Opening up networks (Part II): Creating new value in the enterprise market

November 23, 2010

One obvious, ongoing trend amongst enterprises is the desire to consolidate technology and communications suppliers. In all businesses, the IT Directors and CIOs long for a more simple life; fewer vendor relationships to manage and just one bill for everything. So understandably, becoming a one-stop shop for all managed services is something to which all vendors now aspire.

We now have both feet firmly in the 21st century and, in our new IP-everywhere world,  a clearly horizontally divided communications market has emerged in which “cloud” is the buzzword du jour. The world is full of IT outsourcing companies and systems integrators vying for enterprise business, but none of them run their own carrier  networks. They consume the services of  network operators (the guys who shuttle your packets), who in turn are supplied by network owners (the guys who dig up the road).

Have you ever thought about just how much cost is incurred by support inefficiency in the standard carrier wholesale or reseller model? When building large scale enterprise solutions, things can sometimes get a bit silly:

  1. Network owner A selling Layer-1 infrastructure and supporting network operator B.
  2. Network operator B selling wholesale to operator C and supporting them.
  3. Network operator C supporting their channel partner, IT services company D
  4. Service company D supporting their enterprise customer.

From the point when the end user initially reports an issue to their provider D, just how much delay, human error and eventual customer agitation is introduced, with each additional support ticket that gets logged down the chain?

There is so much operational overhead, conflict and support headaches when human NOCs are chained together. The poor end-customer, being very far from the engineer who will eventually diagnose the fault, ultimately has a very poor experience during the resolution process.

If the cloud is really about enabling access to cheap data, to create value, can operators develop smarter wholesale services to improve efficiency and customer experience? What use is there for abstraction layers to unlock internal management data?

Imagine an operator offering a white-labelled transport network for a large managed services or outsourcing provider. This would take ‘wires only’ to the next level by removing not only customer IP router management, but also something else that a ‘one-stop shop’ shouldn’t really need: human NOC eyeballs performing routine 1st line monitoring and support of all those VPNs, tail circuits and network termination devices.

It seems to me that large systems integrators could utilise APIs to operator assets, running their own software tools, pulling data directly from their core services and customer edge devices.

The key to making the operator value proposition unique here is in removing the friction that normally occurs when the outsourcing provider is supporting their end customers. The provider also has the ability to use the management data in a way that suits them. Global systems integrators have their own route to market for large contracts,they just need a network component in order to build a solution.

Conventional wisdom amongst network operators is to attempt to offer more service wrap to customers, not less. There is a common fear in the industry that now dissuades all operators from concentrating on what they do best, which is delivering bits. Nobody wants to miss out on what is perceived as the smart, high margin business – the “value-add” in managed services. I think it is worth taking time to question this view, for there are other ways to make ourselves invaluable to our customers.

Network operators are the communications enablers that sit between solutions providers and end-user businesses. Surely there is some way to offer more value here by selling intelligence, not just capacity. This kind of smart wholesale looks like an exciting opportunity to me.

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