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Matt Brunk
Matt Brunk has worked in past roles as director of IT for a multisite health care firm; president of Telecomworx,...
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Matt Brunk | March 27, 2014 |

 
   

Competitive Forces in the Telecommunications Shark Tank

Competitive Forces in the Telecommunications Shark Tank VARs/Interconnects are vying with Managed Services Providers to develop more cost-effective service delivery models, especially for SMBs.

VARs/Interconnects are vying with Managed Services Providers to develop more cost-effective service delivery models, especially for SMBs.

Hosted models are gaining momentum, and the pay-as-you-go rationale to gain a comfortable method of predicting business expenses and cutting them instantly is prevailing--at least in theory.

N-able Technologies, acquired by SolarWinds, seems to think that growing the business of traditional VARs and Interconnects is a good idea, too. A key reason is to sell some managed services to their existing installed base of customers before these customers are lured away to cloud services.

The other market that N-able is after are managed services providers (MSPs) that instinctively know the law of the jungle: Be proactive with customer service and deploy the right network and management tools to support those customers, else fall prey to some other MSP that is doing a better job of servicing. The distinct difference between VARs/Interconnects and MSPs is that many VARs/Interconnects are less proactive and focus on service-based offerings, according to N-able's market research.

I asked the folks at N-able an age-old question: "Who's going to pay?" Unlike large enterprises in some cases, the SMB is thinking only of the bottom line, and they tend to develop a myopic view of the value of delivered services over the life of ownership. They often miss the true cost of doing business--until chronic and expensive problems develop into budgetary nightmares. Unlike the more expensive model built for larger enterprises, N-able's pricing model is structured to meet the needs of the SMB with a pay-as-you-go platform that can expand or contract.

The other dilemma that resurfaces and continues to plague the SMB about moving to IP telephony, UC and convergence is, "Does the cost of troubleshooting go up, and if so, how much?"

The answer isn't simple, but it can be divided into parts. First, a substantial amount of effort and cost are wasted on finding root cause issues. Then, because there is a lack of proactive network monitoring tools, anytime a business or technician, network manager or vendor/provider reacts to an issue, the cost is usually higher. Time to resolve issues and the impact on business are metrics that range from hard to soft. Mean time to resolve is easily quantifiable, but business impacts can be subjective.

Still, N-able believes that they can effectively help VARs/Interconnects use the pay-as-you-go model to hang on to their existing customers, and still increase revenue and customer retention/satisfaction--thus providing value.

The other idea that N-able seems to focus on is that VARs/Interconnects need to begin shifting to a more cloud-based business to survive and thrive. In past posts, I've written about the shark tank in which telecommunications resides, and its competitive nature. The investment into cloud services can range from very low to very high.

What I see evolving in cloud services are improved and useful metrics such as those in Thinking Phone Networks. Then, when I consider that our provider Jive Communications provides us with our cloud-integrated Panasonic IP-PBX, I know that cloud services will not remain static.

In fact, I anticipate growth in what cloud services offer in the way of customization and practical needs for providing relevant data on what benefits SMBs and large enterprises. I think imparting relevant information to facilitate better decision making will be the future, with less emphasis on network management tools themselves.

Network management tools are mature, and while there is room for improvement (simplification, lower cost, proper notification to the right person to resolve, and automation), I believe that the real growth will be knowledge data to empower business owners to make better decisions and to become more proactive and less reactive.

N-able extends a trial period to evaluate their services here. The picture that N-able paints is that VARs/Interconnects must get on board with proactive services or the competitive advantages that MSPs offer will pressure businesses to buy in. Cloud services will create new differentiations that will distinguish best of class from the many generic offerings that reap only monthly subscription revenues with predictable turnover of unhappy customers for the sake of churning cash.

Using numbers only is a game that fails to recognize the need for information that empowers business owners and enterprises to improve their businesses, services and processes. Competitive forces may impel everyone to deliver on a newer model and method.

Follow Matt Brunk on Twitter and Google+!
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