An open marriage?

An open marriage?

Carl Churchill Managing Director
Carl Churchill Managing Director of Daisy Wholesale

Carl Churchill, Managing Director of Daisy Wholesale, looks at how an IT reseller can make the move into telecoms.

As we move into 2012, the once very distinct telecoms and IT markets continue to converge. We are getting close to this now with IT vendors launching communications services and communications vendors launching solutions in IT. It’s a marriage of two markets and one that presents a series of major opportunities to the respective channels.

From a commercial perspective, leading businesses from both industries are recognising that offering the other channel’s respective services will ultimately make their customers more ‘sticky’ to them. From a services perspective, the bridge between the telecoms and IT channels is becoming smaller and in the next five years we can no doubt expect to see them selling the same services, fundamentally.

The IT channel is currently experiencing a shift away from traditional IT equipment towards more cloud based applications and remotely hosted services, a model more associated with the telecoms industry and services business. It is as the IT channel begins to adopt these services that MPLS VPN, colocation and hosted services such IP telephony is naturally seen as another valuable add-on. For the IT channel, selling equipment, as they have done historically, is becoming increasingly difficult. In a sense it has become somewhat of a vanity exercise for many IT distributors, who are continuing to generate a lot of revenue from these sales, but not much margin. What the IT channel should be doing is seeing hardware as the facilitator to deliver other services; it is about adapting their core business of traditional IT into more services and data. Those who embrace this change rather than fear it can look upon their future with a far better outlook. They will have more opportunities to grow their business, making it more profitable, whilst creating inherent underlying value in their organisation and keeping their customers more loyal.

The telecoms channel faces a similar situation; whilst they are not trying to sell IT equipment at low margins necessarily, the IT channel is encroaching on what was their traditional core business. With IT resellers paying more attention to hosted services and cloud based applications, telecoms resellers need to up their game in this arena and investigate their own opportunities in the IT channel. Whilst it’s not going to be tomorrow, we should be under no illusion about these changes in the market.

 

An IT reseller who does make the move into telecoms can expect to see better margins and more recurring revenues. To realise these opportunities, they should talk to their aggregator, as in reality, businesses don’t want to have to unnecessarily employ the expertise or invest in the systems/ processes or network infrastructure needed to deliver on these new objectives. It is the role of the aggregator to work closely with those IT channel vendors to look at their customer base, alongside their sales staff, to identify where there are potential opportunities to introduce telecoms services. This may involve conducting co-ordinated visits and delivering customer pitches together, so that the reseller feels fully supported. A good aggregator will assist the reseller in the creation, management and selling of those services. The inferior alternative to this is approaching major incumbent telecoms carriers or providers, who will provide the reseller with the product set, but leave them to go it alone.

The main challenge resellers face when attempting to adopt new services is the fear of the unknown. But, with a good aggregator behind them, they can overcome those concerns without the need to immediately understand everything in that market. Aside from this, IT resellers may initially be challenged by the established relationships which already exist within their customer base. However, if that reseller already has a strong relationship with its customers from an IT service perspective, it should be able to leverage that trust in order to sell them connectivity and communications services.

At Daisy Wholesale, we have seen some fantastic examples of IT resellers who have successfully made the move into telecoms. For many, the key is starting off in a small way and identifying some relatively quick win opportunities, before easing themselves into the bigger opportunities that can support hosted applications and virtualised environments. A good place to start would be delivering managed VPNs into customers with multi sites or delivering Ethernet services that will go hand in hand with the cloud-type value add.

IT resellers will not succeed in selling telecoms services by simply getting in touch with a carrier and putting a link on their website. They must be fully committed to it in the same way they are dedicated to their IT business.