ring diffusion, industry evolution stages, and vertical and horizontal industry evolution. Third chapter represents the model for evolution of a vertical software industry. In this model a vertical software industry includes both the in-house software development within the vertical industry enterprises and the vertical software market, the latter of which means the sales of software products and services from the primary software industry companies to the vertical industry enterprises. During the evolution of a vertical software industry the software development shifts from in-house development to purchase of software products and related services, which is visible in growing vertical software market volume. The last chapter gives an overview of the telecom operator software market referred to as the OSS/BSS market. This includes operations support systems (OSS) and business support systems (BSS) used by telecom operators. The core business processes of operators are described using the eTOM framework developed by TM Forum. A consolidated set of OSS/BSS market segments is presented and mapped against the eTOM process framework. Basic data of the market segments presented includes volumes and growth rates of the segments as well as a number of OSS/BSS vendors in each segment. Vendors' strategies are also classified according to their breath of operations and their focus on the telecom market. Part II. Current State of the Telecom Software Market The part consists of three chapters which describe the role of software in optimizing the business processes of a CSP and consider the diffusion of the OSS/BSS software: First chapter focuses on the role of software in optimizing the business processes of a CSP. As explained in the chapter, investments in information technology may improve productivity only when they are connected to organizational changes. Second chapter uses the data on software spending by CSPs to analyze the effect of software investments on CSP performance. Third chapter discusses "make or buy" consi