On Rad's Radar? - agents Archives

A Lesson in Value Proposition

2012-05-24T02:41:02Z

This came across my twitter stream this week:

"Must-read for founders: A VC explains how to build a killer value proposition" on VentureBeat by Michael Skok, a Venture Capitalist at North Bridge Venture Partners. His slideshare page contains a couple of really good decks of information about Go-To-Market and Value Prop - two things that I help companies address in this industry.

That's his Go-to-Market diagram.

A Value Proposition is created by filling in these blanks:

For (target customers)
Who are dissatisfied with (the current alternative)
Our product is a (new product)
That provides (key problem-solving capability)
Unlike (the product alternative)

When he asks (in slide 20) "What is your compelling breakthrough?" I think about Hosted PBX companies. None of them have any special sauce. If 400 of you have a Broadsoft, it comes down to a few variables:

sales execution and marketing acumen;
technology proficiency to get all the pieces of UC to work smoothly;
onboarding success, which means customer service too;
integration services with other tech for the customer;

When I look at Agents, the same applies. You don't really have any special sauce either, so to stand out you need to either be great at sales, marketing, customer service, or product knowledge, but really a combination of these.

For Master Agents, it will come down to culture and tools that they develop.

Skok says something that Seth Godin preaches: "Ideas are worth little to nothing without: People to execute; Culture to select the right people; and Vision to attract the best stakeholders."

Transactional Agents Called Names

2012-05-04T15:56:44Z

Over at CP, the transactional agents are being called Prostitutes and Zombies in opinion pieces. I find that sad considering that the Zombie comment comes from a guy who whined because he couldn't make huge commissions off call centers any more.

The one thing that most of these opinions neglect is that the World of Telecom is all about Transactions. It is a business based solely on Arbitrage.

Going back to the Golden days of Long Distance, newcomers (the IXC's like MCI, Sprint and Qwest) entered the market by starting a price war. It continues to this day.

Every CLEC that enters a market does so by undercutting the ILEC. Rarely has this been done with any innovation. Even the DLEC's that launched the DSL market in 1999 - Covad, Rhythms and Northpoint - disrupted it with old Bell Labs technology. Bell Labs had discovered DSL technology in the sixties but did not introduce it until 1987. DSL wasn't standardized until 1998. Their whole schtick was to undercut the T1 market.

Hookflash pointed out today that not much has changed in telephone since 1876. Layer 1 may have changed from copper to fiber to radio spectrum, but voice is ultimately the same.

Even VoIP is just another example of arbitrage. Phone.com and other VoIP Providers - most notably MagicJack and Vonage - constantly talk about the cost savings of VoIP, using the technology as simply a replacement for the POTS line.

If you can sell it online, it is Transactional!

As a nation we might have been better off NOT breaking up AT&T. Bell Labs was a national treasure of research. And, look, the gang is back together. The Death Star still flies.

So when you jump on Transactional Agents, take a good look at your own business. You probably market on Saving Money. Where's the Value in that?

And don't give me the "It's how we get their attention" dribble. This industry is in a race to zero. It's the Wild West of prospectors looking for short-term gains -- and I don't just mean just the newer providers. Look in the C-Suite and the Board of Directors at any ILEC or CLEC. All they care about is short term gains.

So who is really the Prostitute here?

The CEO (and his other C-Staff) who lies to the FTC and FCC about a merger and cries about it later, because they didn't get their bonuses?

The Congressmen who take trips, meals and money to stay in office to maintain the status quo?

The CEO of a yet-another VoIP company, who is just out to grab some market share with an Asterisk-based switch?

Just because you sell some cloud services, doesn't make you a non-transactional agent. When you take a customer's telecom spend from $500 to $650 per month by upselling cloud, then you can say it. But if you take $500 per month in spend and shrink it, you are just as transactional as the Zombie - you just color it different.

Cable has come storming into this sector with nothing more than a price gouging grab at market share - which is strictly Transactional!!!

We are all going to suffer because of the Arbitrage mindset. Commissions will decline right along with price. It will be harder to make a living. It will be harder for the LEC's to hit revenue, so debt will cost more, eventually leading to BK.

We have too many players in this Industry and not nearly enough that are innovative or add any real value. And many that barely make ends meet. All of that just adds to the price war, which leads to more transactions.

So who are you calling names?

Is it Cloud versus Agents?

2012-05-02T16:45:52Z

Is it Cloud versus Agents?

As an Agent, I sell bandwidth and transport almost exclusively. I am learning that the Channel does not want that business. The carriers do, but on the wholesale/carrier side. No 10GB private lines. No 1GB ports. Nope. The Channel wants Multi-site multi-access customers. That's fine. Just stop talking about your fiber map then. It's irrelevant for that kind of sale.

The CLEC's also want Agents to sell Managed Services and anything Cloud. That's nice but who cares?

Cbeyond announced that they are "no longer recruiting traditional telecom agents". well, they already signed up the biggest masters - CMS, Telarus, Microcorp, TBI, etc. So what they are really saying is that traditional agents will have to use a master agent to get paid. That's becoming Normal in telecom. Carriers just want to deal with master Agents. I guess, they think that is more effective or efficient. I have no idea if it is either. We'll see, I guess.

Like so many other providers, Cbeyond thinks that the answer to its cloud strategy will be VAR's. That's not likely to happen.

VAR's don't trust telco. (Heck, I'm still waiting a month for an FOC from XO on an Internet T1, so I totally get the attitude.) VARs already have relationships with VAD's like Ingram and Tech Data, who can provide most of what Cbeyond is offering - or they can provide it themselves. Would you go to Rackspace or Cbeyond or EarthLink for hosting? That's basically what it comes down to: who is doing the hosting.

Right now Microsoft itself and carriers are getting into the traditional VAR space (offering hosted Microsoft products and data backup). Why would VAR's shift from a reseller model to a sales agent? It's kind of like, do you want white-label or straight resale?

The thing that most miss is that it is all about Control. In white-label, you can build a branded business that you have a decent amount of control over, especially in Hosted PBX. In straight resale, the bill, the brand, everything is in the carrier's name. No control at all.

My clients - CLEC, ISP and ITSP - want the illusion of control - or at least as much control as they can get. VAR's want the same thing. In the case of the ISP and the VAR, they like technology, but selling and marketing not-so-much. And you won't have much success forcing them into a sales+marketing shop - any more than you will trying to get T1 slingers become Consultative Sales people pitching cloud. Why? Motivation. Comfort Zone.

Robin Robbins has a very successful business offering turn-key marketing programs to VAR's. Cloud providers need to plug in to that kind of a system.

XO just re-launched its old hosting brand, Concentric, probably to get some space between the telco and its cloud services. (XO has to do something about its reputation in the telecom space and re-branding buys them time until someone buys them.)

Some Agents will obviously move into this space. Some already have making money on Cloud Comm like Hosted PBX, UC, IVR and conferencing. Some have sold collocation - although its a big leap to PAAS and IAAS from colo. But virtualization might be a nice tool in that box. It will come down to who you trust to deliver it.

I'm not saying Agents shouldn't be shifting their business. Lord knows that the way it is now, it is extremely tough to make the living we are used to while selling what we are used to. So a shift has to come. I just don't think it will be to the same carriers that make it in the future. When you look at things like commission adjustments, contract disputes, channel segmentation, and the like, Agents might want to try another silo of vendors to see if they get a better shake.

There is a tremendous amount of competition for the attention of Agents and VARs. That means that there will be price competition, commission shopping, and other things that the providers do not want to have to deal with right now.

The only providers who can afford to be exclusive right now are vertical cloud providers and cablecos - both have an almost exclusive product to offer.

Everyone else is selling the same stuff - MPLS, SIP, backup, managed network security, blah, blah, blah. That means the Channel can shop around. And as you can see from the ecosystem diagram, there are a lot of places to shop - VAD, Microsoft, Google, Amazon, ILEC, CLEC, Cableco, MSP, Rackspace, Web hosts, Parallels, ITSP's, and so much more. And Agents can just partner up with a VAR or MSP to sell their own services, leaving the CLEC's out to dry.

It's a matter of control. Do you want to build yourself a business with white-label partners (like VAR Dynamics) or do you want to trust that the telco that is having trouble delivering telecom services reliably will be able to provide you and your customers with unparallelled service delivery of cloud services?

We'll see. In the mean time, be nicer to the Agents. They may be all you have left.

Basic Math for TNCI

2012-04-26T14:47:36Z

TNCI (Trans National Communications International) filed for Bankruptcy in October of 2011, owing Sprint ($5M), AT&T ($1.66M), Verizon ($1M) and Qwest ($1.9M). VZ and AT&T have liquidated CLEC's before for less than $2M. I'm not trying to be pessimistic here, but realistic. Commpartners was liquidated for less than $2M and AstroTel was forced to sell for less than $1M.

Other debt includes Citizens Bank of Massachusetts with a secured claim of $4M and USAC for $1.3M (that's USF funds they collected and did not pay to the government).

TNCI filed a reorganization plan, according to Channel Partners. This is where Basic Math skills act like a fan to the smoke. "In financial statements filed with the court, TNCI projects 2012 total revenues of $73.3 million. Of its projected $60.2 million in total direct costs, TNCI anticipated that agent commissions will account for nearly $8.3 million in costs." First off, $73M - $60M - $8M = $5M left over to run the business and pay back debt. Payroll, benefits, rent, utilities for a CLEC for less than $5M per year in Boston. Out of that $5M they have to pay back the secured debt to the bank and the USF money to USAC - a total of $5.6M. That's lean. That's the kind of math skills that got them in BK to begin with.

There is also the question of the commissions. At a standard rate of 15% on $73.3M, the commission payments should be $11M not $8M.

I just don't see how this works out for the 600+ agents. The customers will be fine either by going direct to the underlying carrier (who wants to recoup losses and maintain revenue streams) or moving to another carrier. Hopefully, agents are working on that now.

Some Stuff Happened While I Was on Daycation

2012-04-23T18:23:04Z

I was taking today and tomorrow off to visit with some pals but the news won't quit.

In the I-can't-stand-it zone, the University of Florida decides that TD's are more important than IT and cuts the Computer Science Department. Just when Florida is playing host to the Rupublican Convention and is looking to make a name for itself, that name becomes DUM or MUD. In a time when we need more science and computer nerds, the state U decides to go a different way.

In Tampa, the former CEO of Savvis has closed his e-commerce company, Savtira, after a flurry of promises to hire 200 people and a number of odg and pony shows about the hot future. Apparently, he has done this before.

Cbeyond has decided that traditional agents are not its future. The Cloud has different demands and demands different partners.

Coresite bought Comfluent to enter the Denver market. "Comfluent plays a vital role in the interconnection community in the western U.S., serving more than 75 customers and managing the Rocky Mountain Internet eXchange (RMIX), the region's largest Internet exchange with access to more than 25 networks. Comfluent currently leases two sites that total approximately 9,300 NRSF," according to the SunHerald

Verizon Wireless wants its deal with the cablecos / SpectrumCo to go through, so it promised to sell off some spectrum. T-Mobile and others think that is just smoke and the deal should still be axed. [see here and there]

Tucows, a domain registrar and fellow ISPCON standard, runs an MVNO called TING.

Vodafone is bidding $1.7B USD to buy Cable & Wireless, according to Rueters

Linux talent will be important in 2013, especially in data centers, reports the Channel Insider

Alex Doyle left Broadsoft for Polycom. Good luck at the new position, Alex!

from Tony: An Insider's Guide to Technology Analysts

Dean Parker, CEO of Callis in Mobile, AL, has been selected in the top 12 finalists for the Ernst & Young Entrepreneur of the Year award for the Alabama/Tennessee/ Georgia region.

Get Off the Agents' Back

2012-04-12T21:48:50Z

These were my thoughts on the 2011 CPZ that I was a panelist on. These are my thoughts as a reaction to the latest CPZ.

Surprisingly, not everyone read my post about how the whole telecom eco-system is shifting. Agents, Masters, Carriers and Cloud Providers are all going to experience a Shift.

Did you ever see Shift Happens?

Considering all these factors - Quota, Debt, declining revenue, pricing pressure, and flat markets - the future does not look bright.

Most of the people who were talking on the CPZ 2012 video about transactional agents are not actually agents and to my knowledge never have been.

Does a subset of Agents shop masters? Probably. On the other hand, I know masters who shop to sub-agents with "I'll give you another point or two to go with me." Part of this is due to the weight of quota on the Master Agency business. Master Agents are under a tremendous pressure to hit quota to keep the support level and sustain the commission revenue at its current level. So don't get mad at the Sub-Agent when Masters are doing it too.

Value and Telecom

The whole Industry talks about VALUE, but can they describe it? No. Our Industry has been a series of me-too, arbitrage bandits selling the same thing: UNE-P, Integrated T1, SIP Trunking, and today it is MPLS. It's all just similar looking and sounding services. How does an Agent or a Prospect tell the difference?

Branding is non-existent in our space, except for the Duopoly of ILEC and MSO. You create value with branding. Other value comes from benefits and differentiation. We are lacking the Differentiation.

Without value, it becomes a commodity. Commodities are price shopped. Tell me the difference between any two Internet T1's or any two SIP Trunks.

Carriers are Unhappy with Agents

Just because Agents don't act like you want them to doesn't mean they are all in the wrong. You built this current eco-system. Now you want the ship to turn on your say so. Easier said than done, pal.

Truthfully, have you done all you can to give Agents the tools they need to sell your product? Not to be repetitive, but have you established your value statement? Do you know who the target market is? Do you know what triggers the sale? Who is the actual buyer? Answer those questions first.

The Industry wants the Channel to go upstream, except they don't. By that I mean, the carriers want revenue. Period. It's all about quota. While they might want an Agent to sell MPLS, they aren't turning away T1 business either. However, they want the Agent to turn away from that business to go upstream. Yeah.

Keep in mind that it might be that the marketplace doesn't want to go upstream either.

Right now, Cable is doing an excellent job of disrupting the market and stealing business with cheap loops.

At a CLEC training, it was stated that cable would own the sub-$500 business. It sounded like they were conceding it. The cablecos will become the de facto ILEC's. I have no idea what the ILECs are going to do. Only the 2 RBOC's have a cellular business. And CLEC's will probably run into too many problems to continue to sell network access.

In that same training, the CLEC stated they wanted Multi-site, multi-access business. Unfortunately, everyone wants that business. Masergy, Smoothstone, EarthLinke, Megapath, Netwolves, Wind, CenturyLink - just to name a few. To hear carriers talk, I guess, MPLS is the new Integrated T1 (in every way). They say there is more margin in it. No there is not. There is more revenue per customer, but they will have to give away margin to (A) hit every site and (B) win the business in a hyper-competitive marketplace.

No one buys the way most service providers sell either. That's why the carriers are always searching for Consultative Sales Professionals. The whole industry sells what they want - and it is followed up by a series of me-too. Just because one CLEC is selling Managed Security does not mean that the marketplace wants it or will buy it or that it will want it delivered that exact way. It also doesn't mean that the next eight CLEC's or service providers need to market that same offering. Do we know what the marketplace is expecting?

How Things Can Shift

One thing that could cause a big shift is if Tech Data becomes a Master Agent. With TDMobility, they already have the platform and are selling cellular in a Master Agent model. Plus by offering mobile device management, TEM and all that hardware, they have caught up to the big Masters. CDW could become a Master Agent if they wanted to - and they might have to in order to sell more hardware.

Dell could become a Cloud Provider. As it stands now, they are an MSP Enabler. And Dell is selling CDN now! It will be interesting to see what Ingram and SYNNEX - both betting on cloud services for their future - do to not have to compete with Dell head-to-head, while also competing with Tech Data.

I don't think that most telcos will make the shift to managed services and cloud successfully. It's labor intensive. It doesn't scale like telecom. They think they can automate everything, but that only works for cookie cutter stuff. Plus they can barely deliver telco services without a headache. I think MSP's will win this war. Any company that can integrate apps (like CRM and invoicing with Exchange and Sharepoint) will be successful. If they partner with VAR's who can handle the on-going maintenance and support that all this technology will require, they win big.

Can the Channel change to become Trusted Advisors? Probably not all of them. Selling Cloud is different than selling telecom. Period.

The Channel basically sells replacement services. Here are some examples: VoIP for POTS: SIP Trunk for PRI; Ethernet for T1. Each transaction is replacing like for like. Even MPLS is just a replacement for Frame Relay, ATM and IP-VPN.

That is why selling Hosted PBX and other cloud services are so challenging: It is not a simple replacement. It's not like for like.

The sales process for selling replacement services is pretty easy. When the sale becomes about business process change or fork-lift upgrades (like Hosted UC or Virtual Desktop), the sales skills are different. The sales cycle is different - and longer. Provisioning takes longer. Ultimately, commission payments are much later.

This is really important to remember.

Selling Cloud and Managed Services will not just be more of a challenge, but it may be less satisfying. Why? Transactional sales types are motivated and driven by quick hits and a lot of ink in a month. Extended sales cycles are less motivating to this type of sales person.

Moreover, as commissions decline with the price decreases, agents have to sell more and more to maintain their revenue goals. Shifting to new products, new sales skills, and a different sales approach will be a huge leap, especially without training, a financial cushion, a deep desire for change, and vendor support.

Agents are not FARMERS! They are Hunters! They do not do Account Management, cross-sell or upsell to the base. Smart agencies will higher a couple of farmers to work the customer base and perform account management.

All of this makes me wonder who will be the Agent of tomorrow, who will be grooming accounts and performing consultative selling of complex solutions to their customers?

The Telecom Ecosystem is Shifting Rapidly

2012-04-02T21:02:47Z

The telecom ecosystem consists of a number of pieces: RBOC, ILEC, RLEC, CLEC, ISP, MSO, IXC, ITSP, MSP, data centers, Master Agents, Agents, VAR's. It is shifting.

As carriers migrate from a commodity access business, so too must the master agents, who - more and more - are tying their business models to the preferred carriers.

Master Agents have morphed into a supermarket of services: CLEC, ILEC, MSO, VoIP, MSP and even hardware (like Shoretel). In some respects, the master agents become the fabric for a quote machine. Basically, the machine churns out quotes from a number of carriers. This approach makes busy work for agents, masters, channel managers. It's only necessary because of a lack of value proposition. There is no clear delineation of specialties for the service providers. Not even from their preferred partners.

More and more masters look like Tech Data.

The Masters are going to have figure out their value proposition to the Channel soon too.

So are the CLEC's. All the mergers are just about complete, so before we start another round of M&A (or worse a round of Bankruptcy filings), could we just hear you clearly tell the Channel what your sweet spot is going to be?

Clearly and concisely - not in 71 slides over 2+ hours - but in one sentence (or a tweet), tell the Channel what we should go to you for?

Tech Data offers 3 of the 4 cellcos services and XO services, through TDMobility. It is a small step to become a Master Agent and add 50 carriers. The difference is that TD offers hardware. It's a one stop shop. And the commission reconciliation is done by TD, not me! YEAH!

SYNNEX and Ingram are in Cloud. (No idea the details because the PR reads like someone swallowed a buzz word infographic.) But if these two VAD's start brokering SAAS services, it makes for an interesting day. In fact, if they acquired or partnered with VAR Dynamics, they would hit a SAAS home run.

Next up is Dell. Dell bought SonicWall and WYSE. It clearly has a strategy. My guess is that Dell will want to be the whole distribution system for VAR's in an MSP world. In other words, hardware, devices, cloud services and managed services will all be sold by the VAR channel with Dell providing the back office and the engine. Dell will become a Managed Services provider Enabler.

Transactional Agents will just ride it out. I hear it in their voice. Some will sell Hosted VoIP and some other services, but the comfort zone is on replacement services. It is very difficult to go from selling replacement services to basically selling insurance (or the invisible).

VAR's are the goal of everyone right now: Carriers, Agents, Cisco, etc. Are they the holy grail? Unlikely. VAR's deal with hardware and delivering their own services. Autotask and Connectwise are a platform to allow them to bill, schedule, monitor, etc. That competes with the carriers.

VAR's, like CLEC's, like control (or more accurately the illusion of control). Telco services with fluid port dates, demarc issues, and other unstable moving pieces are not what they are looking to add.

To be honest, I don't think that the telcos will win the managed services game. They can barely deliver on telco services these days, so how are they going to deliver on software, apps, security and other managed, hands-on, skilled services? Not to mention, the CAPEX of delivering on these services. What CLEC is flush with cash? Most are flush with debt and price pressures are resulting in flat or declining revenue.

Moreover, with the way Agents have been treated as of late (in quite a few noteworthy instances), I'm not certain VAR's will not be enticed to come join that party of MRR.

There are many reasons why I think that cablecos will become the new ILECs and LECs will flounder outside of telco.

IDC SVP & Chief Analyst Frank Gens said, "Volume is going way, way up and price is going way, way down. If [technology companies are] going to drive large-enough volumes to support the revenue levels they're used to, they're going to have to drive the number of customers way up. You'll need millions of customers in order to compete." Gens was talking about software, but it is the same for ISP services, cellular, TV, and voice.

Take conferencing as an example. Why don't the IXC's own that market? It's just a bridge and minutes. Instead Skype, Vidyp and other start-ups have picked that market apart. Even Webex owned by Cisco didn't innovate and own that market. Conferencing is an example of Cloud Communications and SAAS, right? But telcos don't own it. Software companies do. Layer 7 companies. Not Layer 1 companies.

Hosted PBX is another example. ILEC's owned Centrex. Many of them had installed Broadsoft boxes (but were only using it for SIP Trunking). So that market is about 1000+ strong of tiny players picking off low hanging fruit - disrupting the whole sector. Again, telcos did not dominate this segment. Sure there are a lot of reasons for this, but excuses are just excuses. Comcast will probably be the largest player in the Hosted PBX space.

How about data center? ILEC's had space and were colo landlords early, but just didn't want that game. Until now.

And Master Agents just follow the carriers. It's not like they are straying far from the center either. A couple of Masters have TEM platforms. It's a start. But none (that I know of) jumped on the SAAS game early. It's just an example of an ecosystem that follows each other and navel gazes. The main reason is due to the compensation system. Quota is a stern parent.

When I look at what Parallels is pulling together - 350+ apps to API through their portal layer - I see them leapfrogging ahead of the game - or more precisely, creating their own game.

VAR Dynamics does something similar by white-labeling SAAS for anyone to sell. This is the next piece of the puzzle. Network Access, then Apps. Agents already sell some network access. The key is to sell all kinds of network access and a ton of value-adds (like storage, backup, security, compliance). Think like Apple or Google: it's all about the Apps store! Whether that store is run by VAR Dynamics, Parallels, SYNNEX or Ingram, Agents have to find a way to get a piece of that. Why? Because transactional sales is producing less and less revenue and commissions. Last year a GigE port in 56 Marietta in Atlanta was going for $1500 on the low end. Now it's $500. The high end last year was $20K for a GigE; today it is $8K. Revenue is declining; thus, commissions are declining. Agents have to chase more and more deals to make a living.

I propose that Agents have to learn to vacuum. By that I mean, voice, broadband, mobility, security, apps, and other add-ons. Get the whole pie!

The Ecosystem of Telecom is shifting - for everyone. Either shift with it or not.

What is the Market Expecting?

2012-04-01T17:46:30Z

Tuesday I was in Vegas at the Channel Partners Conference mainly for the TCA events. At the TCA Channel Chief Summit, Tiffani Bova of Gartner and Rauline Ochs of IPED Market Bridge Alliance presented research. The take away for me was in perspective.

No one buys the way most service providers sell. That's why we are always searching for Consultative Sales Professionals. Because the whole industry sells what they want - and it is followed up by a series of me-too.

Just because one CLEC is selling Managed Security does not mean that the marketplace wants it or will buy it or that it will want it delivered that exact way. It also doesn't mean that the next eight CLEC's or service providers need to market that same offering.

The market is consuming technology differently. It enters the business via the consumer. About 70% of devices are owned by the consumer in the business environment. Only about 30% are paid for by the business. That means support for devices either isn't available or is imposed on the IT staff by the employees. That's a confusing (and expensive) way to handle it. Don't you agree?

Most of what Bova and Ochs presented had to do with mobility and Cloud. Mobility is a huge problem for most CLEC's as the model for cellular sales is unprofitable - whether they sign a wholesale, agent or MVNO contract - the margin on cellular is thin to none.

And what is prompting Cloud? Two things: ubiquitous broadband and a mobile workforce.

Ubiquitous is really hyperbole because even with 3G, 4G and wi-fi, you can't get bandwidth everywhere and even when it is available it is shoddy (like at tech conference hotels).

Mobile workforce means a couple of things. One that more businesses have accepted remote workers - whether at home locally, across the country or across the globe. The economic downturn (and all the consolidation) has translated into businesses having less workers but expecting more work. This means working at home, while on the road, etc. Hence, not just email, but the application data has to be available from any authorized, connected device. That is the beauty of Cloud.

Cloud changes the way business is done.

Read that again, because that means it has to be sold that way.

It's easier to sell email, because everyone has email and it is almost a requirement. Selling unified messaging gets more complicated. Unified Communications and Collaboration is just too complex of a sale, of an explanation, of an implementation, of a deployment. That's where the service providers want to go, but they neglect the challenge of the sale. There is a lack of the story, the sales triggers, the value proposition, the WHY, and of course the on-boarding.

One thing Bova pointed out was that VDI (virtual desktop) sales have grown in EMEA (Africa and Mid-East) while have stagnated in North America. One reason: VAR's have too big a quota with HP or Dell to take a 500 desktop refresh to VDI instead of selling 500 desktops. Not just the quota for the discount, but to sustain Gold level service. It's the same with Cisco, Microsoft, etc. VAR's will keep selling what they sell for 2 reasons: First, to maintain the current level of vendor support to continue to service current clients in the manner that is expected (or even contracted). Second, making the changes to shift business to an MSP or all service model is complicated and expensive. Bova suggested firing clients and employees to create the business you will need in 5 years, but that's easy to say from a consulting seat. Not so easy from a business owner perspective.

When EarthLink told its channel partners in Tampa that it only wanted Multi-Site multi-access opportunities, it didn't come right out and say that it would stop selling T1's, but that was the underlying message. (And ELNK did tell me that 1GB and 10GB private line, even ON-net, was not what they wanted to sell.) That's one way to start planning for where you want to be. Say no while being specific about what you are looking to offer.

As a whole I don't think the service providers have any idea what buyers are buying or why. Just because you WANT to sell MPLS with security or Hosted UC&C or whatever, doesn't mean that prospects will actually BUY it (that way).

When does something become a commodity? When the customer buys it directly online.

For non-commodity services, you need a well trained sales force that understands the brand, the value proposition, and the target. As an industry we aren't there yet.

I'm going to leave you with that.

Coming soon two posts: (1) Master Agents are like Pharma Reps. (2) Tech Data versus Master Agents.

An Interview with StartMeeting

2012-03-19T17:40:38Z

I had a long talk with Greg Plum, new VP of Channel Development at start-up, SmartMeeting.com at ITEXPO East. He agreed to a short interview.

What's the special sauce for StartMeeting?

StartMeeting incorporates components of web conferencing that have become familiar and trusted, while introducing some new features, including fully integrated toll, toll-free, and HD VoIP audio options, custom greeting and on-hold music, and a fully customizable meeting wall for meeting hosts, all at price points well below the industry.

Why should agents and VARs choose to sell StartMeeting over other web conferencing options?

StartMeeting offers a simple, intuitive, and effective communications solution. Our aggressive pricing, starting at $19.95 per month for a 50 seat license, coupled with a reliable, fully-integrated, audio bridge, will get a prospect's attention. Our differences, including HD audio, social platform integration, and our customizable meeting wall, will make them loyal, long-term customers. Since ease of sale is paramount to the agent, our proprietary provisioning system affords the agent 80 pricing scenarios, paying commissions ranging from 25% to 35%, all via a promo code matrix. It doesn't get any easier than this.

Name one sales trigger for web conferencing.

When a prospect tells an agent they are using ANY web conferencing solution, the agent should recognize this as an opportunity to win this prospect as a customer and save them money by offering StartMeeting. This could also be used to get the attention of a seemingly impervious prospect. Agents can now show them something different... Disruptively different.

CALL TO ACTION: StartMeeting will be offering free demo accounts to agents and VAR's.

Zayo Buys AboveNet

2012-03-19T15:31:01Z

It was a big surprise this morning to hear that Zayo bought AboveNet for $2.2B. My first thought was "Where did Zayo get the money?" I mean, the Dealbook writes, "As of Dec. 31, Zayo had about $25.9 million in cash and short-term investments, along with $682.7 million in long-term debt. It currently has a credit rating of B2." Apparently, Zayo backers and bankers went into their reserves to buy AboveNet. I guess the heady days of Bain LBO is back, thanks Mitt! (LBO is leveraged buy out).

AboveNet was one of the few fiber shops that had its act together. They know where their fiber is. They can quote it fast. They can deliver on what's quoted. And they knew their sweet spot. Except for US Carrier and FiberLight, no other fiber CLEC's that I have dealt with can say that. (I'm waiting over 6 weeks for quotes and maps from IFN and L3.)

This will be Zayo's 21st acquisition. I hope the integration goes well, because in the past Zayo has had issues with their knowledge of fiber assets. It has improved. Google earth!!

Zayo doesn't sell via the Channel - direct sales only. Via email from Dan Caruso, when asked about the Channel this morning, "I am sure we will be supportive of efforts Abovenet has underway."

Rob Powell likes this deal, even at 9.2x projected 2012 EBITDA. I think scale for scales sake is the problem with telecom. Mounting debt combined with shrinking prices does not make for a healthy business. Zayo and Level3 are buying up a lot of the competition, but that hasn't really increased pricing because Cogent and resellers are still there dropping their pants to win any revenue. And the ILECs are in a price war with the cablecos.

I mainly sell transit and transport. Fiber companies are my bread and butter. It is certainly easier to just check a single fiber map, as opposed to a number of them. Here's hoping for a smooth integration.

DEBT

The debt in this industry is crazy. AT&T and VZ combined have $105 Billion in debt. The top 5 MSO's have about $100B with Comcast at $40B. Level3 is at $8.5B. WIND has $9B. CenturyLink has $22B. When you are paying 7.75% on those notes, that's big bucks! Zayo already had $682.7 million in long-term debt; now it will have about $2.9 Billion in debt on approximately $900 million in annual revenue.

I still think that taking Cogent out would be a good move for L3 or someone. You get fiber, revenue, lit buildings and take the low priced carrier out of the market. It did take almost a year for AboveNet's investors to sell, so maybe in 3Q or 4Q. Most buyers - L3, CTL, WIND - have already bought something and are still refinancing debt as well as integrating what they bought.

For the Channel, this mounting debt is scary. Why? Because the CFO looks at the line item for commissions that grows every quarter. He wonders why he has to keep paying it, The CFO thinks, "If I wipe that line item out, our books look great." That's the scary part.

EarthLink's Sweet Spot

2012-03-14T19:53:22Z

I learned a few things at the EarthLink training today in Tampa. EarthLink has 175K business customers and about 3 Million consumers, most of them dial-up customers, providing $20M in free cash flow per month. So of the $1.3B in annual revenue, about $500M is dial-up. ELNK has 4 data centers - Columbia, SC; Rochester, NY; Marlborough, MA; and 55 Marietta.)

The first (or 70+ slides) shows that Pipe is the foundation for Managed Security and other services. However, despite having 28,000 miles of fiber, they don't want to sell transport on it. Even On-Net gets the response that "This is not our sweet spot".

What is the Sweet Spot? As I wrote here, Multi-Location Multi-Access type across LEC's or cablecos.

The partner portal is in development. The customer portal, called myLink, seems cool they way that you can drill done on customer locations in Google Earth and open a trouble ticket.

Agents in the room, called T1 Slingers, asked about DSL, since EarthLink resells ADSL out of 10K end offices through 12 providers. As a resell service, a 1FB is required. And since neither RBOC is really supporting their copper plant and especially not DSL, it leaves the business DSL customer hanging for days when there is an outage. [See my post about Is DSL Done?] 3G/4G wireless backup is my answer for that. There are cool routers that even do it automatically.

The other question centered around T1. "You just are not going to make a living slinging T1's at $400 any more." PRI's are available east of the Mississippi still, which actually IS an advantage for ELNK. TDM PRI's are still the preferred reliable way to deliver voice to a PBX, especially with alarms, faxes, and elevators.

It was an hour on MPLS. I still find it amazing that almost 9 years after my first MPLS class, we are still presenting the Fundamentals of MPLS. For Agents, it will be about layering on services to the MPLS network. The sticky stuff is value added services.

Retail needs a voice line, some Internet, credit card processing, payroll and data backup. That should actually be a bundle that someone offers. ELNK has the old New Edge AX platform that connects payroll and cc processing to the MPLS Network. Add on a VoIP line and some data backup and there's a bundle. Want to make it stickier? Add network DVR to the service so that those IP surveillance cameras can be viewed from anywhere (and can't be erased locally). Bingo! (Do you have an opening in Product Management? My resume is here.)

The team mentioned POS, Inventory, HR and Loyalty programs. Do you have those on the AX platform? Those would make some excellent sticky add-ons.

"So we have an Internet T1 service that connects you securely to one of 4 data centers, Mr. Prospect. Do you currently have a payroll service? Are you looking to upgrade your POS? Are you worried about security on your credit card data (PCI compliance)?"

That's where the conversation has to go. Even though the customers just want the access - as cheap as possible - Agents will have to steer the conversation to: applications on top of that access (AOTTA).

So back to MPLS with Type II access. Ethernet is delivered over a Type II DS3 from the LEC. T1 is delivered over the ILEC copper pair. DSL is a resell of the ILEC product offering. Then for outliers to attach to the MPLS network, there is an IPSec GRE tunnel with BYOB (bring your own broadband). Blended Access.

EarthLink is a Sprint MVNO, but it is more for 3G access where there isn't DSL to attached to the MPLS. Also, for the MPLS customers that want to have one bill that included cellular.

Something else I learned: ELNK bought STS because Rolla knew the Mark Amarant, CEO of STS, and STS had a reputation for best practices in on-boarding customers in the Hosted PBX realm. That's smart, because Hosted PBX (like VDI, another product that ELNK is rolling out), requires a detailed on-boarding process from pre-sales through post-sale, including mapping extensions to desktops, extension attributes, handset type, employee training and some on-site installation. EarthLink is not selling Hosted PBX as a stand-alone. You have to buy access from ELNK.

So in summary word of the day: "Blended Access".

Key association: Multi-location multi-access MPLS.

So Are You Going to Sell VDI?

2012-03-12T22:40:01Z

EarthLink is just one company that hopes the Channel will embrace VDI, virtual desktop infrastructure. "IndependenceIT™ (iIT), provider of the Freedom desktop workspace, today announced at XChange Solution Provider 2012 that it has signed an agreement with EarthLink. Under the terms of the agreement, EarthLink will offer iIT's Total Freedom™ Workspace and Instant Freedom™ Workspace solutions to its customers as a part of the EarthLink's IT Services offerings." [press release]

Can Agents sell VDI?

I wrote about how there is a big difference between selling Cloud and selling Telco. Telecom agents sell WAN. VAR's play in the LAN. Agents usually stop at the Demarc, right along with the telco.

Once you get into the LAN, it becomes a complex sale and requires a lot of digging. More questions. More pre-sales surveys. Maybe even testing. Plus when you change stuff that affects the users/ employees, now you have a culture shift. For Agents, that want to get ink and move to the next one, VDI, Hosted PBX, and SAAS sales just aren't a good fit.

For a while longer, T1 Slingers can make some money - less money - selling cableco and T1's with some Ethernet thrown in for good measure. Eventually, Agents will either have to sell Apps, Managed Servcies or Cloud, or suffr.

One issue with VDI: how do you even get into a conversation about VDI?

VDI changes the culture of an office right from the get go. Today, users want to play with whatever website or app they want on whatever device they want. On VDI, while they could have some of that freedom, some of that will go away, control of those items ceded back to the IT department. Virtual Desktop makes backup and repair simpler. It means that employees can work from anywhere with the same desktop.

Still, selling VDI or managed IT is a different process than selling TDM telecom. It's about apps, head count, downtime, productivity, licensing, security and continuity. That's a different sales process than replacing PRI's or upgrading a T1 to Metro E or even swapping a T1 for a cable modem with 3G backup.

What will it take for Agents to sell VDI? For one, an Agent that WANTS to! That gets it and wants to sell it. Then it requires product and sales training. A lot of it. (I'm available to provide that, just so you know.) Lastly, it will require a provider that knows who they are selling to and why, that is devoted to the Channel. Stay tuned.

The Channel Will Be Driving Sales

2012-03-09T17:15:47Z

Miller Heiman, a sales training company (with a proprietary sales technique and process), acquired Channel Enablers in Australia last September. "Indirect channels now account for the majority of revenue in many industries and is the fastest growing sales route," says Sam Reese, CEO and president of Miller Heiman. That's how we feel at the TCA, too - the Channel will drive more and more revenue every year. One of the Miller Heiman consultants, Steve Cadley, wrote me, "I am excited to share with the Channel Partner community Miller Heiman's expanded capabilities to help organizations optimize all aspects of their channel strategy. As you know Miller Heiman has always had a focus on helping organizations drive revenue, but more on the direct side. Now with Channel Enablers thought leadership, we can cover the A-Z in supporting our clients channel go to market strategy as well as how to optimize their existing channels."

iPad, MDM and Other News

2012-03-09T15:12:30Z

Bandwidth.com bought DASH Carrier Services and renamed it inetwork. Apparently, inetwork is doing gangbusters in the wholesale VoIP space, the largest arbitrage space left, I would imagine. It's the new LD. inetwork offers origination, termination, e-911, SMS and toll-free. The cool thing is the TelcoTranslator that they launched to help with all the acronyms.

Birch has bundled credit card processing with its SMB services. Smart for the retail space. They might want to add 3G/4G redundancy to that. Oh, and I sure hope that are working on PCI Compliance.

So Apple's ipad3 is out. In 4Q the iPad outsold PC's in number of units sold. TDmobility told me that the future is in mobile devices not in PC's or laptops. (Netbooks and tablets are considered mobile devices.) But what is a telecom or pharma sales force supposed to do with the iPad after they plunk down $500 a piece for 50 or 100 of them? Speaking with Jody Haneke last night, it's all about interactive apps that make the sales presentation come alive. (That's what Haneke Design does here in Tampa Bay, home of some great mobile marketing talent.)

The big thing, according to both Haneke and Charles Kriete at TDmobility, is MDM: mobile device management. MDM involves more than just inventory tracking of mobile devices. It includes remote wipe, anti-virus, virtualization, application control and more. If there was a managed service that Agents would want to jump on early, MDM would be it. It only takes 50 or 60 phones to be worth it for a business. There is also room for just mobile security management. The threat to mobile devices is huge. Imagine a virus turning your phone into a surveillance device!

Rumor Mill: is DT bidding on EarthLink? Tata and Vodafone are bidding for Cable & Wireless.

What Else Are You Going to Sell?

2012-03-04T23:44:40Z

TDM is running out of runway. Agents have already switched to selling Ethernet, MPLS and SIP Trunking. What else can they be selling?

Back-up, like Conferencing, is a cash cow that Agents just don't sell. From archiving email per federal regulations to backing up laptops, smartphones, databases, customer records, billing and more "in the Cloud", online backup service isn't much different from Google (see Chrome ad) or Apple iCloud. Access to everything you need through an authorized device attached to the Internet is the beauty to Cloud services, but backing up data is vital to business continuity. How long can a business run without billing records or a customer database? Not very long. Think how flummoxed you are when you lose your contacts in your smartphone. Imagine that contact list was your business. That's why backup is important (to your customers). VAR's are already selling different versions of online backup: their own; a white-label from Remote Backup, DriveHQ or LiveDrive; and a resell of Carbonite (who is hugging Agents right now) or Intronis (who loves the Channel) or Anxient or many others. There are some like SugarSync or Mozy that backup your smartphone and your laptop to the same account.

Managed Security - most of the CLEC's (XO, EarthLink, Netwolves, Integra, Cbeyond), the RBOCs and the ILEC's (Windstream and CenturyLink) offer some type of security offering, usually Managed Firewall, IDS (Intrusion Detection Service) and Network Monitoring. As more data moves to the web (Cloud), security will become even more significant, in the form of email and application security, encryption, event and log management, and mobile device management. For example, Reflexion provides hosted email security, archiving and encryption services exclusively through the channel.

Hosting and email services - everyone has a website or blog; everyone has email. Why shouldn't you be offering those services too? XO started out as Concentric Network, a hosting company. This was Cloud before it was called that. XO sells Hosted Exchange and website hosting. Megapath just rolled out the Microsoft suite. Intercall offers Live365. It isn't big dollars, but it is a place to get your feet wet in Cloud and apps.

Managed IT - remote monitoring of servers and desktops - is a VAR service powered by software like Autotask, Connectwise, Kaseya and GFI MAX. As businesses are essentially dependent upon computers and technology to do business, managed IT services become an option when skilled technical support staff are too expensive, churned or unavailable.

A step past, Managed IT is the remote desktop - aka Desktop-as-a-service (a term I dislike) and VDI (virtual desktop infrastructure). In 1999, Wyse terminals were going to replace desktops for efficiency. It didn't happen (except in the POS space.) Now we are trying it again. MSP's offer this service - with a big fat helping of bandwidth. There are big names in this space, including Citrix, VMware, and Microsoft. There are also a number of providers, like IIS Group, who provide VDI through the channel. Navisite, which TWC owns, just chose Desktone as its DaaS partner.

Next to DaaS is HaaS, or Hardware as a Service. Don't ask me how this is different or how it isn't just leasing. Ask Chartec.

There are issues with selling cloud services - like the service provider's (SP's) financial position; redundancy and resiliency of the SP's architecture; SP's ability to scale in terms of on-boarding new customers properly and scaling tech support for end users; the end users' experiences as cloud services will change some business environmental factors; and licensing issues.

That being said, Agents should be surveying their current customers about the needs outlined here. Why? To get a bigger share of the customer's wallet.

Another way to look at it is: the customer is going to shop these services like he shops T1's, broadband, and voice. He might as well pay you to shop them for him, like he does for the telecom stuff. Get in there!

If you liked this, you might like this blog post too:

What about selling Cloud

One addition, I interviewed VAR Dynamics (local boys from Tampa) at ITEXPO. VAR Dynamics is a private-label Software-as-a-Service (SaaS) and Cloud business apps provider selling exclusively through channels. Apps include Microsoft Exchange, Microsoft Dynamics CRM, Microsoft SharePoint, Zimbra, BlackBerry BES, email encryption, email archiving and more. There will be cross-over in what a provider sells. Just as VAR Dynamics sells the Microsoft software and email security, CLEC's that you are already familiar with - like XO and Cbeyond - offer a variety of services to sell deep into your customers.