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In-house or Outsource? Evaluating the Make vs. Buy Decision

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Webinar | Make vs. Buy ...

Webinar | Make vs. Buy

When: Thursday, November 12th, 2009

Featured speaker: Brian Wood, VP Marketing, Continuous Computing

Sponsors: Continuous Computing, GoAhead, and Wind River

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In-house or Outsource? Evaluating the Make vs. Buy Decision In-house or Outsource? Evaluating the Make vs. Buy Decision Presentation Transcript

  • A Light Reading Webinar In-house or Outsource? Evaluating the Make vs. Buy Decision Thursday, November 12, 2009 Hosted by Simon Stanley Analyst at Large, Heavy Reading Principal Consultant, Earlswood Marketing
  • Speakers • Brian Wood VP of Marketing Continuous Computing • Bill Yaman VP of Marketing GoAhead Software • Jessica Schieve Director of Networking Solutions Wind River
  • Light Reading Make vs Buy Survey • Conducted during October 2009 • Based on >100 individuals at key NEPs • Broad geographical coverage • 44% US and Canada • 25% Europe • 15% Asia Pacific including China • Big and small NEPs • 38% > $1 Billion • 27% < $50 Million • Range of roles • 42% development and engineering management • 37% sales and marketing
  • Agenda • Market Trends • Product Development Cycles & Platform Evolution • Software Outsourcing & Carrier- Grade Attributes • ATCA & COTS Solutions • Conclusions • Q&A
  • Telecom Market Trends •Operators are challenged •Mobile traffic 2X every 9 months •New capacity growth only 20%/yr •Operators focused on increasing revenue & reducing OpEx / CapEx •NEP focus: key differentiation •Application development •Managed services •Customer support •Shift to standardized platforms •ATCA, AMC, MicroTCA •CG Linux OS •SA Forum middleware
  • Typical Product Development Cycle 45% 40% 35% 30% 25% Access/CPE Systems 20% Edge Systems Core Systems 15% 10% 5% 0% 6 months or 6 months - 12 months - 18 months - 24 months - Longer than less 12 months 18 months 24 months 30 months 30 months
  • Product Cycles and Requests for New Features • Product cycles are getting shorter • Historically time to 1st trial has been 2-3 years 45% • This is no longer a viable model 40% • Majority from survey (>60%) 35% 30% • < 18 months from inception 25% Access/CPE Systems to first trial for core systems 20% Edge Systems Core Systems 15% • < 12 months for Access & CPE 10% systems 5% 0% 6 months or 6 months - 12 months - 18 months - 24 months - Longer than less 12 months 18 months 24 months 30 months 30 months • Frequent requests for new features • Quarterly • 68% Access & CPE • 57% Edge and Core
  • Platform Evolution Less Costly but High Cost Best ROI Difficult Application Application APIs Vertically Mgmt Protocol Integrated System SW Approach OS MW ES HW HW HW HA Platform Proprietary platforms Horizontally-integrated Standards-based system In-house R&D + Integration “Plug-n-Play” fallacy Enables focus on value-add Shift From Vertical to Horizontal Integration
  • What Are NEPs Most Likely to Purchase? Best In-Class Building Blocks Pre-integrated Hardware Lowest Price Building Blocks Application Ready System Complete System 0% 10% 20% 30% 40% 50% 60% 70% Likely or Highly Likely
  • What Drives NEPs’ Decision to Buy a SW / HW Platform vs Develop? 60% 50% 40% Time-to-market Cost 30% Number of products available Functionality 20% Carrier-grade capability Standards 10% 0% Not Important 2 3 4 Critical 5 1
  • Platform Evolution High Cost, Better TTM, but Best TTM, Slow TTM Costly & Difficult Best ROI Application Application APIs Vertically Mgmt Protocol Integrated System SW Approach OS MW ES HW HW HW HA Platform Proprietary platforms Horizontally-integrated Standards-based system In-house R&D + Integration “Plug-n-Play” fallacy Enables focus on value-add 3 Years 2 Years 1 Year Shift From Vertical to Horizontal Integration
  • Time to Market Proprietary Platform Application System Platform Development Field Trials Development Integration Time to revenue (33-48 months) ATCA Platform Platform Application System Field Trials Development Development Integration Time to revenue (23-39 months) Application Ready ATCA Platform Plat Application System Dev Integration Field Trials Development Time to revenue (18-29 months) 6 12 18 24 30 36 42 48 Months Source: Earlswood Marketing
  • Achieving Measurable Results Development savings: 70 person years ($10M) Reduced time-to-market from 36 to 14 months Went from “zero” to commercial deployment in 9 months
  • Do NEPs Use Third Party Software? Value add & • > 50% outsource at least 20% differentiation of system software Applications Vendor D • 10% outsource 80-100% of system software Integrated COTS Vendor C Middleware • What are NEPs Outsourcing? Vendor B • Most NEPs outsourcing operating Standard O/S system Vendor A • Many outsourcing protocol stacks Standard Hardware and middleware • Some (~15%) outsourcing COTS-Based Platform applications and network management
  • Example NEP Solution Voice & Connectivity Session Service Applications Control, Management & Intelligent IP Charging Edge Component-based MW to match the product Domains Majority is open source & COTS Middleware Key functionality is in-house In-house integration software Standards always when applicable Operating Linux (mainstream), other commercial, in-house Systems Hardware Focused ATCA IT Hardware Hardware Source: Nokia Siemens Networks
  • How Often Do NEPs Upgrade Software? 45% 40% 35% 30% 25% Access/CPE Systems Edge Systems 20% Core Systems 15% 10% 5% 0% Quarterly Twice a year Yearly Longer
  • Audience Poll Is anything stopping you from meeting your software upgrade goals? • No, we’re meeting our upgrade goals • Yes, in-service upgrade restrictions • Yes, limited development resources • Yes, time to test upgrades • Yes, other issues
  • How Important is Standards Compliance? 3% Very important 21% Somewhat important Not important at all 76% • Software Standards Deliver • Platform Independence • Application Portability
  • Carrier-Grade Attributes Required Throughout the Entire System 3% Very important 23% Somewhat important Not important at all Carrier-Grade Applications High Availability Middleware 74% Carrier-Grade Linux or RTOS (VxWorks) COTS-based Hardware • Highly Available • Scalable • Standards Based • High Performance • Serviceable • Secure
  • ATCA Usage • Are NEPs Using ATCA? • >60% use ATCA for some systems • ~10% use ATCA for 80% of systems • Is ATCA COTS or In-house • ~40% is all in-house design • ~10% are 80-100% sourced from ecosystem • Market Data from Recent Heavy Reading Report • ATCA-based systems will be almost $800M in 2009 • COTS will be $423M in 2009 • Roughly 50/50
  • What Is Important to NEPs When Considering ATCA? Critical or Important Open standards Best-in-class components Total system solution CapEx Feature differentiation OpEx Ecosystem competition Vendor choice 0% 10% 20% 30% 40% 50% 60% 70% 80% • Open standards • No vendor lock-in • Max ecosystem innovation • Leverage Moore’s Law • Best-in-class components • Multi-core SW optimization • Focus on app software dev • Total system solution • Use common infrastructure • CapEx • Pay-as-you-go growth • Skip lengthy & costly R&D
  • Conclusions 1. Time to market is more critical than ever • 12-18 month product development cycles • Rapid introduction of new technologies • Shorter time to revenue 2. Standard platforms enable faster time to market & reduced cost of ownership • Best-in-class components • Application ready platforms 3. Off-the-shelf software & pre-integration further accelerate system development • Operating system, protocol software & middleware for many • Applications and network management for a few, but growing 4. ATCA used for some systems by more than 60% • 55% source some components from ecosystem
  • Q&A Please submit your questions to the speakers
  • Thank you for joining us today! For an archived version of this Webinar, please go to the Light Reading Webinars page: http://www.lightreading.com/webinars.asp