high, a vast amount of special knowledge is needed
in the vendor organization. High integration efforts
consume also the limited amount of compentent
employes of the vendor organization decreasing the
number of customers which it is capable to serve. As
a result, only few large vendors can survive in such
market, and the evolution towards horizontalized
market with standardized interfaces and established
standard architectures (see e.g., dominant design in
Murmann and Frenken 2006) may be delayed or
may never materialize.
The impact of the software interface
implementation efforts on the structure of the market
is studied in this paper on the example of the
telecom operator software. The so-called operations
support systems and business support systems
(OSS/BSS) are used by the telecom operators for
operating and monitoring their networks, as well as
for managing their performance, quality of service,
faults, configuration, roaming, accounting, customer
relationships, frauds, etc. (Terplan, 2001). Though
the OSS/BSS software has been used for several
decades, the software still remains to a large extent
vertically integrated. E.g. activation and
configuration software, performance and fault
management software is often produced by the
vendors of network element hardware.
In this paper, we study whether the high
complexity of the OSS/BSS software interfaces may
serve as a potential hindering factor for OSS/BSS
market horizontalization. We assume that OSS/BSS
software provided by a software vendor for an
incumbent operator needs to be integrated with a
large number of heterogeneous subsystems. Due to
the high interface implementation efforts, the
number of companies capable of providing
necessary integration decreases, and hence the
OSS/BSS market horizontalization may be delayed.
Based on the above assumption, a hypothesis is
made that the OSS/BSS market will split into the
submarket of incumbent operators with vertically
integrated systems, and the submarket of new
operators with vertically disintegrated systems.
Consequently, the OSS/BSS market is likely to be
polarized into many smaller players and few very
big players, serving two distinct types of customers
– respectively incumbent and new operators.
In order to verify the hypothesis, the interface
implementation efforts for incumbent and new
operators are compared in the paper. For this,
interface implementation efforts for the activation
and billing mediation segments are estimated. It is
found that the efforts needed for new operators are
significantly lower as compared with the efforts
required for the incumbents. As a result, a tentative
conclusion is made that the vertical disintegration is
more likely in the domain (submarket) of young
operators, and consequently, OSS/BSS market is
likely to become polarized into many small and few
very big software vendors.
The paper is organized as follows. In the next
section, an approach to interface implementation
efforts estimation is introduced. This appoach is
applied in section 3, in order to assess and compare
the efforts of implementing OSS/BSS mediation
interfaces. Some business implications of the results
of this study are provided in section 4, followed by
the conclusions in section 5.
2 INTERFACES AND THEIR
IMPLEMENTATION EFFORTS
In order to verify the hypothesis that the process of
market horizontalization may be hindered due to the
set of interfaces which need to be supported, we
consider the efforts which a software vendor needs
to devote to interface implementation and
maintenance. The effort estimations are employed as
an indicator reflecting the likely size of the software
vendors capable of providing these interfaces.
Higher interface implementation efforts resulting in
the greater size of the software vendors are assumed
to reduce the number of software vendors in the
market, and hence delay the horizontalization of the
market. Furthermore, horisontalization in two
submarkets can be compared on the basis of the
interface implementation efforts: the greater the
efforts, the more likely delays in the
horizontalization. Eventually, the submarket with the
lighter interface implementation efforts may
horizontalize while the submarket with greater
efforts may remain vertically integrated, thereby
resulting in a market polarization.
In this paper, an interface is defined as a stack of
protocols and associated data formats that govern a
communication between software subsystems.
Protocols in the stack may have different versions;
two interfaces comprised of the same protocols of
distinct versions are referred to as variations of the
interface.
Given an interface to be supported, human
resources are required not only to implement or
configure the software providing the interface, but
also afterwards – for maintenance, for
reconfiguration of a standardized interface, or in
order to perform new integration projects involving
ANALYZING IMPACT OF INTERFACE IMPLEMENTATION EFFORTS ON THE STRUCTURE OF A SOFTWARE
MARKET - OSS/BSS Market Polarization Scenario
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