The cable industry's growing dependence on softwareand network solutions for activating and managing virtually every aspect of its business-- from the back office to customers' homes -- has created a puzzle about howdisparate software can communicate.
The complex mix of new software and how it blends withexisting software -- frequently itself a grab bag of off-the-shelf products -- is gainingmission-critical status for many cable operators as MSOs morph into multimedia companiesthrough the addition of new technologies for Internet access, Internet-protocol telephonyand digital video.
This expanding software patchwork also draws a new breed ofcompany rarely seen in the cable industry but likely to become familiar: the softwareintegrator. New Era of Networks Inc. (NEON) is one such firm.
NEON is a five-year-old Denver-based software-integrationcompany. Its 2,000 customers have included such powerhouses as AT&T Corp., BritishTelecommunications plc, Hewlett-Packard Co., IBM Corp., Lucent Technologies and NortelNetworks.
Now, it's turning to a fertile cable market, as MSOsscramble to install software solutions that speak a common language.
"This is an entirely different approach for cableoperators," said Dick Abramson, president of the newly createdcommunications-industry group at NEON. "The time and cost advantages are great, andthe businesspeople at cable systems know that. Their jobs get less complicated by usingone application."
Abramson said that for NEON, that one application is its"Enterprise Application Integration," which is designed to eliminate what hetermed "inter-applications spaghetti," or the dozens of applications that needto work together but don't.
NEON provides software that replaces the spaghetti with ahub-and-spoke architecture designed to get disparate software to communicate through itshub, where the software language is broken down and information is channeled to the rightapplications at the right time in the right format.
The result, Abramson said, is a "blueprintservice" that can provide cable operators, utilities and telephone companies with aroad map through the complex world of software integration.
"We look at the business recommendations from thetechnology and business-feasibility aspects, suggest how services can interact and developa 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 disciplinessuch as order management, customer records, network-interface systems, order entry,billing systems and the entire system's inter-application environment flow throughNEON's EAI hub, which, in turn, translates myriad software languages.
EAI can translate any software language because "wedefine the rules with each procedure and make decisions based on content," NEON vicepresident of marketing Fred Thompson said.
NEON's application also has marketing implications,Thompson said. "It can build profiles, databases and data warehousing, and it cancapture profiles in real time. The real challenge for cable systems like AT&T is topull together customer databases and billing records," he added.
The move into the cable industry by software-integrationcompanies such as NEON reflects cable's emergence into a multiservice business andits 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 andbusiness challenges the telcos have seen the past 10 years," Thompson said. "Ourchallenge is to see how we can apply our service to those."
According to analysts, cable operators may have littlechoice but to make the best of their piecework software.
"Few companies can afford $300 million to $500 millionto develop end-to-end solutions, and it's not possible for one software company toprovide that. So the only choice is for point-to-point solutions and to patch thingstogether," said Harry Tse, vice president of research for The Yankee Group, aBoston-based market-research firm.
Finding a software company to do the patching is achallenge in itself, Tse said. "Industries such as cable, telecommunications,utilities and insurance have no product commercially available to them because therisk-reward isn't attractive enough for a software company to sell products to thoseindustries, which have lots of requirements and are moving targets. So these companieshave no choice but to hold on to application foundations," he added.
That's precisely why NEON is moving into cable'sneighborhood at the right time, Tse said. "The new class of software is EAI, and NEONis the largest supplier of it. They've done well on the health-care side, and next iscable and the telcos," he explained.
Yet the path into the cable industry for NEON has speedbumps.
"[EAI] is not easy to describe or sell. NEON must hirecable and telco marketers and people who know those businesses. Plus there is competitionon the way from smaller companies such as Active [Voice Corp.] and Vitria [TechnologyInc.]. They both went public with lots of attention, so there are no shortcuts," Tsesaid.
NEON is aware of the impending competition, and it issearching actively for strategic alliances and mergers.
"Our merger-and-acquisition strategy is veryimportant, and it is part of our future," Abramson said. "With the growth of ourcompany, we can't get to our goals without them."
Getting there, he added, will require the company to take ahard look at electronic-commerce, which is a key component in NEON's growth plans.
"Those markets are growing, and if we're acompany that can keep up with that growth, we must have the technology, alliances andacquisitions, as people understand how to 'e-enable' their businesses," hesaid.