On Rad's Radar? - managed services Archives

Growing Out an IT Business

2013-04-08T13:32:44Z

This is a slide from EarthLink's earnings presentation. Basically, telecom spending is flat and it is roughly 11% of what companies spend on IT services. So if you were looking for growth where would you turn? Oh, yeah, IT services.

These have been the 4 segments -- the 4 drums really - that EarthLink has been beating for a while now - MPLS, IP, IT and Hosted Voice.

When you look at the broader picture, MVNO is not a high margin business. It is the new UNE-P. And as I have repeatedly said - Layer 1 or Layer 7 - either own a network or own the applications.

With the onslaught of the cablecos on the SMB market with their triple-play, CLEC's have to pick up the pace on sales. Not only do they have to sell more, faster, they have to retain their customers, too.

CLEC's need to get sticky. It doesn't have to be your own services either. Partner with someone. Speed to market is more important than owning or building. And if you partner with someone, they should have the deployment formula down pat.

Deployment is where the relationship begins. On-boarding is like the first date. When that impression is bad, there is no second date. There are rumors in the schoolyard about how awkward and weird you are. Today that school yard is social media.

Not every provider has the skills in-house to offer security, desktop, RMM and other IT services. Leverage a strategic partners' skills.

The key to stickiness is to be the one throat to choke. It was a lesson I should have learned working in the VAR business, but didn't get until I was an Agent. It is far easier to sell more to your current customers than it is to continually find new customers to sell one or two services to. And if a customer has 3 or 4 services with you, no one can take them away unless you screw up.

I'm not saying become a cloud services broker, but a model similar to that will work. You just need to have a small piece of all of the services that your clients use.

Predictions for 2013

2012-12-19T19:15:00Z

CenturyLink Biz has an ebook out with predictions for 2013 and beyond. M2M, mobility, cloud - all just mind blowing stuff . It's prediction time obviously. Let me say that 2013 can go a couple of ways - DC gets its collective act together to improve the financial situation or it doesn't. The economy will swing with either path - good or bad. We have already seen layoffs and threats of more. The only positive I see is bankers actually being penalize for fraud. That said what is in store for 2013?

Well, the FCC's pace for any case is slow and slower, so they will likely not get to the copper clipping and IP transition until 3Q2013 at the earliest. meanwhile, CLEC's have to be vigilante to document cases of copper clipping, because all the money that they - Integra, Megapath, TelePacific, XO, Windstream - have invested in EoC doesn't work without said copper. I think they will be fine until 2014 on this.

That said, CLEC's have to accelerate their plans for OTT services like cloud and Managed IT. When the copper plant disappears, wholesale (from fiber providers and cablecos) will get expensive. The money will be in Layer 7. I have often said that it was going to be Layer 1 or Layer 7. Without a network that you own, it will be a fight for apps and services. Everything will look like Office 365 - where 42,000 Microsoft partners are selling it for very little margin.

Here's the thing: more businesses are moving to the cloud for so many reasons - mobility just being one of them. Some CLEC's, VARs and even Agents will migrate to a cloud services brokerage model. That will work for slinging Hosted Exchange, SharePoint, CRM, simple backup, even VPS. Network will become a separate sale and negotiation.

I'm still shocked that no one has rolled out vertically based integrated bundles yet.

So mobility will still be huge in 2013, but with the new shared data plans, the monthly bill will be increasing, so businesses (and consumers) will be looking for alternatives. Wi-fi will be significant. When you add in mobile data caps and consumer cable caps - and metering - there will be a net effect on cloud services and OTT services.

When you examine the backlash yesterday on the Instagram privacy gaff (right after Facebook finished acquiring them for $715M), you have to wonder how much longer the online phenomenon continues. Privacy is non-existent. You have to be off-the-grid and paying with cash to be beyond corporate and government spying. I think we will see a little more backlash in 2013 - enough that FB and other companies see a dip in usage and corresponding advertising sales. Have FB and twitter peaked?

The companies to watch in 2013:

RIM and Alcatel because they are re-inventing;
Avaya because of its crushing debt;
Bright House due to its Telovations acquisition and to see if it is the first cableco to chase business outside of its region;
8x8 and similar OTT Hosted PBX players like FreedomIQ;
the Cloud Communications Alliance, especially the members who have not been acquired yet. If Hosted PBX doesn't explode in 2013, it never will;
Sprint because Clearwire+DISH+Softbank = a big ugly mess with Hesse;
Verizon but specifically its OTT hosted PBX service, VCE;
Dell as it continues its shift to cloud services from hardware;
Tech Data - between TDmobility and the Microcorp deal - 2013 will be telling;
AirWatch since MDM is huge and they are being sued;
Master Agencies that have to figure out relevancy in 2013.

For Agents and VARs, 2013 is the year they have to put a plan together. No more waiting. Too many VAR's are already jumping on the telecom/network bandwagon and not nearly enough Agents are jumping into the Managed Services and Cloud space. For Agents, 2 resolutions for 2013 would be (1) partner with a VAR or two; and (2) cross-sell services to grab more of the total wallet share of your customers. Look to revenue per customer and lifetime value of each customer as the most important metrics. (Mainly because they are.)

For VAR's, they have seen some big changes from Microsoft - Small Business Server's end of life as well as the way Office 365 was sold. VAR's also witnessed CLEC's - like Cbeyond and EarthLink - make a big splash in launching managed services and cloud offerings. In 2013, VARs will need network/telecom to make up for the revenue dips. Locally in Tampa, we have seen some Microsoft partners go to programming and integration services in place of the old model of SBS and Exchange. For all of cloud adoption, Integration is the key to any business process outcomes. There aren't nearly enough programmers to do all the necessary integration.

In the Google world, there are companies making money supporting and integrating Google Apps. Backupify, Batchbook, Insightly are just 3 companies that integrate with Google Apps for CRM and backup. As this ecosystem becomes more complete, Microcorp's deal with NeoNova could prove brilliant.

It is this type of package or bundle that most businesses want. Do they want stand-alone Hosted Exchange? Notsomuch. They want a complete package of inter-working software - the Hosted PBX integrated with Outlook and the browser - like they have on their smartphone!! It confuses me that the smartphone is more integrated than a laptop, Mac or desktop.

They want their CRM to integrate with all of it too. If Xobni can pull in all that social data, why can't a plug-in for CRM?

It's this complete solution that is needed. No idea what company will roll it out first or if it will be in 2013.

Cloudy Math

2012-12-11T03:10:14Z

There is a lot of talk about the big money that Agents and VAR's can make if they just switch over to sell Managed Services and Cloud Services. Here are some facts about cloud.

M5 had the highest ARPU (average invoice per customer) when ShoreTel bought them - at $2000. Most other cloud communications providers hint at lower ARPU - maybe around $1000 per customer. However, 8x8 and Cbeyond are public and their cloud ARPU sits at between $200 and $250.

When you examine the "cloud services" of many carriers, it is just Hosted Exchange, Sharepoint and maybe some backup. That's $9 + $10 + $20 = $39 per user per month. Add in a Hosted PBX seat at $30 and you are now at $69 per month. For 20 employees, that's not a bad billing invoice for Agents, but it is also an unlikely sale. What small business will pay $1380 per month for phone and email? A PRI at $550 plus maybe $100 for the PBX lease and $50 per YEAR for Google has you covered. Add in some Dropbox and Bingo!

This isn't to discourage you. It's to put a pin in the hype balloon, which is starting to annoy me.

You will have to sell upmarket. There are 83K businesses in the US with 100-499 employees, according to the 2009 US Census (the last year data is available). With 1000 cloud service providers in the US that will be a fun Red Ocean to swim in.

There are only 17,500 business with more than 500 employees. That 's the spot you would like to sell in but you would need to be connected or a white elephant hunter.

That leaves Agents chasing 20-99 employees - since that is a majority of the businesses in the US. Let's call the average 40. If you sell that business the full boat: Internet, Hosted voice, email and backup - the ARPU is worth it. The sales cycle will be longer. The deployment will require more input and project management than Agents are used to. (In fact, it is more than most carriers have ever had to do!!!) Post-sales support will also be required. So overall, it is a lot more work for a stickier client with more ARPU than you are used to. Are you up for that challenge?

Let's go back to the 8x8 example at $256 of ARPU. That's about a 9 employee shop. So you sell them 8x8 voice, cable modem AND another broadband service (like DSL or 4G or fixed wireless). You offer them Google Apps for SMB via NeoNova for some small change. Add in some Mozy Pro back-up (or Carbonite or other backup service that pays you). Next you try to get the cell phones - there has to be a couple that are corporate owned -- for a few more dollars. Don't forget the 4G data plan.

So you wrapped up the Internet Access, mobility, voice, some DR (disaster recovery), backup, email and office suite. After that, what software do they use? How about Conferencing? Do you see? You have to grab the whole wallet (or you can't make much money).

It has to become a lot like McD's. What do they do? A call center hits you first in the drive-thru with, "Would you like to try our ______ special today?" No. "okay. Order when you are ready." But don't forget "Do you want fries with that? or can we Super Size that for you?" It sounds cheesy but you are going to have to do it.

CenturyLink, XO, MegaPath and quite a few other carriers offer transit, Hosted voice and cloud services. It will all be on one bill, with one carrier to blame, with one throat to choke. It makes it easier to sell --- check boxes on an order form or site survey.

You better hurry because the MSP's like MindShift and others are already out there doing this.

When you consider that Parallels AS platform allows hosting companies - like Intermedia.Net - to sell, bill and deploy these services (Hosted PBX, email, storage, office) with a click on an online order page, spend this month - the last month of 2012 - deciding what your plan is going to be for 2013. While I hate the hype, many of your competitors are already targeting your customers. Selling them a T1 will be easy after they sell them VDI or backup or Hosted PBX. Then what do you do?

Again, you have to do it but I wanted you to have a realistic view of what it was going to be like. You have vacuum up the services - all of them - heck, sell them office supplies if someone will pay you for it! Managed Print anyone ;)

The Changing VAR World

2012-10-16T01:44:04Z

Opening evening at UBM's BoB Conference was a panel discussion about the change in the VAR and MSP community. This is a collection of tweets about the panel discussion #bob12.

Social Media (SM) , mobility, are cloud - threats to some, opportunities to some - both to many.

"Behave like a three-year old: fall down, learn something, try again."

How do you scale marketing and lower customer acquisition costs in cloud?

The Channel is hiring sales <-- luv to know where they are finding them.

Amazon has $1bill cloud biz and not even 5 people on the street.

Amazon, folks, offers just 2 services in self-serve fashion.

RainKing, Salesforce, radian6 (social media), data mining to understand clients better.

Vendors need scale, but the channel needs customer intimacy (and the channel needs to build its own brand).

Manufacturers do not like the channel. Channel Partners are not enamored with the the manufacturers either.

Biggest Issue: Mainly vendors don't understand what the channel does. Manufacturers/vendors do not like that channel partners are not exclusive and offer choice to the marketplace. [Telecom vendors are the same way!]

@UBMChannel: Number 1 trouble w/ vendors: they don't understand solution provider business and value. "We are not just vehicles to end customers" #BoB12

@UBMChannel: Marketing has changed as businesses do. Moving from finding customers to how do customers find you? #BoB12

Overall, even as the marketplace is changing, manufacturers are slow to change. Vendors still want the channel to just get them customers, push their products and get out of the way. The Channel now wants to build a brand, retain customers, increase wallet share, and sell managed services (some of which will be their own). Unfortunately, there isn't a huge ROI on that strategy for vendors. In Telecom as well.

A final point by the panel revolved around Gartner pushing the Cloud Services Broker model on VAR's. The panel thought that was a ridiculously low margin business - basically, transactional. It is likely going to become what the VAD (value added distributors like Ingram and Tech Data) will become in some sense.

Here's the flipside to that. Right now VAR's have accounts with both Ingram and Tech Data (and likely at least one other distributor like SYNNEX, D&H, CDW, Insight). When looking for hardware, VAR checks to see who has it in stock, at which distribution center, and for how much. When things switch to cloud services, it is unlikely that VAR's will have accounts at all 3 because they are not going to manage SAAS accounts across multiple vendors like they do now. It will be about going with 1 or 2 plus having their own.

The panel noted that we are in the midst of a change in the VAR business to a completely new organization - structure, personnel, skills, compensation, financing, marketing, sales and metrics will all be different when it is all done.

Sales is changing. Not only what is sold, but to who - IT is not the only buyer in an Enterprise any more. IT doesn't own the desktop anymore due to consumerization of IT. CMO and CFO buy differently from CIO. Can IT sales people sell to buyers other than IT?

Plus sales isn't about low hanging fruit anymore. It's about harvesting the whole tree. Acquiring customers is getting harder and more expensive. Retaining customers will be huge. Acquiring customers is different now. CLIENTS FIND YOU NOW, via blogs, social media, SEO, PPC. Are you involved in that???

The three panelists are making money now on Help Desk, End user Compute Space (which can include VDI) and in Global Managed Services (including help desk).

Cloud Will Be About Integration

2012-09-21T15:34:13Z

John Zanni, Vice President of Service Provider Marketing and Alliances at Parallels, spoke at the 6th TCA Channel Chief Summit in Orlando. Zanni presented on studies that Parallels has conducted globally about the SMB space and cloud services. That data is extensive.

Parallels sells through a wide range of partners - LEC, ISV, VAR, MSP, Cable, VAD (see diagram). It provides an easy way for SMB clients to by cloud services through the APS system, which through API's provides for deployment and activation form some 300+ cloud service providers, including TCA's own Alteva.

One thing that Zanni said was that Integration would be a factor in cloud service sales. That will be a problem for carriers. VZ bought Terremark for this. EarthLink has acquired a couple of MSP's for this. NTT grabbed Centerstance to add to its customer solutions portfolio.

The TalkingCloud 100 is filled with Google Apps Integrators. For the cloud to work for the business, there will be integration, deployment and on-boarding help needed. This is becoming a sector by itself.

Evolve IP just snagged IPiphany, a managed IT provider in Chicago.

In the end it will all be about the UX - the user experience. That is the battle to win.

Various Tidbits

2012-07-11T16:40:49Z

Two of my pals work at Counterpath. It went on NASDAQ today. Congrats! "CounterPath Corporation (OTCBB: CPAH) (TSX-V: CCV), an award-winning provider of desktop and mobile VoIP software products and solutions, today announced that its common stock will commence trading on the NASDAQ Capital Market on July 11, 2012. The stock will continue to trade under the symbol "CPAH" on the NASDAQ Capital Market and under the symbol "CCV" on the TSX Venture Exchange." Counterpath is a Vancouver, BC, Canada, company. Big VoIP/tech hub there.

CenturyLink wants more than the 30% of the $300M USF reform fund called Connect America. In fact, they want to overbuild on existing WISP's with that money. WISPA Opposes the new federal Subsidies for CenturyLink. Personally, I don't think that any LEC or MSO should receive federal funds. If we had the best broadband in the world, I would say okay - that's worth the money. We don't. They spend more than $300M in lobbbying per year!! Spend that money on broadband. Plus there are small businesses called Wireless ISP's already in that market that C-Link is going to spend tax dollars to put out of business! That's the Corporate Way!

MegaPath has the largest Ethernet over Copper footprint in the US. There are 600 Central Offices with ADTRAN Total Access 5000 gear to provide facilities-based EoC up to 20 MB.

Data Centers are growing. That was actually a headline yesterday. No kidding!

Health Care: What HIPAA Means for Data Centers. My understanding is that transport isn't a worry - and there is no such thing as HIPAA compliant transport! It is all about the storage, security and handling of the medical records - physical or electronic. That also means data centers have to be secure and tracking visitors, in case one gets access to a storage device. BTW, it is HIPAA, not HIPPA. How can you even say you are compliant if you get the acronymn wrong?!

Dell Voice is offered in Canada as a competitor to Vonage Mobile. Dell Voice is now on Blackberry, just in time for their corporate jet auction.

XO introduces a purple logo and a new XO Partner Program.

I remember all the WinTel articles about the Intel-Microsoft alliance dominating tech in the 90s. Today, not so much.

Voice Carrier wasn't thinking when it named itself. Branding rule number 1: if they can't find you in search, you don't exist. Didn't you learn anything from Xerox or Kleenex?

"Today services like Dropbox give people access to their work anywhere, any time, on any device, and users love it. (52% of our survey respondents said Dropbox is used in their organizations. Only 12% of IT departments are supporting it.)" How Mobile Consumer Devices Drive Cloud Applications in Enterprise IT.

Are you like a dog with a bone about anything?

Good News from CenturyLink Channel

2012-07-10T18:21:05Z

Sat in on the CenturyLink Channel Alliance - Get back in the Game Roadshow in Tampa this morning. It was nice to see Stacy Conrad from Microcorp; Josh Anderson and his co-workers from Telephony Partners; Dale Tucker from CCA; and put a face to an old Qwest SE, William Hobbs, now a CCA Emerging Sales Technology Consultant (ETSC) for Florida. Hobbs did a nice job on Why VPDC and The Benefit of Cloud over Colo. The roadshow had 3 parts (Hobbs did part 2):

New Savvis-CenturyLink Phase II Rules of Engagment overview;
Cloud/Hosting Solutions portfolio;
Third Party Data Center Updates/E-Line;

Dale Tucker went over the Rules of Engagement, You definitely need charts and glossaries to follow along the categories and acronymns. Basically, colocation, managed hosting, virtual private data center (VPDC), public cloud, private cloud, and managed servcies (like Hosted Microsoft Exchange) are all available to the Channel to sell at full commission - unless you engage an account exec - then it is HALF!

For agents used to working with AE's, this will be a bummer. However, half is better than zero. Also, with the ETSC as your godfather inside the C-Link-Qwest-Savvis beast, you won't need the AE.

A lot of colo and data center business comes from the Channel.

And for those that do not know how to sell Colocation and Data Center, the TCA has done quite a few webinars, including Getting Your Arms Around the Cloud by Allan Watkins of Total Telecom Management n Atlanta and Let's Talk Colo, moderated by Khali Henderson of Channel Partners magazine and featuring Dany Bouchedid of COLOTRAQ and Chris Palermo of GCN.

Tucker did mention that Savvis is working on a sales certification for colo and hosting. This silo will be a huge focus for C-Link it seems, especially with 54 data centers

Hobbs spoke about not talking about the technology of cloud, but about the business side of cloud, especially cloud services like VPDC and Compute-on-demand. It's about right sizing the data center. It's about OPEX versus CAPEX. It's about DR/BC. It's about getting out of the IT business and back to their own business focus.

C-Link also has an initiative to light up data centers with C-Link network - wave, IP-VPN, MPLS and Internet Bandwidth. There are 154 data centers now. In Jacksonville, FL, C-Link is putting in a ring to connect CSX, Peak10, Colo5 and the C-Link data center on a metro fiber ring. C-Link is also connecting 4 data centers in Charlotte on a metro ring. AboveNet did something similar in Atlanta by connecting almost all the data centers on a metro fiber ring. Agents can easily sell ELine, IQ Port, Private Port and WAVE into these 154 lit buildings.

Hobbs pointed out that the integration is going well with CenturyLink-Qwest-Savvis.

8,016 Reasons to Offer MDM

2012-07-06T01:37:28Z

In the last year, 8016 devices were left in US airports, according to TJS. Credant’s research found that the following types of devices were left behind:

Smartphones and tablets: 3,444 (43.0%)
Laptops: 3,576 (44.6%)
USB Drives: 996 (12.4%)

Despite a proliferation of BYOD in the enterprise, "only 10% of enterprises use dedicated MDM software, says Telsyte." This is Australian enterprises, but the US number probably is similar.

There are some 30 mobile device management suites. ZDnet reviews 10 of them, including AirWatch, AmTel MDM, IBM, Symantic and Zenprise. Gartner has a Quadrant report on MDM vendors. It's a growing business, so a good time to get in the game.

The VDI Trend

2012-06-22T15:21:50Z

EarthLink launched TechCare. "EarthLink TechCare is a fully managed outsourced help desk that is customizable and scalable, enabling customers to relieve their overburdened IT staffs and refocus on more strategic initiatives, " states the press release. Basically, it is a tech support hotline for companies. This follows their launch of Cloud Workspace, a hosted desktop and virtualization application service. VDI and Managed IT are the new tools in the CLEC kit.

tw telecom has rolled out a virtual desktop services as well. TWC's NaviSite signed up with Desktone to deliver a cloud-based Desktop-as-a-Service. AllCovered is an MSP that is acquiring smaller MSP's that offer VDI.

Citrix and its partners, like Ncomputing, are bringing back the thin client for use with virtualization. And these thin clients are cheap!

I'm wondering when Dell will roll out a Wyse service offering. They didn't acquire Wyse, Sonicwall and others just to let them stand by themselves.

Best Buy's Geek Squad added a Channel program to help them sell Managed IT nationally. Managed IT, remote monitoring (of desktops, laptops, and servers), and virtual desktop are all kind of in the same bucket. And all require serious bandwidth. You aren't going to be running an office on VDI on cable modem, which may be why EarthLink and other CLEC's are embracing IT. One way to combat the cablization of the small business market (sub-$750 telecom spend) is to add enough reasons - VDI, VoIP, Cloud, monitoring, etc. - to require dedicated bandwidth (or even MPLS for private WAN and cloud). Dedicated bandwidth counters the cable modem versus the T1 debate.

We'll see if the right message and value proposition pop up in the marketplace to move the needle on this set of service offerings (VDI, Managed IT, RMM) from the CLEc world. The MSP sector already delivers these services.

One tool to make the message pop in the marketplace is smarter PR. CLEC's need to craft press releases to explain what services offerings are being sold, to whom, and why. It is one avenue to get the story as concrete as possible to the marketplace.

The New Channel Myth

2012-06-21T20:54:19Z

The new myth about the Channel that everyone is spouting is doom and gloom. In Larry Walsh's latest, he talks about VAR's closing, vendors selling direct and other woes.

Here's some news for you: the Channel has ALWAYS competed with Direct for sales - VAR's and Agents. And we always will.

Can some of this stuff be sold via a website? Certainly. It ain't free though. A robust e-commerce website can easily cost $1 million to create and more bucks to maintain and update. It has to work on how many platforms - IE6-9, Firefox versions, Chrome, Safari and mobile? Then there is the SEO and PPC campaigns to drive traffic. Not free either.

In addition, shopping cart abandonment rate is 75%. So your PPC campaign is going to be expensive, while you figure it out and remove all the hurdles. (However, most companies never improve their website or work on the abandonment issues.)

And if it can be sold online, it can be price shopped online. So margins will be slim.

The ILEC's have tried selling small business services (and residential offerings) online. It is cheaper to get a customer to sign-up online as opposed to dialing a toll-free number. Humans cost 30x what a website does, but you can't sell complex stuff that way. Even Hosted PBX with number porting and extension-to-desktop mapping requires more than many can do with a website.

Telarus has GeoQuote. That has already powered how many agents to sell commodity telecom services like T1, DSL and POTS for the lowest going price.

VAR's have accounts with both Ingram and Tech Data. Many have sold gear by utilizing the API's from these VAD's to add to their websites. This has been going on since before 1999! It hasn't really affected the landscape of the Channel either.

One thing that will come into play: while that commission line item on the balance sheet keeps getting larger, the cost of direct sales is just as large and expensive. As benefits increase along with the cost of commercial real estate and taxes, the indirect channel looks more and more promising.

There is always attrition. Small businesses close. M&A occurs. New VAR's and Agents open up. It' show it always was.

Will order-taking decrease? Certainly. Mainly because the price points and associated commissions will be just too low to sustain an agent's lifestyle. It happened with Linksys routers and DSL modems too.

Will there be a massive re-boot to the Channel? Doubtful. It will be a slow, pain-staking shift that most won't notice.

A CLEC called me about hiring an old telecom salesman. The guy wanted $55K base and would only accept $1800 in quota. That just doesn't pay out. A $55K salary is really $75K with office space, benefits, taxes, cell phone allowance and mileage. While if he hits quota from month 1, he will bring in $140K in revenue in that year, but that's not $140K in net income to pay that salary. Compound that times 1000 salespeople and see if that works out. Now add sales managers, regional managers, national managers and executives - it falls apart pretty quick.

That same $140K at 15% is going to cost you $21K that year from an agent. See the difference?

We've seen Cbeyond and EarthLink fire direct salespeople recently to hire sales teams that can sell clouod services. We'll see how that works.

As I have pointed out before, cloud is not about replacement services and telecom sales are all about replacement services.

VC-backed and public companies won't be able to make enough sales with just direct and online sales to move the needle enough for thier masters on Wall Street (or Silicon Valley). And it will come at an big cost.
Yet how much M&A can you do, especially when you consider that M&A usually fails at achieving any of the synergies and benefits that the CEO puported to Wall Street?

Yeah, the Channel is going to change, but what else is new?

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.

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?

Dell Gets WYSE

2012-04-02T16:30:19Z

Dell announced that it is acquiring WYSE today. WYSE is known for its dummy terminals, particularly for POS (point-of-sale). WYSE also has gotten into desktop virtualization - not that strong a leap. Wyse has shipped more than 20 million units and has over 180 patents, according to the press release. This acquisition "extends Dell's desktop virtualization capabilities and drives attachment of enterprise solutions, including servers, networking, storage and services."

The other piece is that WYSE has 3000 partners. Too bad a CLEC didn't think to buy it just for that new channel.

Dell is an interesting company because while it is known for hardware - PC's, tablets, gadgets and servers - Dell is making the move to cloud.

__PLACEHOLDER__

Going back to December 2010 when "Dell announces the acquisition of the cloud-based medical archiving leader InSite One to help healthcare organizations simplify retention of healthcare data." The PR says, "Additionally, like Dell's recent acquisition of Boomi, this acquisition builds on our strategy to help customers take advantage of the economics and scalability of the cloud in the way that best fits the requirements of their industry and the needs of their business." So while Dell chases the Cloud, it seems to be doing it in a hardware-services model. In other words, VAR's are used to selling hardware and wrapping one service around it. Dell is still doing it. InSite One was image archiving for medical - basically, managed storage.

Storage - like InSite One, Compellent and EqualLogic.

Networking: Force10 Networks and SonicWall. Both also spill over into Security in the managed security segment, which falls in with Dell's SecureWorks and KACE divisions. Security is supposed to be a big game to be in. Dell is buying into that space. I wonder how many VAR's it picked up with Force10 and SonicWall... 1000?

Next, AppAssure backup and recovery was an obvious move to become more of a managed services provider -- or to empower its VAR's to become MSP's. That might be the strategy: empower its VAR's to become MSP's all through Dell services (and hardware).

This puts Dell directly in competition with the VAD's - Ingram, Tech Data and SYNNEX. Who will get the attention of the VAR?

And to tie that strategy of a VAR becoming an MSP is the announcement that Dell Offers Partners 'Cloud Services & Solutions Certification'. That ties the MSP bow up.

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.

The Scoop on TDMobility

2012-03-23T16:09:04Z

I spoke with Brian Kosoy, PR manager for Tech Data, and Charles Kriete, the Executive Vice President of TDMobility. Kriete is also the founder of the company that developed some of the key technology (CellManage) in TDMobility. His company was acquired by the joint venture between Tech Data and Brightstar. TDmobility launched recently as a way for VAR's to offer cellular service - handsets, devices, netbooks, tablets, mifi - to their customer base through Tech Data. Give it a listen. (embedded Flash player)

There are 2 sections. TDActivate acts just like an authorized dealer does for cellular products. Pick your device, pick your plan, activate it through the carrier - all through a TDMobility. It is not a true MVNO. It all goes through the carriers - AT&T, T-Mobile and Sprint.

TDCellManage is the MDM or mobile device management platform. It is similar to a TEM model, where you can see the carrier billing, the devices, the contracts. It can be more as a solutions and software pillar to provide applications control on the device, email security, remote security (like wipe), desktop virtualization and anti-virus. RIM, Good and AirWatch software is available. This is the value that the VAR can add over an authorized agent, Best Buy Mobile or Amazon.

It's all about Management - managed servcies, TEM (telecom expense mgmt) or MDM (mobile device mgmt). Get in the game!

Download the mp3 here.