Hosted IP – the New Centrex

The death of Centrex is greatly exaggerated.  Customer premise solution vendors have been predicting this for years, much to their chagrin,  new features and the economic climate have only increased the value proposition for Centrex.  New PBX lines have declined 22% over the last year.  Hosted lines have increased 30% over the last year. 

The name Centrex in the US market can go by many names today.  Hosted solutions or hosted IP service are other names.  It is also available in a wide range of configurations today.  You can find traditional service using analog or digital phones.  This is sometimes referred to as TDM (time division multiplex) or classic.  It is available is a variety of IP configurations.  You can get pure IP services based on standards such a SIP or a variety of vendor specific proprietary IP services.  You have the choice to use new IP phones or use gateways or adaptors to keep your existing phones.  Choices include voice only solutions or include multi-media services such as instant messaging or desktop video conferencing.  You can include traditional voice mail service, unified messaging, or unified communications.  SIP provides enhancements such as find-me follow me service, single number service (for mobile integration), and fixed mobile conversion (for multi-mode phones that roam from wireless carriers to WiFi LANs).  Each business can mix and match these together in a solution that still provides the benefits of a Centrex or hosted solution.  Let’s step back a step and clarify some of these capabilities, benefits, and terms.

Centrex is a names that was originally used in North America to denote business services.  Today the same capability is know a variety of names depending on who you ask and what they are promoting. 

This capability still has the same value proposition. 

• Lower capital expense (CapEx). 
• Carrier grade reliability provided by the service providers
• Today it provides the same self service control as a premise based solution
• Grow one line at a time (instead of increments defined by the hardware)
• Lower operating expense (OpEx) because the system is maintained by the service provider (not resources within the business)

The ability to provide the needed capability with lower CapEx and OpEx in these times of economic downturn and ever tighter budgets is the reason that studies show the percentages of businesses are moving to hosted solutions (i.e., Centrex) as opposed to premise based solutions.  The economics are favorable.  The feature set is equivalent.  The choices are numerous.  Implementation can be quicker and smoother.  Products like C3C provide the business the control over moves, adds, and changes as well as the individual employees  the  ability to manage their services easily.  Customer self service is available for all the configurations mentioned here, including both legacy (or classic) TDM as well as IP services.  What’s not to love?  If you would like more information on this subject then add a comment below.  We’ll be glad to help you understand what your local service providers offer. 

I’m also interested in your experiences.  Please add to the discussion below in the comments section.

Goodbye from ITPX / NCUG

The ITPX  / NCUG conference is over.  Thanks to the Board of Directors, the exhibitors, and all the presenters for a very informative show.  For those of us who attended, we learned that “classic” does not mean “old” and “collaboration” is the new “UC.”  For those of you who did not attend, consider coming next year to see what you are missing.

I hope to see all our C3C customers next year in Las Vegas for ITPX/NCUG 2011 !!

An Update from ITPX / NCUG

The second day of the ITPX / NCUG conference in Las Vegas has begun.

Rob Scheible of Nortel gave a well-received Plenary Session this morning on “Hosted IP Communications for Large Enterprises.”  He explained that a hosted IP environment allows customers to have a ‘pay and scale as you go’ model, which is very advantageous from a capital expense versus operating expense perspective.  According to Rob, the top 30 Centrex features along with hunt groups and ACD are supported with hosted IP.  Finally, of special interest to existing Centrex large enterprises is the hybrid Centrex – the concept that analog and digital Centrex lines can be mixed with SIP lines in the same customer groups.  The C3C® application supports a traditional TDM environment or a hybrid Centrex.  C3C® is ready for users today to perform moves, adds, and changes on both classic Centrex lines or new IP stations.

This afternoon will be a presentation on “Features and More Features.”  I look forward to hearing the lively discussion that is sure to follow.

Visit Strata Group at ITPX/NCUG

Are you planning to attend the ITPX/NCUG Conference in Las Vegas the first week of May? If so, come visit Strata Group!

While I will not be presenting this year, Nortel is a a Gold Sponsor and they will be featuring Strata Group’s C3C application in their booth. Stop by the Exhibit Area on Tuesday or Wednesday and ask Nortel to give you a glimpse of C3C.

If you want a personalized demo or more in-depth information, please contact me at info@stratagroup.com any time during ITPX/NCUG. I will be happy to show you the latest offerings in the Administration Graphical User Interface, the Small/Medium Business User Interface, and the business End User Interface. You can see first hand what is new with C3C and how C3C can help your business.

I look forward to talking to you at ITPX/NCUG!

Charla Dziedzic
Customer Solutions Manager
The Strata Group, Inc

The Status of Business Services

Business services vs. residential services

Business services have always been a big money making part of a telecom service provider’s market because business users typically produce a higher average revenue per user (ARPU) than residential users. Business services actually help subsidize residential services in many rural areas of the United States. Local utility commissions take into consideration the higher phone usage and more frequent changes that a business customer generates as compared to residential customers and allow higher rates for business users.   Business services typically include more sophisticated features for conferencing and group functions such as hunting or call pickup.  The business user may want things such as distinctive ringing that identifies calls from outside the company for special attention.  Many businesses have call centers that require automatic call distribution (ACD) so that calls are handled as quickly and efficiently as possible.  The residential user is typically happy with a simpler feature set containing caller ID, call waiting, call forwarding and possibly voice mail.

What are business services market segments?

Hosted vs. CPE

Once upon a time the business user did not have a lot of choice over where they purchased services. The local phone company provided voice services. The phone company may have also provided data service for connecting their local networks to other locations or to the Internet. The business could choose to have phone service hosted by the phone company or purchase customer premise equipment (CPE) like a key system or PBX. These CPE solutions were typically more feature rich and offered a lot of control but the business was required to handle all the management (requiring trained resources). They also had to deal with maintenance and upgrades which could be expensive.

Telcos vs. MSOs

Today the business user has a lot more choices. Deregulation in the 90’s brought alternate service providers for voice and data service. Inter-exchange carriers offered to bypass the local phone company for customers who had key systems or PBXes as well as discounting data connectivity. Later cable companies started offering voice service and introduced very attractive bundles of service. The proliferation of wireless service represents an additional choice, especially for the road warriors. Finally, voice over IP solutions such as Vonage and Skype are turning the voice market on its head with free calling within their network and very cheap rates everywhere else. The business user now has a range of choices in technology and service providers that can confuse even the most educated business user.

What is coming in 2010

This trend of more and less expensive choices shows no sign of slowing. The SMB market is still the most attractive. The size of the small to medium business (SMB) market opportunity is too big for any service provider to ignore.  The numbers of SMB in the US alone has in excess of 25 million small businesses (courtesy Small Business Administration).  Traditional phone companies will have to pick up their game with new services, bundled pricing, and value added offerings to keep their market share.  They currently own greater than 95% of the business services market (courtesy Fierce Telecom).  Alternate service providers such as cable MSO and VoIP providers are hungry.  These competitors are aggressively deploying new services such as Ethernet services and SIP trunking services to attract these business customers.  See our earlier post on SIP trunking in August 2009.  The alternative service providers are increasing their spending in this area in 2010 by as much as 20% in some cases (courtesy Light Reading).  Ethernet services for data connectivity grew as much as 40% in 2009 over the previous year.  Ethernet and SIP trunking are typically lower long term costs to the service provider because the customer manages the day to day administration.  Customer self service will continue to be table stakes for any business services offering  and the service providers who excel in this area will succeed.   While everyone seems to agree that the economy has stabilized in the financial sector it is yet to be seen how quickly this will spread to other segments of the economy.  Service providers are forecasting an increase in their capital spending.  Business customers will benefit from this in the form of more options and more competition between providers.  Overall it should be a better year than 2009.  What do you think?

Providing a Solution

Are we seeing the proverbial light at the end of the tunnel – is it the end of the recession?  Whether or not the recession is officially proclaimed “over” by some financial experts, the goals for communications companies will remain the same for the foreseeable future.  We all will continue to focus on decreasing costs and improving productivity.  We will look for processes and applications that help us perform more work and produce more results with fewer resources.  Gone are the days when an organization can afford to “throw money at a problem” and simply hope that a positive outcome will be achieved.  All of our employees are expected to work harder and smarter.  And these same people will expect tools supporting the enhanced productivity being demanded of them.

Whether fewer employees result due to layoffs or attrition, they will rely more on applications to perform the greater demands of their jobs.  Applications that fill these needs are necessary.  While the applications have an initial implementation cost, once deployed, the cost quickly can be returned.

I do not foresee a future where a company hires ten new people when they have a need.  Instead, I believe they will hire two people and provide these people tools to assist them in their jobs.  Therefore, the tool needs to be a solution.  It must be a well-crafted application designed to meet the users’ specific needs, not just a “one size fits all” product that may or may not help the users complete their tasks.  Communication companies will actively seek applications that are cost effective, are able to be easily integrated into their existing environment, are powerful yet straightforward to learn, and provide an immediate value on their investment.

Whether the recession is over or not, applications which help employees better perform their jobs will allow a company to meet the goals of decreased costs and improved productivity.  And these are the applications communications companies will be seeking even in a post-recession environment.

CSS and OSS

Wow!  A title with nothing but acronyms and abbreviations! Better start by explaining those.  Customer Self-Service or CSS refers to the ability of a user or the person who administers telephony or IT service for a company to add, delete or modify their own service.  Traditionally Customer Self Service was reserved for only large enterprises.  The limiting of CSS to larger enterprises has changed due to customer demand.  Everyone should be able to manage his or her own services today.

Operational Support Systems refer to the tools and systems a service provider uses to manage their networks and services.  This can include fulfillment or provisioning, billing is typically a key component, fault management and performance management should also be considered.  Some sort of order entry or Customer Relationship management (CRM) system may be linked to billing as well, and depending on the architecture, a work-flow management system may tie it all together.  Whew!  That’s  a lot of stuff.  All of these complex systems allow a service provider like Verizon or Charter to manage their cost through automation as well as reduce errors and improve overall customer satisfaction.  How important these systems for automation are probably depends on the service provider’s size and complexity.  In smaller or emerging market service providers sometimes throw manpower at the problem.

The two ideas of Customer Self Service and Operational Support Systems are frequently seen as tightly coupled.  A web portal may provide a presentation layer driven by business logic that flows through the OSS.  The web portal provides secure access.  It provides a web interface that easily allows the users to perform some of the same types of tasks the service provider performs.  They might be able to add lines.  They might be limited to simply changing existing lines.  The service provider decides what to allow the customers to control through the business logic that drives the web portal behavior.  Customers win through more control.  Service providers win through reduced operational expenses (OPEX).  It’s a win-win all around.  The introduction of web services has made interfaces more predictable and service oriented architecture (SOA) promotes clean division of functions between building blocks.  Still a typical service provider has invested many millions and many years to successfully build their back offices.  Any changes can affect their costs (OPEX) and ability to provide service (revenues).

A service provider can’t afford to stand still even with these risks.  Customers are demanding new services.  The competition is always looking for a leg up or something to differentiate them in the market.

A service provider could perform a complete back office overhaul to modernize and add self-service.  Changing a lot of systems at the same time is pretty high risk (and high priced) due to the integration needed.  Most companies can’t afford that risk.  An alternative approach is to look at an overlay approach.  Implement a CSS solution for those new services or for the subset of capabilities targeted first.  The service provider can choose what to migrate to maximize the value and match their cost tolerance and manage back office impacts.  This allows the costs and the risks to occur in a more controlled fashion.  Customers can realize value sooner if the service provider picks high value capabilities or services first.  If the service provider tackles their entire offering in one big step the cost and risk are greater and the customer doesn’t see value for a much longer time.  By picking those high value capabilities to be managed by the new CSS system the customers would gain value sooner.  Integration between different systems is the biggest cost component in a back office.  The service provider can migrate services with a minimum  integration impact first.  For example allowing customers to manage capabilities that don’t impact billing reduces the need for billing integration.  They can grow and migrate more services as their customer base embraces the idea or their willingness to pay increases.

OK, the service provider IT organization has their eye on OSS modernization and CSS addition.  They’ve got a strategy to migrate in such a way to maximize value, manage the risk, and match the budget.  I recommend the service provider IT organization target a new solution that is designed with self-service in mind from the start in order to achieve the most effective CSS solution.  Many OSS are expert systems.  They are designed to support the networks they support but do little to simplify things or make it usable by any but highly trained, expensive personnel.  A better CSS solution is one that is designed from the ground up with self-service in mind.  Look for systems that hide the complexity and are targeted at the average user, not the dedicated telecom or IT professional.  The CSS solution should be based on modern technologies and flexible architectures.  It should be extensible.  It should provide the ability to integrate with other back office systems as needed but not be dependent on them.  By outlining a migration strategy and then electing a CSS system that matches it every service provider can achieve back office modernization and customer self service in a cost effective fashion.  In summary:

• Add customer self service to increase customer satisfaction and customer stickiness while reducing OPEX
• Reduce risk by targeting high value services first and understanding integration needs
• Modernize back office to provide flexibility based on newer OSS design approaches

That’s my view of back office modernization and self-service.  What’s your opinion?  Please send your feedback and comments below.

SIP Trunks: The Carrier’s Competitive Advantage

We have not had this much excitement in the trunk world since AT&T became the first U.S. carrier to offer ISDN service supporting Primary Rate Interface (PRI) back in 1988 (that was upper case AT&T not the modern lower case at&t). Unlike the PRI rollout, SIP trunks are not being touted with great fan fare by the tier 1 service providers but by scrappy upstarts willing to press a technological advantage. All the hype and misdirection tends to obscure the simple fact that SIP trunk is the next evolutionary step of connecting your PBX or IP PBX to the public switched telephone network (PSTN). Since not all service providers are offering SIP trunks, this is creating an exciting pricing model and competitive advantage to those carriers that do offer SIP trunks. SIP trunks offer technical advantages and cost savings over traditional PRI trunks, and from a technical perspective SIP trunks offer all the flexibility and advantages of IP based networks. The increased flexibility of traffic routing and prioritization of an IP based transport coupled with SIP agnostic attitude towards payload makes migrating to SIP trunks a smart move. SIP trunks allow a service provider to offer value add services such as presence, click to call, instant messaging and video conferencing all over the same connection. In the immortal words of the late great Billy Mays of Sham Wow fame, “but wait there’s more.” While converting your voice services to SIP trunks is a technically savvy move, an even more compelling argument for migration can be made based in cost savings. It is estimated that a business can save anywhere from 25 to 50 percent of recurring OPEX. A business will realize savings by eliminating the need for PSTN gateways and costly PRIs. Additional cost savings may be gained through converged access of voice and data, one line, versus two. A SIP trunk can contain a specific number of DS0s instead of 23 at a time as required by the T1 specification. Sizing the trunk specific to the traffic load can produce incremental savings, which can quickly add up. Service providers will need to provide consistent and timely turn up for SIP trunks and provide a mechanism for their ecosystem of resellers to quickly, accurately, and efficiently roll-out SIP trunks to small and medium businesses.

Interest in additional information on SIP trunks, check out these links.
http://www.siptrunk.org/whatissiptrunking.php
http://www.voip-news.com/feature/essential-guide-sip-trunking-040108
http://www.nojitter.com/blog/archives/2009/06/more_sip_trunki.html

New Strata Group Blog!

Please check back for our blog as we will be posting frequently.  If you have any suggestions for topics you would like to read about…let us know!

Thanks,
Strata Group Blog Team