CHANNEL BLOGS


CONNECTIONS T


he New Year is upon us and the future looks decidedly


cloudy. It is always difficult to pinpoint where change in the channel will come from, or exactly what it will look like, but we can be more certain about the drivers of change, namely the major structural transformation underway in the way we all work. We have all become much more mobile, more flexible, which is something that communications infrastructure, particularly broadband, has brought about. This new freedom is driving demand for more and more bandwidth as organisations see the benefits of more flexibility in deploying their workforce. It is a step change that will be supported by the cloud computing revolution and underpinned by NGNs.


However, I don’t believe we will see SMEs migrating completely to the cloud just yet. It is more likely that some form of hybrid solution will arise, not least because companies have already invested in physical infrastructure that they won’t want to simply throw away. Businesses will also want to start by moving non-critical applications and data into the cloud, until they get confident about using cloud services for more mission critical services. I also fully expect our own cloud offerings to be initially useful to service providers who want to augment capacity in a flexible way, without getting rid of their existing data centres (ie, pay- as-you-grow models).


In the current economic climate a fundamental driver for growth is capex


Colin Annette


avoidance. Cloud computing offers IT on a utility model that is elastic and offers the flexibility to match demand, reducing the capital requirements for IT investments – a capex spend to opex expense. Cloud computing will create new markets as greater levels of IT capacity that were previously unaffordable become accessible to organisations. Cloud computing can also give small business owners a competitive advantage by making their company’s IT more flexible. Cloud applications on the Internet are accessible wherever the employee is operating.


But despite all that cloud computing has to offer small businesses, a potential sticking point is the network connection. Because all cloud services are accessed over the Internet companies need superb network functionality. Small businesses never had to worry about network performance before with casual Internet use. But the network really matters in the cloud, so you need to plan the network interface and have strong security. It can affect employees if people can’t access the apps in the cloud reliably and quickly. The channel will be absolutely fundamental to the delivery of these new ways of working.


www.comms-dealer.com COLIN ANNETTE, DIRECTOR, BT WHOLESALE


was standing at the bar during the recent Comms Vision Conference at Gleneagles when a well known reseller principal piped up, ‘It’s all a load of old b**!!ks really. The carriers would have you believe we’re all going out of business if we don’t start selling their hosted services’. While I empathise to an extent, we sold more hosted seats than customer premise extensions for the first time in October and over the past few years we’ve seen the re-positioning of STL as a Communications Service Provider (CSP) offering services such as voice, data, mobiles, flexible working and business continuity.


CROSSTALK I


Don’t get me wrong, this hasn’t just ‘happened’ and the transition has been quite painful at times because people who’ve spent the last 15 years screwing boxes to walls sometimes take a bit of convincing – as do the customers who’ve got used to being able to touch their investment.


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The trouble with the traditional reseller model is that it’s typically built on the need for regular cash hits. Injections of liquidity from system deposits, final payments and monthly maintenance collections on which the reseller has become dependent in the daily quest to manage cashflow and pay the bills. What’s more, and despite the robust theory behind this model, it always seemed to absorb cash. How I yearn for a debtors list to paw over in search of solvency again – not!


Building up the endowment factor through monthly billed services isn’t as painful as you might think, largely because the transition happens over a period of time and we’ve reached a position where 90 per cent of our monthly overheads are met by these recurring revenues. We have no overdraft and we never needed to consider borrowing as the axis of the business shifted.


We have a fairly clear view of the world moving forward and it doesn’t include much ISDN. Leased lines and MPLS installations are the fastest growing part of our business. Equally, it’s not just about hosted: We think there are three likely voice scenarios – customer premise IP PBX, customer owned hosted IP PBX and conventional hosted – all of which connect to the ‘STL pipe’.


We’ve also embraced the dark side, and having virtualised our own servers (again not without some resistance) we now offer data services and virtualisation to our customers over their own pipe. Using SIP


and virtualisation means that we can also deliver business continuity for voice and data and allow a customer’s staff to work from anywhere. This is quite an easy sell when it’s snowing.


So what does all of this mean? Well, we’re profitable and cash generative. In fact the more we sell on a rental or opex basis the better our cash position becomes to the point that we sometimes look to use our own cash for this purpose. A good example of this is funding the capital cost of hosted or mobile hardware over the period of an agreement, which is something we will do if the credit rating is good. Crucially, we’ve also built real value into our business because the endowment factor undoubtedly increases the value of the business.


Ironically, we had a rush on telephone systems last month. So what do I know? Maybe the man in the bar at Gleneagles was right? Or, to use a stock market phrase, maybe it’s just a ‘dead cat bounce’.


Increase your revenues and grow your business. Become a Kcom channel partner. Visit www.kcom.com/partners or call 0800 915 5298


32 COMMS DEALER JANUARY 2011 www.comms-dealer.com


BRENDON CROSS. MANAGING DIRECTOR, STL COMMUNICATIONS


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