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Convergent Communications Asia-Pacific
by Agatha PoonEvent Summary
On January 21, Hong Kong-based i-Cable announced the launch of a market trial to deliver VoIP phone service over its cable network. The company has targeted 45,000 households in selected areas throughout Hong Kong during the trial period.
Market Impact
The company i-Cable's VoIP trials are consistent with the Yankee Group's previous assessments of how Asia's broadband market will develop. For example, in our November 2001 Convergent Communications Asia-Pacific Report, "Asia-Pacific Broadband Access: Forecast and Outlook, Part 1," we stated that the deployment of broadband applications would be at the heart of the broadband industry moving forward.
Regarding its Internet operations i-Cable has been optimistic. With an aggressive goal to acquire a market share equal to its main rival PCCW by the end of this year, i-Cable has been seeking new revenue streams through innovative marketing and competitive pricing, and this expansion of its product portfolio is clearly part of those efforts.
Although a number of cable operators in more developed markets like Japan and Korea have already focused on service enhancement, the provision of cable telephony has yet to be a commodity in the marketplace. The company’s VoIP offering could serve as a useful case study as to whether enhanced voice services might not someday become the tail that wags the dog.
The Yankee Group believes that the cable modem market will continue to make inroads in the region. By 2004, we project that about 24% of broadband subscribers in the Asia-Pacific region will be connected via cable modem.
Recommendations
- Given the maturity of Hong Kong's telephony market, i-Cable must work closely with equipment vendors and software suppliers in ensuring that the quality of cable IP telephony will be comparable to traditional voice services provided by telcos and voice resellers over the conventional PSTN network.
- As the broadband market continues to evolve, each broadband access technology is playing a crucial role in shaping the competitive landscape. But taking advantage of its leading position in the broadband battlefield, DSL operators must push ahead with attractive service plans that can retain broadband users with high-cost performance and compelling applications.
E-Sourcing Strategies
by Carrie LewisEvent Summary
On January 28, 2002, EDS and Mi8 Corp. announced an alliance agreement under which EDS will resell and co-brand Mi8's application service provider (ASP)-based provisioning and management of Microsoft Exchange messaging and collaboration (delivered over both public and private networks). Both companies will also jointly test, deploy, and co-sell additional applications (not yet announced) delivered via Mi8's ASP model.
Market Impact
With ASPs consolidating and going out of business, rationalizing the viability of the software as a service delivery model is increasingly difficult. EDS E.solutions indicates, however, that the ASP model—for messaging and collaboration solutions—is the "preferred" mode of delivery for a "high percentage" of their customers (the Fortune 500).
Most vendors and analysts remain supporters of the ASP delivery model. They argue that offering messaging and collaboration as a service provides the starting point for selling complex hosting solutions. Our research indicates, however, a caveat—while end users at the market’s high-end are willing to purchase outsourced messaging and collaboration solutions, those at the mid to low end of the market remain sidelined when it comes to purchasing this solution. Existing internal solutions and financial constraints are the barriers that prevent users in this segment of the market from even reaching the starting point.
Conclusions and Recommendations
- The EDS and Mi8 alliance provides a solution that extends the market reach of both companies, but it does not ensure success. Offering a jointly developed solution (supported by Mi8's automated provisioning and management technology platform) that addresses financial constraints and justifies ROI to internal IT departments is the key to successfully selling this solution to mid-market and SMB end users.
- ASP-delivered messaging and collaboration solutions mitigate delays in worldwide communications and operations—an ideal value proposition for Fortune 500 consumers. They also offload internal IT departments from having to manage an essential business tool, but not a core business function. These value propositions, however, do not hold up for the majority of consumers in the mid-sized to SMB end of the market that typically have a limited global presence.
Small and Medium Business Communications
by Helen ChanEvent Summary
On January 23, Cybergate, Inc., formerly hosting subsidiary of e.spire Communications, and Affinity, Inc. announced that they have merged. The combined company will be known as Affinity, Inc. and will be headquartered in Ft. Lauderdale, Fla.
Market Impact
As the Yankee Group predicted in 2000, smaller, midsized hosting companies will merge to scale business and to create a more formidable presence in the competitive small and medium business (SMB) hosting market. This combination creates a player that has the potential to rival Interland—formed in 2001 after Interland and HostPro merged—which was a recent bidder for Cybergate.
The combined Affinity, Inc. will host over 275,000 paid Web sites, have an active base of over 2,000 resellers, and occupy three data centers (estimated total of 22,000 square feet). Efforts to integrate the two companies and to unify their hosting service portfolios are already underway. The company also indicated that the entire company is financially viable and expects to be cash flow- and EBITDA-positive by year-end 2002. It plans to grow its business organically with efforts focused primarily on customer service and bringing to market innovative products and services.
Conclusions/Recommendations
- The two companies have complementary strengths with little overlap. Cybergate (whose hosting brand is called ValueWeb) is strong in shared hosting and has built a business targeting non-tech-savvy SMBs with an estimated ARPU of $30 per month. This compares with Affinity's strength in dedicated hosting that targets more technologically sophisticated SMBs with an estimated ARPU of $1,250 per month. Together, the company is more flexibly equipped to service SMBs of different sizes and technology needs and to migrate the SMB up the value chain.
- The merger allows the company to compete more effectively. The combined company is better positioned to aggressively go against larger national service providers such as Verio and Interland, which have developed extensive reseller networks and a migrational path of hosting solutions. In addition, the new company has a stronger opportunity to penetrate more deeply into private label hosting, particularly as wholesale providers are selected for their innovative and complete solutions, customer support, and financial viability.
- This deal puts even greater pressure on smaller hosting firms to merge in order to compete in a market whose players are becoming more sophisticated and have a wide customer reach.
Application Infrastructure & Software Platforms
by Neal GoldmanEvent Summary
Results of a Yankee Group Application Infrastructure & Software Platforms survey highlight that streaming media is still in the early stages of adoption and that the education industry leads enterprises in streaming adoption.
Market Impact
Recent survey results indicate that only 22% of enterprises used streaming in Web applications in 2001. While 37% indicated that adding streaming capabilities is in their plans for 2002, 41% have no plans to implement streaming in the next 12 months. The education industry led adoption with 56% of education companies using streaming as compared to under 10% of manufacturing enterprises. Only 25% of streamed data was live broadcast, although that varies by industry segment.
In terms of platforms used to deploy streaming applications, UNIX and Windows were evenly split. Interestingly, 42% of corporate networks are multicast-enabled and an additional 24% are planning on doing so. Multicasting can dramatically reduce the cost of streaming live broadcasts and this result was higher than we expected. Results also indicate an even split in support for Real Networks and Windows Media with at least 20% of respondents supporting both. Since both clients are readily available, enterprises can generally expect that end users will have both installed on their desktop.
Conclusions
- Vendors must ensure ROI is at the top of their marketing and product strategies. User perception is that streaming is complex and costly. Where enterprises see potential benefits of streaming, the perception of difficulty and the cost of implementation have made ROI hard to justify. The education industry has had the most to gain from streaming, and therefore, has been more willing to pay the price. Both infrastructure and creation products need to focus on ease of use and ease of deployment to grow their businesses. Microsoft Producer for PowerPoint demonstrates how a creation tool with specific application focus can allow a nontechnical user to create a synchronized video presentation in minutes.
- Enterprises must revisit streaming ROI analysis. By observing the success the education industry has seen, enterprises must look more closely at the benefits streaming can provide internally, whether for sales training, customer interaction, or employee education. Streaming products, such as Inktomi Media Publisher, can make it relatively painless for enterprises to increase the effectiveness of corporate communications across far-flung geographies.
Wireless/Mobile Latin America
by Andy CastonguayMarket Event
On January 17, Brazilian operators Telesp Celular, BCP, and Tess announced an SMS interoperability and exchange agreement that will facilitate short messaging service (SMS) in São Paulo, Brazil's most important cellular region, and also the southern states of Santa Catarina and Paraná. The agreement is the largest of its kind so far in Brazil.
Market Impact
While other SMS agreements have been developed in Brazil, the size of these operators and the strategic location of their operations will force SMS accords to be reached by the rest of the market in the coming months. While the majority of active handsets are incapable of originating and sending a message, the operators estimate that 3.5 million users are capable of sending and 8 million can receive text messages. As Brazil's leading commercial market, the growth in messaging will have profound influence on the remainder of the country's operators.
Recommendations/Conclusions
- Even though this latest agreement is fundamental for SMS growth, the most important next step will be for São Paulo's operators to abandon two-tier SMS pricing for contract and prepaid subscribers, and establish a single, inexpensive rate for all. Making SMS popular among prepaid users will not only drive usage; as prepaid subscribers discover the value of SMS, they will consequently have greater demand for mobile originator handsets. Such an effect will give operators the opportunity to provide more advanced services to a wider public.
- While some initial efforts have been made to facilitate the exchange of short messages, with the outstanding SMS growth expected in 2002, operators and WASPs must properly design their systems to handle the sudden burst of SMS likely to be generated from the new agreements. Even though the price of SMS is a prime factor for use, reliability and speed of delivery will continue to be the primary points of SMS success for operators.
Internet Market Strategies
by Paul RitterEvent Summary
SmartForce, the world's largest enterprise e-learning company, announced on January 16 that it is acquiring Centra Software, a leading provider of live e-learning and real-time Web collaboration software. The acquisition will be the largest to date in the e-learning industry, valued at approximately $284 million. The acquisition of Centra will strengthen SmartForce's leadership position in the e-learning space by adding 775 new customers to its existing base of more than 2,500 customers.
Market Impact
The deal increases SmartForce's ability to provide targeted learning solutions that support critical enterprise business processes. Centra's collaboration solutions are designed to facilitate strategic business processes across the extended enterprise, including product launches, customer interaction, sales training, hands-on software application deployments, employee training, and other revenue-generating activities. The integration of Centra's collaboration technology with SmartForce's extensive learning content and customizable e-learning platform will allow the combined entity to offer e-learning solutions that address the growing needs of the enterprise market for cost-effective training alternatives to in-person meetings that often involve high travel costs. SmartForce offers Internet-based tools that allow customers to track, monitor, and analyze each learner's progress through the assigned learning path. Corporate managers can use these tools to measure the effectiveness of their e-learning programs and evaluate their return on learning investments. This acquisition is likely to lead to intense competitive pressure on other firms in the corporate e-learning space such as Digital Think, Click2Learn, and Docent.
Conclusions and Recommendations
- Corporate spending on Web-based learning and collaboration tools and technologies has been increasing steadily over the past 12 months. Enterprises recognize the value and effectiveness of real-time collaboration and on-demand training that firms such as SmartForce and Centra provide.
- Live collaboration facilitates the learning process by offering real-time human interaction, a personalized learning experience and situation-specific advice that help make learning complex issues easier.
- The ability to deploy training solutions to a geographically dispersed workforce, and to measure the results and financial payback will be key drivers of growth in e-learning solutions for all firms in the space.
- To remain competitive, e-learning providers must continue to take steps to differentiate themselves through strategies such as vertical market specialization, multi-platform delivery, and sales channel expansion.
BtoB Commerce & Applications
by Kosin HuangEvent Summary
Last week, reports of the impending collapse of SAP and Commerce One's highly visible partnership hit the press. Erroneous news that the alliance had ended and that the two enterprise software companies would no longer maintain their joint-licensing agreement was quickly corrected by SAP. Additional inaccurate reports of SAP's abandonment of online marketplaces were also rectified. The real story is that the two companies both sell and compete with each other on the e-procurement front with two separate products and wanted to delineate the components sold. The components formerly known as Enterprise Buyer (Professional Edition) will continue to be developed and maintained by SAP as part of mySAP SRM. The components formerly known as Enterprise Buyer (Desktop Edition) will continue to be developed, sold, and maintained by Commerce One as part of its "Collaborative Procurement." Both SAP and Commerce One will continue to sell MarketSet, the e-marketplace solution that was the original basis for the alliance back in September 2000.
Market Impact
SAP and Commerce One's increasingly competitive relationship despite efforts at an alliance places both companies in a difficult position. If the co-opetition intensifies, the partnership will not last in the long term. The competitive nature of the relationship is, however, not really a cause for concern right now, as the two companies are not competing head-to-head on accounts. If, however, the two firms continue to expand their footprints in the e-sourcing and e-procurement application software areas, then they could potentially place the alliance on shaky ground.
Recommendations
- Long-time speculation that SAP may eventually acquire Commerce One (SAP already owns a 20% stake) still holds some potential. Interestingly enough, SAP views Commerce One's technology as an integration hub. Back in January 1999, Commerce One acquired Veo Systems, a provider of XML-based open commerce networks to accelerate its trading networks' BtoB interoperability. This will operate as the foundation by which Commerce One can provide complex systems integration between business partners' disparate systems. SAP plans on employing Commerce One largely for this BtoB integration technology piece while SAP will supply the applications that leverage it. SAP may acquire Commerce One to complete its strategic vision.
- On the other hand, SAP may have no desire to acquire Commerce One at all and instead divest its Commerce One interests and make a split. The value of having an interest in Commerce One has greatly diminished since the decline of the BtoB hype surrounding marketplaces and procurement. It may not be the wisest move for SAP to further sink money into Commerce One when SAP already can leverage what it needs from the current partnership and its current stake.
- Customers may remain cautious regarding their own risk in deploying applications offered from this alliance. Until an acquisition or a split is realized, existing customers can best manage that risk by phasing implementations.
Mexico Market Strategies
by Felipe GonzalezEvent Summary
On Wednesday January 9, the Nicaraguan government approved a cellular telephone license for a company controlled by Mexico-based Grupo Salinas, which holds a close, though still unofficial, relationship with Mexican mobile operator Unefon.
This is the final step of a process that began in last March, when Grupo Salinas' subsidiary, PCS de Nicaragua, won a bid for the Nicaraguan B-band, defeating its Mexican rival Telcel. For the 10 year license, Grupo Salinas offered US$8 million, but until last December it had failed to make payment.
Market Impact
Grupo Salinas is a name that Ricardo Salinas Pliego, one of the two main stockholders of Unefon, uses for referring to the group of different businesses he controls. It is not an actual holding company, but only a referential name. At the moment Unefon officials are firmly stating that the Nicaraguan activities are completely separate from its Mexican operations and that the Nicaraguan license is "a personal venture" of Mr. Salinas.
As the stock of TV Azteca—the largest company of Grupo Salinas and the actual owner of the stake in Unefon—has been strongly punished by the market in the past when it has invested in its cellular subsidiary, it is very likely that Grupo Salinas now prefers to maintain this new venture clearly apart from its core companies, in order to avoid any fears and suspicions from its investors.
Though this is the first time that the Group carries on a telecommunications venture outside of Mexico, other business units have already expanded operations into Central and South America. This, as well as any other future additional international expansion of its cellular business, will help Unefon in terms of economies of scale, both in operational and marketing aspects.
Recommendations/Conclusions
Grupo Salinas should try to generate confidence among the investors, in order to be able to openly present the advantages of Unefon having a larger international footprint, as well as a licence that in the future could be highly worthy for the major regional carriers interested in completing a continuous international coverage.
Convergent Communications Asia-Pacific, Japan Market Strategies
by James WalshEvent Summary
On January 21, MEDiA K.K., a subsidiary of FTTH operator, Usen Broad Networks, announced new charges for its voice service called "Em Den," which will commence from January 30. The new menu includes an item called "6 Yen Call." As the name suggests, billing is in units of ¥6 (US$0.05), for which callers will be able to make a two minute local call, or an inter-prefecture call of between 23 and 90 seconds, depending on distance.
Market Impact
Since the start of the MYLINE pre-registration scheme in 2001, the price of domestic calls has continued to fall. This trend has been particularly noticeable since the end of last year, due to the entry of a number of new operators to the market. From December 21. Heisei Den Den Co., Ltd. introduced a circuit switched call menu to 9 metropolitan areas including Tokyo and Osaka, charged at ¥7.5 (US$0.07) per three minutes for a local call and ¥10 (US$0.08) per two minutes for a inter-prefecture call (although users also pay a fixed monthly fee). Major broadband operator Yahoo BB Technology has announced plans to introduce an IP telephony service called "BB Phone" from spring 2002. This will be available to Yahoo BB ADSL subscribers only, however, calls to all phones in Japan will be possible at ¥6 (US$0.05) per three minutes for local, and ¥18 (US$0.15) per three minutes for long distance.
Recommendations/Conclusions
- As the number of options proliferates, there is a danger in confusing the user. Operators, especially new players, must be very clear in their promotion campaigns, about the relative merits of their particular services.
- The Internet telephony market is still in its infancy in Japan. However, as more operators, including broadband players and ISPs, introduce voice options into their menus, it will gain traction, which will eventually prompt the more established operators to introduce services. There will be ample opportunities for providers of VoIP solutions such as soft switches, gateways, and controlling software.
Wireless/Mobile Europe
by Farid YunusEvent Summary
Vodafone, on January 22, announced it had reached the milestone of 100 million registered customers, based on its share of ownership in 28 operators around the world.
Market Impact
The announcement by Vodafone would have been met with trepidation by all other aspiring world dominators. With penetration now above 70% in Western Europe and approaching 50% in other developed regions of the world, the window of opportunity for the same rapid growth has all but slipped away. For those who would argue that a proportionate customer base is not the same as control, an estimated 80 million users were registered on Vodafone’s majority-owned networks at the end of 2001. Its size has brought unmatched economies of scale and leverage within the vendor community. It is the preferred provider for large enterprises, sharing as they do globe-straddling operations, or at least ambitions. And while perhaps not as overt as certain industry players, Vodafone is also starting to set the agenda for services, prices, and performance benchmarks, and the future shape of the mobile industry as a whole.
Recommendations/Conclusions
- But all is not lost for the competition. As the burden of developing, launching, and marketing successful 3G services exacts its toll, greenfield operators and incumbents alike will be forced to seek partnerships. A fresh wave of carrier consolidation is therefore inevitable, presenting a ripe opportunity for other wireless groups to expand their presence.
- Though a market leader in terms of size, Vodafone has not often led by example. As an organization not known as an innovator, it has been relatively passive in promoting 3G services, delaying rollout schedules in most of its markets, and its mobile portal Vizzavi has not fared as well as expected. But more recent endeavors such as flat-rate European roaming and more equitable revenue sharing agreements with content partners, have been commendable and will, out of necessity, be emulated by others. The interests of shareholders and the common good are not always conflicting, so let's see more of the same, from affordable data pricing models, to greater partner access, to its consumer and enterprise customers.
Media & Entertainment Strategies
by Adi KishoreEvent
Microsoft announced a major restructuring of its TV division on Tuesday, January 22, eliminating its UltimateTV division in Silicon Valley. Two thirds of those employees will be absorbed into other Microsoft groups. The remaining 168 employees will be given three months to find other jobs within Microsoft or face severance.
Market Impact
Despite extensive media coverage and industry attention, the reorganization will have a minimal impact on the market. The UltimateTV service will continue to be offered, and Microsoft will retain its Silicon Valley headquarters. This brings the last part of the former WebTV division into the fold, following Microsoft's decision in March 2001 to shift control of WebTV (now MSN TV) to its Redmond headquarters. The bulk of the employees will be distributed across the Xbox/hardware, TV services, and TV platforms divisions, with the remaining 168 employees in UltimateTV's operational and marketing staff given time to find another position within Microsoft.
Analysis
- While UltimateTV has found it difficult to gain significant penetration in the U.S. market, Microsoft has clearly stated its intention to continue offering the service; thus, eliminating the division should not be equated to eliminating the service. Microsoft has not traditionally abandoned product categories in the past, and it is unlikely that the company will do so now.
- UltimateTV's limited penetration success is indicative of the limited response the DVR/PVR category as a whole has generated. According to the Yankee Group's Digital Home Entertainment Survey, 46% of respondents were aware of the product but only 9% were very likely to buy it; a further 13% were somewhat likely. When the price point of $199 was introduced, only 4% said they were very likely, while a further 11% said they were somewhat likely to buy a DVR. This underscores the relatively flat consumer adoption curve that DVRs will face moving forward.
- Even though WebTV was acquired in 1997, it was never fully integrated into the Microsoft TV division until now. This reorganization does provide some operational synergies, if not internally then at least for the company's dealings with outsiders. It also brings the Xbox team in touch with the UltimateTV team, allowing for the hard drive on future generations of the popular Xbox game console to become the Trojan horse that brings the DVR into the consumer home.
E-Networks & Broadband Access
by Jamie GruenerTrend Summary
The storage industry is entering a new era in which virtualization is becoming more integrated in how storage management is handled. But the challenge remains the same: how to define storage virtualization as well as how customers will best utilize it to improve the management of data. Storage virtualization as a concept isn't new. However, how it is being deployed as part of data management has changed and will continue to evolve in 2002.
Market Impact
Storage virtualization masks the complexities of storage and improves the management of SANs by presenting logical views of storage resources regardless of the storage vendor. But that general definition fails to cover all layers of virtualization. It also doesn't assist customers who increasingly face too many choices determining the best virtualization technology for their needs, now being amplified by every vendor with a management tool suggesting they have virtualization. While it is still a very nascent market today, the Yankee Group estimates $150 million was invested in storage virtualization as a market segment in 2001, which will grow to $1.1 billion by 2005. There are two significant trends surrounding virtualization in 2002. First, virtualization's role in the storage environment is changing, becoming more of a service layer that will feed information to data management and storage resource management tools above it in the storage management layers. This means customers will increasingly see virtualization suppliers offering value-added features that take the attributes of virtualization and apply it to data management and even policy-based management. Those suppliers that provide the most value in additional features leveraging virtualization will excel, those that don't will struggle. Second, storage virtualization now has multiple meanings that customers must take note of. Storage virtualization now occurs at the following levels: block, disk, network, file, and application layers (looking down into the storage environment). Customers, in turn, must assess what primary goals they are meeting by deploying virtualization and grade vendors based on where they focus their virtualization capabilities.
Recommendations
- Enterprise and carrier customers must determine what goals they wish to reach by implementing virtualization, and ask hard questions of storage vendors to determine what's real and what's just marketing. Storage virtualization is an essential technology to be deployed in network storage, but customers must ask themselves what they are getting, especially the additional data management and storage resource management value.
- It's time for storage vendors to be clear about their positions on virtualization, and what benefits they provide customers through virtualization. Virtualization by itself is a feature how it is packaged and integrated with data management and storage management is key. Storage virtualization frontrunners FalconStor and DataCore already recognize this, and are offering additional value through data management and policy management tools.
Billing & Payment Application Strategies
by Lisa CebolleroEvent Summary
On Monday January 7, VeriSign announced the planned acquisition of H.O. Systems for $340 million in stock and cash. Savannah, Ga.-based H.O. Systems (a LiveWire Corp. subsidiary) provides billing and customer care solutions for wireless carriers. The acquisition is expected to be completed by the end of March 2002.
Market Impact
VeriSign has been on an acquisition Spree as of late. With the acquisition of H.O. Systems, VeriSign has the opportunity to integrate several of its internal products to provide a solution that it hopes will help them to become a major player in the wireless market. With the integrations of Illuminet, a subsidiary of VeriSign recently acquired in December specializing in SS7 network services (calling name delivery, calling card validation, wireless clearing, wireless roaming, fraud management, LNP etc.), H.O. systems and VeriSign's payments gateway, VeriSign has all the pieces to the puzzle to compete in the space with the likes of other wireless billing vendors such as Convergys and Amdocs. However, there is a lot more than just having the right pieces to being successful.Conclusions/Recommendations
- H.O. Systems has been relatively successful in the Tier 2 and Tier 3 wireless markets in the United States; however, it has never made a big play for the clients in the Tier 1 space. In the wireless and wireline industries, Illuminet has a client list that could be leveraged by VeriSign to create more business for H.O. Systems and expand its target market. Illuminet also has a presence in international markets, whereas H.O. does not. This international presence will undoubtedly be leveraged to bring H.O. Systems into new geographic markets.
- Historically, billing and customer care companies that are managed by a non-billing parent company have seen hard times due in part to lack of understanding of the customer care and billing side of the business and synergies that on paper make sense but are difficult to execute upon in the marketplace. In this case, VeriSign will use the Illuminet install base in hundreds of carriers as an inroad for billing system cross-selling opportunities. However, considering that the audience for SS7 networks (engineering, network operations) and CCBS (IT, marketing, finance, customer service) within a given carrier is entirely separate, we foresee challenges when it comes to product cross selling.
- Comparisons of the price with the recent Kenan Systems acquisition—announced less than one month ago—are also inevitable. Consider the fact that Kenan system supports well over 200 million subscribers globally compared to H.O., which currently supports (generously) 5 million subscribers in North America. Now consider that the purchase price of US$300 million for Kenan and US$340 million for HO Systems. Hence, we believe that the purchase price was high given the install base and the investment needed to prepare H.O. for the international community.
Communications Services for the New E-conomy
by Sandra PalumboTrend
Recognizing the increased role telecommunications services are playing in an enterprise's business, some service providers are shifting their sales focus away from selling a product or service and toward putting together a complete technical solution that solves an enterprise's business problem.
Market Impact
According to the Yankee Group Enterprise Communications survey, 51% of respondents find the most difficult problem they face in running their corporate network is containing network costs. Enterprises are focusing on getting the most value possible out of each service or product it purchases. Specifically, enterprises are increasingly focused around how the telecom portfolio will impact and, more importantly, benefit the business. With a strong focus on containing costs and leveraging telecom to enable business objectives, buying decisions for products and services within the enterprise are being made at much more strategic levels. As a result, the decision-making responsibility has moved from the to the CIO/CTO/CFO level. The bells and whistles of a particular product will not close the sale. The service provider must demonstrate a clear understanding of the enterprise’s business, the issues they are facing, and how a partnership with the service provider will solve their problems and improve their business. These up-front sales activities of identifying a customer's problems and mapping them to the service provider's portfolio will lead to deeper and more integrated business arrangements and future sales opportunities.
Service providers such as Sprint and Infonet have adopted such sales models, specifically for selling higher value professional and managed services. This approach should not be limited to these services but expanded to include all products/services available within a provider's portfolio.
Implications
- Actual metrics, such as return on investment and cost of ownership, must be provided during the sales process to demonstrate to the enterprise that the solution available has a wide-reaching business impact.
- Service providers must tailor their offerings to be directly aligned with the enterprise's needs instead of offering just a list of products/services.
- The carrier/enterprise relationship will transition to a more integrated partnership arrangement similar to the traditional system integrator/enterprise relationship.
Customer Relationship Management Strategies
by Sheryl KingstoneEvent Summary
On January 21, HAHT Commerce, an enterprise software company focused on demand chain management, announced its intent to acquire Paris-based iMediation, a channel management provider focused on collaborative marketing and arcadiaOne, a content exchange vendor. Under the terms of the agreement, HAHT will issue 8.5 million shares for all iMediation outstanding stock including stock from arcadiaOne recently purchased by iMediation. The dollar value of the deal was not disclosed.
Market Impact
HAHT Commerce's roots are in providing order management functionality. The company combines back-office integration expertise with order management functionality to create electronic selling solutions for its clients. Tight integration between selling functionality and operational systems ensures accurate electronic presentation of product pricing, availability, specifications, and order status. The approach also seamlessly moves electronic order data into financial and materials management applications. HAHT has successfully implemented its application in a number of industry segments, with particular success in the process manufacturing industry.
The acquisition of iMediation expands HAHT's product footprint by providing collaborative marketing functionality so that branded manufactures have the ability to distribute high-quality marketing microsites that partners can customize and embed in their Web sites. The microsite management technology adds brand and marketing content management and HAHT's demand management suite. Enterprises and partners can then also share data on customer interactions across the demand chain. Beyond the technology benefits, the acquisition rapidly expands HAHT's European presence and an install base that expands HAHT's expertise into the consumer packaged goods industry.
Conclusion
- The rise of more strategic business process automation along with the trend to externalize information outside of a companies four walls have forced companies like HAHT to rapidly expand their product offering to include a new set of applications and infrastructure built around demand chain collaboration.
- By HAHT adding collaborative marketing applications it provides branded manufactures with indirect channels the ability to improve brand control by providing consistent, high-quality marketing messages through channel partners' Web sites.
- Also, by capturing customer behavior data and sharing that information in real time (e.g., product needs or even pricing and availability), companies can improve information flow through the entire value chain enabling companies to predict product demand, and then tie that information to supply chain management data, so companies don't find themselves saddled with idle inventory.
- While this is a good addition to their suite, other issues such as lead management and training and certification still need to be addressed since channel partners are a company's local presence and can substantially extend the reach of a product while also improving the solution with value-added services.
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February 5, 2002
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2002: The Year of Wireless Messaging and Entertainment Applications in Latin AmericaFebruary 7, 2002
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Using the Web as an Enterprise Brand Management ToolFebruary 13, 2002
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