Verizon Taps Cisco Innovations To Streamline Managed Services

Mike Marcellin, VP, global managed solutions, Verizon

Mike Marcellin, VP, global managed solutions, Verizon

November 12, 2009 – Verizon sees an opportunity to accelerate what has been a steadily growing managed services business by leveraging a new generation of premises routers from Cisco that make it far easier for a carrier to alleviate customers’ IT burdens across multiple applications.

“This is a big growing area for us,” says Mike Marcellin, vice president for global managed solutions at Verizon. “We’ve been partnering with Cisco for a good bit of time around the capabilities they bring in support of managed services.”

In fact, Marcellin notes, as the range of applications support and integration enabled by such routers has expanded over the years, the complexities of managing all these capabilities across the enterprise have served to increase the appeal of managed service offerings. “Businesses want a single device like the [Cisco] ISR (Integrated Service Router) that integrates routing security and converged video and voice on top of that, but the complexities of managing all these applications is often more than they’re ready to handle, especially in a distributed environment,” he says.

With the newly released second generation of the ISR, a product line that debuted in 2004, service providers will be able to more efficiently add applications to each customer’s managed services portfolio as needs expand, says Shashi Kiran, senior manager with Cisco’s Network Systems and Security Group. “We’ve overhauled the entire portfolio of the current generation of the ISR family,” Kiran says. “We’re increasing performance by a factor of five but keeping the price points at the same levels as the previous generation.”

Kiran says one of the revolutionary aspects to the ISR G2 is support for virtual on-demand services. “Now you can bring on any service at any branch remotely, without having to deliver a new service module to every location every time you want to upgrade the services,” he says.

“Verizon Business will offer a managed version of this new platform that will centralize ongoing support and management,” Marcellin says. “By coupling the features of Cisco’s next-generation global ISR with Verizon’s extensive managed services expertise, enterprises will benefit from a low-touch, all-in-one solution.”

Marcellin views this next phase as a natural step in Verizon’s managed services progression. “We’ve invested over $150 million in our managed network platform over the past ten years,” he says. “We’ve focused on building significant automation and scale. When it comes to bringing in the ISG G2, we began working a year ago on this platform, so as they roll out the final version we’re ready. It doesn’t require a significant amount of manpower increases and will be implemented within our existing operations centers.”

Cisco has designed the ISR G2 to work with a service-ready engine that is shipped at a low incremental cost with the initial purchase of the ISR, Kiran explains. Once the SRE is in place new applications can be licensed and added by the managed service provider without a truck roll, which not only lowers costs but speeds service delivery. “Anything that’s connected to the switch’s Ethernet ports, including video cameras, IP phones, servers, etc., you can control and monitor remotely,” he says.

“From our perspective the fast service enablement is a huge factor,” Marcellin says. “What we’ve seen over the course of the years we’ve been supporting these managed services is that once someone initially purchases a device for routing or VoIP and over time wants to add new applications. They don’t want to flip on everything the ISR does at once.

These new capabilities come at a moment when the incremental revenues associated with managed services are becoming much more significant to Verizon. “Managed solutions as we track them are part of a relatively small bucket of strategic services,” Marcellin says. “Those are ones we see significant growth on. As we look at our core networking services, we’re not seeing as much growth as we once did. So the growth on the overlay will be increasingly important to us going forward.”

The U.S. market swing to managed services hasn’t come easy. “When we started offering these types of services many years ago, enterprises in the U.S. were more reluctant to yield control over their internal network operations,” Marcellin notes. This contrasted with the trend in Europe and Asia where businesses were much more amenable to the managed service model, he adds.

“Now we’re seeing businesses in the U.S. starting to catch up,” he continues. “We’ve been managing wide area networks for 20 years. Five years ago only about 10 to 15 percent of our MPLS customers were managed service customers. Today the ratio is at 40 percent. Now customers are looking to us to manage LANs, wireless LANs, WAN optimization, security and even the applications themselves.”

Indeed, cloud computing and other hosted apps have now become an important part of the managed services portfolio, Marcellin notes. “We have a substantial cloud computing option and also a wide array of hosted solutions in our cloud,” he says.

“We’ve built a tool set that doesn’t require these hosted applications to sit in our data centers,” he explains. “They can be at customer locations, at kiosks, in retail stores or airports. We ensure our customers can deliver the applications they require regardless of whether we’re hosting them or not. Every customer has a different perspective on how they want their managed services to be configured.”

Now video is coming into play in a big way as another spur to demand for managed service support. Here again the ISR G2 could become an important factor insofar as it was designed from the ground up to accommodate video applications, including video conferencing as well as various iterations of streamed content.

“We’ve seen tremendous growth in customers’ use of video,” Marcellin says. “One area is the adoption of video as part of a broader collaboration strategy. Virtually all of our customers are talking to us about this. Some are implementing use of video as part of their remote collaboration agendas; others are asking us where they need to invest. Cost cutting relative to travel is a major driver.”

Video is coming into play in a wide range of other areas as well, he notes. Internally video distribution for training and sales support is now a norm. At the same time enterprises are making far more use of video in their interactions with customers.

“We’ve been able to support video capabilities in the past,” Marcellin says. “But we’ve had bottlenecks at smaller sites like retail stores where you often don’t have significant connection speeds to support high-volume video traffic. But now, with some of the efficiencies the ISR G2 brings, we can make video a reality in these locations. You can do video conferencing or streaming of digital signage content or operate a video kiosk with a virtual, remotely stored inventory.”

“We spent a lot of effort on quality enhancement for video so that you can get better performance in bandwidth-constrained situations,” Kiran explains. “There are enhancements that add support for latency-sensitive applications and for use of multicasting to conserve bandwidth, for example.”

It’s been a long time coming, but the combination of improved support capabilities, sophisticated applications hosting, higher bandwidth and advanced integrated routing devices has made managed services a mainstream part of today’s enterprise services marketplace. “Being able to provide options to customers that allow us to take on the management responsibilities for these services without their having to expand IT staffs has proven to be a pretty powerful value proposition,” Marcellin says.