A short conversation with the CEO of VAR Dynamics, an MSP Enabler, about white-label and the hype around cloud. We also talk briefly about cloud and the economy.
Have you read is our first interview with Tony Francisco?
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I do like the statement from Ian Moyse, "We are seeing the same swathe of change as we have seen in other industries with providers who ignored the changes in customer buying choices (take Kodak, Blockbuster Video and the big record shop chains such as Tower Records and HMV). This change will be a contributor but not the only cause to the start of a new re-shaping and re-sizing of the channel with resellers facing new competition from Telco's, Xsp's and a new breed of reseller and potentially vendors themselves."
I also find it interesting that after VZ re-boot sits channel, Verizon's Executive Director Cloud and IT Services Product Managment and Product Engineering (big title) is quoted on twitter at an expo: "Joe Crawford confirms that SMEs are not self provisioning. Sales channel critical #telcocloud"
In the Wall Street infused pressure cooker that is the C-Suite at many vendors, the channel is tolerated today because they have to increase sales any way that they can. The CEO's stock options depend on it. (I am only being a little witty there.) The debt load that many vendors carry is heavy. It is dependent on sales revenues since the debt is tied in some ways to the stock price. The stock price is tied to revenue and dividend. So the channel is looked at as a tool - a sales tool.
Unfortunately, right now, agents, VARs, inter-connects and even MSPs are worried about getting their own ship in order as the changes occurring around them are affecting their business models. So while they try to keep their own plates spinning in the air, the last thing they can handle is another desperate vendor who doesn't understand the channel nor truly wants to support the way it needs to in order to be successful.
]]>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).
]]>A short conversation with the CEO of VAR Dynamics, an MSP Enabler, about white-label and the hype around cloud. We also talk briefly about cloud and the economy.
Have you read is our first interview with Tony Francisco?
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.
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EarthLink is really pulling out the umbrella to get it to rain in Cloud. EarthLink picked up XO's former CMO, Michael Toplisek, as EVP of IT Services. The press release says that he was President of Concentric Cloud, but that was for a hot minute, since XO only rolled out that brand 2 weeks ago. He's not a cloud guy - he worked at XO, Global Crossing, MCI and Frontier - all telcos. The only IT he got near was conferencing at GC. Why would you spin this resume? (Especially after the Yahoo resume-gate.)
EarthLink rolled out 4 cloud packages. "The Cloud Launch Pad, the Cloud Entry Bundle, and the Secure Email Bundle enable customers to economically partner with EarthLink to complement their internal IT resources by leveraging a comprehensive mix of IT Services and security experts in an enterprise class data center environment." [Source: PR Newswire] FYI, "Cloud Launch Pad is designed for organizations that want to leverage the benefits of a virtual environment or that currently run VMware® environments and need additional elastic computing capacity."
These products allow the business to keep things intact, but layer on Cloud Services from EarthLink to complement the current system or outsource extra capacity or services.
The Secure Email Bundle is with Zimbra, encryption and archiving.
The fourth package is Cloud Workspace, which is hosted virtual desktop.
An interesting play since it sounds like it requires MPLS. If so, then ELNK is tying their products to MPLS, probably to insure quality of service delivery.
Will they be able to sell these services against other MSP's and VMware partners? We'll see. It will depend on training - not just salespeople but the marketplace as well.
Watch this video where all the Master Agents talk about why they are choosing EarthLink.
]]>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.
]]>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 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.
]]>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.
]]>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:
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.
]]>People deemed LD dead years ago (like when MCI went BK), too, but there are still a large number of agents and resellers making money on LD and pre-paid calling cards.
Until TDM is retired, agents will still be selling POTS, DSL and T1 - and making a living doing so.
Here's the problem with selling Cloud (other than the fact that cloud providers keep screwing commissions to agents):
The sales process is different! Selling replacement telecom services is not the same as selling managed services (like cloud and IT). How different? The conversation, script, questions and prospecting for IT is distinct. The buyers may not be the same. Sales triggers are dissimilar. It requires sales and product training.
I worked for a Novell VAR from 1996-1999. The sales trigger was when something broke. In telecom, the sales trigger is usually the end of the contract, because the penalties for leaving early are huge. Other sales triggers for telecom: expansion, moving, or a shift in IT (i.e., more bandwidth needed because of VoIP, Citrix or backup).
Dave makes a point about "do you want to be in that cheap stuff or do you want to do good by your customer". Do agents want to be in "the cheap stuff"? No. Our commissions are based on MRR. We would like it to be as high as possible. However, we don't make the prices, the carriers do, so why blame the sales force?
In some cases - like government agencies -- the prospect is looking to reduce the telecom spend due to budget constraints. If I don't do it, someone will.
Back to being mad about the prices falling:
Agents didn't commoditize telecom, CLEC's did. It started with the LD penny wars and has continued every since. In 1999, when Covad, Rhythms and Northpoint all IPO'ed, all 3 selling DSL nationwide against each other without any differentiation was another hit. DSL (broadband) created pricing pressure on the T1 business, which continues to erode to this day. Moreover, the Integrated T1 became a commodity long ago, again due to a lack of CLEC differentiation (branding, innovation, product design and marketing). SIP trunking came along as a "cheaper" alternative to a PRI. See how that goes?
Today, we have $200 Covad T1's and $2 per MB Cogent bandwidth adding to the price compression. So who's fault is it? (I won't even get into the companies that went through BK and really screwed up telecom with that arbitrage mindset or the fact that even as revenue diminishes debt is increasing.)
When you look at the Hosted VoIP space, there isn't a whole lot of differentiation either. There are so many players, it is confusing to the buyers and sellers. It doesn't help that so many of the providers don't know what they want to be or who they want to target. "Wholesale, white-label, retail - whatever! Just sell something!"
In the video, I make a point that no sales person is going to walk away from revenue. Well, most carriers don't walk away from revenue either - even bad revenue (no margin revenue).
Let me give you an example: there is a Hosted UC shop that really only wants UC customers, but doesn't really say that to its Channel. When an Agent brings them "small" hosted PBX deals, it is frowned upon -- but they don't say No (to the revenue).
If the carrier doesn't have a target market - like AboveNet and Smoothstone do - then it is selling against everyone everywhere. That's just stupid. Service Providers need to start thinking like fiber and cablecos: ON-Net is Good. Type II is bad.
As we get into Cloud services, we are talking bloody red ocean - everyone and their brother is a player: web hosts, data centers, MSP, VAR, telcos, cablecos, CLEC, ITSP. Yeah, that will make it easy to sell. How would an agent even do a competitive analysis?
If you want an Agent to sell your stuff, answer these questions:
If you can't answer these questions (or want to give me BS answers), this is your problem! Don't blame the Channel.
]]>It started out coincidentally as VAR Dynamics CEO, Tony Francisco, was on my plane this morning. And he just recently moved from Silicon Valley to Tampa Bay, where I live. He is working with Gazelle Labs and spoke at BarCamp Tampa Bay, which is an un-conference I co-organize for the last 4 years. I had to go to Miami Beach to talk to him though. Go figure!
VAR Dynamics is the geeks in the cloud that run the servers that run the software that VAR's and service providers then re-label and sell to end-users. Back in the day, they would be labeled Master MSP as they enable MSP businesses. I called then an MSPE - a managed service provider enabler. Tony disliked that immediately. They are like the VAR Viagra - get them up and running on the Cloud in a day, fully turn key and automated through the magic of open API's. Tony didn't like that either, but his VP of Marketing, Darrek Porter, a man who was in politics once upon a time, did. This system allows VAR's to consume and re-purpose cloud apps in a self-service atmosphere.
I like it when the discussion is lively, more like buddies chatting over coffee than telling me your talking points. VAR Dynamics has almost 200 partners, which include telcos, VAR's and MSP's. What's the difference between VAR and MSP? Mainly mindset. Break/fix versus MRR (monthly recurring revenue).
VAR Dynamics white labels a lot of Microsoft products like Exchange, Sharepoint, CRM and soon Lync Lite. They also white label Blackberry Enterprise Server and Zimbra. Why Zimbra? "For those that don't like Microsoft." They have add-ons like archiving and "Compliancy", which means help complying with the myriad federal regs like PCI, HIPAA, GLBA, SOX, etc.
Francisco did name drop Autotask, ConnectWise, Jamcracker and Reflection as current or future partners -- again through the magic of well coded open API's.
Are you a company with a base of customers looking for MRR - "and control of their future"? Then VAR Dynamics wants to talk to you.
How do you control your own future? By selling white-label services, you are the provider - no carrier deciding that the bottom looks better when they stop paying commissions - so the monthly commission isn't going to get cut off, unless the customer leaves you.
]]>Bloomberg reports, "Best Buy Co., the world's largest consumer-electronics retailer, agreed to buy Carphone Warehouse Group Plc (CPW)'s stake in their U.S. mobile-phone joint venture for 838 million pounds ($1.34 billion) and close the U.K. stores it opened less than two years ago."
So Best Buy goes deeper into mobile retailing (well, not sharing profits on its Best Buy Mobile stores).
Today, Best Buy also decided to buy an MSP, mindSHIFT Technologies, Inc., for $167 million.
The press release stated, "The transaction will help accelerate Best Buy's growth in the small and mid-sized business IT services category. mindSHIFT provides cloud services, data center services and professional services to more than 5,400 clients and 25,000 managed desktops in key markets throughout the United States."< br/>
Rodrego A. Byerly tweeted, "mindShift deal makes strategic sense -Best Buy possesses very significant distribution capabilities to deliver managed services to small biz." Best Buy management thinks that their future is as some kind of MSP, which may or may not be true. And buying one that focuses on small biz (it has less than 5 desktops per customer????) is a start, but can it work? Will businesses look to Best Buy as their technology partner? Not sure, since most experiences I hear about say that the Best Buy herd is unskilled. They are no Chuck Bartowski!
More from the MSP / VAR space: "Presidio will acquire all of the outstanding common stock of INX. The proposed transaction will create one of the largest national advanced IT solution providers. The post transaction company, which will carry the Presidio name, will employ over 1,800 IT professionals operating out of 45+ offices across the United States and will offer clients unparalleled access to world-class consulting, engineering & technical resources."
This represents a big day for the VAR/MSP space. We will be seeing more and more of acquisitions in the VAR and MSP space through 2012, it's just too hot of a space. Telcos, cablecos and other VAR's are looking to grow - revenue, skills, talent and technology (like data centers and NOC's). It's far easier to buy than to build.
Telecom equipment provider Tekelec agreed to be taken private for $11 a share in cash, or about $780 million, by a group led by Siris Capital. Other participants in the deal include ComVest Group, GSO Capital Partners, Sankaty Advisors and ZelnickMedia.
In VZ news, FairPoint trust sues Verizon for $2B for fraud in its sale of New England landline business to Fairpoint in 2008. The $2.3B deal is allegedly the reason that Fairpoint went BK. Not for nothing, but I and other analysts wrote about how this deal would be a disaster. Apparently, we were right and Fairpoint didn't do proper due diligence. Where's the lawsuit against the Fairpoint Board of Directors for failure of their fiduciary responsibility?
According to Business Insider, "Urban Airship which helps companies add features like push notifications and in-app purchases to their mobile apps on multiple mobile platforms, has raised a $15 million Series C round with strategic investments from Verizon and Salesforce."
]]>EarthLink gets relationships with about 120 VAR's that laready sell the Solution Center and hosted application services. That's probably as valuable as the NOC itself.
"In addition to the Solution Center, EarthLink is acquiring Synergy's cloud-based application service which provides end-to-end hosted IT capabilities for the environmental services vertical market. This service already utilizes the EarthLink Cloud framework for hosting its cloud-based application service and features SuccessWare21® software." [marketwatch]
The fastest path to Cloud and Managed Services is via acquisitions, so expect more of them. If the company has a NOC or data center, contracted customers, and a channel (VARs or Agents selling services), it means gold.
CLEC, ILEC and some cable companies are realizing that just selling pipe isn't going to be enough. Managed services and Applications - OSI Layer 7 - si where the money will be in the future.
As an Agent, I'd start brushing up on how to sell managed services.
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