SUPERCOMM 2002: New Enterprise Breakthrough

Cisco, Other Vendors Help SPs Appeal to Business

Hoping to prove the old adage that two heads are better than one, large equipment companies have positioned themselves to help service providers make a stronger play in the enterprise space.

In that regard, Cisco Systems Inc., Lucent Technologies Inc., Nortel Networks and now Alcatel are selling professional services for the service provider set, and are bringing their switches, routers and other gear along for the ride.

Through these new partnerships, service providers get access to a variety of vendor resources, from development assets to create vertical applications, to network engineering personnel, to sales representatives and referrals and more.

Cisco probably has cut the highest profile in helping service providers target the enterprise by establishing strong relationships with Sprint Corp. and other carriers. Nortel, which says its three-year-old program preceded Cisco's, relaunched in February its Service Provider Initiative, now referred to as MarketForce. Lucent unveiled its Customers' Customer Program 19 months ago. And Alcatel chairman and CEO Serge Tchuruk, speaking at the Spring N+I show about the company's move to target enterprise customers in the United States, said the company plans to help its service provider customers better play in the enterprise services market as part of that strategy. Verizon Communications Inc. is Alcatel's first partner in that vein.

"Cisco has transformed the way we sell," says Bill Brownell, vice president of the company's Internet business solutions group. "We're selling solution sets, and then routers and switches just follow. That's what we're helping service providers do."

Managed Services

Brownell's group, which began life focused exclusively at the enterprise, now advises service providers how to market to large corporations and small and medium businesses. "We bring to bear our business markets -- what service providers really are interested in," he says. "Also we bring our e-business knowledge. Both to build service provider margins."

Cisco remains committed to service providers despite the economic downturn because it sees strong indicators that large corporations and small and medium businesses ultimately will outsource many services to service providers, says Brownell.

At SUPERCOMM last month, Cisco unveiled a global survey, conducted by Nielsen/Acrobat and IDC along with Cisco's own Internet Business Solutions Group, on the enterprise outsourcing opportunity. The study, which polled 521 corporate IT decision makers, shows the top opportunities are in IP VPNs, managed security and IP telephony, including IP Centrex and managed IP PBX. "There is more interest in outsourcing than we had thought initially," Brownell says. Managed service opportunities could grow from $45 billion in 2002 to $100- to $130-billion in 2006, the study found.

Cost savings is the big driver of interest in outsourcing, he says. Functionality is another key driver, he says, adding that services like IP VPN create an extended enterprise while IP telephony can help with workforce optimization. According to the study, 20 to 30 percent of the enterprise market is interested in outsourcing such services while half of the overall market is interested in those technologies. "That's really good news for service providers," Brownell says.

To help service providers grab hold of that opportunity Cisco is doing everything from joint sales calls to collaborative application development and collective network resource planning with its service provider partners.

Global Out-Tasking vs. DIY Interest Chart
Source: Cisco Systems Inc.

Winning Numbers

Sprint is among the service providers that has benefited from Cisco's resources, and vice versa. Back in December 2001, the carrier entered into a three-year strategic relationship with Cisco. The agreement focuses on joint marketing and sales as well as technical issues of IP-based and broadband services. "Cisco is very strong in the enterprise marketplace," notes Chris Wixom, director of strategy alliance at Sprint. "They've got upwards of 80 percent market share."

Sprint and Cisco announced in March they had won a multiyear, multimillion dollar agreement with Case Western Reserve University, the largest private research university in Ohio, to upgrade its communications network infrastructure. Sprint is deploying a Cisco switched gigabit Ethernet to the desktop solution across the university affording students, faculty and staff high-speed access to the university's LAN from every building on campus. Sprint also provides the university with Cisco's Aironet WiFi wireless data network, which enhances the wired network by providing access to network resources for people carrying portable computers and handheld devices.

The partners followed that deal with another multiyear agreement, this time with Coast Dental Services Inc. They agreed to deliver a wide range of new communications technologies from Internet voice services and wireless applications to managed network services and high-speed data.

"We're very excited about what Cisco has brought to the table with us," Wixom says. "If we go to Case with Sprint E/Solutions, managed network, wireless and Cisco equipment, we say not only do you have the Sprint/Cisco alliance and SprintLink, a Cisco-based solution, but we have all these capabilities within Sprint. Customers have been very enthusiastic about what we can bring to the table."

The companies declined to provide dollar values of those deals, or how the partners divided up the winnings. But those are just a couple of the deals the partners have won together, says Wixom. As of January, Sprint has signed about 20 customers with Cisco and "our funnel is quite large as well," Wixom adds.

The Sprint/Cisco alliance comprises three main project teams, each of which typically meets quarterly, says Wixom. The teams are the go-to-market team, the solutions team and the technology advisory board. The go-to-market team does joint sales calls, provides incentives in the field to solve customer issues and deals with sales and marketing-related issues. The solutions team develops customer packages. The technology advisory board talks more generally about where the market is going, what customers want and whether Sprint is on track with its broadband strategy.

"The alliance lets us put together a more advanced solution," Wixom says. "In many cases Cisco was going in separately. In many cases we wouldn't have all their stuff certified. So [with the alliance] you don't run into integration issues, and it's one point of contact."

Sprint has launched five solutions through its partnership with Cisco, and is on the way to adding two to three additional solutions through the end of the year, says Wixom. That includes a long reach Ethernet solution, enterprise content delivery network, IP VPN, dedicated Internet access and IP telephony solutions. "We're working with Cisco on frame over IP with UTI and L2TP 3 and coming out with advanced solutions around that," he says. "We're also working on new designations on AVVID, which we've been very successful selling. We're working on a new enhanced QoS over IP backbone [technology] so customers are more comfortable using AVVID over IP." (UTI stands for universal transport interface, a pre-standard technology that preceded layer 2 tunneling protocol, or L2TP. AVVID stands for Architecture for Voice, Video and Integrated Data. AVVID is Cisco's framework for Internet business solutions; products such as Cisco's popular IP PBX fall under the AVVID umbrella.) "Sprint is trying to move from product-centric solutions to network-centric solutions," says Wixom. "We're working with Cisco on managed services. We just launched Sprint Enterprise Network Services at N+I. We're working to take Enterprise and AVVID into the managed world."

Making solutions look customized without them actually being customized is key to developing new enterprise-focused services that can net significant revenue for service providers, adds Cisco's Brownell. The way to do that is by building enterprise-vertical templates for financial, education and other industry sectors so that pieces like OSSs, which account for most of the complexity and cost of putting together solutions, are already in place, he explains. In addition to Sprint, Cisco also is helping AT&T Wireless, US Signal and the nation's top two cable companies, among other network operators, to better target enterprise users, says Brownell. Unlike the Sprint deal, joint sales calls are not part of the strategies with AT&T Wireless and US Signal, which is a wholesale fiber optic network operator in the Midwest.

The focus of the AT&T Wireless/Cisco partnership is to help AT&T Wireless turn its business into a "Net-ready business" using the Cisco business model, says Judy Cavalieri, director of e-business strategy and marketing for AT&T Wireless. From a customer perspective, that means "how do we focus more e-business applications to make customers more successful online," she explains.

Cavalieri says AT&T Wireless has worked with Cisco more on the philosophy and principles of doing this than on application development itself. "Cisco is very successful in the way they deliver applications, so you can take a big project and move it through processes quickly," she says. Cisco helps AT&T Wireless "chunk down" big projects "and get action and focus around them," she says, adding Cisco may bring in third-party partners who have had similar project experiences to help out. "They provide us a coach and counseling," Cavalieri says of Cisco. "Just learning from Cisco, how they did it, and not making the same mistakes is valuable."

Top Business Functions Supported by Future IT Projects100 Chart
Source: Cisco Systems Inc.

Nortel: May the Force Be With You

Nortel Network's MarketForce program, recently relaunched under this new moniker, takes a multipronged approach to helping service providers identify new enterprise markets. That involves increasing sales, strengthening customer relationships and increasing customer awareness.

Al Safarikas, vice president of marketing with Nortel's metro enterprise business unit, says the company provides sophisticated new database tools to help service providers identify which geographical areas and businesses within those areas have the greatest propensity to subscribe to specific services, such as optical Ethernet. The vendor also helps service providers do pricing and price modeling on a per market basis, as well as service definitions and SLAs, he says.

To help carriers increase sales, Nortel offers its direct touch sales force and sales training.

Strengthening customer relationships is all about working with service providers to help them gain "mindshare" on new services, Safarikas says. That includes providing customers with content development tutorials, which can be put on their Web sites, he says. "We've put together a seminar series with Sprint, Qwest and Genuity, where we go in the market with them to build profile," he says.

And for a long time Nortel has partnered in marketing efforts with service providers to increase customer awareness, he adds.

At the onset of a program, Nortel has a list of deliverables and capabilities it presents to the service provider partner, says Safarikas. "We suggest they bring key customers, like an advisory board, and we sit down and tailor programs. We consider it a statement of work. We consider it a pledge that this is what we're going to do together."

In this vein, Nortel is working with Qwest Communications International Inc., among other service providers. The recently an- nounced Nortel/Qwest alliance is focused on services based on Nortel's voice over IP, metro optical and Intelligent Internet product lines.

Alcatel Tells Enterprise Story

With its name on the giveaway show bags and its top executive on tap as the opening keynote speaker, Alcatel cut a wide path at the Spring N+I show in Las Vegas. So it was no surprise when chairman and CEO Serge Tchuruk said the enterprise customer is now a key focus for Alcatel.

Indeed, many telecom vendors have turned their attentions to the enterprise market recently in light of the dim service provider sales prospects of late.

The company has spent about $20 billion to acquire businesses, mostly in the United States, to gain entry into the enterprise market, Tchuruk says, noting CTI company Gensys as one of those companies. The company plans to leverage its relationships in the carrier space to tackle enterprises and to help its service provider customers better play in the enterprise services market, says Tchuruk. Verizon Communications Inc. is Alcatel's first strategic partner to help deliver convergence to the enterprise.

Brian Witt, director of carrier solutions marketing for Alcatel's Enterprise division, tells xchange the vendor will work closely with Verizon and other interested service providers at three layers. That includes work at the e-business application layer, which ties into Alcatel's Genesys business that deals with multimedia call center applications. It includes activities a layer down tied to Alcatel's Omni PCX, which is an IP PBX Verizon already is reselling, Witt says. And it includes collaboration at the third logical layer, Witt adds, which is the network infrastructure on the enterprise side, including boxes like LAN switches and IP VPN devices, and the network infrastructure on the carrier side.

Beyond working with carriers on the technical side, Alcatel does primary market research on what bundles the marketplace wants, what service providers need to do to support those bundles and then helps in the promotion of those bundles at service provider events, Witt says. "What we are doing is working with the carrier to define the offer and to provision it in the network," Witt says.

Lucent's Loaves and Fishes

Vince Molinaro borrows from the farming lexicon to describe Lucent Technologies Inc.'s Customers' Customer Program, which has tools and training as its key tenets.

"We're not only feeding the customer for the day," Molinaro says. "We're teaching them to farm and eat forever."

Molinaro, Lucent's senior vice president of North American sales, says the company does some co-selling to help create leads and help the market understand what service providers have to offer, but that service providers tend to be good at selling existing services. "The value we're bringing to the table is the skills and the transformation."

That means helping service provider customers create a sustainable business model to reach enterprise customers, he says. Helping service providers decide what marketing collateral they need to create interest and demand for services; what service configuration tools need to be in place; and what other enabling technologies are required to offer particular services to enterprises are the key goals here, he adds.

Molinaro declined to provide names of the service providers with which Lucent is working on this front, but he says it has several ILECs and long-distance provider customer partners in the program. "There's an IXC we helped create an IP VPN bundled service for." In that case, he adds that Lucent created the equipment bundle, provided Web-based and instructor-led training for the carrier's sales team, provided 800-number support, lead generation and joint selling. "The incremental business [Lucent's been able to help carriers realize as a result] I'd rather not get into specific numbers on," says Molinaro. "But we've been able to demonstrate increased market share."

And while Cisco is known as a leader in the enterprise data networking space, Lucent and Bell Labs have a great base of knowledge to share about networking in general and the potential of next-generation services on the wireline and wireless side, Molinaro adds.

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