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The Declining State and Role of Consultant Liaison Programs

The annual TEQConsult Group survey of members of the two North American professional organizations for telecommunications consultants, Society of Telecommunications Consultants (STC) and Canadian Telecommunications Consultants Association (CTCA), is now in process. The results of the survey are published annually on this website; last year’s article can be found here, and a new article discussing the results of the latest survey will be available within the next few weeks.

A new survey question this year was included to evaluate the current state of vendor Consultant Liaison Programs (CLPs) compared to several years past. The early survey results are not promising for the vendors, because there is a strong view by many consultants that the state of CLPs has gone downhill during the past few years due to major budget cutbacks and downsizing/termination of the programs. Though personal relationships with CLP personnel remain highly positive, there are fewer associates in the programs. There are also fewer in-person encounters (one-on-one and group meetings) owing to travel constraints. Considering the meager resources traditionally allocated to CLPs in comparison to other sales/marketing expenditures, this is not looking good for the future existence of vital programs. For every new program that starts up, it appears that an existing program is either terminated or downsized. The trend is not good for consultants or the supplier. I know I have written about this topic before (see The Fate of the Nortel CLP), but it demands more attention.

The Value of Consultants to Clients and the Vendors
The dynamic nature of the enterprise communications market and the growing complexity of system solutions are too much for many end user organizations to keep abreast of and understand, and this is why they often turn to consultants for help and guidance. The situation is even more complicated with the pending acquisition of Nortel Enterprise Solutions (ES) by Avaya, because many Meridian 1 customers are unsure what to do about their communications needs going forward in the future, when the fate of their installed system is in doubt. I’m sure the Avaya/Nortel situation will stimulate new system purchases and create increased demand for consultant services this coming year. I, myself, have received more inquiries from end users about their installed Nortel PBX than about any other topic. Another system supplier creating a new market dynamic, Microsoft, will also drive customer need for consultant support in the upcoming year.

Based on research by The Brookside Group LLC, a consultancy focused on the telecommunications consultant community since 1993, vendors risk major sales opportunity losses if they do not connect with and support consultants. Brookside estimates that telecommunications consultants directly influence 20-25% of total telecom equipment and network services sales to the enterprise and SMB markets, a number representing more than a billion dollars of annual revenues in the North American market. A single experienced consultant can directly influence several million dollars of annual sales (with a good number recommending more than $5 million), because four of five consultant recommendations are implemented by their customers. Brookside also contends that deployment of new technologies is greatly aided by consultants: there is no doubt that consultants contributed to the strong growth of IP telephony systems earlier this decade and can help with the current roll-out of new communications and collaboration tools. Consultants can be a vendor’s best friend, because a strong relationship between the two parties will likely spur more advanced system sales at higher revenue levels. On the other hand, working with a consultant who is unfamiliar with a vendor’s offerings can prove to be a harrowing experience for all involved. Consultants function as gatekeepers who can either let someone in or keep someone out.

A consultant’s primary responsibility is to their client, but it doesn’t preclude helping a vendor make their case to the client. Many consultants are hired owing to their relationships with the vendors. Consultants bring to the process a familiarity with product and service offerings or personal relationships with vendor associates who are needed to answer questions or resolve problem issues; this benefits both sides of the sales process. It’s a two way street, just like the relationship the vendors have with the media, including working press and analysts. STC and CTCA members are seasoned professionals who must abide by ethical standards to retain their membership and play by the rules of the game. It appears that they are living up to their part of the bargain, but the vendors, in general, may not be, if further cutbacks are implemented.

CLP Issues
When I first started in the industry, most CLPs consisted of one or two individuals whose primary bag of tools was an “800” number and product guide that was updated on a periodic basis. The communications system vendor CLPs were first modeled after the program established by IBM in the 1970s. During the 1980s CLPs expanded in size and scope. Annual conferences and road shows became part of the CLP agenda to better establish personal relationships, disseminate information, and receive feedback. I believe that the function and role of the CLP may have peaked in the mid-1990s before websites became the primary marketing channel for many vendors.

The advent of corporate websites proved to be a valuable CLP tool, but also a silver bullet that wounded the program. What was at first a flesh wound has become a gushing hemorrhage. Electronic distribution of information came to be a (poor) substitute for sometimes-required human support services. The market slump at the beginning of this decade resulted in major budget cutbacks for many marketing programs, including the CLP, and during the past 18 months, a time of significant economic pressures and sales declines, the cutbacks have taken an ever stronger toll. It now appears that some CLPs have to justify their existence to merely continue operations, let alone expand.

For several valid reasons, the leading system suppliers continue to expend far more resources on industry analysts on a per capita basis, as compared to consultants. Of course there are a far greater number of working consultants compared to influential industry analysts. Some of the CLPs have more than 1,000 registered consultants in their programs; the number of industry analysts tracking enterprise communications is a fraction, in comparison. When it comes to in-person meetings, it is not unreasonable to support one or two representatives from each analyst/research firm, but to involve hundreds of distinct consulting organizations in a meeting is far less manageable and prohibitively more costly.

I am fortunate to be included in both the analyst and consultant programs, so I don’t feel shortchanged, but those who are members of consultant programs, only, must be fairly high profile to receive attentive treatment from the suppliers. Even if total resources available to a CLP are greater than the sister IAR, there are far fewer members in the latter program that are being supported. I don’t believe per capita support resources should be equal, but the gap between the two programs needs to be addressed. A single analyst can sway many customers to or away from a particular vendor, but a consultant is the one that more heavily influences the final sale. I’m a member of both programs, when available, for all of the recognized vendors, and I like to think that my role as a consultant is as valuable as my role as an analyst for individual end user customers who seek my advice or read my writings.

One reason IAR programs are often better financed than CLPs is that the analyst program may be closely tied to the vendor’s public relations function. PR is a well established discipline that is recognized throughout a vendor organization, whereas the CLP has a smaller recognition and understanding factor. Analysts and press have wide audiences; a consultant, at any time, may have an audience of one client. This is a fact and one that has hurt the CLP in times of budget cutbacks.

Budget cutbacks are currently affecting all business organizations and have resulted in staff layoffs, travel restrictions, and general overhead expenses. Everyone today has to do more with less, not just the CLPs. CLPs, though, are relatively small in size compared to most other marketing and support organizations, with bare minimum staffing, i.e. a single associate, in several instances. A business option is to outsource the program function, and some small vendors new to the market have opted for this, but established vendors should be able to justify an in-house program. CLP justification, however, has become more difficult during the past few years due to recent changes in executive hiring trends. Fighting for scarce resources has been escalated from an annual battle into a war for survival.

A situation without strong historic precedent is an unusually high number of top-tier executives working for the enterprise communications system suppliers who are relatively new to the industry. For many, this is their first experience with or introduction to telecommunications consultants. As the suppliers expanded beyond their core telephony roots, they required individuals with skills and experience from market sectors that did not interface with telecommunications consultants or understand their critical role in the marketing/sales process. The job of the typical telecommunications consultant is unique in the sense that many have a central role in the RFP and system recommendation process. In contrast, most software and data communications consultants are involved in a client’s daily operations activities after the product purchase is made. Though many traditional telecommunications consultants are morphing into business process consultants, much of their business is still derived from new system screenings, evaluations and recommendations.

As the consultant role is not initially understood by new executives arriving from companies outside the traditional telephony market, justification of CLP expenditures is made more difficult. Executive time on the job alleviates this issue, but it becomes rough going for the CLP in the interim.

Another shift in market dynamics that is slowly diminishing the role of consultants and value of CLPs is the growing use of system integrators (SIs) by end user organizations. Today’s SI is responsible for an increasingly wider range of IT subsystems, and the evolution of TDM PBXs to IP telephony systems has brought voice communications under SI control to a greater degree than ever before. As the role of traditional TDM shrinks in comparison to the rise of other IT subsystems, many customers are allowing their SI to select their next voice communications system.

This is a consultant/CLP issue, because many SIs have existing relationships with telephony system suppliers. A SI is usually involved in big projects, meaning more potential revenues for selected system vendors, and is supported as part of the supplier’s distribution channel operation. Requirements for a traditional consultant, and the support of the CLP, are more limited, because the SI assumes the consultant’s role and function, though the SI is usually more subjective regarding new system selection.

Where Are Things Headed?
It is an undeniable fact that the ranks of traditional telecommunications consultants are diminishing. They are in the unenviable position of becoming an endangered species, because they are aging and not being replaced by young blood.

For example, the STC members who have responded to my survey have, on average, more than 20 years’ industry experience. It would be accurate to say that most of these telecommunications consultants are middle aged, if by middle aged we could expect them to live to be more than 100 years of age. During the past two decades or so, individuals who became consultants in the IT field were far more likely to be on the computer or data communications side of the picture, not telephony system or voice communications.

The market shift is also reflected by the evolving competitive landscape. For example, much of Cisco’s success in telephony has had more to do with their dominant position in the world of data communications, as opposed to the greatness of their early product offerings. Similarly, if Microsoft succeeds as a telephony system supplier through its OCS 2007 solution, it will be based on their dominant position as a software applications developer and messaging system supplier.

Each company requires the support of the telecommunications consultant community, but to a somewhat lesser degree than is required by the more traditional PBX system suppliers, such as Avaya, Nortel, or Siemens, who are far more voice-centric competitors. Second tier competitors, such as ShoreTel, truly need the support of the consultants to continue making strong headway against far larger and more established system suppliers, especially in the more lucrative enterprise size segment of the market, where peripheral applications play a more important role in product selection.

There is no doubt that telecommunications consultants still play an important role in the market dynamic and will continue to do so for the near future, but looking further down the road, the number of influential consultants will dwindle. Many members of the first generation of telecommunications consultants are at or approaching the time to retire in the next few years, but this does not detract from the requirement for vendors to support the consultants today or tomorrow.

Let’s not worry about a decade from now, because the most important thing is to survive and try to prosper in the interim. For this reason many of the system suppliers, and some major distributors, need to shore up their CLPs right now, because too many sales opportunities can be lost to competitors who are on the ball about their CLP.

My last word to the executives is not forget to support your local consultant, because the job you save may be your own.