NEON Lights Solution To Cable Software Mix

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The cable industry's growing dependence on software
and network solutions for activating and managing virtually every aspect of its business
-- from the back office to customers' homes -- has created a puzzle about how
disparate software can communicate.

The complex mix of new software and how it blends with
existing software -- frequently itself a grab bag of off-the-shelf products -- is gaining
mission-critical status for many cable operators as MSOs morph into multimedia companies
through the addition of new technologies for Internet access, Internet-protocol telephony
and digital video.

This expanding software patchwork also draws a new breed of
company rarely seen in the cable industry but likely to become familiar: the software
integrator. New Era of Networks Inc. (NEON) is one such firm.

NEON is a five-year-old Denver-based software-integration
company. Its 2,000 customers have included such powerhouses as AT&T Corp., British
Telecommunications plc, Hewlett-Packard Co., IBM Corp., Lucent Technologies and Nortel
Networks.

Now, it's turning to a fertile cable market, as MSOs
scramble to install software solutions that speak a common language.

"This is an entirely different approach for cable
operators," said Dick Abramson, president of the newly created
communications-industry group at NEON. "The time and cost advantages are great, and
the businesspeople at cable systems know that. Their jobs get less complicated by using
one application."

Abramson said that for NEON, that one application is its
"Enterprise Application Integration," which is designed to eliminate what he
termed "inter-applications spaghetti," or the dozens of applications that need
to work together but don't.

NEON provides software that replaces the spaghetti with a
hub-and-spoke architecture designed to get disparate software to communicate through its
hub, where the software language is broken down and information is channeled to the right
applications at the right time in the right format.

The result, Abramson said, is a "blueprint
service" that can provide cable operators, utilities and telephone companies with a
road map through the complex world of software integration.

"We look at the business recommendations from the
technology and business-feasibility aspects, suggest how services can interact and develop
a map to integration," he said. "Our technology can become a 'wrapper'
around older applications until newer ones are ready."

With the hub-and-spoke approach, cable-system disciplines
such as order management, customer records, network-interface systems, order entry,
billing systems and the entire system's inter-application environment flow through
NEON's EAI hub, which, in turn, translates myriad software languages.

EAI can translate any software language because "we
define the rules with each procedure and make decisions based on content," NEON vice
president of marketing Fred Thompson said.

NEON's application also has marketing implications,
Thompson said. "It can build profiles, databases and data warehousing, and it can
capture profiles in real time. The real challenge for cable systems like AT&T is to
pull together customer databases and billing records," he added.

The move into the cable industry by software-integration
companies such as NEON reflects cable's emergence into a multiservice business and
its growing need for integrated networks. With that emergence, however, come challenges,
including outdated and disparate software.

"Cable is beginning to see a lot of the technical and
business challenges the telcos have seen the past 10 years," Thompson said. "Our
challenge is to see how we can apply our service to those."

According to analysts, cable operators may have little
choice but to make the best of their piecework software.

"Few companies can afford $300 million to $500 million
to develop end-to-end solutions, and it's not possible for one software company to
provide that. So the only choice is for point-to-point solutions and to patch things
together," said Harry Tse, vice president of research for The Yankee Group, a
Boston-based market-research firm.

Finding a software company to do the patching is a
challenge in itself, Tse said. "Industries such as cable, telecommunications,
utilities and insurance have no product commercially available to them because the
risk-reward isn't attractive enough for a software company to sell products to those
industries, which have lots of requirements and are moving targets. So these companies
have no choice but to hold on to application foundations," he added.

That's precisely why NEON is moving into cable's
neighborhood at the right time, Tse said. "The new class of software is EAI, and NEON
is the largest supplier of it. They've done well on the health-care side, and next is
cable and the telcos," he explained.

Yet the path into the cable industry for NEON has speed
bumps.

"[EAI] is not easy to describe or sell. NEON must hire
cable and telco marketers and people who know those businesses. Plus there is competition
on the way from smaller companies such as Active [Voice Corp.] and Vitria [Technology
Inc.]. They both went public with lots of attention, so there are no shortcuts," Tse
said.

NEON is aware of the impending competition, and it is
searching actively for strategic alliances and mergers.

"Our merger-and-acquisition strategy is very
important, and it is part of our future," Abramson said. "With the growth of our
company, we can't get to our goals without them."

Getting there, he added, will require the company to take a
hard look at electronic-commerce, which is a key component in NEON's growth plans.

"Those markets are growing, and if we're a
company that can keep up with that growth, we must have the technology, alliances and
acquisitions, as people understand how to 'e-enable' their businesses," he
said.

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