliers that want to expand into the ASP space are joining the fray, wanting to exploit the OSS opportunity and recognizing the ASP model as a way to help struggling competitive providers get to market and reach profitability more quickly.

OSS needs are expected to increase exponentially during the next few years. According to the Gartner Group (www.gartner.com), companies spent about $1.9 billion on OSS software in 1998. By 2003, spending is forecast to climb to approximately $4.4 billion. Wireline companies, such as the ICPs and DSL providers, will be the dominant spenders on IT-related software and services, according to Gartner.

But new or smaller communications service providers might not have the money or know-how to invest in their own OSSs, at least at the beginning. So using an ASP to set up systems for provisioning, billing, network management--and possibly even to manage those systems--may be an attractive option for competitive providers with limited resources.

"There is a need for OSS talent and a need for startups to get into business as quickly as possible and concentrate on their core competencies," says Steve Queroli, chairman and CEO of NetworkOSS (www.networkoss.com). OSS issues "can take up so much of their budget and time that they can't get into business right away."

Indeed. That was exactly the notion that drove enhanced services consulting firm Simplified Development Corp. (www.simpletel.com) into the ASP space. The company provides network and back-office infrastructure to telecom providers on an outsourced basis, allowing smaller companies to access the Simplified platform on a lease basis with only the responsibility of managing the switchgear, which the company supplies.

CEO James Cashiola says that in early 1997, Simplified decided telecom applications shouldn't sit in hardware because switch vendors would not be able to update that software quickly enough. So in 1997 the company created products for Class 4 and some Class 5 replacement.

"When you turn 'switch dumb' you can provision and control via software," he says. That way, "virtual service providers" can remotely control those switches (located at carrier hotels around the country and the world) for real-time service management, including service creation, provisioning, rating, integrated billing, least-cost routing, network management and customer support for circuit- or packet-based services.

The switches are located at data network exchanges owned by Inflow (www.inflow.com), an e-commerce and web-hosting company, which will also act as a clearinghouse for every transaction administered by service providers and their customers.

Simplified had expected to turn up its services, called BroadReach, in December, with plans to be in the top 30 U.S. metropolitan areas and top 25 global cities by mid-February.

Like many other vendors in the OSS software market, billing and customer care software supplier Info Directions Inc. (www.infodirections.com) has also recently moved into the ASP space.

Like Simplified's, Info Directions' offering is intended to allow providers of telecommunication products and services to focus on marketing, customer satisfaction, and other business initiatives, rather than investments in an IT infrastructure. Integrated communications providers subscribing to the service will gain access to the application via the Internet to perform the functions required to operate their billing system without having to staff for, install and maintain the usual hardware necessary to perform these functions. The package supports local, long-distance, data, broadband, VoIP, ASP usage, wireless, xDSL and related services.

"This is a natural extension of our core business," says Donald Culeton, president of Info Directions. "Our target market is realizing the multitude of advantages inherent to a hosted application. Our experience in billing and proven success makes the ASP offering that much more appealing and accessible to the marketplace."

But Dave Gellerman, vice president of technology and corporate development at Hekimian Laboratories Inc. (www.hekimian.com), questions the argument for expanding from the OSS software/equipment space into the ASP arena.

"Hekimian has looked at it very seriously, and it isn't clear to us what the business case is to make money," he says, adding that "the whole ASP market hasn't materialized the way people thought it was going to."

Gellerman notes that 25 years ago, Tymnet and GE Information Services used a timesharing, or pay-as-you-go method to provide applications, but both failed. "There's also a value-chain question," he says. "Are you just a remote host or do you actually operate it for them? In the latter case, where you take everything, then it's a more valuable plan, but the client ends up being hostage to you."

A different model from single-vendor ASPs is NetworkOSS, which is pulling together the operations support software of a variety of suppliers to offer on an outsourced basis to new service providers (for more on this company, see Gail Lawyer's story "NetworkOSS Plays Host to Popular Titles" in xchange's Billing & Customer Care special, Oct. 15, 2000).

NetworkOSS provides software from the likes of Cygent Inc. (www.cygent.com), Daleen Technologies Inc. (www.daleen.com), DSET Corp. (www.dset.com), OpenCon Communications Systems (www.opencon.com), Portal Software Inc. (www.portal.com) and Syndesis (www.syndesis.com) to companies such as broadband IP services company FiberStreet Inc. (www.fiberstreet.com).

United Support Systems Inc. (www.ustwo.com) is another provider of outsourced billing, customer care and operational support systems for communications service providers that uses popular existing OSS software. For example, it recently announced plans to use customer care and billing software from MaxBill Ltd. (www.maxbill.com).

Beyond providing back-office software for telecom and data communications transport providers, some ASP OSSs are actually helping service providers and, in some cases, corporations to manage web hosting services or specific websites. One company in this space is NOCpulse Inc. (www.nocpulse.com), which calls itself an Internet operations management service provider, or MSP. The company's Command Center tests the internal performance of web infrastructure hardware such as servers, load balancers, routers and the like. It also tests the external functionality of the web, including items such as scripts, cookies and links. Currently, NOCpulse is selling directly to ASPs, business-to- business companies, large dot coms, and others with 15 or more servers. In the future, it expects to announce plans to target service providers such as ISPs and ICPs.

Another ASP on the Internet-centric side is Nupremis Inc. (www.nupremis.com), which provides managed server and storage solutions, and managed enterprise applications, from a global network of Internet data centers. Its offerings help carriers rapidly enter the applications services delivery marketplace using such hosted infrastructure as Oracle applications management and back-end integration services, Compaq Computer Corp. (www.compaq.com) high-end server and storage solutions, and OSS software from companies such as Objective Systems Integrators Inc. (www.osi.com).

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