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Telco Managed Services: Does it Pay?
 

Telecommunications companies that traditionally provided your voice telephone service are now peddling a variety of other managed services for business, such as VoIP, security, e-mail, and networking. Should you buy?
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As any owner of a small or mid-sized business will tell you, saving money is paramount. Technology is one area where that especially comes into play. Of late, they’re finding that a good way to save is through the bundling and management of a variety of telecommunications services such as wireless voice and data, wireline voice and broadband data, security, voice over Internet protocol (VoIP), and hosting. Often managed services require no upfront capital investment in software, and minimal hardware investment.

Until fairly recently, these kinds of packages weren’t readily offered to small and mid-sized businesses because they were too small for the purveyors to focus on. But according to a recent Forrester Research report “Emerging Demand For SMB Managed Services Presents Opportunities For Many Vendors,” approximately one-third of small and mid-sized businesses are interested in procuring VoIP managed service in the next year. With demand, supply follows.

Bundling advantages

Beyond saving money, as small businesses expand they have increasingly similar needs, albeit on a much smaller scale, as large enterprises. They need one-stop-shopping for their phone system. That’s where the solution of a bundled package all in one system comes in. According the Forrester report, 73 percent of surveyed small businesses would choose managed services as a means to simplify operations.  Provider Covad’s research attests that small and mid-sized business users "want to purchase multiple solutions from one trusted vendor rather than spending time and resources to investigate and pull together multiple services from different vendors,” says company spokesman Michael Doherty.

Another thing to consider with managed services is that you could respond quickly to a spike in business without having to worry about scaling your technology or any other telecommunications-related growing pains.

A big part of getting a bundled package is reliability and clarity. As anyone who has ever made a call over the public Internet can tell you, frequent call dropping and low quality sound are all too common.

Unless the small businesses themselves are tech companies, many owners are alike in that they don’t want to deal with, or don’t understand, the technical parts of the organization. They are too busy trying to grow their business. And, they rarely have an IT person on the premises. Says Michele Pelino, senior analyst at Forrester, “Managed services allow small businesses to have the benefits of technology but without the worries.”  Covad’s Doherty adds: “We provide expert installation and maintenance, including automatic updates to ensure customers always have the most advanced features available.”

Managed service options from telcos

Telephone companies, aka telcos, have been the route most small and mid-sized businesses have gone through for these kinds of purchases but there are other options nowadays. Telcos have been focusing on other things -- like fighting off competition from places like Skype -- hereby opening up the market for other suitors.

Stepping into the game are also value-added resellers (VARs). Typically they deal in data but have lately gotten into the voice game. Many of the regional and some national providers have started selling hosted VoIP services.

There are some risks to managed services. Make sure that technical support is readily available. This means not only a conscientious -- and available -- call center but also monitoring to make sure that the quality is up to snuff. Ideally, the provider would have someone able to come out to the premises, too.

As a small business owner, you have to be prepared to give up a bit of control, says Forrester’s Pelino. “Everything is outsourced so it’s not inside your business. So, if something isn’t working it’s your business that suffers." However, for many small businesses, Pelino says, in this case the benefits outweigh the negatives.

Last updated: Dec 1, 2007




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