First of all, most of the telephony market, the BIG part of it that makes money, resides in the SMB space. Everyone admits, including the equipment manufacturers, that the SMB suffers from fragmentation, and many also go on to state that the SMB is ill supported. I think it would be fair to say that the SMB generally is not adequately equipped with cost-effective support tools for VoIP and IPT deployments. The SMBs also evolve, and when they reach a level of maturation, look back at their networks and telephony configurations and ponder how they got there. Growth in the SMB is cyclic and reflects whether or not there is consistency in the implemented solutions--and this is where the MSPs could argue most that lack of consistency is the greatest ailment of SMBs.
Then, according to Ted Cole, VP of U.S. Channels at ADTRAN, "About 40 percent of ADTRAN's business is from Managed Service Providers (MSPs)." ADTRAN is unveiling on December 15, 2008, its Remote Management of VoIP Networks using the Netvanta 450 Server powered by n-Command MSP, a powerful easy-to-use network management platform for remote management and monitoring of ADTRAN Netvanta or Total Access converged solutions. ADTRAN has relationships with N-able and is a certified vendor of Level Platforms.
The ADTRAN n-Command MSP platform allows network managers to:
* view and report current and historical Voice over IP (VoIP) performance statistics * automate individual or network-wide firmware upgrades and configuration backups * simplify installation and turn up * improve asset tracking and inventory management * monitor and report on the overall health of the network by location or customer
As I sat there watching the demo of the n-Command, I had flashbacks of prior years, when we managed and monitored the 3Com NBX systems using Qovia's interface. ADTRAN's solution is pretty slick, but remember, this is an MSP targeted solution, and after having another ah-ha moment, I realized pretty quickly that the MSPs have a lot to prove. Out of the gate, the Netvanta 450 lists for $8,995 and the second year costs are based upon licensing the quantity of nodes (managed devices). ADTRAN's gear keeps patch and change management under control -again, that's for only ADTRAN's gear. Backups and restoration are also a snap except for the IPT 7100 and 7060. This process, as in many SIP telephone applications, isn't so snappy. ADTRAN isn't supporting all its gear with this solution either, so some caution applies to avoid disappointment. The n-Command MSP package will support up to 5,000 remotely managed ADTRAN devices.
The cool thing about the n-Command package is Voice Quality Monitoring (VQM) and as I previously reported, VQM is a tool that could be just enough for many SMBs, and I've harped on assessments, monitoring and reporting of metrics for IPT solutions for several years and made known that most SMBs can't afford these tools.
Factor in 5,000 managed devices and that's a cost of $1.80 per managed device (Switch, Router, Gateway, IP-PBX) for year 1. That's nothing, and looking through the eyes of experience, MSPs are targeting SMBs with a vengeance. I say this because of what I'll call an off-conversation I had with an MSP. His perception of Interconnects is general and not real favorable, but he's dead on target when he said his customers want him to be the single point of contact and source for IT and telephony. MSPs don't want to roll the trucks either, and since they are operating under Service Level Agreements (SLAs) that involve monetary penalties, they have a lot at stake. Still, there will be differences along with pros and cons of using hosted/managed services over Customer Provided Equipment (CPE) or Interconnect/VAR solutions. Regardless of these differences, a rock solid and affordable management tool needs to be in place for either model. This is the single sentence that ADTRAN needs to heed.
The Netvanta 450 does everything we were doing back in the days of managing and monitoring 3Com NBX IP-PBXs with the Qovia solution. Systems were backed up automatically and on schedule and we were proactively monitoring packet/network health. What's very cool about the 450 is its ability to patch and change all those firmware updates and backup-prior-configs of ADTRAN gear. Then, drilling down to see what happened to who and where using the VQM tool will reduce those unwanted truck rolls and provide a means of pointing smarter bird dogs in the right direction.
Jamie Britnell, Product Manager of ADTRAN's Netvanta 450 reminded me:
Large enterprise users, or what we sometimes refer to as the "distributed enterprise," could find some value in n-Command MSP. Those types of customers can really be thought of as a small MSP to some extent, where the NOC is at the company HQ and the remote stores/locations are the customers. These remote sites are essentially small businesses in their own right. These locations don't have their own IT staff, so they require the folks back at HQ to solve any problems they run into: voice quality issues, for example. HQ is also responsible for maintaining the firmware (for new features) and configs at the remote sites, so having a tool like n-Command MSP would make that process easier.
I understand that these types of customers may be looking to cut costs as much as possible, so they may see a system that focuses only on ADTRAN equipment as a solution that doesn't provide much value. We don't see n-Command MSP as a replacement for those systems, but as a complement to them. Especially with the presence of VQM reporting, we believe it is a very powerful took that enterprise customers can use.
Obviously, the analogy of the distributed enterprise to an MSP has its limitations. For instance, the HQ isn't looking to make money off the remote sites to manage their network or provide quality assurance. However, the decision can be based on the ability to reduce overall operating costs for the company, since each remote site doesn't have to hire a true MSP to manage their network. They can simply rely on the HQ NOC to remotely manage it via n-Command MSP.
I understand that these types of customers may be looking to cut costs as much as possible, so they may see a system that focuses only on ADTRAN equipment as a solution that doesn't provide much value. We don't see n-Command MSP as a replacement for those systems, but as a complement to them. Especially with the presence of VQM reporting, we believe it is a very powerful took that enterprise customers can use.
Obviously, the analogy of the distributed enterprise to an MSP has its limitations. For instance, the HQ isn't looking to make money off the remote sites to manage their network or provide quality assurance. However, the decision can be based on the ability to reduce overall operating costs for the company, since each remote site doesn't have to hire a true MSP to manage their network. They can simply rely on the HQ NOC to remotely manage it via n-Command MSP.
Earlier this year I attended certifications with a member running a "distributed enterprise" network, and I think Jamie is right on target.
Lastly, the economy. Customers aren't too likely to open their checkbooks, and those that want to retain cash may find hosted solutions attractive on the front end. Meaning, less cash upfront is required--but not without risk. ADTRAN is attempting to minimize the risk for their MSPs plain and simple. The n-Command solution also removes a lot of legwork in the patch and change management and backup/restoration of gear deployed. This translates to less manpower on part of the MSP, and serves to ensure SLAs are met and cash penalties avoided.
ADTRAN has several MSPs that were in beta, including Alpheon of Morrisville, NC that runs the n-Command solution as an inexpensive alternative to paying for engineering/technical salary dollars to back up, patch or change firmware or respond onsite.
I could rattle off some philosophical differences between MSPs and Interconnects, but it wouldn't serve to solve or convince anyone either way.
See: Hosted VoIP vs IP-PBX Mini Series Part I, Part II, Part III, Part IV.
The real test will be time and whether or not MSPs can gain significant entry into the hearts of the SMB customers. I think it's a matter of time and if the MSPs can prove worthy, remain profitable and provide what customers want through the longer term, then I think we will see a shift in numbers of market share. Instead of the customers being fragmented, the market will be fragmented. Either way, ADTRAN wins for what I think is a clever converged solution that supports the MSPs that are putting up SLA dollars to ease customer fears over hosted solutions. I have to add that MSPs or see Hosted IP: Centrex in IP Clothing, just aren't the same as Centrex; they just don't have the same size fleet of the Telcos or the presence. Maybe they don't need to.
Still, ADTRAN stands to score bigger if they can scale the Netvanta 450 to the Interconnects, VARs and SMB environment. They could potentially sell more 450 servers since the supporting infrastructure must be ADTRAN switches and routers on the LAN/WAN, and this would really leverage the onboard tools of n-Command and VQM.
