Market Assessment: Service Verification Technologies

Market definition: After a communication service is activated, service providers must ensure that the service is being delivered to the customer as it was originally ordered. Service verification tools perform this service assurance task by validating device configurations, auditing service paths, and, when trouble is found, rolling back configurations to previous, proven versions. Service verification tools also sometimes include device configuration state maintenance as well, although this sometimes overlaps with the function of service activation tools. Service activation tools must interface with the operational support system (OSS) as well as network devices such as routers. These systems also must interoperate with the OSS components that perform service definition and network planning and installation functions.

Market Review:

• More Overlap: Many competitors in the service activation space offer service verification technology, as do competitors in the performance management and reporting space. As hard times drive these competitors to enter more markets to secure sufficient revenue, we will see even more overlap among service activation, service verification, and performance management vendors.
• More Competitors: The operational support system market is currently characterized by a large and growing array of players varying greatly in size and focus. Smaller, newer competitors such as AI Metrix and Dorado will continue to offer service verification as part of end-to-end solutions that compete with traditional giants Telcordia and Ericsson, along with new niche players in the market such as GoldWire and Viewgate.
• Expanding Partnerships: Many service verification players are forming partnerships with service activation and service management vendors that offer complementary services.

Near-Term Market Drivers:

• Hard Times in the Service Provider Market: A general economic downturn will continue to force service verification vendors to scramble to expand and strengthen sales and sales channels at almost any cost.
• Customer-facing SLM Morphs into Service Verification Temporarily: Due to the breakneck growth and overnight decline of custom IP service providers, vendors of IP service level management products have found that their products haven’t really been embraced yet. But these same products can be quickly adapted to perform vital service verification within the service provider network, providing cash flow to their vendors in hard times. A case in point is SLM-vendor-turned-service-verification vendor Viewgate Networks.
• More Partnerships: Service verification vendors will continue to form partnerships in an effort to expand sales channels. As the service provider market enters an upturn, we can expect consolidation in the entire OSS market as these strategic partnerships formed in hard times with complementary and even competing vendors ultimately become mergers when cash starts flowing again.
• Service Providers Seek to Create Competitive Advantages for Themselves: Service providers will increasingly turn to offering custom communication services based on IP. As the market for these differentiated IP services grows, the demand for systems that enable rapid creation, activation, and verification of these packet services will grow with it.
• Enterprise Customer Demand for Self-service Provisioning: Demand for self-provisioning via service portals is growing. These self-service portals require IP service verification tools to ensure that user-provisioned services actually meet user specifications. Due to the nature of user self-provisioning, customer-facing service verification tools will be especially critical in this environment.
• Search for Simplicity: Service providers need simpler, faster, and more streamlined service verification tools for deploying IP services that interface with service activation and OSS systems, thus driving more development partnerships. As the service provider markets enter an upturn, many of these partnerships will become mergers and acquisitions.
• Increasing Merger and Acquisition Activity: As dipping stock prices create tempting bargains, expect partnerships formed to extend functionality to result in mergers and acquisitions. Don’t be surprised when former competitors merge into a single company offering expanded functionality, especially in the service verification/fault management/performance management space.

Long-Term Market Drivers:

• Need for Faster Revenue Generation: The lure of faster revenue flows is a key business driver for service verification technology. Rapid provisioning tools enable quick deployment of services, which if properly verified enables quicker billing and faster revenue recovery, leading to better cash flow for service providers.
• Supremacy of Simplicity: Customer demand for simplicity of implementation, verification, and management, as well as one-stop shopping, will drive vendors either to expand their product lines or merge with vendors of complementary products.
• Interface with Billing Systems: Verifying service delivery and service levels is not enough for sophisticated custom IP service clients. These clients also want rapid billing adjustments for services not delivered properly and/or on time. Therefore, service verification systems will be integrated with performance monitoring and billing systems to meet customer demands.

Offensive vs. Defensive Responses:

Service Providers Seek to Create Competitive Advantages for Themselves

Offensive

• Service providers must offer not only rapid deployment of custom IP communication services, but also quick and constant verification of those services to establish a competitive advantage in the marketplace.

Defensive

• Custom IP communication services have not proven their profitability. Fast deployment of “fat pipes” is the quickest, least expensive, and most reliable means for service providers to generate revenue.

Enterprise Customer Demand for Self-service Provisioning

Offensive

· Service providers must offer self-service provisioning via service portals. Therefore, service providers must purchase IP service verification tools from a vendor that can support on-demand provisioning via Web portals.

Defensive

• Self-service portals have not proven their profitability. Despite guaranteed profitability, self-service portals most definitely will jeopardize the overall viability of a service provider’s network, as well as create problems in defining and meeting realistic service level agreements.

Search for Simplicity

Offensive

• Service providers need simpler, more streamlined IP service verification tools that interface with a variety of OSS components from multiple vendors.

Defensive

• The benefits of being able to select “best of breed” service verification components are unproven, and are likely negligible when compared to the speed and efficiency of one-stop shopping for all OSS component products. Besides, current IP service activation tools often include elements of service verification, which makes purchasing separate verification tools largely unnecessary.