Surging Demand for Collaboration Support Poses Challenges and Opportunities for SPs

Bill Versen, director, global unified communications and collaboration, Verizon

Bill Versen, director, global unified communications and collaboration, Verizon

October 27, 2009 – Demand for telecom services that support collaboration within and among enterprises of all shapes and sizes has grown to where network service providers’ ability to compete in the commercial services market increasingly depends on having the expertise and wherewithal to address these needs.

“Collaboration” is a catch-all term that spans a wide range of apps and services, including messaging, Webcasting, internal Wikis and blogs, document management, videoconferencing and unified communications. Once the domain of large enterprises, these activities are now a fundamental part of doing business in the small to medium business (SMBs) sector as well.

For telcos, MSOs and other service providers, the important common denominator is that all of those apps and services require a network. But they also require expertise. Absence of standardization, competing vendor claims and the need to precisely tailor solutions to customers’ needs pose significant challenges to service providers.

“The terminology is still being defined by the hardware and software vendors,” says Jeff Cayer, who’s responsible for video communications products in Verizon’s unified communications and collaboration portfolio. “That’s a pet peeve. They definitely have some great stories, but at the end of the day, the only way that you can connect those endpoints is through the network.”

Several factors are helping drive the collaboration market, most recently the lousy economy, which has companies looking for new ways to maximize productivity rather than staffing up. Collaboration apps and services help by reducing waste from travel-related downtime, which is why telepresence has emerged as a major growth segment in this sector. Research firm Ovum, for example, projects the cumulative market for managed telepresence services will be $1.7 billion over the next four years, marking a significant jump from the $77.4 million projected for 2009.

“Organizations across industries are trying to do more with less,” says Tim Low, vice president of marketing at Daptiv, a supplier of hosted software services. “Removing some of the friction in business processes is key to helping them do that.”

Mergers are another driver because companies often don’t want to risk losing top talent at acquired companies by forcing those employees to relocate. Collaboration tools provide a way for those remote offices to work efficiently with headquarters.

How efficiently? Enterprises get a fourfold return on investment on collaboration, according to an October 2009 study conducted by Frost %26 Sullivan on behalf of Cisco and Verizon.

For service providers, offering collaboration products is a way to differentiate themselves and sell more than just bandwidth.

“To keep Verizon as a premier communications provider, we can’t just provide the basic services,” says Bill Versen, director of global unified communications and collaboration at Verizon. “We have to keep evolving as end user needs evolve.”

Some collaboration services are particularly appealing to network operators because of the amount of bandwidth they require. For example, multi-screen HD telepresence systems such as HP’s Halo product can require 10 to 30 megabits per second per room, while streaming videos such as sales-training Webcasts easily run in the low megabits. Big pipes also are required when collaboration includes file sharing, such as an auto manufacturer exchanging CAD files with one of its suppliers.

Besides the connectivity itself, the network also can add value in terms of flexibility and cost reduction. For example, a service provider that has both wired and wireless properties could extend collaboration apps to mobile devices, while SIP trunking can reduce conferencing costs.

Some enterprise collaboration products are available on a hosted or software-as-a-service (SaaS) basis. That approach can mean more revenue for broadband providers because enterprises often have to upgrade their connections or add SLAs as they become highly dependent on apps and services that reside outside their domain.

SaaS-based collaboration products also can have a lower upfront cost than if the enterprise buys everything. That expands the addressable market by helping make collaboration an option for more enterprises, particularly small and medium entities (SMEs).

One example is Daptiv, whose SaaS collaboration customers range in size from 10 employees to 15,000 – and include Comcast.

“We have a lot of customers in the 10- to 30-user range,” Low says. “Sometimes people think that just because it’s a small or medium business, they don’t have similar challenges [compared to] large enterprises. But what we see is that the challenges are very, very similar.

“It’s just that small and medium organizations often have less infrastructure and fewer heads to manage all of that. So SaaS in the small and medium market makes particular sense.”

Declining hardware costs are helping telepresence break into the SME market.

“Before Cisco announced the merger offer with Tandberg [in October 2009], I would have said the big five vendors were still targeting telepresence at multinational corporations,” says David Molony, principal analyst at Ovum. “But now I think it’s clear that Cisco/Tandberg is intent on building a vertical portfolio which will bring HD video from boardroom to the desktop. That will give SMEs better access to full telepresence sessions with bigger users.

“Also, as vendors like Avaya and Mitel move telepresence off the hardware platform and into a software environment, there will be even better scope for SMEs to adopt the version that suits them.”

The wide variety of enterprise collaboration products creates opportunities for service providers to play the roles of advisor and systems integrator.

“Let’s talk about your devices, your OSS,” says Verizon’s Cayer. “As you go down the layers, the complexity grows. That’s where the carrier can come in. We can bring in professional services and a vendor-neutral stance and help you come up with the best strategy.”

Like some of its rivals, Verizon partners with makers of collaboration products, such as Cisco. Those relationships could leave CIOs and IT managers wondering if Verizon will recommend, for example, only Cisco products for enterprises looking for help with telepresence.

“Our answer depends on their situation,” Cayer says. “If we knew that the customer just made a significant investment in standards-based video, that would not be our recommendation because there are a lot of limitations on the Cisco equipment today that would not enable our customers to take full advantage of that investment. In that scenario, we’d recommend Polycom or Tandberg, for example.”

Sprint, meanwhile, partners with vendors such as Cisco, IBM and Microsoft to target the collaboration market, adding in network offerings such as class of service, SIP trunking and wireless.

“Sprint doesn’t necessarily offer all of the pieces of unified communications. No one really can,” says Maria Trysla, marketing manager for convergence and unified communications at Sprint. “So our strategy is to partner with leading unified communications providers to enable their solutions.”

Collaboration services frequently span multiple enterprises, such as when a company works with a business partner to develop a product. In those cases, the enterprises might want a neutral third party – whether it’s a service provider or an SaaS vendor – to handle tasks such as archiving a project’s video and documents.

“There’s an opportunity for telcos to better facilitate business-to-business collaboration,” says Lance Shaw, group product marketing manager in EMC’s content management and archiving division. “Company A says: ‘We’re being sued by company X. I’m going to need everything that went on between us.’ That should be something that’s readily available.”

In some cases, collaborating enterprises use service providers to handle tasks that require access to their corporate networks and servers – access they wouldn’t feel comfortable providing to the other collaborators.

“The enterprises don’t trust each other, while a service provider can act as a trusted partner and provide connectivity across enterprises,” says Stefan Karapetkov, emerging technologies director at Polycom.

Regardless of whether it’s a vendor or a network operator providing it, security is another important aspect of collaboration. That’s because collaboration often centers around something highly valuable and confidential, such as intellectual property.

In some verticals, such as finance and health care, there are additional security requirements mandated by regulators. So when selling collaboration products into those verticals, it helps to understand their unique requirements and tailor the solutions accordingly.

“One of the big aspects of enterprise collaboration is security,” Shaw says. “That’s not just knowing who everyone is. It’s also the auditing and tracking and compliance. Often that’s forgotten.”

Telcos and services providers such as Sprint historically have been more aggressive than MSOs in targeting the enterprise market. So it’s no surprise that some collaboration vendors say they’re seeing the same pattern in their corners of the market.

“Currently we’re seeing much more cooperation and much more interest in partnering from the service provider community: AT%26T and Verizon,” Karapetkov says. “Polycom has a business development team that is focusing on AT%26T, Verizon and the other telcos. We have business development people trying to develop this around cable operators.”

Sometimes the collaboration-market partnerships are born out of crossing paths in other sectors.

“Another reason why we have very good contacts with the telcos is because they know Polycom from the voice business,” Karapetkov says.

Ovum’s Molony is among those who believe that MSOs, as well as smaller telcos, are set to get into the collaboration market.

“I’m sure the managed telepresence proposition is going to move from Tier 1 global telcos into the next layer, [such as] national telcos in emerging markets, CLECs and no doubt the MSOs.”