Vendors Ready Wares as Outsourcing Trend Grows

CORPORATE ENTERPRISES now have an increased appetite for network outsourcing -- a trend expected to play out in new products and services being launched this week at the ComNet 2000 conference, in Washington.

AT&T Corp. at the show is poised to make key "outtasking" or managed service announcements aimed at large customers ready to let go of portions of their network operations, company officials confirmed.

And several of Cisco's ComNet announcements -- mostly products that combine circuit-oriented telephone services with new packet services -- are aimed at the service provider market, which is made up of emerging carriers eager to build telephony options, officials said.

Meanwhile, Nortel President and CEO John Roth said his company will soon formally set up a professional services organization to design and prescribe networking technology for Nortel's largest customers, rather than just sell network hardware.

"We have a very large service organization now," said Roth in an interview (see page 20). "It was probably close to $1 billion last year, if it had been broken out as a business. But we had never really formalized it as a business."

Now with more corporate customers choosing to outsource their networks in order to spend more time on application development, it is time to underscore the effort, Roth said.

"We are moving away from shipping boxes to fulfilling a network solution. More of our customers are saying 'I want you to design this network, and I want to know the price for a unit of capacity,' " he said.

Seth McGovern, IT manager at SleepMed, a Boston-based sleep disorder clinic, is one of the many networking officials losing interest in the sometimes overwhelming job of building and maintaining a network.

McGovern said he keeps most data in-house but farms out services such as network administration and selecting phone-switching ports.

"I expect my vendors and service providers to classify where I want to be going on WAN security issues and things like that. I put my faith in them to tell me how to route traffic and that kind of thing," said McGovern.

Outsourcing has been creeping into corporate enterprises for some time, but is becoming more visible, as evidenced by the slew of ComNet products geared toward the service provider arena.

"There are going to be a lot more announcements geared at the service provider space this year. ComNet has traditionally been a show focused on the latest router or LAN switch," said Bill Rich, president and CEO of VocalData, a Richardson, Texas-based company that sells to service providers in the IP local exchange market.

Sources attributed the enterprise interest in outsourcing to several factors, including the technical talent shortage and the need for IS departments to focus on mission-critical applications.

"There is one more often-overlooked factor, and that is the rate at which companies are merging with other companies," said Anthony Russo, senior vice president of MCI WorldCom's Global Solutions.

After a merger, the combined company is expected to be quickly up and running with no time to marry infrastructures, according to Russo.

SHOWBRIEFS

Lucent details IP network management offering:

Lucent Technologies at ComNet 2000 will be taking the wraps off an IP network management software package developed in its Bell Labs testing facilities.

Geared toward service provider and large enterprise networks, the software provides a panoramic view of IP networks, giving network managers the ability to adjust network configuration from a high level down to the elemental level of routers and switches.

Alcatel focuses on U.S. with IP telephony system:

Paris-based Alcatel at ComNet 2000 will be making a major push into the U.S. enterprise market. Alcatel will introduce its Omni PCX4400 IP telephony system, an IP-based enterprise voice communications system for 50 to 50,000 users. The product networks a company's voice and data systems, allowing the voice system access to the same power that is available to the data system, according to Alcatel officials. The Omni PCX4400 is currently in beta testing, with general availability in the summer. Pricing information will be released then.

Sedona Networks launches company, products:

A new company called Sedona Networks will make its formal debut at ComNet 2000.

Sedona will unveil for service providers its Services Internetworking Architecture, which is a platform for real-time provisioning of bundled networking services, such as quality-of-service assurances, across any type of access infrastructure. The company will also unveil the Sedona Concourse, which allows service providers to connect to various public and private voice and data networks through a single platform at the network edge.

Outsourcing facts

* Outsourcing requires increased attention to service-level agreements and may spike the sale of software to monitor the efficiencies promised by service providers. Large accounting firms and systems integrators are creating service-level management divisions.

* Nortel, Cisco Systems, and Lucent Technologies are preparing for the outsourcing surge by ramping up service provider offerings, a market they expect will dwarf the enterprise networking market.

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