Posts Tagged ‘API’

Opening up networks (Part II): Creating new value in the enterprise market

November 23, 2010

One obvious, ongoing trend amongst enterprises is the desire to consolidate technology and communications suppliers. In all businesses, the IT Directors and CIOs long for a more simple life; fewer vendor relationships to manage and just one bill for everything. So understandably, becoming a one-stop shop for all managed services is something to which all vendors now aspire.

We now have both feet firmly in the 21st century and, in our new IP-everywhere world,  a clearly horizontally divided communications market has emerged in which “cloud” is the buzzword du jour. The world is full of IT outsourcing companies and systems integrators vying for enterprise business, but none of them run their own carrier  networks. They consume the services of  network operators (the guys who shuttle your packets), who in turn are supplied by network owners (the guys who dig up the road).

Have you ever thought about just how much cost is incurred by support inefficiency in the standard carrier wholesale or reseller model? When building large scale enterprise solutions, things can sometimes get a bit silly:

  1. Network owner A selling Layer-1 infrastructure and supporting network operator B.
  2. Network operator B selling wholesale to operator C and supporting them.
  3. Network operator C supporting their channel partner, IT services company D
  4. Service company D supporting their enterprise customer.

From the point when the end user initially reports an issue to their provider D, just how much delay, human error and eventual customer agitation is introduced, with each additional support ticket that gets logged down the chain?

There is so much operational overhead, conflict and support headaches when human NOCs are chained together. The poor end-customer, being very far from the engineer who will eventually diagnose the fault, ultimately has a very poor experience during the resolution process.

If the cloud is really about enabling access to cheap data, to create value, can operators develop smarter wholesale services to improve efficiency and customer experience? What use is there for abstraction layers to unlock internal management data?

Imagine an operator offering a white-labelled transport network for a large managed services or outsourcing provider. This would take ‘wires only’ to the next level by removing not only customer IP router management, but also something else that a ‘one-stop shop’ shouldn’t really need: human NOC eyeballs performing routine 1st line monitoring and support of all those VPNs, tail circuits and network termination devices.

It seems to me that large systems integrators could utilise APIs to operator assets, running their own software tools, pulling data directly from their core services and customer edge devices.

The key to making the operator value proposition unique here is in removing the friction that normally occurs when the outsourcing provider is supporting their end customers. The provider also has the ability to use the management data in a way that suits them. Global systems integrators have their own route to market for large contracts,they just need a network component in order to build a solution.

Conventional wisdom amongst network operators is to attempt to offer more service wrap to customers, not less. There is a common fear in the industry that now dissuades all operators from concentrating on what they do best, which is delivering bits. Nobody wants to miss out on what is perceived as the smart, high margin business – the “value-add” in managed services. I think it is worth taking time to question this view, for there are other ways to make ourselves invaluable to our customers.

Network operators are the communications enablers that sit between solutions providers and end-user businesses. Surely there is some way to offer more value here by selling intelligence, not just capacity. This kind of smart wholesale looks like an exciting opportunity to me.


Opening up networks (Part I): There’s nothing wrong with being a plumber, if you have a really cool toolbox

August 25, 2010


“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.” Mark Twain

The Internet has developed an annoying habit of eroding 20th century business models that were based on the artificial scarcity of some resource or service. The music recording  and newspaper industries have been grappling with this difficult truth, because their business was based on the belief that the media distribution mechanism was what had value. The whys and wherefores of these economic effects are an extensive and widely discussed topic, so you can do the research if you’re interested, but while we’re on this subject I’d like to highlight one of the best articles I’ve read recently: Jeff Jarvis’ summary of how the relationship between privacy and publicity has now inverted.

So anyway, back to data pipe operators. There has been a storm brewing for the last decade: I’ll just recap on the main “threat” for the benefit of anyone who isn’t familiar with this topic. In telecoms we have an industry built historically on voice and messaging services. Direct user-to-user services. The IP revolution, and convergence of all services onto this medium, has meant the end of vertically integrated services that are tied to the network. When communication services become decoupled from the transport network the old-world services lose their scarce status. Do you remember the news headlines when Skype began to get popular? Just wait and see what happens after today’s Google Mail “voice” kick-off.

Traditional voice minutes make juicy profit margins, whilst the data offerings that replace them do not. We have a digital communications industry converging on a commoditised data transport layer where price is the only key differentiator.

With the price of data connectivity tumbling, those margins will eventually become, in the words of Mr Creosote’s maître d’, “waffer thin”. Meanwhile the delta between data revenue and bandwidth usage is increasingly at an alarming rate, particularly for mobile operators. This is a big problem when you have a one-sided business model, where revenue comes only from selling these products to users.

And thus the scene is set for the following premise:

Long term growth in the telecoms industry will not come from just selling  connectivity.

Telcos’ (especially traditional, retail telcos) have a psychological inhibition – they really don’t want to be straight utility providers. After a century of business as usual, there is an entrenched belief within telcos, almost a sense of entitlement, that they should be the ones selling communications services to end users.  Consequently they fail to concentrate on what they still do best  – delivering bits – and instead we get what Rudolf van der Berg calls Apple and Google envy. The aspiration (as this 2007 Gartner report makes evident) is to be in consumer and enterprise IT “services”. Offering services is cool, being a digital plumber is not.

When the threat of ‘over-the-top’ providers began to take shape, somebody somewhere began talking about telcos being demoted to “dumb pipes”. Dean Bubley has pointed out that whoever coined the term “dumb pipe” has cost the industry untold millions. Indeed this negative response doesn’t get us very far. Particularly when, in reality, what is being threatened is merely the unwarranted assumptions of the industry. One of the knee-jerk reaction of those concerned was to start demanding payment from the likes of Google, on the grounds that they were getting a free ride.

The prevailing trend has been to go on the defensive, rather than changing the mindset of the business by considering the possibility that these threats might actually be perceived as opportunities. I am amongst those who think the industry needs to take a step back and accept that being a plumber is fine, when you happen to be in possession of a very flexible, intelligent toolbox. A toolbox that can create new value from the network and its data, and ultimately introduce new ways of doing business. After all, the network operator has the potential to understand the customer better than anyone, as Alan Quayle is keen to remind us.

Imagine the possibilities that could arise when we create an interface between the transport network, including all the high value data on it, and those who are best at innovation: software developers. In future posts on this topic I’ll take a look at some examples of what might be possible.