By: Scott St. John

The customer relationship management software (CRM) landscape for communications service providers (CSPs) has been largely dominated by industry-giants, Amdocs (NYSE: DOX) and Oracle (NASDAQ: ORCL). But why and at what cost?

Both companies have been on a bit of a buying spree for some time, gobbling up Independent Software Vendors (ISVs) at an impressive clip. In many ways, their acquisition strategies have led to their market dominance, providing them both with an impressive, sasquatch-sized footprint while reassuring their best-of-suite pedigree. However, their seemingly insatiable appetite for acquisitions has also left somewhat of a hole in the fabric of the OSS/BSS landscape; one that might be soon filled by software-bellwether Microsoft and a growing army of partners.

Prior to Amdocs’ acquisition of Nortel’s Clarify CRM in 2001, the CRM landscape was quite different. You saw companies like Clarify, Siebel, Peoplesoft, and Oracle slugging it out for a piece of the CRM market. And, like all good oligopolies, this competition was good for customers, but all that was about to change.

Amdocs’ acquisition arguably removed Clarify as a major competitive threat from the enterprise marketplace, but it provided Amdocs with a best-of-breed CRM solution and an impressive list of nearly 300 customers, including many household names in telecom. It was a bold move by Amdocs and it wasn’t entirely well received. Analyst firm, Forrester even urged Clarify customers to migrate to other CRM solutions at the time. However, coupling Clarify’s CRM prominence with Amdocs’ vertical telecom focus was a little divine inspiration. It gave Amdocs a significant advantage and head-start towards building a cohesive customer-experience management suite for communications service providers (CSPs). Since then, Amdocs has intentionally continued to consume specific companies that further round-out their OSS/BSS portfolio including such companies as Cramer, Longshine, SigValue, and, most recently, Bridgewater.

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Not to be outdone by Amdocs, Oracle struck back with monster acquisitions like Siebel and Peoplesoft (collectively totaling over $15B), followed by smaller, but more telecom-specific, acquisitions of Portal Software, Metasolv, and Netsure. Notably, Oracle’s acquisition strategy appeared to be more focused on consuming key rivals Siebel and Peoplesoft. However, their investments in OSS-leader Metasolv, Portal and Netsure affirm their focus on the telco marketplace. Even so, Oracle’s strategy does seem to fall a little short of the strong vertical focus on CSPs that Amdocs continues to bring to the table.

After the dust settled, and I’m not entirely convinced it has, Amdocs and Oracle’s aggressive, grow-through-acquisition strategy collectively cost over $18 billion dollars and removed 10 key innovators from the OSS/BSS marketplace (Fig. 1). If you add other notable industry acquisitions during this time to the mix such as Syndesis (by Subex), NetCracker (by NEC), and most recently Intec (by CSGI); over a dozen leading OSS/BSS providers have been swallowed up in the last decade alone. This has not only significantly diminished competition and innovation; it also has also created a steep up-hill battle for any independent software company that is trying to compete with more than one 500-pound gorilla in the room. From a customer perspective, top-tier CSPs only have a few real choices left and the right one depends on, well, their risk tolerance.

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