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Push or Pull?

Posted on: Wednesday, 16 June 2004, 06:00 CDT

Most of the talk today regarding outsourcing is related to the loss of U.S. IT jobs overseas. The real outsourcing story, however, may lie within U.S. boundaries-the outsourcing of enterprise data and voice network functions. This new service provider model is different, however, from what has come before, including the failed application services provider (ASP) efforts of several years ago.

Todays IT outsourcing trend involves all the major carriers, as well as a select group of integrators and product vendors, all of whom say they can provide enterprise data and voice network functions at lower costs, and with more reliability and less fuss than customers can do themselves. Unlike the mostly now defunct ASPs, though, this outsoucing group seems to have legs.

Several major carriers used the Networld+Interop (N+I) show in Las Vegas to tout their services, signaling the pending push for enterprise customers. WiITeI, for example, well known for its wholesale carrier services, is creating a sales team to sell its services directly to the enterprise market.

At N+I, WiITeI CEO Jeff Storey talked of his company's 30,000 miles of fiber and long history as a carrier's carrier, but also emphasized its servicing of enterprise customers through the years. WilTel's enterprise push revolves around its Ethernet wide area networking structure, which is based on its multiprotocol label switching (MPLS) network architecture. Storey says the carrier also will launch managed security services and managed routing services to enterprise customers.

AT&T also was at N+I, talking up its MPLS-based Ethernet services to end-users. Richard Klapman, product director of data network services, said the economics of Ethernet are compelling. "Customers get more bandwidth at lower cost," he said. "Ethernet is the future," he added, with voice over IP "the killer application for Ethernet."

MCI's big news at N+I was its new partnership with Microsoft in the Web/audio conferencing arena. MCI will use Microsoft Office Live Meeting for the carrier's future conferencing services, eventually creating a "one-touch" conferencing service from customers' PCs.

According to MCI's Neal Lulofs, the company is also leveraging its MPLS-based network to offer IP-based services, converged offerings and virtual private networks.

So is all this "push" or "pull"? Push is what I call trends touted by vendors that may or may not be embraced by customers. Pull is when customers are actually asking for new data and voice network solutions. The ASP era was fueled mostly by the push, not the pull.

This time, the scenario looks different. This time, end-users seem to be in need of less complicated solutions for their increasingly more sophisticated networks. This time, customers are in need of options that lower their costs while improving their productivity.

This time, those companies offering outsourced services seem to have a better handle of the types of services that best fit the needs of their customers, rather than trying to shoehorn solutions where they are not needed. This time, the pull is driving the service provider model.

kanderberg@comnews.com

Copyright Nelson Publishing Jun 2004

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