ShoreTel and M5: Change In the Wind

With its acquisition of M5, ShoreTel’s new cloud division faces some integration and positioning opportunities. Currently, ShoreTel (700 partners) and M5 (100 partners) only share a small number of partners that offers both hosted and on-premise resold VoIP offers. 

M5 considers its go-to-market offer completely channel friendly; 70 percent of its offers, for which they receive a referral fee, are partner identified offers. These partners are never or almost never involved in the long-term support for customer service or renewal. M5, ShoreTel’s cloud division, handles quality of service, billing and customer support. M5 differentiates through its management of call quality (it owns the soft switches and PBX), data and the hops, providing live support and a view of customers. M5 uses phone and calls as strategic assets; however, the company does face the same problems other providers have when moving to cloud offers. 

The size of the legacy systems has changed because of demands for VoIP hosted offers; seats that were 20 to 50 now have increased from 50 to 500. Service providers are strategically positioned to meet enterprises’ SLAs for connectivity, and the expectation may be for more applications built on the relationship with the providers. However, the ability for providers to add managed offers to their connectivity offers is also hampered by traditional carriers’ sales teams generally not understanding the cloud or VoIP needs of their customers. While M5 is both a “provider,” hosting offers, it also is a manufacturer, and today, does not have a progressive service provider white label program. To be successful in hosted offers, providers need to develop new models to target and understand customers, their VoIP needs or PBX replacement requirements and how to proactively sell or manage the customers directly or offer white label SaaS offering from a company such as M5.

There are some best practices in cloud or SaaS offers in the market from which M5 can take a cue. Support.com offers a fully integrated OSS and BSS offer, which looks like a fully integrated provider offer but does not require changing the infrastructure or direct customer support from SPs’ sales teams. Support.com offers a SaaS based support team that looks and feels like the “provider’s” customer service but is in reality a sold, billed, hosted and offered by Support.com staff.

This model allows companies that have hosted offers to take advantage of trends:

• Enterprises moving to cloud offers
• Enterprises demanding SLAs for new applications like the ones provided by their telecom or carrier 
• Consolidation of providers will cause enterprises to demand more cloud offers from their providers
• Ability for providers to offer cloud offers and knowledge about their customers’ business processes and requirements are limited

M5 can improve its strategic reach to new clients by taking a page from white label offers and market to and support noncustomers with its own quality of service and sales program to spur growth and add value for customers already getting connectivity from traditional Telcos. M5, according to Keith Nealon, “is directly involved with cloud customers to ensure quality of service, support and escalation of real-time issues during a call.”

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Lauren Robinette

lrobinette@acgresearch.net
www.acgresearch.net

Are You Ready for the Cloud?

A recent study of providers across the globe concluded that traditional carrier and Telco providers are not ready or not able to offer cloud alternatives. Even those providers that have acquired cloud companies still are challenged to find the right sales force to migrate enterprise subsystems to the cloud.

Approximately 70 percent of 600 CIOs surveyed indicated that they spend 13 percent of their budgets on service provider public cloud as an infrastructure in a managed offer, and they estimate their demand will grow to more than 40 percent in three years. This development is forcing enterprises to evaluate their business processes across all departments and identify how cloud can support them.

The decisions are not clear cut. For example, a company may need higher security on premise managed by local or onsite resources owned by the company, but for communication and collaboration the company needs public cloud offers. For back-up and recovery a relationship with a provider or MSP may provide a solution that makes the cloud attractive for reducing resources and access to data. Before selecting which cloud solution is right, each process should have identified requirements and risk rate, and the solution should meet those demands by process or client.

Providers, therefore, must address the obstacles they face when dealing with enterprise customers. Cloud offers from such companies as Amazon, Microsoft and Google can almost fully support the small-medium business self-service customers, but their models are completely inadequate for enterprises, which have often relied on traditional providers for SLAs for connectivity. It is not certain that these providers can manage the cloud SLAs. To effectively meet enterprises’ requirements, providers will have to initiate major restructuring of their go-to–market, sales and delivery systems.

Some providers have already filled their gaps in cloud offers: OpSource, Terramark and Savvis and other providers have purchased other companies to acquire cloud offers. But it still remains to be seen if they can they sell their cloud offers. Only NTT, which purchased Dimension Data and OpSource, has the system integration skills to sell the offer in a consultative fashion. Even if each of these companies have cloud offers, getting the offer to market and selling it will still take several years. To fill their cloud gaps, Telcos must acquire, partner or build to meet the demand.

‪Which companies will be the winners in off-premise cloud? How will the market evolve between SPs (Verizon), asset-heavy system integrators (SI) (CSC), over the top players (Amazon, Google), cloud pure plays (Rackspace)?‬ It is unlikely that Rackspace’s, Amazon’s or Google’s offers would be considered an enterprise infrastructure offer as they have limited ability to address the SLAs of enterprises. Service providers address SLAs for connectivity; however, they will need to develop the consulting skills to enable migration of subsystems to public or private cloud.

Obstacles preventing companies from delivering vary. Verizon has more than 300 SIs or professional service staff that must be trained, and the company must deal with changes in leadership, alignment with Terramark, and lack of processes. Savvis/Centurylink has the same challenges. NTT is quickly retooling DiData to sell cloud offers. This company is the only one with the SI, cloud and connectivity of SLAs for enterprises. Some outsourcers such as CSC have good white label vBlock (VCE) stacks that will be a standard offer in the cloud. Just as Ericsson, IBM and HP do with different infrastructure technologies, some just as these Sis do will also manage infrastructure as an outsourcer.

‪As it currently stands, partner-to-partner partnering with vendors is the primary strategy that would really change the cloud market, because it is the quickest way for providers to move from connectivity providers to full offers of cloud enablement. Vendors have deep relationships with system integrators and have created loyalty and preference with top-level integrators, for example, Accenture, IBM and HP. Service providers, Tier 2 and cable operators that create partnerships with low-end vendors, which have SI Lite VAR partners, will be able to target the mid- to low-end market with loyalty, incentives, training and partnering offers. Partnering for risk-adverse Telcos enables them to change, invest and move to new technologies. Partnering 1) allows for white labels for cloud offers and the acquisition of go-to-market sales skills; 2) reduces investment up front for cloud-based offers (if white label is leveraged); 3) reduces sales staff training; and 4) derisks the cloud for the provider’s sales team, which is generally focused on connectivity.

‪Providers need to refine the lifecycle of their offers to increase their chances of offering targeted cloud services. They need to really understand their subscribers, for example, are they wireless or wire line (they know which but not what the business is)? Service providers must identify connectivity requirements, for example, size, and most importantly, understand their customers’ business IT processes, needs and systems. Once these factors are fully understood, providers can develop consulting and migration strategies and successfully deliver cloud to enterprises.

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Lauren Robinette
lrobinette@acgresearch.net
www.acgresearch.net

Ethernet QoS: Trust, But Always Verify

Unlike legacy Frame Relay and later ATM, Ethernet initially lacked the quality of service (QoS) guarantees that business customers had grown accustomed to. Not surprisingly, enterprises and even wholesale carrier customers were reluctant to adopt Ethernet services. By creating mechanisms that separate different QoS service levels via virtual LANs: “best-effort”, priority data, and a stringent QoS class, service providers can offer various service level agreements (SLAs) to meet enterprise or wholesale carrier customer requirements. Of course, service providers have to provide consistent Ethernet QoS whether the service is running over their own network or a third-party provider partner. While service providers have more direct control of Ethernet QoS when it runs on their own network, it becomes even more challenging when they have to leverage a third-parties’ facilities to meet a customer’s needs that reside outside their network footprint.

Download this eBook to learn about approaches, challenges and opportunities in achieving consistent Ethernet service QoS. Ethernet QoS: Trust, But Always Verify - FierceTelecom http://www.fiercetelecom.com/offer/offer/ethernet_qos#ixzz1K5P7gQA2

Ray Mota
rmota@acgresearch.net
www.acgresearch.net