RESEARCH FORECAST REPORT SERVICE FULFILMENT SYSTEMS: WORLDWIDE FORECAST 2017 2021 DEAN RAMSAY Analysys Mason Limited 2017 analysysmason.com
About this report This report provides forecasts for communications service provider (CSP) spending on telecoms-specific service fulfilment software systems. It provides details of how spending will vary by delivery type, service type and region across different subsegments. The report also provides recommendations for how vendors and CSPs can approach the changing demands of telecoms service fulfilment software. It is based on several sources, including: Analysys Mason s strategy reports and other analysis developed during the past year interviews with CSPs and vendors worldwide. GEOGRAPHICAL COVERAGE Worldwide Central and Eastern Europe Developed Asia Pacific Emerging Asia Pacific Latin America Middle East and North Africa North America Sub-Saharan Africa Western Europe SUB-SEGMENT COVERAGE Engineering systems Activation Inventory management Order management KEY QUESTIONS ANSWERED IN THIS REPORT What is the overall size of the telecoms service fulfilment software market and what will be the key drivers of growth in the next 5 years? How will spending vary across different sub-segments of the service fulfilment market? How will spending vary across different regions and service type? What are the major drivers and inhibitors that will affect growth rates of CSP spending on service fulfilment systems? WHO NEEDS TO READ THIS REPORT Vendor strategy teams that need to understand where growth is slowing and where it is increasing, according to different sub-segment categories. Product management teams responsible for feature functionality and geographical focus, and product marketing teams responsible for market-share growth. Market intelligence teams at vendors that want to understand how their competitors compare with each other. CSPs planning network function virtualisation (NFV)/software-defined networking (SDN) and digital transformation journeys. Analysys Mason Limited 2017 2
Three key trends expected during 2017 2021 1 2 3 Increased network function virtualisation is inevitable and the traditional OSS concepts will become unsellable in developed markets. The NFV boom seems to be developing more slowly than expected. However, the move to a programmable virtualised network is now unstoppable and vendors that cling to traditional ways of selling OSS products will suffer in the coming years. CSPs are increasingly looking for progressive NFV/SDN-ready solutions and services that will allow them to evolve. SaaS delivery models will increase during the forecast period, but we do not expect this to be the primary method of deployment by that time. Increasing cost pressure and improved confidence in cloud delivery is driving growth of SaaS delivery models in areas such as activation and some field engineering systems. However, in other core fulfilment areas, CSPs will continue with more-traditional onpremises or cloud deployments, not in a SaaS model. The SaaS delivery model is more popular in the engineering systems sub-segment because of the tool-like nature of these systems. Growth in service fulfilment professional services revenue will be small, but the SI segment will see some revenue growth. Many new paradigms, systems and architectures are being tested as part of the virtualisation of the network and the fulfilment of new digital services. Over the forecast period, this will translate into increased SI work for suppliers as the CSPs try to make the next generation of concepts and software work together in the way it should. Field services revenue will increase when 5G deployments start in 2019. Analysys Mason Limited 2017 4
Recommendations for CSPs 1 Digital transformation is key for CSPs to access revenue beyond traditional connectivity and multimedia. The timing of CSPs digital transformation projects will create a temporary hierarchy of operators that are capable of engaging in adjacent business models and accessing new digital service revenue. Part of this transformation journey is an upgraded network and OSS architecture based around hybrid virtual/traditional networking, slowly phasing towards virtual. Fulfilling services in this paradigm will require a service orchestration system, digital service catalogue, dynamic next-generation network inventory and integrated service assurance. 2 CSPs that introduce virtualisation should develop a strategy for deploying a service orchestration system. Operators focusing on the introduction of NFV/SDN should have a parallel strategy for introducing service orchestration in the OSS. Business processes and OSS support in the stack above the hybrid network must be significantly altered to fulfil services over this more dynamic ecosystem. Service orchestration will enable CSPs to maximise the benefits of NFV and to realise new efficiencies in the ordering and provisioning process. Failure to modernise the fulfilment stack will lead to issues in exploiting the advantages of NFV/SDN. 3 5G and small-cell densification will dramatically change the requirements of RAN planning and optimisation. The radio network will evolve during the forecast period. In 2017, CSPs such as AT&T and China Mobile are densifying metro RANs with small cells, paving the way for 5G deployments. This will have a huge impact on the way these dynamic 3D radio maps are planned, maintained and optimised. MNOs need to partner with a RAN optimisation specialist to perform a standards-based approach and co-operate with other MNOs to navigate through the high-interference environment of 5G. Analysys Mason Limited 2017 14
Recommendations for vendors 1 The orchestration of a software-programmable network will be key for CSPs that introduce NFV/SDN in the next 5 years; a proven record of delivering vngn-sf solutions will give them a competitive advantage. Introducing NFV technology into a network without a modern NFV-ready OSS will not allow a CSP to take full advantage of the virtualised architecture. Fulfilling services over that network in an agile real-time fashion requires a service orchestration paradigm and various upgraded OSS components, such as a digital service catalogue and dynamic inventory. This requirement will drive new revenue in the space to 2021. 2 Vendors should have their own open-source strategy and be ready for open source to disrupt their existing business. The use of open-source software and platforms is widely accepted across the telecoms software landscape, but developments in 2017 such as ONAP and OSM suggest that COTS product revenue is likely to slow over the forecast period. It would be prudent for vendors to engage with these groups to establish their place in the future value chain. 3 Digitalisation is a broad prospect and many new opportunities are on the horizon; helping CSPs on their journey to becoming digital service providers is the cash cow of the coming decade. The incentive for transitional CSPs is that new, previously unobtainable, or previously non-existent revenue is accessible to them if they can play a larger role in the digital economy than just that of connectivity provider. This presents an opportunity for vendors to enable low-friction holistic service fulfilment for a constellation of new services. Empowering that transformation will be the new revenue hothouse for fulfilment vendors. Analysys Mason Limited 2017 15
CONTENTS EXECUTIVE SUMMARY RECOMMENDATIONS FORECAST MARKET DRIVERS AND INHIBITORS BUSINESS ENVIRONMENT MARKET DEFINITION ABOUT THE AUTHOR AND ANALYSYS MASON Analysys Mason Limited 2017 48
About the author Dean Ramsay (Senior Analyst) is a member of Analysys Mason s Telecoms Software and Networks research team. He leads the Service Fulfilment research programme and contributes content to the CSP IT Strategies programme. He has 16 years of experience in the telecoms industry, working initially in network inventory management at MCI Worldcom and Verizon Business and, subsequently, as a service delivery manager with several tier-2 carriers and interconnect providers. Dean joined Analysys Mason in 2011 following 2 years working as an analyst in the mobile sector. He holds a BA in English from Anglia Ruskin University. Analysys Mason Limited 2017 49
Analysys Mason s consulting and research are uniquely positioned Analysys Mason s consulting services and research portfolio CONSULTING We deliver tangible benefits to clients across the telecoms industry: communications and digital service providers, vendors, financial and strategic investors, private equity and infrastructure funds, governments, regulators, broadcasters, and service and content providers Our sector specialists understand the distinct local challenges facing clients, in addition to the wider effects of global forces. We are future-focused and help clients understand the challenges and opportunities that new technology brings. RESEARCH Our dedicated team of analysts track and forecast the different services accessed by consumers and enterprises. We offer detailed insight into the software, infrastructure and technology delivering those services. Clients benefit from regular and timely intelligence, and direct access to analysts. Analysys Mason Limited 2017 50
Research from Analysys Mason Analysys Mason Limited 2017 51
Consulting from Analysys Mason Analysys Mason Limited 2017 52
PUBLISHED BY ANALYSYS MASON LIMITED IN AUGUST 2017 Bush House North West Wing Aldwych London WC2B 4PJ UK Tel: +44 (0)20 7395 9000 Email: research@analysysmason.com www.analysysmason.com/research Registered in England No. 5177472 Analysys Mason Limited 2017. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means electronic, mechanical, photocopying, recording or otherwise without the prior written permission of the publisher. Figures and projections contained in this report are based on publicly available information only and are produced by the Research Division of Analysys Mason Limited independently of any client-specific work within Analysys Mason Limited. The opinions expressed are those of the stated authors only. Analysys Mason Limited recognises that many terms appearing in this report are proprietary; all such trademarks are acknowledged and every effort has been made to indicate them by the normal UK publishing practice of capitalisation. However, the presence of a term, in whatever form, does not affect its legal status as a trademark. Analysys Mason Limited maintains that all reasonable care and skill have been used in the compilation of this publication. However, Analysys Mason Limited shall not be under any liability for loss or damage (including consequential loss) whatsoever or howsoever arising as a result of the use of this publication by the customer, his servants, agents or any third party. Analysys Mason Limited 2017