This time it’s different.
The idea of VARs selling carrier services or business connectivity services is nothing new, but it’s definitely gaining steam. Today’s mobility craze, the widespread adoption of services-based IT, and the desire to lock up recurring revenue streams have led more VARs to adopt carrier services, with the goals of fattening their margins and increasing their stickiness with customers.
And it’s a two-way street. Many carriers, from telecom service providers to cable companies, are champing at the bit to partner with VARs, seeing VARs’ close-knit relationships with regional customers as the key to touching those customers themselves.
|Slideshow: 10 Carrier Services To Boost Your Bottom Line|
“We see it all the time,” said Dan Foster, president of business markets at service provider heavyweight MegaPath, San Jose, Calif. “We see integrators and VARs who almost come across as telecom agents from a salesperson’s perspective. They might be a $450 million integrator all the way down to a local computer consultant. This is a function of the IP convergence.”
Vince Bradley, CEO of master agent World Telecom Group, Malibu, Calif., said VARs are now the No. 1 profile of new agents. Like Foster, he sees the truer convergence of hardware, software and telecom network services as driving much of the shift.
It isn’t yet a widespread phenomenon, but both movements -- VAR to carrier, carrier to VAR -- are eliminating the traditional boundaries between IT VAR, telecom agent and other solution provider labels that were a lot more easily defined even a few years ago. The ITtelco channel convergence is on.
Show Them The Money
One of the most prominent examples of what traditional VARs and integrators can do with a thriving carrier services business is Presidio Networked Solutions. Presidio’s telecom services business is housed in its Presidio Managed Networks unit, which has 18 direct reps focused on telecom, with plans to add up to four more every year. Presidio, Greenbelt, Md., has more than 35 telecom partners, and about 10 percent of telecom services sold by Presidio have a professional services component.
Presidio Managed Networks as a whole is growing 40 percent year over year, faster than all of its other businesses, according to the company.
Kevin Mulloy, president of Presidio Managed Networks, said Presidio began to focus on telecom services following its 2007 acquisition of Solarcom, which had a small, but profitable carrier services arm.
“It was a beautiful little business with very high growth,” Mulloy said. “We thought if we could grow it to sufficient scale it’d be really significant from a value creation side.”
Strategic Products and Services (SPS), a Parsippany, N.J.-based solution provider, is another networking powerhouse with a thriving carrier sales practice -- growing 20 percent year over year, with MPLS and SIP sales at the top of the pile.
“It’s a component of the total solution,” said Jim Maynard, vice president of sales. “We would really prefer to sell a total solution so we can integrate the applications we’re selling. It’s good to have relationships with the network providers.”
SPS began a formal focus on carrier sales about five years ago, said John Franconere, director of sales operations. In many cases, he said, the real motivation lies in customer stickiness, not in the commissions SPS receives.
“We take a look at their current network environment and can potentially optimize the network and manage carrier relationships for that client,” he said. “Often, we’re able to forget the commissions we receive. It’s significant compensation but not in comparison to the rest of the deal.”
NEXT: Can The Carriers Commit?