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Avoid Confusion: A Knowledge of Supplier Agendas Mean Substantial Savings in IT and Telcom

(PRWEB) September 2, 2005

Convergence is a life changing event provided we can overcome our initial confusion as our traditional suppliers stake their claim in non traditional (to them) IT services.

The suppliers clearly have their own agenda’s but once you understand those agendas and can leverage off the various benefits each supplier gives to you. You should see significant productivity improvements as old ideas remerge and new ideas and alliances form. All indications are that IT services are a strongly growing market and a market fuelled by these new ideas.

IT convergence means that as a customer today you are now finding your traditional Telecommunication carriage providers selling you IT equipment and applications; and your IT equipment and application providers selling you telecommunication services. Traditional boundaries that existed between voice and data are being swept away and everyone is talking about IT convergence.

This is not a new story and those that have spoken with Cisco, NEC, Avaya, IBM or Nortel (to name only a few) would be aware of the claimed benefits of IT convergence to maximise your usage of your current infrastructure or applications. Each will claim to have a unique solution, however there stories are surprisingly similar and each is clearly after expanding their share of your “wallet”.

This is simply because IT convergence means to them accessing a share of the total IT & Telecommunications wallet that they were not able to access in the past. However often to the buyer IT convergence is confused the benefits are often esoteric or poorly explained and it is easy to be caught up in the various agendas of the suppliers.

A current example is IP Telephony, where you have the traditional voice infrastructure providers protecting their customer base. They advocate the “safe and sure” approach of migrating your voice environment to IP. While the IT and network vendors approach voice as an application advocating voice “call servers” and a big bang approach of integrating voice services with IT.

Both approaches will meet particular user requirements; however it is easy to get caught up in the agenda of the various providers in the market.

However what are the agendas? How do you make yourself aware of them?

The best description of the various agendas I have seen comes from IDC who categorises suppliers into three types. Those types are Network Centric, IT Centric and Equipment Centric, defined as follows:

Network Centric: this category comprises the network operators that have offerings beyond the typical access and transport component; network provisioning, configuration and monitoring. They are often building capabilities to migrate and install next generation services.

IT Centric: the category encompasses the IT vendors with data centres capabilities including server hardware and operating system, Web applications and databases. They often bundle solutions with application implementation services and application management and monitoring.

Equipment Centric: this segment includes the equipment side of the convergence supply chain, with provision of LAN/WAN routers and switches, IP PBX, IP Phones and also sometimes maintenance, network readiness assessment.

In the past a customer who had an application requirement would go to their traditional IT vendor or if they wanted equipment they would go to their equipment provider. Those clear cut deliverables from suppliers are disappearing with each supplier vying for a greater share of their customer’s “wallet” and driving for a greater share of the IT services market.

It is interesting to note that each supplier is coming from their position of strength today and leveraging the strength and relationships in their customer base to break into non traditional (for them) areas of IT services.

From a marketing perspective access to adjunct IT services is the low hanging fruit. This means as a carrier managing customer networks and moving the telecommunications “cloud” to the desk top port makes logical sense. However in Australia with Telstra’s acquisition of KAZ, Optus and NCS (Singapore National Computing Systems) and Telecom New Zealand’s acquisition of Gen-I, there is a clear move from the Telecommunication companies to own the end to end IT services market including the applications.

From general research this appears to be a global trend especially in the UK, Europe and North America and Asia is not too far behind. Gartner recently (3/5/2005) published Asia/Pacific’s IT services market revenue growth at 12.4%, which outperformed the global market growth rate for 2 straight years. In the light of this type of growth it is obvious that this market represents an attractive area of growth for companies especially the Telecommunication companies who have been stuck at single digit growth for a number of years

All this means that following the initial confusion and the struggling with the various supplier agendas you should see IT service prices drop across the board. Each supplier will be using there business model to full advantage. Telecommunication companies cross subsidising and bundling their service elements. Application pricing erode with shared services and new technologies such as IBM “On Demand” services reducing CPU cost and storage. Equipment suppliers marginalising the cost of equipment to gain a greater share of the surrounding service elements and push for annuity revenues.

For those that have been in the IT and T industry of 20 years or more we have seen all this before with bureau services of the 80s and CPU time sharing of the 70s.

However with the global economy and the drive to maximise productivity, the re-emergence of old ideas and the creation of new ideas and alliances will, I believe, accelerate. So provided we can overcome the initial buyer confusion IT Convergence has the potential to drive significant synergies and efficiencies into business processes and deliver even greater quality of life.

About the Author:

Craig Price is the Managing Director of BITTS Pty Limited, http://www.bitts.com.au. He has over 22 years expereince in both IT and Telecommunications and today through his company provides consultancy, provisional services for customers and vendors in ICT.

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