2008 State Of Technology: Networking - Services
According to Everything Channel's 2008 State of Technology: Networking survey, channel partners listed network management services as some of their most profitable outlets. In addition, the survey showed that most solution providers are focused on building the network; more than 80 percent of VARs in the survey say they already offer installation, network consulting and design. Meanwhile, between 10 and 14 percent of solution providers say they plan to add VoIP and/or unified communications (UC) design, UC consulting and managed hosted VoIP services as opportunities arise.
One strong reason for increased interest in services has to do with the current economic slump, partners told VARBusiness. As the economy slows, organizations have to find ways to cut costs and maximize resources, while still maintaining vital functions necessary to growing their businesses. Managed services offer a way for those networking functions to be provided for companies that might not have the budget or resources to hire external staff.
"Basically [small and midmarket businesses] understand that systems and networks are getting easier and easier to manage on their own but they don't have the time to ensure that they meet service levels," said Christopher Labatt-Simon, CEO of D&D Consulting Ltd., Albany, N.Y.
Consequently, services are particularly attractive to the midmarket and even larger SMB space--which is still showing marked growth but feeling the pinch of challenging economic times. As a result, businesses in this space will often require services that manage just one or two components of infrastructure, as opposed to its entirety, partners said.
"In that space, you have growing companies that are investing in opening new offices and maintaining current profit levels. What they're not going to do is build their own large infrastructure and hire their own IT people," Labatt-Simon said. "We start seeing more convergence of technologies such as telecommunication, videoconferencing, IP cameras, networks and the need to make sure networks are highly available. So not all managed services necessarily revolve around providing day-to-day operational support."
Koji Mori, director of network services for Calsoft Systems, Torrance, Calif., agreed that services are a particularly lucrative revenue stream for VARs in the midtier and SMB space because of current economic conditions. Mori said that need opens up a niche for his VARs to deliver services at the level of a utility that resolves traditional break-fix scenarios.
"Networking products have become a lot more mature," Mori said. "The technology has not really changed dramatically in the past five years, so the stability and the ability to turn it into a commodity has made it easier for the reseller to be able to deliver a utility-level quality."