Beyond the pipe: CompTel panel touts packaged managed service strategy

Telecommunications Americas, March, 2004 by Sean Buckley

With traditional telecom services increasingly becoming commoditized, service providers have to think outside the pipe to stay successful. This is especially true when it comes to winning in the enterprise, where success comes down to a fundamental understanding of each customer's need for services that fit their business processes.

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Such a notion was the talk of the town at the kickoff panel hosted by Telecommunications[R] magazine and Cisco Systems at the CompTel/Ascent Alliance spring conference in Anaheim, Calif. Moderated by Tere' Bracco, vice president, enterprise systems and solutions for Current Analysis, the Winning in the Enterprise panel included various elements of the managed services chain, including service providers (Broadwing and SAVVIS), vendors (Cisco) and application providers (NetSolve).

The enterprise managed service opportunity is multi-faceted and not only differs in size, but also in terms of vertical industry segment. The term managed service has a number of different connotations that run the gamut from basic word processing services to specific vertical market applications designed for the manufacturing, banking or entertainment industries.

The services that are gaining the most traction include integrated voice/data via T1, managed security, managed IP PBX, metro Ethernet and SAN (storage area networking). Sameer Padhye, Cisco's vice president of worldwide service provider marketing, sees an increasing demand for advanced hosted IP PBX and other advanced hosted IP voice services, but also sees an ever-increasing demand for managed security services and branch office services for larger enterprise customers.

Traditionally, the carrier's main customer focus for managed services has been on the large business market, because it provides a larger revenue stream. However, the SMB market, which typically does not have the same expertise or technology savvy, represents a ripe opportunity. But, unlike the Fortune 500 market where there may be 50 target customers that can bring in higher margins, the challenge of serving the SMB market is the ability to gain a steady revenue stream.

The panel agreed that providers can gain inroads with SMBs by partnering with local VAR channels or OEMs (such as Cisco or Hewlett Packard) or application providers (NetSolve) that have existing SMB relationships. Once it gains the trust of that customer, the service provider, in tandem with its partner, can upsell additional value-added services.

Leveraging its long-haul network infrastructure, Broadwing, for one, has targeted the enterprise segment via partnerships with DSL providers like Covad and applications providers like NetSolve. In addition, the operator provides its customers what could be called a mirror network management with various fault isolation, monitoring and network troubleshooting tools. This is a two-way service view, where the service provider can get a holistic view down to the customer endpoint and the customer can gain visibility on how its network connection is operating according to what it paid for.

"My advice to any service provider targeting the SMB is to come up with a packaged solution for that segment," said Jeff Betteker, Broadwing's vice president of sales engineering and customer operations. "Carriers need to understand what the SMB is looking for and ask if it has the ability to provide it with the type of service it needs. You need to look deep and hard into your own organizations to see if you have the depth, breadth and skills to go out and provide that service, and realistically most carriers do not."

Similarly, SAVVIS, which has continued success in both the banking and entertainment industries, has adopted a modular approach. Through this approach, SAVVIS can serve the largest financial institutions on Wall Street and large broadcasters, and also reach down into supporting various IOC video service initiatives.

Darcy Lorincz, SAVVIS's vice president and general manager, argues that those operators that have the billing relationships are in the best position to take advantage of providing enhanced services. "If you look at any of the triple play companies, their churn is 50 percent less than it was a year ago," Lorincz says. "You have to find the right things to sell to them and get the billing relationships so you can sell even more services. The only way you're going to do that is by finding those partners that want to leverage your brand and customer relationship."