Next-generation networks promise to bring telecom operators significant cost and revenue benefits, but much of the existing telecoms IT infrastructure is far from optimal and cannot not scale to cope with the demands of next-gen services. To fully realize the benefits of NGNs and to better align them to changing business needs, telcos worldwide must transform the systems that support network and customer operations. They need to shift the systems from vertical stack to horizontal layers and bring in more automation in the business flows, thereby increasing efficiency and improving quality by reducing the opportunity for errors and omissions.
Already telcos like BT, Telstra and KPN are reforming, consolidating and redesigning their business and operational support systems, as they migrate their core networks to all IP.
Telstra, for instance, plans to scrap its IT system and replace it with new business and operational support systems in the next few years, as part of the company's five-year transformation project announced in November 2005.
According to Telstra, the first stage of the IT project transformation is the billing and customer support systems, which is due to be released at the end of 2008. Telstra expects that the new BSS, known as Release 1, will enable the company and its staff to be more productive and efficient in managing the call volumes.
On the BSS front, Telstra has Amdocs/Cramer as its major software supplier for the operation systems project, as well as a range of small software companies like Syndnesis (acquired by Subex Azure), Metasolv (bought by Oracle), Infovista and VPIsystems to handle various element of the overhaul.
The OSS platform, known as Release 2, covers the fulfillment, inventory control and customer service assurance systems for Telstra's mobile and BigPond broadband networks, and is due to be completed at the end of 2009. The company has selected IBM and Accenture as its system integrators for the project.
With Release 2, Telstra will connect its front-end and the backend of the business, which will enable the operator to have line-of-sight visibility into accurate and complete records and brings a lot of productivity and efficiency, according to a Telstra spokesperson.
Another example is BT, which through its One IT project aims to consolidate its IT systems, reducing from thousands to less than one hundred and to use a small number of strategic suppliers of these systems.
Non-technical challenges
Analysts suggest the process and speed of the BSS/OSS overhaul will be affected by a number of factors, most of which are not related to technological issues.
Take Telstra, which cited communication with employees as a major challenge faced by the Australian telco during its transition.
'When people are going to be impacted by transformation, they want to know a lot of information. Then in early stages there isn't a lot of information you can really share with,' said Gregg Winn, COO of Telstra. 'So you have to manage expectations with employees, communicate with them and make your message very appropriate, targeted and timely - not over communicating or communicating too early.'
For some, says Ovum analyst David James, it will be more a question about the organizational culture that does not embrace change or the lack of a top management team with a clear vision and ability to manage changes simultaneously.
Analysys principle analyst Danny Dicks points out that given different operators take different approaches to the transformation, the challenges and barriers they face varies from networks to people.
'There's no right and wrong approaches - the key thing is for an operator to match the approach to its particular needs,' he says.
Beyond these, Dicks says telcos need to pay a lot of attention in dealing with issues related to data during migration.
The traditional 'extract - transform - load' tools are developed for large, one-off database-focused migrations and to be a general-purpose tool for enterprises. Telcos, therefore, are faced with some challenges that are particularly relevant to them concerning the speed with which the target systems for the data are changing and the age of the legacy systems supporting the source data, he notes.
Also, the migrations that they need to carry out aren't just about data in databases, but also about migration of software applications (migrations of whole OSSs).
With typical large migration projects taking anywhere up to two years to complete, it's a bit like trying to hit a moving target, he adds.
The good news is that companies like Celona, Business Objects, IBM, Ab Initio and Informatica have developed a new generation of data migration tools to address these issues, putting emphasis on separating the data structure model from higher-level models of business processes and rules.
Despite all these challenges, Analysys suggests that growth in the market will be driven by operators' changing investment requirements as they seek to create and launch new services. This will boost the BSS/OSS market in Europe from X5.1 billion in 2006 to more than X9.5 billion in 2013, 9% annual growth, as the transition from traditional BSS/OSS to next-generation telecoms IT gathers pace.
Although there are no forecast figures on Asian markets, similar buying patterns are likely to be seen in the region as well, says Dicks.
'In both Europe and Asia we will see a gradual move in investment away from traditional sectors of the BSS/OSS market, such as billing, and toward systems that support efficient creation and delivery of new services as well as business intelligence and network security.'
In addition, he adds, spending on integration will increase significantly as operators seek to combine legacy and new systems to deliver a much wider range of service over fixed broadband and evolved 3G mobile networks.
Greater use of enterprise software
Ovum's James said telcos will also increasingly embrace commercial-off-the shelf enterprise IT software as they continue to seek operational efficiency and reduce time to market and costs on their way toward transformation.
Enterprise IT has been embraced in only two non-strategic places in telcos - for the administration of the company itself - finance and human resources - and in sales for salesforce automation and customer management. However, telco transformation offers many opportunities for global software vendors to be able to cost-effectively deliver applications with enterprise characteristics across a much wider range of telco activities.
'The enterprise software market as a whole will grow at nearly 10% per annum over the next few years, and the telecoms sector will not be lagging behind the market, as they see that greater use of software products will lead to a reduction in their large expenditure on integration,' James wrote in a research note.
Many of the largest software vendors such as Oracle and IBM have already identified the telecoms market as a major growth opportunity, by acquiring or partnering small BSS/OSS vendors to provide an end-to-end BSS/OSS solution to telcos.