Perhaps the bottom is now behind us – time will tell. Regardless, the economy is still way off from where it was a couple of years ago. Sales cycles are still long. Businesses continue to take a “wait and see” approach to new telecom and other technology investments. Potential customers even are delaying projects with high ROIs or that will generate immediate cost savings.
Of course, this is putting the squeeze on service providers and the channel partners who represent them. Revenue growth has stalled and many are seeing dramatic revenue declines. This is forcing service providers and channel partners to look for new sources of revenue outside of their traditional businesses and relationships. And, these new sources of revenue are increasingly coming from collaborations – often brought about by enterprising channel partners – between service providers from different industries, but with potentially mutually supporting products and services.
For example, many interconnects and VARs tell us that their recommendations for network infrastructure and phone system upgrades – many of which would actually lower customers’ ongoing expenditures over time – are being met with, “We don’t have the budget right now.” If these providers (or their channel partners) are going to get these clients to move forward, they are going to have to help “find the money” for them. So, they are reaching out to telecom expense management providers, whose services then become the first part of now two-part proposal:
- Let the TEM provider audit your existing telecom budget to find waste (billing errors, oversubscribed services, missing credits, etc.).
- Use this “found money” to pay for the infrastructure or phone system upgrade that will further reduce ongoing expense over time.
At the same time, market forces are pushing the TEM providers toward these sorts of relationships, too. Their clients are asking them to find more than waste. They now also want telecom and networking infrastructure improvement recommendations. Therefore, some TEM providers are now offering moves/adds/changes management services and LAN/WAN improvement consulting – and developing relationships with other service providers that can implement these recommendations.
Another trend in partnering is between VARs and systems integrators – whose revenue traditionally is based on equipment sales and installation services – and managed service providers. They want to bring managed WAN, VoIP and other ongoing services to their clients, and share in the resulting recurring revenues.
When combined with the earlier TEM example, this can result in deals with as many as five different service providers in a single proposal:
