Cognition 2.0

In previous blogs I have discussed the role of Service IDs and the evolution of terminal devices and services. One component we haven't spoken about is about the provider end and how it is connected to the huge and ever changing web of devices and users. In previous blogs I have also explored the MPP pattern for SOA and have shown its advantages when dealing with resource utilization and abstraction in the services layer, and the applicability and generality of the architectural pattern in the latter.

On the other hand, it is well known that Service Providers are not benefiting from the revenue flow going over their networks. The main source of revenue for them is the connectivity and, to some extent, also content services they provide to their customers as a 1:1 relationship with each end-user. Carriers also have interfaces to wholesale partners and other rebillers of services, but they are completely blind to the types of revenues that the network they laid out and maintain is enabling, and are excluded from participating in them.

So why then do I use the word "ecosystem" in the title? Because an ecosystem consists of a series of "systems" that depend on each other for them to survive. This means that it must be an "N-fold win" environment and process where all participants benefit from every interaction to give the system operational closure. It is a Nash Equilibrium state, where the strategy of any participant benefits that participant and the entire ecosystem, as well.

Pardon me if I don't go deeper into ecosystems and Nash stability problems, but the idea is clear: not only the individual but the entire group must benefit from the strategy of each individual that is part of an ecosystem. This is the main distinction I want to make when using the term ecosystem, as compared to other vendors that like using the term without really understanding what they say. They use the term lightheartedly and from their commercial practices and strategies you come to realize they are just using ecosystems to denote a set of interacting systems, and that's all. There is no concept of profit, except for the individual company with complete disregard of the effects on the entire group. Now, how does this apply to Service Providers in the telecommunications industry?

Telcos and the telecommunications space have undergone a series of transformations, namely:

• Network transformation
• Service transformation
• Business transformation

However, these transformations are not yet enough to accommodate ecosystems. As you may already know, each of the transformations are dependent on the former, i.e. service transformation is only possible once the network transformation is done or is at least underway. As an example, only once the network has been changed to an all IP network, services can be homologized and combined to provide a new series of product offerings and operational modalities. Same thing applies to business transformation as a result of service transformation, in which the new service offerings must yield the corresponding business benefits and by improving on existing business processes and strategies.

Still, all the above transformations contemplate the individual organization as their scope, however, and in order to be able to speak of an ecosystem, business transformation has to happen within a framework that includes not only the individual, but also the rest of the community, industry, or market segment. Enter the "Market transformation"...

A new transformation is due when speaking of business transformation, especially in these times of economic hardship and recession. The market is the collection of interacting entities with equal knowledge and governed by the market law of supply and demand. However, the law of supply and demand applies to only one product, or better put, to every product in the market. In our case, in this blog, the purpose is to study a set of products, each dependent on other products and with potentially complex interdependencies. We are interested in the market dynamics of a system of products that has both structure and temporality. In such a system, changes in one product will necessarily impact other products, and hence will influence and shift the behaviour of consumers and suppliers alike. The survival of a product and its underlying company that produces it depends on the economic equilibrium of price and quantity of the good, but we also know that the availability of the product may be dependent on another product being available and valuable, e.g. cars are dependent on fossil fuels being available and adequately priced. A sharp increase in price or lack of availability would negatively impact car sales.

As such, a new market paradigm has evolved and value chains are currently in effect. In the telecommunication space, the core network of service providers and services being consumed on top of it by users through devices has created a tightly integrated and controlled product system. Telecom carriers, service providers, and consumers are all dependent on basic core network capabilities warranted by the network, service, and business transformations, but each provider needs to specialize in its own capabilities and offer them in an abstract way. This means that the division between products and services will disappear and everything will become a service in the new economy. The network becomes a service the same as the product delivered on it becomes a service as well. Once everything is offered as a service, an ecosystem will begin to form and grow organically. The same way that the network transformation achieved all communications to be IP-based, the market transformation will achieve that all products will be delivered as services. No wonder that the terms Infrastructure as a Service (IaaS, Virtual Private Cloud), Platform as a Service (PaaS, capabilities for infrastructure to become the platform for developing code that extends the enterprise to the cloud), Software as a Service (SaaS, fully functional applications ready to be extended and customized by the consumer), and Desktop as a Service (DaaS, fully configurable virtual PCs that can run on any device and remember all the user's settings and files) are becoming more and more popular and available.

To summarize then, what is a Provider Ecosystem? It is an open market that follows a Nash equilibrium pattern and delivers value over the network through an integrated strategy of service-based offerings. The combination of services into products is the responsibility of consumers, but the service offerings are the responsibility of the service providers. Service Providers need to embrace new technologies that allow them to take their products to the network as services and offer them to any participant in the network, be they other Service Providers or consumers.