Talk about silos. Does it make sense for the creation and management of services to exist in different parts of the telecom brain?

Getting IP service creation right is the one play that will save the telecom service provider from annihilation by hip Internet companies such as Google, Yahoo! and Facebook, or so the story goes.

Service creation may indeed be the purview of IT-based Internet companies. And there is no doubt it is a competitive advantage, especially considering that creating services is something providers have historically relied on their switch and signaling vendors to do. They never really learned to fish in this regard.

However, creating a service is just the beginning; managing a service is a lifelong endeavor. Although in the disposable world of IP services, it may be a life-cycle endeavor. Telecom service providers have always been good at service management. You might say it is their purview. Because service providers can always find a way — and are indeed developing the infrastructure — to obtain new services from third-party developers, perhaps the real competitive edge will be in the management of services rather than their creation. Advantage: service provider.

Telecom experts see a resurgence of the service management market, and it is safe to assume that growth will not be for the management of legacy services.

Martin Creaner, president of the TeleManagement Forum, said that service management is reaching a second bloom of youth: “The way services have been managed in the last five years has been less than promised. Now, with this concept of end-to-end services, it is getting a whole new breath of life.”

Other experts agree. Matt Herdlein, executive director of service management for Telcordia, said the service management market has caught a second wind. “Three or four years ago it was a solution looking for a problem,” he said. “Now the market is exploding.”

After recently announcing a preferred vendor agreement with France Telecom for service management-related solutions across all its 157 properties, Herdlein said Telcordia has 21 other clients in its Service Director pipeline, which it could close in the next six months.

What has changed about service management, besides the demand, is that it is no longer limited to performance and fault management. “It now includes service quality management, service level agreement management, device performance and customer experience,” Herdlein said.

Something else has changed with service management. As evidenced by the cover story in Telephony's Guide to Business Transformation, the lines between service creation and service management have blurred. In fact, as demonstrated by Verizon with its approach for building new services on its FiOS network, service management and service creation will become equal parts of the more overarching process of application and service development.

For perhaps the first time in its history, Verizon has taken an approach to new service development that includes service management and other operations support systems/business support systems functions during the design and development of a product, including the device management capabilities mentioned earlier.

“When we were launching FiOS in May of '04, we did a lot of analysis on how to evolve our current systems. We bit the bullet and said we would do it the right way,” said Shadman Zafar, chief information officer for Verizon Telecom.

At the TM Forum's Management World Americas this week in Dallas, the organization is devoting nearly four hours on Wednesday to six sessions covering various aspects of service management. Sessions include discussions about the management of service level agreements — not only with customers, but with the content providers against whose purviews they are competing — and managing the customer experience. There also will be a session on a service management topic that is as political as it is technical: enabling guaranteed Internet.

The renewed interest in service management is reflected in OSS Observer's market forecast of the service assurance segment, in which the analyst firm includes service management. (See chart on page 22.) OSS Observer expects the service assurance market to grow by approximately $840 million over the next four years. That's about the same 10% compound annual growth rate of the overall global telecom software market. Last year, OSS Observer forecasted the service management market itself would grow from $172 million in 2006 to $561 million in 2011, a CAGR of 27%.

If Verizon is indicative of a new mind-set around service creation and management, it appears service providers are heeding the call of Pat Kelly, an analyst for OSS Observer, who said in his report, “If [communications service providers] hope to have any success in the marketplace on new services such as [voice over IP], IPTV and mobile video, service assurance deployments will need to occur prior to the introduction of the service, not after the early adopter's stage.”

Verizon is not alone in taking this new approach. The telecom market overall is drifting toward the IT-based service oriented architecture (SOA) that Verizon has deployed. It is the software segment's complement to IP multimedia subsystem (IMS) on the hardware side. SOA, by definition, looks at the world through the prism of the service rather than the network. And although both the IMS and SOA frameworks are designed for enabling a multitude of services, it appears that for those still measuring themselves by these individual yardsticks, the importance of service creation vs. service management will be determined by the most visible new service: video.

In all likelihood, the industry will come to the same conclusion as Verizon, which is that the two are not capabilities to be used as competitive tools against each other — i.e., Internet companies excel as service creation while telecom excels at management — but instead must become part of the same system.

Like SOA, the idea that service creation and service management will exist as part of some service development cloud is primarily conceptual. The service creation domain will still consist of third-party application development environments and service delivery platforms (SDPs) built on Web services, which in the words of IDC analyst Shira Levine are a manifestation of SOA for telecom. And the new craze called Web 2.0 is perhaps the next-generation application environment for those SDPs.

As for service management, it will still consist of myriad testing solutions, performance management and monitoring solutions, data collection and analysis tools, reporting tools, probes, and the fingers of operations personnel. These are the market segments for which the earlier forecasts were given. The players won't necessarily change, but the opportunity will. It will grow, and the new network architectures such as IMS and SOA will simply allow service providers to exploit them to a fuller potential.