World Telecommunication Day 1999 |
If there is a single reason why the task of creating and maintaining corporate communications networks is increasingly moving outside of the corporations themselves and into the hands of public network carriers, it is probably the Internet. More broadly, it is the vast amount of data traffic that most corporate networks now support and transport - a factor that makes them far more complex and far more difficult for the corporations themselves to maintain.
''The Internet is changing everything,'' says Rick Roscitt, president of AT&T Solutions, AT&T Corp.'s professional services subsidiary. ''The march is inexorable: All traffic will move to an IP network. You have to find a way to reconcile traditional ways of doing business and the Web. You have to find a way to coexist, or to give up the old model and go to the new one.''
Using that logic, it makes sense that a company changing the overall mechanics of how it does business would seek a partner that is experienced in the new mechanics. Telecommunications service providers are obviously experts in building, operating and managing their own complex networks. Why not offer to do the same for their largest customers - and make a tidy profit while they are at it?
''If you're a multinational corporation - or if you're a mom-and-pop shop looking to act like a multinational - the complexity of networking is such that outsourcing is becoming an imperative,'' says Mr. Roscitt.
With competition heating up in all business sectors, economic and personnel considerations become ever more important in maintaining a competitive edge. For that reason, carriers believe their customers would be better off focusing their efforts and resources on their own businesses rather than on sorting out and maintaining an advanced communications network.
Due in part to the ubiquity of the Internet, that model could increasingly apply to small and medium-sized businesses as well as large ones.
The business at hand
''The reality is that there are more and more companies that are looking to move functionality and capability to another provider, so that they can focus on what their core business is,'' says Tony Russo, senior vice president for MCI WorldCom Global Solutions, the managed services arm of MCI WorldCom Inc.
Different network operators take different approaches to managed services, but it is clear that the biggest of the carriers are those best equipped to lead the managed services charge.
''In this outsourcing space, we're one of the only companies that came in early and said we were going to do this,'' Mr. Roscitt says. ''It was seen as a niche.''
For AT&T Solutions, purchasing the IBM Global Network was a way of ensuring that it could adequately meet the worldwide needs of large corporate customers, thereby securing multimillion-dollar contracts from companies such as Bank One Corp. and AlliedSignal Inc.
The IBM Global Network acquisition was ''a global play, a skill play and a technology play all rolled into one,'' says Mr. Roscitt. The business will be renamed AT&T Global Network Services when the acquisition is completed, which is expected to be this year.
MCI WorldCom took a different tack. The carrier felt it already had well-distributed global network assets, particularly because its many acquisitions have given it a network that is all its own across many parts of the world.
''The big difference between ourselves and the people we compete against is that we put this on one network,'' says Mr. Russo. ''We don't have to deal with third parties.''
Managed services offerings take many forms. In some cases, carriers like MCI WorldCom and AT&T provide off-the-shelf solutions, overseeing several companies' networks in a similar fashion. Often, however, these service providers customize their approach for a given contract, in some cases even going so far as to create a separate network operations center for a given customer and to hire all of the company's information technology staff as carrier employees.
''It's everything from managing a router to managing handsets on a desktop,'' Mr. Russo says. The package might include managing equipment on the customer's premises or even managing the customer's staff. ''It can go the gamut as long as it touches telecommunications,'' he says.
Some of MCI WorldCom's largest managed services customers include the U.S. Postal Service, the Federal Aviation Administration, Nasdaq and Sea-Land Service Inc.
The carriers offering managed services are facing competition not only from one another and others like them, but also from the potential customers themselves.
''The biggest competition is inside,'' says Mr. Russo. ''All along, these services have been provisioned from within. One of the biggest fears in moving to an outside firm is that they won't have the same sense of urgency that an internal department does. Companies are looking to see if they can truly gain benefit by taking it outside.''
Since that perception can be difficult to combat, MCI WorldCom's approach is to replace human and corporate devotion with promises in the form of service-level agreements, which establish parameters for reliability and network uptime and dictate financial penalties for times when those goals are not met.
''We've replaced Johnny in the IT department with service level agreements with teeth,'' Russo says. ''If you're not performing, you pay.''
Jason Meyers