The integration of complex, sophisticated and costly "back office" systems is prompting a fundamental change in how cable operators choose their software, hardware, equipment and system management providers.
A customer service rep. views a screen from the Intelligent Customer Support Solution (ICSS) from Jones Cyber Solutions.
Aging legacy networks with their patchwork quilts of disparate systems, and the push to capture new revenues from video, voice and data services, are forcing many cable operations to partner with dozens of pure-bred back office system providers, each with a specific service or product necessary for an efficient back office operation.
Consequently, the one-vendor-can-do-it-all mentality is fast becoming a distant memory. Vendors are definitely seeing the value of partnering with each other as they scramble to meet the cable industry's exploding back office demands, and are following the lead of a new breed of system integrators and a host of ancillary service providers.
Piecing together the back office system mosaic, which includes a vast array of software, hardware and management systems all expected to seamlessly work together to provision, bill, service and maintain customers, now requires more than a single provider with an "end-to-end" solution.
"It's not possible for us, or anyone else, to deliver the new technology, software and hardware required in today's complex infrastructures, so it means we have to work with other vendors," Van Zant says.
Even traditional billing and customer care providers such as DST/Innovis admit that back office times are quickly changing, and the partnership strategy is gaining momentum.
"When you knit together different components from different vendors, you need interfaces, and no one can do it all. We can do billing and customer care, but what a single vendor can usually offer is a mile wide and an inch deep, so the best-of-breed mentality is very appealing," says Bob McKenzie, senior vice president of strategic marketing for DST/Innovis.
Yet, even with all the interest being shown in this strategy, it could use a boost from open standards, which experts say will go a long way toward helping it reach its full, competitive and cost-savings potential.
"AT&T is running three different billing systems and they almost compete with each other. We have to help integrate them. But how? Our plan is to open products up, but there are still challenges with standardization and interfaces. The key for us is to nurture relationships with other vendors, and we need interface capabilities with other vendors and systems," McKenzie admits.
The front end of ICOMS, Convergys' cable/broadband solution.
"They have at least two (disparate) systems, and the problem is (that) they just can't provision telephone service, so they are downplaying it," says one person familiar with the situation who preferred not to be identified. "Most U.S. cable operators are now understanding one-stop shopping isn't a good plan, but some are locked into long-term agreements, some for as many as 15 years, so they either have to buy the vendor out or get around the contracts."
Contracts or not, AT&T is pushing ahead with its back office integration plans, albeit with some trepidation. "We have long-term agreements in place, but won't talk about them," says Joe Bagan, senior vice president and CIO for AT&T Broadband. "Some of the areas (represent) big challenges, so we try to purchase intellectual capital from companies to make the provisioning pieces work. Our plan is to use the best (products) we can. The biggest benefit to the long-term agreements is the companies have an organizational history, which has helped us."
AT&T, Bagan says, is operating under a "buy before we build" philosophy of adding pieces of technology "that work" in its back office, especially in its drive to deploy more cable telephone service. "Telephony is very complex, with lots of rules, regulations and steps to get provisioned correctly. The challenge for us will be to automate as quickly as possible," he says.
Smart product planning will help, too, experts insist. In fact, without it, a back office can easily become an unruly mess. "Some lose site of that philosophy and do small pieces of customization, and it grows to 20 different products. Not many companies can afford the perceived benefits of a custom solution. Some companies have spent hundreds of millions of dollars for them, and they failed," says Curt Champion, director of cable and broadband marketing for Convergys Corp., a billing and customer care provider.
Convergys, he notes, now understands its emerging role in the best-of-breed strategy. "Companies don't look for us to do 90 percent of their back office integration. They're finding best- of-breed to do provisioning, enhanced workforce management, administration, etc. We may provide 70 percent to one company, while another may just want baseline functionality."
For major players such as Cox Communications, which arguably is the most aggressive cable operator in the drive to roll out the triple play of services, its back office issues stretch beyond the residential market into the commercial segment.
"We're trying to focus on business users and leverage what's in place with residential billing and customer care engines and bring in other services from different vendors, but it's a very different customer base. We must maintain the flexibility of our bundles and the provisioning, installation, service, support and billing functions," says Clayton Lia Braaten, vice president of operations for Cox business services.
For that to happen, Lia Braaten says, vendors must help with the answers. "We insist on open APIs and won't change out our billing engine, so vendors need to find a way for a gateway to billing systems to attract and retain customers. The key is to strike a balance between vendors."
Balancing a gaggle of vendors has its own set of challenges. Says Lia Braaten: "Life is easier if there are six or less vendors. It's too difficult to manage 30 different vendors."
Yet committing to one or two back office system integrators could be just as risky. "Operators recognize there is no single vendor or solution, but some have walked into long-term contracts which they aren't happy about because of the proprietary products, and customers are exasperated with that," says Carrie Packer, vice president of broadband management services for C-COR.net, an equipment and technical services provider.
There's an added catch, however. "Operators don't believe one vendor can do it all, but they also want to call just one number for service–but can't. If they have one vendor, they could be held hostage with set prices, and there are lots of proprietary walls up. With best-of-breed, they have multiple vendors. That's where we work best," Packer maintains.
She also suggests that cable operators "must insist on open network interfaces." For the multiple vendor strategy to work, she adds, "we need operators to force system standards because we need access to open systems, which sets up the choice for best-of-breed products."
The wide range of software, hardware and management systems crucial to the new era of integrated back office systems is sprouting new vendors into the market as well, particularly in the billing segment, and reflects the integration mentality.
"We're different than the legacy billing companies," says Erik Wetmore, senior manager of market development for Portal Software Inc., a billing software provider with 20 cable and DBS customers. "We look at it from a billing operations system because 80 to 90 percent of billing is the same across all markets, and we can supplement a cable operator's legacy system with nearly 300 partners and an alliance team that manages them."
Portal uses a group of system integration partners in sync with its billing and customer management software, which Wetmore maintains is the essence of the best-of-breed approach.
"Operators don't want 10 different vendors, but two or three–and then fill in the ancillary gaps. In today's marketplace, it's not just a selection of eight players, and you can't start from a crawl to an immediate sprint. Intelligent steps are needed along the way," he says.
The market is beginning to step up its activity, experts say. "The market is just waking up and understanding its need for a flexible back office system. Operators and vendors accept the fact that legacy systems won't carry the day, and that's step one. Operators are now willing to pay 20 to 25 cents a month per subscriber just for the software," says Del Guynes, vice president of business development for Jones Cyber Solutions, a developer of custom care software products.
Just how closely cable operators and the new era of back office system integrators–from software providers to field operations–can work together could determine the success of this new best-of-breed strategy. In the meantime, most experts agree that more back office system vendors will be bursting onto the scene.