Operators are enthusiastic about the opportunities to earn more revenue by selling software as a service or cloud computing to customers. But wait, warns George Malim: current IT and billing systems may not be up to the task of managing them  





Steve Hughes, Colt: the terms ‘OSS and BSS’ are
out of context with the new service delivery model

Martin Creaner, TM Forum: it won’t be cheap and
the business case will have to be carefully constructed

Patrick Bossert, Convergys: In the telecoms BSS
world the devil is in the functionality detail

Cloud computing and software-as-a-service offerings present an attractive way for operators to generate revenues by providing such services to their enterprise subscribers. However, the management complexity of delivering such services falls well outside the scope of established OSS/BSS systems.

Current systems aren’t up to the job. “Can current systems deliver?” asks Martin Creaner, chairman of the TM Forum.

“By definition today, the answer has to be no. I’d be very surprised if they could because they haven’t been designed to do it. When you look at Amazon and how it has opened its system to the outside world, you can see that it has been a huge challenge, and their systems that are not that old.”

Try and map that to Deutsche Telekom, BT or AT&T, he warns, and “right across the back office they have got hundreds of systems and some of those are absolutely ancient”.

Steve Hughes, virtualisation and cloud computing specialist for Colt’s managed services, is more positive. “This is possible today. However it requires a fairly high level of complex systems integration to achieve a cohesive customer service delivery experience,” he says.

“The choice of calling them BSS and OSS is somewhat out of context with this new service delivery model as there is no easy way to separate the two sets of functionality as customer service blurs the line between the two.”

Serguei Beloussov, chief executive at Parallels, which provides automation and optimisation software to enable carriers to provide infrastructure applications and online services to enterprises, agrees.

Broader options

“In our case, it’s more than traditional OSS,” he says. “In cloud computing you have a much broader set of components with a much broader set of options so the management stack is not just for the operator but a delegated stack to include the operator, the distributor, the reseller, the client and the end user — all of which need to have the ability to configure the system themselves.”

But does that mean yet another, separate stack has to be constructed in isolation from and, later, integrated into the existing OSS/BSS in order to run cloud and SaaS propositions effectively?

Creaner certainly hopes not, although he does acknowledge some standalone functionality is required.

“I don’t view it as a situation of creating more islands of functionality,” he explains. “It’s more a case of upgrading a few select crown jewels within the system. However, it won’t be cheap and the business case will have to be carefully constructed. After all, there’s no point investing $50 million in systems to support a service that might generate revenues of $3 million in the first three years.”

Mel Bale, head of 21C application engineering at BT, shares Creaner’s view. “It’s not necessary to build a new stack in the OSS/BSS architecture but some new functionality is required, for example, depending on the resilience strategies adopted,” he says.

“However, moving to a SaaS or cloud model does present an opportunity to simplify systems and automate more processes such as ordering, auto-recovery and auto-scaling to meet SLAs.”

Beloussov sees more of a need for adjunct systems. “Operators have OSS and BSS in place so typically our system works as a front to those systems,” he adds.

High reward

Creaner advocates targeted investments; “The investment needs to be made in making systems fit for purpose,” he adds. “Rollout to new customers probably won’t be anywhere near as fast as expected and I think the sweet spot will be services that require a relatively low level of upgrade to balance against a relatively high reward.”

The services aren’t the issue, it’s the platforms required for them to run on effectively. “SaaS is taking off,” says Creaner. “Infrastructure as a service makes highly provable financial arguments. Platforms as a service are the tricky proposition.”

Hughes at Colt also sees the complexity. “The area that is of most complexity is the multi-faceted nature of the service offer that service providers are trying to bring to market,” he adds.

“Combining the network with computing and storage provisioning adds a significant amount of workflow into the provisioning and management control layers.” Each vendor of each layer has its own approach to this, “which complicates the issue”, he notes.

“Furthermore, by having different services controllable by the customer at different layers in the service provision, a capability must be put in place to cater for either automated control or manual intervention by the customer while keeping the platform as a single set of resources for all services.”

Business efficiency

The cloud and SaaS debate is double sided for operators. Where they can generate revenues by selling such services directly to their customers or managing and billing for them on behalf of third parties, they can also generate efficiencies in their own businesses.

“You’d imagine that the concepts would have dual attractions to operators,” Creaner says. “But I believe tier one operators will always run their own systems. For tier two and tier three players I see absolutely no reason not to go down the cloud and SaaS road.

“For instance, outsourcing application store management to a provider that runs the whole thing on an operator’s behalf is something the operator is comfortable with because it’s a new business,” he says.

“Their comfort level is higher on externally facing elements. In a perfect world, you could have three or four cloud-based billing systems and several service management or network management capabilities provided through the cloud but the reality is that I’m not sure operators will eat their own food for a while and much uptake by operators will rely on greenfield deployments.”

Others think operators are already engaged — whether they realise it or not.

“Although cloud computing may be perceived as a relatively new phenomenon, some providers have been delivering services this way, in some cases for, several years,” says Andy Wilson, vice president of sales and marketing at CTI Group. “Arguably many of these players have already moved to this effective delivery without even realising it.”

Bale at BT freely admits this: “BT already uses some SaaS-based services provided by others internally and sells other services as SaaS offerings. We have also developed virtualised and cloud compute platforms for use internally and offerings in the market place,” he adds.

Segmented market

Patrick Bossert, head of market strategy at Convergys, agrees but sees great challenges ahead as the market has segmented itself in three ways. He sees billing enablers to SaaS providers emerging alongside SaaS billing providers and SaaS marketplaces and resellers such as Amazon, Oracle and Orange Business services.

“There are many in-the-cloud billing options available today,” says Bossert. “Effective delivery relies on offers from all three segments working together as a solution. Most of the market isn’t there yet, with many services providers offering their own hosted solution rather than offering it truly in the cloud via a marketplace. “Only when you combine all three do you get a truly effective offering that can deliver at the sort of price-points that make SaaS billing a differentiated market in its own right.”

Even so, vendors can’t provide such services on a whim. “Effectiveness depends on how well the software is designed,” adds Wilson. “It must complement the workings of an operator in its general day-to-day existence. There is potential for aspects of such billing services to be offered in a SaaS delivery, working to a pay per minute model.

“However, in this more fluid format one must ensure that data being shared is securely locked down whilst being transported or delivered on an ad-hoc basis.”

Bossert also emphasises that the sheer complexity of operator billing can’t be ignored by SaaS propositions. “There’s no doubting the capability of some of the newer SaaS billers, but in the telecoms BSS world the devil is in the functionality detail,” he says.

“We add over 90 features to our core billing product every year to give our customers the richness of functionality their marketing departments are looking for. The SaaS offerings are like winding the clock back by a decade.”

Bale sees two key technology challenges for service providers; “One is the immaturity of some technology for OSS systems,” he says. “Two is the limited availability of enterprise-scale applications designed to run in a cloud or SaaS environment.

Operationally, the main challenge is to significantly increase the level of automation, particularly around IT management and service-level management so as to reap the benefits cloud or SaaS can provide.” GTB