Telecom agents are beginning to enter the managed services field and are following the well-traveled path of many a data-oriented VAR.
IT resellers have been making the managed IT services transition since at least the late 1990s, looking for new revenue and margin opportunities. Telecom agents now look to managed services for much the same reason: They want a new revenue source to supplement their traditional business lines.
The managed telecom services segue, while easy enough to envision, can prove difficult to execute. Sales often rest on telecom service arbitrage: Can the telecom agent’s voice offering beat the customer’s current phone bill on price?
A managed services deal, in contrast, may hinge on more complex factors, and the sales cycle may lengthen accordingly. The service itself is another issue: Telecom agents must either acquire the managed services skills and infrastructure or obtain those services through the partnering route.
As for the latter strategy, telecom master agents have emerged as important intermediaries. Telecom master agents provide access to managed services, offer sales training, and, in some cases, broker partnering arrangements with IT VARs. They also maintain contracts with carriers, which helps agents source telecom solutions. Some of those companies now offer to set up their agent partners in the managed services business.
The role of telecom master agents
Justin Chugg, marketing director at Telarus Inc., a telecom master agent based in Sandy, Utah, estimated that about 40% of the company’s telecom agents offer a managed services solution. Telarus offers its agent partners a range of services from managed routers to managed security. Telecom agents who sell such services can significantly boost their income.
As a telecom master agent, Outreach Technology LLC, headquartered in Naples, Fla., started looking for new revenue sources a couple of years ago.
“We wanted to look for a tangential revenue stream,” said Pete Keane, president at Outreach.
The company decided to cultivate managed services and transition its telecom agents into that space. Keane said agents can expect, on average, to generate $700 in monthly services revenue per customer location. Managed services, however, can add $2,000 in billing to that amount, based on a fairly typical customer environment of two servers and 18 workstations, he said.
With a 15% margin, profits would increase from around $100 per location to $400 in this managed services scenario.
Another motivation for telecom agents: protecting their accounts.
A three-year phone support contract is all that’s keeping the customer with a given agent, Jones said. As the pact winds down, the agent becomes vulnerable. An IT reseller can step in with a Voice over IP solution and a wider set of managed IT services, while the agent is limited to voice.
“When a solution provider leaves a gap in their portfolio, it opens the door to another company to take over the deal,” Chugg said. Adding managed services to that portfolio helps agents “solidify a complete solution for their clients,” he said.
Barriers and challenges facing telecom agents
Rogers said it’s much easier for IT specialists to move into the voice space than it is for voice resellers to move into IT. He said the task of preparing telecom agents to sell managed services has been slow going.
“It’s a totally different sell,” Jones said. “It’s not as simple as getting the phone bill and doing the math. They have to go into discovery mode.”
Jones said the discovery phase involves asking prospects a few key questions, and their answers help build a managed services sales presentation. Among the questions: How much server downtime did the customer experience in the last year? How much money did it spend on copier maintenance? Is the customer an eight-to-five organization, or does it need after-hours support?
The managed services sales approach marks quite a departure from analyzing a phone bill, Jones said.
“That’s been the biggest challenge: getting telecom agents up and trained,” he noted.
Lack of managed services knowledge is another barrier.
“Telecom agents don’t know what they don’t know when it comes to IT managed services,” Keane said. “And we were no different.”
Keane said attending ASCII Group and CompTIA events helped get his company up to speed on managed services. As for the learning curve, he pointed to the logistics of managing customers with multiple locations as a particularly tricky area.
Partnering options for telecom agents
Teaming up provides one way for telecom agents to plug the managed services gap. A two-pronged partnership between CharTec and Outreach Technology is one example: Outreach agents sell CharTec’s managed services, and CharTec’s IT-oriented partners provide on-site installation and tech support. The combination expands a telecom agent’s portfolio and covers the logistical challenge of providing localized on-site services. CharTec partners obtain more feet on the street in the form of Outreach’s network of telecom agents.
The alliance builds ties between agents and IT providers. When a telecom agent finds a business opportunity, Outreach engages the appropriate local CharTec dealer who then signs a contract. The contract spells out the rules of engagement, defining the responsibilities of each party.
In Telarus’ case, telecom agents may tap the company’s carrier relationships to offer managed services. Telarus’ alliance with EarthLink Inc., for instance, lets agents sell a range of managed services including hosted security, managed security, data center and virtualization, managed routers, managed phone systems, managed colocation and managed firewall, Chugg explained.
Bandwave Systems Inc., a Philadelphia bandwidth services VAR, offers a backup and data recovery solution, putting its agents in a position to pick up a piece of business that might otherwise wind up going to an IT provider.
“It’s an add-on product for us,” said Tom Azelby, managing partner at Bandwave.
In another take on managed services, Bandwave recently debuted its Cable-Connect aggregation service, which pulls together national business cable providers for agents with multi-region projects. Cable-Connect includes a monitoring service that spans end points -- the routers and modems.
John Moore is a Syracuse, N.Y.-based freelance writer, reachable at email@example.com.
Dig deeper on Managed service provider (MSP) business model