In one way this is very opportunistic for the service providers. The existing market for OSS and BSS products is very murky. Promises are made and not kept. Expectations are dashed again and again. Vendor consolidation puts valued products out of the future strategic portfolio of big software conglomerates. Outrageous prices. Many service providers would now just like to start over fresh. Walk away from investments in old OSS/BSS that are underwater and will never provide that multiple return on value.
And pressures exist to do just that. New competition: small providers are entering the market in ever greater numbers. Internationally, there are more providers today than existed before the bubble. Many of these new providers are targeting very specific markets, either by region or by type: segmentation such as new office and residential developments, or big retail store chains. In attacking dynamic new markets, these service providers demand the ever elusive, agile infrastructure. They are buying new OSS/BSS.
Knowing where to set the price for your product or service is a critical piece of information.
Ironically, among big service providers and vendors it does. Mostly the service providers learn the relative prices via the RFP bidding processes. Vendors and providers jostle for position and in so doing self correct abnormal prices in vendor markets.
If prices are only given out under NDA, how does a provider leverage price adjustments? Actually, most providers either do not accept the NDA associated with price disclosure or quietly break it. They leak the price of one vendor to competitive vendors in order to drive down prices during closed bidding. If, as a vendor, your bid is too high, someone at the service provider will tell you. So after a while, all the “in players” pretty much know each other’s prices. Only the small vendors and the newcomers are left out in the cold. Unfortunately, this describes the cloud-based software vendors.
Hidden Costs
Basically today most entrenched OSS/BSS companies are hiding their prices. Discounts and custom pricing have become the norm. Some of this is a result of the price depression after the bubble when vendors had to sell at any price to survive, but did not want to seem less valuable than before. In the tough times, more “poker playing” mentalities survived as telecom executives than did the open, idealistic executives. These “poker players” deeply believe in never showing their hand during a negotiation. Prices are seldom accepted and the typical buying process involves bidding down vendor prices. So where prices are openly posted, they are overinflated to allow for these future discounts.
Open Pricing leads to healthy markets; this is an age old, economic axiom. Prices are critical information that seems “missing” from the service provider decision matrix. So, can healthy competition occur in markets where secrete high prices are always discounted?
Seeking Parity in Price and Value
So, how should vendors set prices for OSS/BSS support software and for service provider products in this transition from the old school, “perpetual license” price model to the cloud-based subscription model?
Decision Analysis proves what common sense tells us. It is worthwhile to buy information when the knowledge will change the balance between two otherwise equal choices in a critical decision. As a vendor, knowing where to set the price for your product or service is a critical piece of information that becomes quite valuable. At the margin point of a choice, the pivotal point of a sale where a buyer decides between two product choices, to the seller the information is worth the perceived value differential in the buyers head. So also a buyer, a service provider or OEM/re-seller, will pay for information which reliably describes the relative value of different product choices. A key word here is “reliability”; in practice all information must also be discounted by the uncertainty that it is
Pipeline
Publishing, Volume 6, Issue 9
