Transformation is infiltrating the communications market, intermingling disciplines as well as services. Beyond supplying voice and data on one network, channel partners can leverage the power of IP to blend telecom, IT, television, security, and wireless and in-building controls. While this new era of converging disciplines creates opportunity for partners of every stripe, building a strong foundation to withstand the strong winds of change requires an evolution of expertise, knowledge and skill requirements.
I think were all in agreement that the role of partners is changing dramatically, says Dale Johnson, president of the Technology Assurance Group (TAG), an industry association for solutions providers. The causal points are myriad, including the growth of IP solutions, Wi-Fi and WiMAX, and the capacity for the movement of information combined with an accelerated ability to mix voice, image and data for new utilizations.
The technology revolution at work in the market is challenging enough from an educational perspective, but it also requires a corresponding evolution in VARs, integrators, interconnects, agents and other channel partners business models. Portfolio diversification and solutions complexity has driven a more consultative approach to the customer as well as a need for differentiation and specialization.
The explosion of converged opportunities enabled by IP has provided channel partners with unprecedented variety of solutions to bring to market. The sheer number and complexity of options, however, quickly can become a jumble.
The solutions providers challenge, then, is in understanding the demands of the business user, interacting with various combinations of solutions and determining which ones are correct for the application. The question is, how do you engage with the vendors and become knowledgeable, says Johnson. It was paint by numbers in the past, selling boxes. Now its on the Van Gogh level, and you need a really good art school to attend.
While IP telephony with unified messaging for small and medium businesses and enterprises is the poster implementation for IP-based converged services, it is becoming a mature baseline technology, paving the way to the rise of applications.
That said, there is still plenty of interest from businesses in basic VoIP. VoIP has been glamorized as a technological panacea for all business problems, and customers are looking for new functionality to connect remote workers and get unified messaging, says Michael Carpenter, president of CTSource Inc. The company has been in business for more than 20 years, and began as a computer consulting firm that taught people how to use word processing and spreadsheet programs. It evolved into a data VAR, and now CTSource is a converged solutions provider selling a range of server-based communications solutions, including IP PBXs and applications.
We did reactive selling for years, Carpenter says. Customers would call up and we would try to give them the lowest possible price on a box. Now, VoIP is not one-size-fits-all and you have to be careful to manage customer expectations. Carpenter emphasizes that having an arsenal of IP and traditional solutions, and a breadth of expertise to evaluate the customers situation, is essential to succeeding. Its conceptually correct that a company can save money by going to VoIP, but the reality depends on call type and volume, he says. If its a company such as a florist with a lot of high-touch activity, like a call center and a sales organization, VoIP makes sense. For a PR firm making calls all day, IP telephony will allow them to see that the Wall Street Journal is calling them back, so they can drop the call theyre on to answer the phone, Carpenter notes. A more static organization, he says, such as a pharmaceutical research firm, probably would not benefit. The cost of integrating new equipment would outweigh the core advantages of VoIP.
Despite continuing demand, simple convergence in the form of VoIP running voice as an application on the data network is no longer a significant differentiator in the communications market. IP telephony itself has become commoditized, says Lawrence Imeish, principal consultant for Dimension Data plc, a value-added distributor with offices worldwide. Fortunately, the solution provider has access to plenty of advanced technologies deployed by service providers in an effort to hang onto their customers. The service providers understand that business has become commoditized, so they need to provide something else, and advanced applications are driving core network requirements.
To retain their converged value propositions, VARs and integrators need to embrace those applications, Imeish says. More and more, you will see instant messaging and presence for the corporation, conference servers integrated with a phone, drag-and-drop buddy lists for starting a video call or conference, and other bells and whistles, he says.
VoIP is sparking a convergence of devices as well. People think of telephony as a siloed technology, but now the phone is no longer just a phone, Imeish points out. Its an information device with the intention of bolstering ease of use. And there are unlimited applications you can layer, thanks to XML and SIP. Schools, for instance, can take attendance on the teachers desk sets. Its all changing the way we communicate with each other.
Still other innovative solutions that partners can bring to market include security surveillance, telco replacement services and IP video. Microwave Satellite Technologies Inc. (MST), for instance, is an integrator that provides video conferencing, cable television, local and long-distance telephone services and interactive video to multinational corporations, commercial buildings and multifamily residences with an eye to replacing the telco or cable provider within the building. It also constructs, operates and services private cable TV and video services, then offers a revenue share to the property owners on the usage. For instance, MST is working with Telkonets PlugPlus commercial powerline LAN communications system to provide telecom services via the electric wiring to residents in Trump properties in New York. What is a stranded asset [in the electrical system] turns into a revenue generator or a third wire for LAN and building control functions, as well as money-making applications like voice, IPTV and wireless services that can be sold to tenants, explains Frank Matarazzo, president of MST.
Another advanced area is the trend toward smart buildings; the automation of HVAC, lighting, security, audio-video equipment, communications, energy and controls. As we move forward, we are acting more like a general contractor of low-voltage systems, especially IP-based security cameras and IP sound systems, says Paul Janik, president of Midco Inc., a 45-year-old company that specializes in systems integration. It offers telephony, wireless LANs, IP network support and equipment, and video over IP applications. The evolution of the market has pushed us that way. It began with security video cameras, connected with coax cables, and evolved to video over fiber. The next logical step was IP cameras, particularly for multilocation companies wanting to look at operations in distant warehouses or plants. Often IP security opens up larger prospects. It becomes part of the converged VoIP sale.
IP video will drive yet further market opportunities, according to Carol Blanchar, CEO of Conexo Inc., a vendor-neutral consultancy that works with suppliers and enterprises to create IP reference architectures and solutions. Last year we saw VoIP as a general term for convergent technology, she says. IP television and video expands this idea to content-delivery platforms. Telcos investments in the IPTV space with their FTTx deployments signals a paradigm shift.
The global enterprise is facing stiff competition and is looking at managed services and outsourcing, says Blanchar. They also have a maniacal focus on cost variability and agility. They can only be supported by a content-delivery platform that allows their business to be managed with those principles in mind, and broadband IP video technology will be part of that.
For instance, secure communications to protect intellectual property is a growing need. Many companies have three different developers and multiple suppliers, all outside the firewall, says Blanchar. So they need a VPN and a content-delivery strategy, to be flexible and to adapt to numerous partners with consistency and regulatory compliance.
Blanchar also notes that applications development may be an area where a converged partner needs competency. CEOs look to know with confidence what is going on in their business, so customer data and support data are in the spotlight. They are refining business processes to be more productive. They are looking to make use of APIs, so they can bring content together in one spot, she says Along with the technical explosion comes the need to understand the interrelationship of the solutions, and how a new application impacts existing infrastructure. Adding an application will result in an increased amount of information on the existing LAN, for instance.
The rapid evolution of technology is another complicating factor. Wi-Fi is not even 4 percent deployed yet, says Johnson, but now heres WiMAX looming on the horizon with 70mbps across 30 miles on offer.
Another dramatic driver for the converged solutions provider transformation is changing customer expectations. The result is that the partner marketplace is segregating into those embracing the evolution and becoming true solutions providers, and those serving yesterdays needs. The top concern to be a part of the former is restructuring ones strategic thinking.
The business owner is now knowledgeable about the potential of IP telephony, for instance, and they are looking for a solution for their business need, says Johnson. Namely, they want to satisfy their customers without being restricted by time, place, situation or technology. So employees mobility and capacity to do their jobs must extend way beyond the office. Partners must understand the business processes and challenges, then address them through technology, rather than the other way around. Understanding technology is not a competitive advantage, Johnson says. You have to understand business needs: That business mobility is a moving force, and maximizing the capacities of individuals across every device and connectivity is a directive. So that means I am now a consultant, not just provisioning phones and lines, but actively managing communications in their broadest form.
Thats not to say that channel partners should be all things to all people. As the business technology continues to become more diverse and complex, partners should focus in on areas where they can become best-in-class.
Where theres mystery, theres margin, says Gregg Kalman, sales vice president of channel strategy and programs at Avaya Inc. With a multitude of manufacturers and converged solutions, the expectation is that the solution provider will provide them everything they need. But end users will look to someone who can integrate across applications and also have expertise in their particular vertical. Competition will become ferocious as partners look to differentiate themselves, and there will be a weeding out of partners unable to evolve.
Traditionally, the telephony business has been a cradle-to-grave proposition, where the partner looked to the vendor to provide everything he or she needed to put solutions in place. That reliance on a single vendor has gone by the wayside, says Kalman. Now, as businesses become truly IP-based, youll have one manufacturer for the data network infrastructure, one for the messaging software, one to provide call center applications and one to be your wireless vendor. And that has put a premium on systems integration tying it all together.
In light of the integration requirement, solutions providers shouldnt pick too many vendors in the quest for the value add. You may have a checklist of things you need in your pantry to create a winning recipe, and for each of those, you only need one provider that you can know inside and out: One telephony vendor, one router manufacturer, and so on, Kalman notes. With all the pre- and post-sale complications within each vendor, its too hard to provide a smorgasbord of options for every checkmark. The cost and complexity goes up with each new vendor you bring on. You want to have enough flexibility to meet customer needs without getting lost.
Another key to being successful in a heterogeneous solutions market is narrowing ones customer focus. Cisco Systems Inc., Avaya and other vendors are creating communities containing developers, vendors and integrators, coming together to create ecosystems of solutions, with reference architectures that cut across technologies but are built for specific markets. In such a market, the need for a focus intensifies for the partner. End users wont choose a partner because he or she is Cisco gold level or platinum [level] with Avaya that rank will become table stakes, says Kalman. But not everyone has $20 billion in the bank for R&D. And the low-risk, low-return volume business model doesnt work now, where theres never an end customer that didnt look good. Now you have to be a sharpshooter instead of using buckshot.
To compete, a partners value proposition has to be better or equal to the competition, and that means specializing.
BULLDOZE SILO MENTALITY
Not surprisingly, the new opportunities, strategies and customer targets within the converged world also are driving a business model evolution. For VARs and integrators to survive the transition brought on by converged technologies, they must shake off their former siloed technologist roles and become solutions providers with a mix of wireline and wireless, network services and premises equipment, professional and managed services, and applications for voice, data, video, content and security.
Its not a task without challenges. The partner business will first off become more capital intensive as advanced solutions hit the market. Technical talent is more expensive, plus more complexity requires additional investment in demo equipment, training, and sales and marketing efforts. But the opportunity for return also goes up.
Converged communications is changing the nature of how companies compete, says Kelly Lumpkin, CEO and director of business development at Alternate Access Inc., a solutions provider focused on IP telephony for remote workforces, call centers and small businesses. For us, it gives us training as a budget line item, margin from hardware and add-on products, a layer of recurring revenue from maintenance contracts and network services, and fees for application development and professional services.
The biggest challenge for partners transitioning with the market is staffing up. A converged partner needs to blend data, voice and strategic expertise. To get the skill set you need to support the new world is not an easy task, particularly since its interdisciplinary, says Lumpkin. Telephone systems companies put in high-margin product and enhance revenue with break-fix support contracts and reups. Data VARs design LANs, sell network hardware, install software and manage security. They carry two very different expectations in terms of how often they visit customers, reliability of the systems, time to fix problems. Trying to pick up each others business is not so easy. Theres also a third level of expertise now, which is learning to speak to senior management in business terms rather than bits, bytes and bandwidth.
Because the solutions provider can no longer be simply a technologist, Blanchar says the new role includes process management. Solutions providers have to roll out technology, but also prove the business case, run a pilot, think about marketing needs the role has changed inadvertently, she says. IP video and head-end equipment is in little pieces that are supposed to work together, but you find out when you buy them. So you have to test and integrate. Then, because the technology is so agile, we expect a cascade of upgrades as you add more. So you have to develop a competency in managing all that. It all slows down time-torevenue for the partner.
The communications market has become a complex world with new requirements forcing the channel partners to become solutions providers. Despite the challenges, renovating and revitalizing ones partner sales organization into a converged solutions outfitter is a requirement for survival as customers and technology continue to evolve. One thing is for sure, that this is so much greater than just a technological revolution, says Johnson. Those that understand that, and invest in their business accordingly will survive and thrive. Those that dont will find themselves obsolete.
|SOLUTIONS PROVIDER PROFILE: CONEXO INC.
Conexo Inc., established in 1996, is a communications consultancy with an end-goal of improving communications testing and rollout. The company focuses on ferreting out the most effective strategies to help companies migrate their communications infrastructure to keep pace with the service needs of a rapidly changing market.
By properly aligning the latest technologies and strategies with its clients business opportunities, vendor-neutral Conexo helps companies maximize returns while simultaneously lowering operations costs.
Conexo has defined and refined methodologies to streamline the testing and rollout of complex equipment, while maintaining regulatory compliance and supporting corporate governance.
|SOLUTIONS PROVIDER PROFILE: DIMENSION DATA PLC
Dimension Data plc is a solutions provider operating in 30 countries on five continents. It helps clients plan, build and support IT with expertise in networking, security, operating environments, storage and contact center technologies. It also provides consulting, integration and managed services.
Dimension Data focuses on helping businesses evolve their infrastructures away from separate, siloed systems, towards standardization and the convergence of the application and network layers. The idea is to provide rational, customized solutions, along with IT infrastructure lifecycle services that cover everything from design and procurement to deployment and training to ongoing support and optimization.
|SOLUTIONS PROVIDER PROFILE: MIDCO INC.
Established in 1960, MidCo Inc. has grown from a small intercom and paging contractor to a systems integrator for converged communications implementations. With offices in Chicago and central Illinois, it provides services nationwide for traditional phone installations, IP telephony and network equipment and support, and IP security systems.
MidCo provides a complete solution process from design and installation, to service and training. Its motto is that growth is Connected to Your Success, and emphasizes training and support as the cornerstone of the company. It has diversified over the years to merge a wide range of voice and data technologies, and also performs general contracting for IP-based systems for applications ranging from security to sound systems.
|Alternate Access Inc. www.alternateaccess.com
Avaya Inc. www.avaya.com
Cisco Systems Inc. www.cisco.com
Conexo Inc. www.conexo.com
CTSource Inc. www.ctsource.com
Dimension Data plc www.didata.com
Microwave Satellite Technologies Inc. www.mst-online.com
Midco Inc. www.midcosystems.com
Technology Assurance Group LLC www.tagnational.com
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