SMB execs should track SBC-HP progress

Giant mergers in the telecom industry are grabbing headlines this week, but it's the SBC-HP alliance that SMB execs should get a grip on.

Just like the recently announced acquisition of AT&T by SBC Communications, the MCI acquisition was designed to expand a regional player's – Verizon – presence in corporate America. This means businesses that have become used to telephone companies courting them with competing packages will have two choices instead of four.

For small and midsized businesses (SMBs), however, there is another recent SBC announcement that deserves attention. It could produce a new set of managed services that could alleviate some of their day-to-day IT/networking challenges.

The blending of voice and data networks and traditional IT offerings that will result from the partnership is a watershed moment for the telecommunications industry.

The alliance between SBC and Hewlett-Packard not only creates some potential benefits for SMBs, it also may provide a model for IT vendors and telecommunications carriers that have grappled with the issue of scaling their efforts to fit the budgets of the SMBs.

As more of the IT industry's attention is focused on SMBs, the largest vendors must find new channels to penetrate such a highly fragmented sector. A significant part of this challenge is based on the traditional gap that exists in the channel structure for IT products and communications services.

The SBC-HP recent alliance is aimed at overcoming this challenge.

Until recently, the IT and communications industries existed in parallel, yet separate worlds. Despite plenty of promises over the past decade of powerful new business applications that would be span these two worlds via convergence, most SMBs have lived with computer systems and communications equipment that operated independent of one another. Although there may not have been any economic incentive to operate separate computer and communications networks, most SMBs were satisfied as long as each was stable.

As a result, SMBs have been historically served by two separate sets of value-added resellers (VARs): One that focuses on IT systems and software, the other selling communications equipment.

The regional Bell Operating Companies, such as BellSouth, SBC, Qwest and Verizon, have also played a pivotal role selling transport services, as well as communications equipment.

Now, technology advancements and greater economic incentives are driving SMBs to investigate integrated voice and data solutions. And the challenges of managing IT systems and communications equipment prompt more SMBs to explore various on-site and remote services to help them offload some of the IT management responsibilities.

This has led to a significant increase in demand for managed services.

SBC and HP's alliance is intended to be a "one-stop, one-call" management package that will encompass desktops, servers and voice networks.

The companies are promising to offer joint services in response to six common infrastructure challenges:

  1. IT and telecom convergence technologies
  2. Mobile data services
  3. Wide-area networks
  4. Network and infrastructure security
  5. Business continuity services
  6. Branch office operations and integration

Although SBC and HP said they won't focus on SMBs until later this year, this joint initiative should be of interest to SMB IT managers who would like to reduce the total cost of ownership of their IT and communications operations. It would also create a unified platform to support new business applications, such as virtual call centers and integrated messaging.

However, success isn't guaranteed, as history tells us.

Such alliances not only require the two parties to develop compelling solutions, they also require that the sales and service delivery organizations from both companies can work closely with one another to provide a single, coordinated face to their mutual customers. This is a tough task for the staffs of IT vendors and communications service providers that speak different technical languages, address different customer requirements and typically operate with different incentives in place.

If SBC and HP can overcome these coordination issues and provide a potent portfolio of integrated voice and data solutions to SMBs, they can create a model that finally bridges the gap between the IT and communications segments of the technology market.

Jeff Kaplan is managing director of THINKstrategies (www.thinkstrategies.com), an IT strategy consultancy in Wellesley, Mass. He can be reached at jkaplan@thinkstrategies.com.
This was last published in February 2005

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