Enterprises Eye Cheap, Flexible Network Services

SAN MATEO (06/02/2000) - TIn the continuing push toward voice/data convergence, enterprises wary of taking the plunge into new technologies such as VOIP (voice over IP) are finding a test bed of sorts in the form of a new breed of telecom-based service providers.

This class of carrier, which is currently gaining favor with customers seeking low-cost, flexible telecom services, will use next week's Supercomm 2000 in Atlanta to move full steam ahead with network convergence technologies in its own bid to woo customers from the traditional telecom giants. Enterprise telecom managers, mindful of their own next-generation networks, are keeping close tabs.

"At a conceptual level, enterprise IT managers can keep an ear to the ground on what's going on in terms of building a network of service, since that is what they are getting pressure to do," said Elisabeth Rainge, an analyst at International Data Corp., in Framingham, Mass.

At the show this week, IT executives could be eyeing these carriers showing everything from specialized hardware add-on devices that pump voice applications over data networks, to new tools designed to boost QoS (quality of service) or other network capabilities. Also on display will be the use of emerging softswitch technology designed to run large volumes of legacy voice traffic onto a packet-based voice network.

To some extent, enterprise's growing telecom interest stems from the fact that business-to-business e-commerce soon will require them to begin acting as their own service providers to accomplish such tasks as getting supply-chain partners working with them online, according to analysts.

And yet it remains unclear whether most enterprises are trying to mimic service providers' internal strategies to start moving such VOIP building blocks in-house, or if large companies instead will begin purchasing value-added services from the new providers. Likely, it will be a combination, Rainge predicted. "There are all different kinds of enterprises," she said.

The benefits of moving to a converged network model are undeniable, promising to bring enterprises lowers costs on things such as long-distance calling, more reliable network performance, a blending of voice and data traffic, and the ability to roll out services more quickly.

"We are always in touch with our preferred list of carriers to see what road they are taking with respect to wireless or [converged networking services] or any new products we may want to align ourselves with," said Goutham Surapaneni, CTO of Farmington Hills, Michigan-based Complete Business Solutions Inc.

Upstart service providers are currently targeting small to midsize enterprises with things such as ready-to-go converged networks.

Another new technology makes it possible for a service provider to promise certain SLAs (service-level agreements) to their business customers. "The enterprise, just like the service provider, wants to start offering these kinds of SLAs internally as a department guarantee," Rainge said. In the case of the largest enterprises, staff bonuses are even being tied to these guarantees, she added.

Yet some enterprises are reluctant just yet to tap those all-purpose carriers for the services they need.

Systems engineer Dan Hawkins, at grocer Albertson's Inc., in Boise, Idaho, said his company is unlikely to look to service providers to outsource their voice/data networks, although Hawkins said he keeps an eye on the service provider market.

"It's the old Albertson's culture. We're sort of like family here. When you do it from the outside, it is not a part of us," Hawkins said.

There are other cultural barriers to enterprise use of service providers and the adoption of VOIP, said Don Lawrence, president of the Westford, Massachusetts-based National Convergence Alliance, a new coalition of VOIP companies working to create awareness around the technology.

"There is a natural market resistance to new technology, especially when the old technology is still very useful," Lawrence said.

Brian Fonseca contributed to this report.

A new breed

At Supercomm 2000, enterprises take notes as new vendors tout telecom-oriented wares.

* QoS solutions provider Minacom International Inc. will debut a new version of its network management software.

* Electronic Data Systems Corp. will make a play with wholesale applications on demand.

* MCK Communications Inc. will unveil a service provider strategy for deploying voice-over-data networks.

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