My recent interviews have had a common theme: getting closer to the customer. I’m not talking about providing better customer care (although that never hurts); what I am talking about is getting closer to the customer’s network.
What does that mean? Well, the way I understand it, it means that you go beyond providing connectivity to delivering applications performance. Literally, you are managing the performance of the customer’s critical applications, such as ERP, CRM, etc., that must be accessible across a WAN.
You could provide the optimization and acceleration of applications atop an enterprise network or you could bring those functions as well as the applications back into the cloud. Simplistically, that’s just the difference between a managed CPE offer and a managed hosted offer.
So, this is another discussion about moving up the value chain? Right.
Consultant Jeff Kaplan, managing director ThinkStrategies Inc., told me it is imperative that service providers offer such services because customers are seeking strategic sources that not only can satisfy their basic connectivity needs but also address their more advanced service requirements.
So, what we are really talking about is hedging against commoditization? Right again.
There will be increasing pressure on service providers to move away from a bandwidth usage-based charging business model to a value-based business model.
The difference between them is charging $1,000 per month for 1.5mbps and uptime of 99.995 percent and charging $300 per month to guarantee response times on your customer’s SAP transactions will never be greater than three seconds.
“It’s a completely different sale. It’s a hugely greater value,” said analyst Joe Skorupa, research vice president of Enterprise Communications Applications and Infrastructure at Gartner. And, for carriers, he said it’s one that requires new technology, new processes and a new mindset.
Before you start thinking this is future stuff, Skorupa said there are carriers already moving toward billing based on transaction-level response times. “Some folks are even thinking about business process response times,” he said, explaining that a business process like processing a customer order may involve several different transactions with multiple systems and parties.
Kaplan offers these examples: AT&T’s new cloud computing service, Verizon Business’ SaaS enablement, and BT’s acquisition of Ribbit.
And, those are just the Tier 1 carrier examples. Do I really need to mention the G word? Yes, Google and its ilk are all over it.
So, you might want to have at least one more conversation about moving up the value chain and hedging against commoditization by getting closer to your customer.
