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As part of its regular coverage of telecom and IT channels, Channel Partners covers the transformation of channel business models. This blog includes entries from its ongoing coverage, including case studies of partners in transformation.

The Transformation of Voice Smart Networks – Part 4

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VOICE SMART NETWORKS
Transformation leader: Dale Stein, Partner
Number of employees: 14
Year established: 1982
Original transactional business model: Telecom VAR selling phone systems; subagent
Post-transformation business model: Managed service provider, data/voice VAR

How has you company been challenged by the transformation away from a transactional business model?

Through this transformation to the new model of managed services, we have encountered a number of challenges. The first was the services being resold by providers such as Microsoft. There are a number of little nuances that no one tells you about until you’re in the program. These are lessons learned that have cost us time, money and resources.

For example, we started out converting a number of our clients from [on-premises] Exchange servers to the Microsoft Cloud. We underestimated that transition and how rough it would be due to problems within the current Exchange servers. It was a strenuous process to sit down with every employee and determine how they were keeping their emails, where certain folders were located and how archiving was taking place. It took a great deal of time and energy to acquire that information because most employees never realized what they had and didn’t have, so the individual effort was taxing.

Once the transition was complete, we were struck again with issues, as the cloud has gone down twice. Given Microsoft’s size, it was nearly impossible to contact any level of support. There were no numbers to call because the company shelters itself from the end-user. When the cloud did come back up, not everything operated like it did before. This forced us to go back in to our clients and reprogram their accounts.

Adding to those difficulties was that there is no recurring revenue with the Microsoft model; it’s a one-time charge for the upgrade. Still, we had to go in and maintain all of those changes, which, of course, was challenging. Lastly, an unexpected issue we never saw coming was that the end-user had to change their password every 90 days after the migration; if they didn’t they were locked out. This led to more customer calls and time spent on our end. It was a typical IT approach where Microsoft took something simple and made it complicated.

The second issue we have faced is that the cloud and the industry as a whole are still being defined. There is a tremendous amount of change and a number of companies are being acquired. For instance, we started our platform with a help desk, Do IT Smarter, which was then purchased by Clear Point. Six to seven months after the acquisition, Clear Point decided to change its business model to go direct. They gave us a 30-day notice to move our customers over. We were able to negotiate an extra 30 days and had to scramble to make that transition. To add to that, they still owed us commissions and we lost out on those. In this type of environment, you need to be mindful of the contract you have with your outsourced suppliers and be careful of contracts set up because of the number of consolidations that are occurring.

The third challenge within this transition was underestimating how bad many companies networks’ truly are within their facilities. We have encountered jerry-rigging, cheap equipment and infrastructures with no integrity whatsoever. When we come in and provide the customer with a stable network, there is a lot of re-education to explain why they experienced viruses, slowness and other issues, and what they can do to maintain a strong infrastructure moving forward. In addition, we are concerned about one-off products such as CRM platforms and other software that companies deploy that we don’t have the capacity to support. We ended up redefining what our best client could be, which helps to keep these surprise networks within a more controlled environment.

As a recap, this transition has taught us not to underestimate our vendors, forced us to be more aware of the consolidations occurring in the industry and also be aware beforehand when going into networks that haven’t been maintained or designed by people who understand what this industry is all about.

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