ClearPath: bridging the affordability gap for SMBs

Telecommunications Americas, Feb, 2005 by Sean Buckley

For what they lack in size, small to mid-size businesses represent a rather large opportunity for managed security services. Senior Editor Sean Buckley recently sat down with Cliff Young, president and CEO of ClearPath Networks, to discuss how the company is finding a growing base for its managed security offerings in the vastly underserved SMB market.

Q. What are the common needs and requirements in the SMB when it comes to managed services?

A. The SMB is a very interesting market. It's highly fragmented and not deep in terms of vertical segments. Generally, they lack IT staff, capex, and tend not to have competency around security. More than 50 percent feel they are not adequately protected but just grin and bear it. The problem is that there's a two-sided affordability gap. First, it's difficult to make ROI because you don't have the number of employees or locations to amortize the basic fixed costs of an applications infrastructure. If you're a small business, to get up to the application layer and leverage applications, you have the hurdle of putting that infrastructure in place. We have addressed that by automating the service delivery process and have integrated the comprehensive nature of our offering. With that we can deliver a fully integrated, all-in-one solution that has auto management capabilities, and for that reason it's affordable for small businesses. From a service delivery perspective, we're putting in an appliance at the customer premises, which runs connectivity, management and security application buckets. All of these services are automated with a proprietary device that runs on software that's integrated with our backend systems to provide an integrated environment.

[ILLUSTRATION OMITTED]

Q. What has been the response to the service thus far?

A. The SNAP VPN 5.0, which is the appliance-based service, was launched in May '04. Since we began offering that through our channel in June, we have had 148 different partners to sell the solution. This month, we will be in 54 new partners to sell the service. It's been a tremendous growth area for us. We always knew that these guys were underserved and they needed an all-in-one solution. The solutions partners like it because it gives them a platform to deliver managed services. It can be sold as an appliance with maintenance contract or as a managed service offering to certified solution partners. When they buy it as a managed service offering, the solution partners will see their customers in a hierarchical directory structure, so they can manage them by customer or by feature type. One of the challenges solution partners have with small businesses is that they don't have any infrastructure, so every time something breaks they have to go out to the customer premises and see what happens rather than being proactive about having visibility into the whole environment.

Q. How big is the SMB opportunity for managed services?

A. It might be the biggest growth area. Security is already a big growth area, and while I think managed services will take off in all segments, the biggest growth area will be in SMBs. This is because they are the guys that need it the most, but can afford it the least. Until managed services can bridge that affordability gap, SMBs will remain underserved. The big market opportunity is security, which is driving the need because these guys are getting hit with all of the same threats externally that big businesses have. There's a great demand out there, but no one has addressed it effectively in terms of bridging that affordability gap.

Q. In a few words, what sets you apart from the pack?

A. The differentiator is automated service, the comprehensive nature of the solution and our exclusive focus on the SMB market. Our competitors, which are focused on the enterprise market, have taken point solutions and tried to dumb them down to make them more affordable, but they don't bridge the affordability gap because they don't make them simple to manage.