NetSolve Finds Niche With Managed Services

At a time when many service providers are struggling for survival, one company has found its niche selling a broad set of managed services through service providers and other indirect channels.

NetSolve, an MSP that delivers remote network management and security services, does about 75 percent of its business through carriers and solution providers, including AT&T, IBM Global Services and NEC in Japan, said Craig Tysdal, president and CEO of NetSolve, Austin, Texas.

Broadwing, a communications service provider and NetSolve's latest partner, said last month that it would resell the MSP's network monitoring, managed firewall and intrusion-detection services as Broadwing Network Services.

NetSolve's Tysdal says resisitence to turning over management to a service provider is diminishing.

"We become more of a partner [to our customers] than merely a vendor of bandwidth," Osha said.

Broadwing, which competes against carriers such as AT&T, WorldCom and Qwest Communications International, is in the midst of a contracting market simultaneously hit by the burst of the Internet bubble, an economic recession and the Sept. 11 terrorist attacks, an event that changed the dynamic of the entire service provider industry, Osha said.

"Once IT managers, CIOs and others began rethinking their strategy [after Sept. 11], it was no longer about Web enablement and having open communications with customers. The priorities had changed to security, disaster recovery and business continuity," Osha said.

For Broadwing, that's where NetSolve comes in,by providing a line of services that target customers' new priorities, Osha said.

"Those service providers that have fallen by the wayside were exposed because they focused on a single product, market or customer niche," Osha said.

It's a market predicament that NetSolve foresaw in the mid-'90s when it was operating as a carrier called Southwest Network Services. Consequently, the company decided to change direction as well as its name, Tysdal said.

"The decision was made to change strategies because we believed in the long term it would be difficult to be profitable as an alternative carrier, something that has proven to be true," he said.

The strategic shift has paid off. The company, which has been profitable for more than three years, last year brought in $50 million in revenue, the bulk of which comes from subscription-based services that provide a recurring revenue stream, Tysdal said.

Its services, which carry a money-back satisfaction guarantee, scale from midmarket to large enterprise customers. "We can manage four, five, six locations or just four, five, six devices," he said.

To deliver services, NetSolve developed a set of proprietary tools, built on an Oracle software platform, that are compatible with widely accepted network protocols. This allows NetSolve to provide services to customers at reasonable rates, Tysdal said .

With an Oracle database at the core, NetSolve provides customers with Web-based portal access to network performance data, he said. "The customer watches us work," he said.

One challenge NetSolve faces is the ongoing resistance among businesses to outsource network and security services for fear of losing control, Tysdal said.

For customers still queasy about turning over management of their networks to a service provider, NetSolve recommends starting small and working their way up. "You don't have to give us the entire shop," Tysdal said.

Customers could outsource 24x7 WAN support to NetSolve and add more services as their level of comfort increases, Tysdal said. "People can continue to focus on the things they do best," he said.

However, NetSolve does see evidence that resistance to turning over management to a service provider is diminishing, Tysdal said.

"Yes, there is resistance, but it's less than it was four years ago, and it was less four years ago than it was eight years ago," he said.

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