On Rad's Radar? - master agency Archives

Business is a Thinking Man's Sport

2013-05-09T17:11:53Z

When I heard Mark Sanborn call business a thinking man's spot, it made me smile and then think. Oddly, most of these news items have all fallen in my lap today. It made me re-think how the value added distributors (VADs), like Tech Data, were going to morph.

Tech Data is the 2nd largest VAD at $26 Billion after Ingram Micro (at $37.8 Billion in sales), but TD is located in Tampa Bay, where I reside.

Tech Data has a long standing sales agent agreement with XO. Next, it established a cellular master agency with TDMobility, which also offers MDM. Then last year, TD inked a deal with master agency, Microcorp. Tech Data has long dabbled in telecom, without actually embracing it.

CDW has a telecom division that is doing very well.

SYNNEX has a $180 million per year telecommunications division, according to an executive bio I read today.

Ingram Micro inked a deal with TWC and CenturyLink.

Adam Edwards at Telarus thinks this is great. I think it is the beginning of the shift for distributors to take over for most master agencies for network services. For straight telecom services, the distributors are in a better position to automate the process for the channel and for the carriers. In fact, for cablecos who lack the automation for channel sales, working with a VAD may actually enhance their channel opportunity.

When stuff becomes a commodity like T1, broadband, cellular, voice, hosted email, web hosting and hardware, margin comes from efficiencies. I see much of this, especially in the small business marketplace becoming something you buy at Amazon or Best Buy fairly soon. The more savvy VAR's will have a check box for each service to insure that the customer has it taken care of -- and to see if she can take it over under her billing or management. The total wallet share idea.

Where does that leave Master Agencies? They will have to morph like some of them are doing into either an extension of a carrier's channel sales division or a cloud service brokerage. Unfortunately, even in both those realms, they will be competing with VADs. SYNNEX, Tech Data, Ingram Micro and Arrow have cloud platforms. Sprint is making a play in this space as well, utilizing its Parallels system to sell cloud services to its wholesale and retail customers. APNI and VoIP innovations both rolled out private label Hosted PBX services as well. It seems we have come full circle in VoIP - white label, wholesale, retail, wholesale, white label.

I think cloud will be the sticker service. Once you start selling even Hosted Exchange or Sharepoint, are you going to want 2 vendors for this or just one?

Everyone seems to be scrambling to figure it out - masters, carriers, CSBs, VADs - and even the Agents and VARs, who are the ants marching in this scenario. It takes some real thinking to figure out the next move and then the next one after that.

Everything is Changing, No One is Happy

2013-01-25T15:08:19Z

Belkin is buying Linksys from Cisco, who is exiting the consumer business. What are they doing with the Scientific Atlantic set-top boxes?

Logitech is dumping some of its product lines as it re-vamps.

Andy says that Yahoo Voice is shutting down.

Microsoft sales of Office365 are decreasing.

Intermedia is acquiring Telanetix, which does business as AccessLine, for about $55M.

EarthLink is laying off as they realign.

So much is changing - and so fast.

You know what else is changing? The role of Master Agents and VADs (like Tech Data and Ingram).

Dell knows that hardware sales will continue to decline, which is one reason it is looking to go private. Microsoft knows that its best days are behind it. WinTel used to dominate the computing space. Then Apple iOS starting winning laptops and smartphones - and definitely the tablet sector. Android is the O/S for smartphones and tablets, but Chrome laptops are also in the market.

When everything is wireless do you need switches and cables?

Level3 just revamped its Channel, but the masters are wary of signing it. XO has a new contract out that masters also are balking at signing. Why?

Qwest/Savvis/C-Link stopped teaming agents with directs, but Level3 instituted something like teaming. There is a commission hit for teaming. Here's the dilemma:

One, prices keep dropping, so commissions are lower. Agents have to work harder to make the same money.

Two: Current customers want to lower the bill with every contract renewal, which means that commissions dip (or disappear) unless the Agent switches its customer base to a new provider.

Carrier Quotas keep going up, despite No. 1 and 2. So Masters can't hit the quota, lose commissions and can't pay the agents.

Everything is cloud, but revenues are much smaller, the sales cycle is longer, and the sale is more work for the agent. For less money.

Telecom - you know, the network - transport and transit - are still selling, and agents still want to sell it, but the carriers don't (or can't maybe) pay commissions on straight network sales. So Agents look for carriers that will pay them to sell transport and transit. Masters don't get this business. Carrier Channels sales dip. The cycle spins.

Most Cloud services providers don't work with Masters, so those sales don't go into the Masters revenue. Lost revenue.

VADs like Tech Data and Ingram are selling cloud, cellular, network and hardware.

VADs already have a relationship with VARs. VARs are comfortable with their relationship with the VADs. Why would they switch to the Masters?

Gartner's Bova likes to talk about the transformation of Agents but she misses two key points: Agents are on a hamster wheel and can't just jump to a new one because they need to keep the cash coming in to satisfy quota, bills, churn, etc.

Point 2 is that there isn't an easy transformation path for an Agent to become a cloud services broker. A billing system, integration with the vendors, cash flow, liability, and other factors all get in the way of an agent becoming a CSB.

Despite what the Carriers want - more sales, more VARs selling their stuff - and what the Masters want - pretty much the same thing - the cogs in this wheel - the Agents and VARs - are not yet ready or in any position to make sweeping changes to their business to satisfy Carriers or Masters. The VARs and Agents have a business model that they are running with every day. They have customers that they are trying to satisfy every day. The added pressure from carriers and masters to transform, while also sacking their current revenue stream is a catalyst for disaster.

Look around - Intel, Microsoft, Dell, Cisco, EarthLink, Cbeyond, Logitech - these are just the companies TODAY that I see in turmoil. All of these sell via a channel distribution model, so if they see revenue hits what do you think is happening to their channel partners????

DUH

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.

News Items for Your Viewing Pleasure

2012-11-26T19:36:02Z

I hope you had a nice Thanksgiving break. Thanks for reading my stuff! I appreciate it. A bunch of news items for your consumption.

Good Technologies sues AirWatch and MobileIron over patent and marketing infringements.

8x8 scored a couple more patents.

Digital Rights Group Slams Verizon's Anti-Neutrality Argument: Verizon claims that open Internet/network neutrality rules violate its free speech rights! [I won't rant here. I won't.]

Cool video hangout with some of my pals talking about the New Service Providers - with Dave Michels, Alex Doyle, Larry Lisser and Brooks Robinson.

The Idea of Office is changing! "A new survey by Intelligent Office finds that people are choosing where they want to work rather than being assigned a standard work place location." [source]

What Obamacare Means for Small Employers in 2013. Nice set of charts about expectations.

Healthcare experienced more security breaches than any other industry in 2011! "More than 21 million patients have had their medical records exposed to hackers during the past three years alone." That is a lot of HIPAA violations! Physical records have the same security needs as electronic ones. More about HITECH from the Level3 blog and from the US Signal blog.

Telephony Partners follows tw telecom with electronic signature of contracts! It's a little strange for some customers, but e-sign is easier than printing, signing, scanning and emailing.

More on the Microcorp and TDMobility Deal

2012-11-06T19:53:49Z

Microcorp announced a deal with TDMobility (here and here). I have written about TDMobility before (most recently here and before), where I proposed that it would be a small leap for TDMobility to become a master agency. Instead, TDMobility teamed up with a master agent, Microcorp, instead.

Tech Data already has a direct relationship with XO. I mentioned that it isn't going stellar - and I want to elaborate. Tech Data, like any hardware VAD, has a unique model built around distributing hardware and software (licensing) for partners like Cisco, Microsoft, HP and IBM. The VAD works on slim margins - like grocery chains - counting on co-marketing dollars and other incentives from its partners to bring in revenue. Those co-marketing dollars (and associated quotas) dictate the attention that a partner gets, the same way the P&G pays to get perfect placement for Tide on the laundry aisle.

Smaller partners are relegated to the corners of the website or among the millions of SKU's in the catalog.

The VAD has tens of thousands of VAR's as customers, but hardly any are exclusive. When I was working for a VAR we had accounts with SYNNEX, TD and Ingram. A purchase comes down to pricing, stock and location. A battery backup from APC is very heavy. You want it to be available (in-stock) in a warehouse as close to the end user as possible to cut down on shipping costs (and delivery times). That - more than anything - determines a transaction.

Now as we move from inventory to services (cloud or telecom), things change. VAR's will not want to have to log into numerous systems to place orders or check status, so one VAD will win the majority of the business from a VAR. No longer will a VAd have tens of thousands of (shared) VARs. Once a VAR chooses a VAD for a servcie - whether that is Office 365, backup, or cellular - it is very likely that the VAR will stick with that VAD for all future similar transactions. A very different model for the VADs to deal with.

What else changes? All that warehouse space and inventory will shrink as the shift occurs from hardware to services.

Now in the telecom space, while TDMobility may have a handle on the paperwork for a cellular sale - a very transactional sale - the move to voice, Hosted PBX, MPLS and SIP Trunking will be very different!

The VAR's won't know which carrier to ask for quotes from at first, so there will be a lot of channel manager intervention (or a crap ton of useless quoting).

Telecom orders require a lot of paperwork - agreements, surveys, LOA, etc. Clean paperwork hand-off results in a happy customer, an accurate order and usually timely compensation. There isn't any online ordering. The missing link here is twofold: (1) back office; and (2) access to VAR's.

Telecom doesn't have a back office system. There aren't any API calls that can be added to improve efficiency. There is just a mess of manual systems that will have to be pushed, poked and jeered.

Imagine if you will, a VAR putting in a quote request for a cable broadband circuit, getting a site survey form (that resembles a service agreement more than a little), submitting it, waiting, getting an okay, and then ten days from the start told that it is a no-go.

Or an order for a 10MB DIA circuit languishing on someone's desk at a CLEC office for an extra month or so before frantic calls get it moved up the supply chain line. You think I make this stuff up? In 2012, telecom is more broken and antiquated than it was in 1996. How you can talk about cloud services and not build one cloud service from the ground up to act as ordering-billing-ticketing is beyond me.

Access to the VAR's is another hurdle. There isn't a gate to get at the advertised "60,000 resellers". TD's own people don't know the event schedule. Only a handful of the VAR's attend the show - like the Agent shows as well. This adds even more shows to the schedule for both Microcorp and its carrier partners. Despite this time and monetary expense for an additional show schedule, will you touch enough VAR's to make the process (and partnership) worthwhile? We will see.

I'd like to know how the commission situation is going at TDMobility in cellular. I know of authorized agents who have filed lawsuits for carrier-wide abuse of charge-backs from cell providers. Commissions are the reason we are in this - and those commission numbers will be sparse in comparison to Ingram's $36B in annual revenue and TD's $26B.

Microcorp Partners with TDMobility

2012-11-05T13:47:50Z

Big announcement out of Atlanta this morning at the Microcorp One-on-One: Microcorp, amaster agency, has partnered with TDMobility. The agreement between TDMobility and Microcorp will provide the 60,000 TD Resellers with the ability to offer a comprehensive portfolio of voice, data and cloud solutions through Microcorp's long-standing relationships with 50+ carriers. Details to follow.

This is a big announcement for both companies. TD already had a direct relationship with XO. It wasn't going stellar.

As I have written previously, TDMobility was one-step from being a master agent. This was the baby step closer. We will see how this works out for both parties.

What's Happening?

2012-08-24T20:34:01Z

Broadview Networks filed bankruptcy, albeit a pre-packaged debt reduction plan.

CenturyLink and Mediacom join the broadband cap club. Mediacom has a low end cap of 150 GB. Ouch! For cable companies, metering and caps are about preserving the TV money, but telcos should be cap free.

Are you a Start-up? Pitch your company at StartupCamp in Austin!

President's Club contests are popping up. Microcorp has recruited 6 carriers - M5, Level3, Comcast, EarthLink, Cbeyond, ACC Business - to help Agents qualify for the trip. WTG just announced their first President's Club destination: Puerto Rico. And Telepacific has a President's Club, too.

FCC's 8th Broadband Progress Report is out. About 30% of the US population does not purchase fixed line broadband - but they may get broadband at work or via 3G. Only 6% are stranded on dial-up, so I am having a hard time swallowing all the money that CenturyLink, Frontier and Fairpoint are getting in federal funds to build out - at approximately $775 per user!!

EarthLink's customer profile according to Mike Toplisek: "In large part, they would fit into the range of five employees up to 1,000 employees. Probably 95% of that customer base fits in that size."

The Economist has an article about OTT (over-the-top) VoIP apps and their effect on mobile operators.

The FCC approved the sale of SpectrumCo spectrum to VZW. There were a few restrictions on the joint marketing venture between the two.

FCC Suspends Special Access Rules, Will Collect Data To Modernize Them.

The Alternate to Cloud

2012-08-15T20:09:00Z

For Agents that just don't want to go cloud, there are some alternatives. In my latest book, SELLECOM 2: Selling Cloud Services, there are a few products that Agents can sell that still fall inside the Replacement services umbrella. T1, broadband, cellular, voice are all replacement services for the transactional agent. That road is bumpy. It won't take much for you to make some extra revenue.

One way is SIP Trunking. Everyone offers it. Find someone you like and trust and sell that, although if you are reading this blog, you probably are selling SIP Trunking already.

Next up is Conferencing. Web, audio and video conferencing are coming of age. Most companies use some kind of conferencing, you just have to get in the habit of asking about it. It's as easy as asking them if they use Webex. Then go into your pitch about quoting them a cheaper rate. You will see a couple of conferencing companies with booths at CPExpo in Orlando in 3 weeks.

Another easy one is efax. If you are selling VoIP, what do your customers do about faxing? One answer is efax from you.

One more quick one for your customers is email. Hosted MS Exchange, Blackberry Enterprise Server, Office 365, Zimbra, Zoho and Google Apps are all answers to the email question. Almost all of them pay you a commission through a vendor. (Google doesn't.) Zoho just rolled out email marketing into their suite of services. J2 bought Landslide.com to create CRM with email marketing. J2 also sells efax. Faxbetter.com is owned by my pal and is always looking for partners to sell 50+ numbers. The efax and email space are a nice little sale that will make you money.

Now to hit two bigger options that may be considered SAAS, but them conferencing, efax and email are all cloud services too. Just most folks don't look at it that way.

Telecom Expense Management is finely coming into its own. Many master agencies - like PARTNERIQ by TBI, INSITE from Microcorp - are offering TEM. Your typical medium sized business problem has more than one contract for telecom. Multi-location businesses have a number of circuits at each location. TEM allows for the centralization and organization of billing and contract data. If you sell it, you end up being the outside telecom department for that business. Isn't that what you want? That's always been my goal.

The final thought for Agents is MDM, mobile device management. There are so many reasons to offer MDM. "One laptop is stolen every 53 seconds! 70 million smartphones are lost each year, with only 7 percent recovered."

"MDM is in essence software that secures, monitors, manages and supports mobile devices deployed across mobile operators, service providers and enterprises and its s main objective is to provide a high level of security on a mobile communications network, while supporting multiple devices and continuing to reduce cost and downtime," writes TMCnet. TDMobility and MetTel are just a couple of vendors that offer agents and VAR's the MDM service to sell.

TEM and MDM offer "a complete view of customer spend, billing; Inventory and trouble ticket management." They are a way for you to differentiate yourself from other agents and other sales teams, while increasing your own profitability per account.

We hear a lot of talk about cloud - and technically these are cloud too - but you have to add to the catalog of services you offer today to become a trusted advisor. TEM and MDM are just two ways to have a value based conversation with your customers.

The Mobile Master Agent

2012-07-03T00:01:37Z

There is a lot of chatter in the Channel about Transactional agents being replaced by VAR's and Consultative Agents. I see Master Agents having to do a similar dance real soon.

Tech Data is one of the largest VAD (value added distributors) in the world. Most VAR's have an account with TD to buy hardware. The TDmobility division is a master agent for cellco services. Moreso than any master agency I know of.

Now Ingram, the other large VAD, just bought BrightPoint for $650M. 'BrightPoint distributes mobile phones and other wireless devices sold by companies such as Apple Inc, LG Electronics Inc and Nokia Oyj to customers, which include Sprint Nextel Corp, Vodafone Group Plc and RadioShack Corp." basically, BrightPoint is fulfillment - one of the big hurdles in the MVNO world.

Ingram is becoming a Cloud Aggregator and a Mobile Aggregator. Tech Data is a Master Agent for mobile, XO, some cloud and MDM. This might be where the transactional agents end up: as customers (or partners) of a VAD.

Agent Exclusivity

2012-06-26T14:06:52Z

There is a lot of talk in the Channel about Agent exclusivity to Master Agencies. Most of the talk is from Masters.

Telecom is an industry of short memory. We forget everything.

We forget that MCI left many agents high and dry when they filed the largest BK in history (up to that time).

We forget that telecom companies have a history of BK - Cogent, Above.Net, MCI, XO, Integra, Williams, Global Crossing, Birch, MacLeod, Winstar, Adelphia, Covad and the other DLEC's (see here and here and here). Over 60 companies have filed BK in our industry since 1996. We may yet see another round of that soon.

Now Master Agencies have not gone BK as far as I know. However, with the increasing pressure from carriers to hit quota quarter after quarter or lose commission points, it is only a function of time before Master Agencies have to "re-adjust" the commissions they pay agents.

Agents learned in 2002 that you cannot have a single source of income. Period. Look what happened with InterNAP just recently!

There are reasons to use more than one Master Agency - other than shopping commission points. I use one for AT&T only - and I have since I parted ways with my BellSouth agent.

My current Masters do not have a contract with MegaPath. MegaPath seems to have an offering that my clients might like. Should I ignore that or find an agency with a contract for MegaPath?

At the end of the day, I have to think about my business, my revenue and my customers. I don't put my revenue above my customers, but I do put it above my vendors and partners.

No one is making certain that my business is doing well except for me.

One other memory loss: there was a time that carriers had exclusive agreements (at least the ILEC's did). What did the Agents do? Set up a different LLC for each contract. There have always been ways around exclusivity. Do you we really have to play that game again?

Better than forcing exclusivity, how about giving your agents enough reasons (VALUE) that they won't look elsewhere? That's the real answer - for Masters and Carriers.

FINAL THOUGHT:

It is funny that this conversation comes at a time when traditional agents are largely being written off for VAR's as the future of the Channel.