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Wednesday, September 20, 2006

IMS is just an application

It was my pleasure to spent some time at the VON conference in Boston last week having an off-the-record conversation with an executive from one of the big IT vendors. As a former Oracle employee, I have a pretty good insight to what makes the players in this space tick. They've all got big plans. If my correspondent is right (and history is on his side), there's about to be a major supply-side change in telecom.

A few years ago, IBM was heavily pushing their Service Provider Delivery Platform (SPDE) initiative. Whilst not completely congruent with IMS, it occupies more-or-less the same space. It got a bit stuck in the mud, probably being ahead of both its time and IBM's sales abilities. Everyone likes to use the "C" word (hint: _onvergence_) to describe change in this industry, none more so than the meeting of IT and Telecom. Yet almost every time you see the 11-letter swear word, you know some intellectual sin is hiding closeby. In this case, the "convergence" is really a titanic battle between traditional network equipment providers and IT vendors that mirrors the battle between the Internet players and Telcos for user attention.

Now everyone's playing the service delivery platform (SDP) game. IBM, Oracle, Microsoft and BEA vs. Lucent, Nortel, Alcatel, Nokia, Motorola and Ericsson (not to say Huawei and others). Cisco and others are hiding low enough in the stack to bypass the conflict zones. Both sides have seen massive commercial bloodshed in recent years, and are fit and hardened. My hunch is that the IT side is fitter, and is about to eat a lot of the Network Equipment Provider (NEP) business.

Some highlights of our discussion.

The big IT platform vendors have long offered a suite of both horizontal business applications (e.g. HR, Finance) as well as vertical solutions (e.g. manufacturing). As far as this vendor is concerned, a telco is just another software application that resides in a common application, storage and management framework. Granted, there are some special tweaks and extra capabilities needed, but not a separate supplier ecosystem.

As my source puts it: "IMS isn't a platform. We're the platform, IMS is just an application. And you don't hard wire an application into your network, particularly one as complex and inflexible as IMS."

We also know the story. Ghandi-like, the IT vendor enters with a fresh product unproven in battle, and gets laughed at by existing specialists in the domain. The consultants go on an implementation death march, the project manager loses his bonus, the salesman gets sacked. Then the product matures, and the enemy opens fire. Then the IT company wins: they work out not just the technology, but how to make the sale. In the case of IBM, for example, they'll package it with outsourcing services, and access to IBM's enterprise sales channels.

This is probably a good time to be concerned as an investor or employee of a NEP who isn't following the Telco 2.0 mantra: get ready to specialise in what you do uniquely well, or diversify into adjacent markets. We've been here before. Oracle's founder Larry Ellison was right a few years back when he said there would be horizontal consolidation, and he bought out Peoplesoft and Siebel. Now only small niche vendors can compete in HR and CRM apps. With less fanfare, he and his competitors are gunning to absorb the vertical applications.

The telco and NEP response historically is: we're special, real-time is too hard for generic IT kit, our volumes are too big, out uptimes too tough. That might have been true one day, but take Oracle as a case study again. Note how they have already absorbed companied like TimesTen whose original raison d'etre was to do the transaction processing for telcos that other databases couldn't touch. The sands of time are flowing against this argument that telecom is special and unique. Oracle will, naturally, be more than happy to take your money to deploy IMS applications within their framework -- as will IBM, Sun, BEA and others. In my conversation it was suggested that IMS will be just one of many service delivery "libraries" around -- its being a bloated Tower of Babel restricting its use to a few narrow PSTN replacement and FMC uses, and simpler systems being deployed for most uses. Service-oriented architectures are also a competitor, as they enable intelligent end-points to access the raw presence and profile data and make their own routing decisions, rather than have an inflexible network do it for them.

Each of the IT vendors has different strengths and weaknesses: IBM's services, Oracle sales, BEA's technology, Microsoft's zeal. Too early to say how much flesh each vulture will rip off the service delivery platform carcasses.

Also at VON were a host of smaller IMS vendors. A few will flip into the hands of the big IT companies as they fill out the components of their platform via acquisition. That means you need to focus on one component, do it better than anyone else, and look for the exit. The history of IT is littered with bodies of small companies that thought they could prosper independent of the ecosystem hubs. (There are a few exceptions like security products that for political reasons require market separation.) Given the weak differentiation message of some of these, I don't expect to see them around for too long. If you're not the _only_ or _best_ at something, I'd liquidate the capital quick and return it to the shareholders.

I personally believe the future is a service-oriented architecture, not a session-oriented one. There's a big "SO WHAT?" for operators here. They need to change culture, structure and process to avoid conflict between IT and network functions. The specific things we at IMS Insider think should be done will have to wait for another day, however.

Naturally, I'd be the world's worst salesman not to suggest you come to London on 4-5 October to debate this with your peers at our IMS Services Forum industry brainstorm event.

Comments:
Nice article!

I think there are a number of reasons IMS is in trouble.

One reason is there is no common developer structure/interface, that is/will be(?) deployed/offered across the carriers, for third party developers. I hear the talk about IMS applications, what I do not see is how IMS is going to offer an open, compliant standards approach for third party developers. The carriers are not interested. They typically want IMS in order to deliver and sell unique applications to their customers for increased profit margins. They are not interested in a common industry approach, since they would be offering a common offering and loose their margins.

The IT world leaders have an interesting opportunity to change the teleco world.

We shall see!
 
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