|Dan Baker Blog|
Wireline Act IV, Scene II: Packaging Network & SaaS Services Together to Serve SMBs
We knew Shakespeare was a great poet. We now learn he was a remarkable soothsayer too. Last week, scholars at England’s famed East Anglia University discovered a long lost manuscript of the bard which accurately foretells the plight of the 21st century wireline business. Here’s an excerpt:
Our revels now are ended. These telecom services,
As I foretold you, were all electrons, and
Are melted into air, into thin air:
And like the baseless fabric of CSP visions,
The cloud-capp'd towers, the VoIP gateways,
The solemn switches, and the global net itself,
Yea, all which it inherit, shall dissolve,
And, like this insubstantial pageant faded,
Leave not a rack nor server blade behind.
Telecom is such stuff as dreams are made on;
And each business it makes is soon rounded with a sleep.
Wireline service providers have lived through plenty of drama in the past 30 years. If Shakespeare were alive today, the wireline business could easily supply enough material for his next tragedy. Consider the following play outline in three acts:
- Act 1. Circuit Voice Long Distance had a long and profitable run until fiber optics and Dense Wave Multiplexing transformed the precious wine into water out of a spigot.
- Act 2. Voice Mail and IN Services were among the most profitable products telecoms ever offered, but IP enhanced services and unified communications have steadily chipped away the luster of the former gold mine.
- Act 3. VoIP was once the darling of wireline’s future. But an explosion of VoIP service providers and mobile competition have whittled VoIP’s profits to the bone.
So what can small telcos and cable operators do to ensure a profitable Act 4? Well, to answer that question, you should talk to John Frame, director of product marketing at Sigma Systems. John’s got a plan – a well-thought-out one – that Sigma Systems will soon be rolling out to its customer base of 60+ service providers. The new script calls for Sigma to play a far more challenging role – shifting from plain ol’ OSS software supplier to packager of on-net and SaaS solutions from a bewildering array of third-party cloud providers.
Dan Baker:John, wireline providers have certainly been down the service commoditization road before. Exactly where will service providers go to boost their bottom line?
John Frame: Actually Dan, the scenario is not as bleak as it may sound. Service providers already enjoy a great relationship with their customers. The trick is for cable operators and telcos to augment their traditional services with SaaS services. We think there are tremendous opportunities here, especially around serving small-to-medium businesses, or SMBs.
Our customers already rely on Sigma Systems to manage their service orders and provision their elements and mobile devices. Now, with a small incremental investment, they can add to that traditional OSS stack various cloud services such as Mozy storage backup, Google Apps, Go To Meeting, SugarCRM and Symantec dotCloud security. And we enable service providers to package all of this up into an offering for their SMB customers. We chose to use well-known brands with a high level of market awareness. Our end goal is to have 15 to 20 applications in the SaaS catalog. We also include a portal for the SMB to actually self-manage their services.
DB: Microsoft is still the biggest name in business software. So I’m curious why Microsoft is not among the SaaS applications you’re rolling out.
JF: At Sigma, we have a great relationship working with Microsoft. We are partnered and working with Microsoft to add them to our solution.
At the same time, telecoms can earn margins working with folks like Google or Zoho. Our system diagram (below) shows the full range of what we offer. On the left side (in orange) are the traditional services that the Sigma Systems platform has been provisioning for a number of years: high-speed data, managed voice, etc. On the right-hand side, we show the new third party cloud services we are provisioning with the brand names below.
The key is to bring all these services under a single service-management or provisioning umbrella. As the orders come in, we break them apart and hand off the order components to the right places. We can also do a partial rollback, full rollback, and manual intervention to improve the customer’s flexibility and experience of the service.
DB: From in-house software to cloud services is quite a leap, isn’t it?
JF: Well, for two years now, we have offered our customers the option of deploying our Service Management Platform in the cloud, which we run on top of Amazon’s AWS.
But I hasten to add that the cloud deployment is optional. They can choose either traditional software or move to the cloud. Privacy and regulatory concerns over cloud services are being addressed, so we think SaaS will become the preferred option as we go forward; however, we are perfectly happy to support traditional in-house deployments. Our J2EE application allows us that flexibility. If a customer wants our solution on-premises, we simply provide the hardware specs needed to support that in-house.
DB: How do service providers interface with the SaaS providers in this new business scenario?
JF: Basically the service providers need to get into the cloud service brokerage business. The manner of brokering varies quite a bit but essentially boils down to three kinds of SaaS vendor partnering:
- Advertising Channel – At a basic level, the telecom works with the SaaS provider to merely publicize a particular cloud application to SMBs. No billing or provisioning is done and the telecom typically earns a sales commission.
- SaaS Partner’s Application Distribution – The next step up is full brokerage of the SaaS solution – doing provisioning and Tier 1 customer support for the application where the SaaS partner’s brand is fully visible to the SMB customer.
- White Label Distribution – Finally, the telecom could roll the SaaS partner’s application into a larger suite. So instead of the SMB customer seeing a family of SaaS brands, the telecom’s label is what they see – even though it’s the same third party applications under the covers.
At Sigma, we can enable the telecom to support any or all of these partnering roles. As you know, we grew up as a service management or OSS supplier, so we are basically integrated into pretty much every billing system out there, which makes our life a lot easier. We simply add billing and SaaS services that are generally billed at a flat per user, per month, or per period subscription rate.
For many of the customers and prospects I am talking about, the billing answer is to simply have the SMB pull out their credit card and be separately billed over-the-top.
Another advantage is that we can combine the cloud services bill with the on-net services (voice, high speed internet, etc.) bill to deliver a single bill to the SMB customer.
DB: Wow, if you can pull that off successfully, it will be quite a feat. I’ve got experience working with ISPs who will certainly compete with CSPs for the SMB cloud business. My impression is the ISPs are still struggling to make the customer ordering experience smooth. Today it’s very clunky.
JF: Yes, you can almost hear the chair swiveling in the background as people try to cut and paste information from one system to another. Mistakes happen when they do that and it just goes on and on.
With us, a single platform handles the network and the cloud-based services. This allows us to open up some pretty cool integration benefits. For example, if the telecom provides hosted voice out to the SMB, when the phone rings, the SugarCRM package pops up details on the person who is phoning in. So boom, you know who’s ringing and can direct the call to the right person if they require special treatment.
Another advantage is that we integrate on one portal. If a new employee is coming on board today, you simply add the employee here, give them their extension, pick the apps you want to give them and they are off and running. A welcome email is sent to them with instructions on how to configure the applications. In short, this is a big time-saver for a small business. SMBs are typically short-staffed, so integrated telco/cloud services makes them more productive.
DB: Let’s not forget the Verizons and AT&Ts want a piece of these cloud services.
JF: Yes, the large carriers will compete; however, they are unlikely to pursue, say, a 20-person flower shop with three stores in the Greater Denver area. For that type of account, local cable operators such as Charter or Cox Communications will probably have the upper hand.
When it comes to that 50-employee-or-less firm, the cable operator or the Tier II/Tier III telcos are in a beautiful position to really bring really strong packages to market. At the same time, they don’t have a national footprint that would allow them to compete at the large enterprise level.
DB: Even though you are dealing with only one portal, the user or administrator still needs to learn your terminology and sort out a dozen or more fairly complex services with many options – it’s like the TV remote that scares people because it has so many buttons.
JF: Yes, Dan, we definitely have to get the interface right. We will provide a set of reports, for example, that will answer the SMB’s question: “Am I getting full value from the Mozy backup service? Are people at my company truly backing up their files?"
Another must-have feature is single sign-on. Here we are working with the individual SaaS providers to provide a single password to access the SMB’s application. It’s a big advantage because the SMB no longer needs to remember names, passwords, and URLs for the various applications they subscribe to. I go to the one portal provided by the telco or cable operator and from there I can see all the details around the subscription – down to the individual user level if you need that. For instance, we can see what services a Larry or Lisa has signed up for. And maybe we notice that Lisa has signed for hosted voice, but not online backup, so we can guide Lisa to ensure she takes full advantage of the applications available to her.
We think the administrator at many of these SMBs will often be the CEO equipped with an iPad, so we’re rushing to support that interface too.
John Frame is director of product management for Sigma Systems, which delivers service providers with a broad array of SaaS applications for their customers. He brings 20 years of experience in the computing industry and has held many roles in software development with 12 years specifically in product management. Dan Baker is research director of Technology Research Institute (TRI) and has been a B/OSS market synthesizer since 1994. Today, he focuses most of his research in the telecom business assurance practice where TRI has recently published a 635-page analysis report.
Dan Baker is research director of Technology Research Institute (TRI) and has been a B/OSS market synthesizer since 1994. Today, he focuses most of his research in the telecom business assurance practice where TRI has recently published a 635-page analysis report.