Being Direct With VARs

One of the most pressing issues facing solution providers serving small and midsize businesses is the number of vendors contacting customers directly without informing the so-called "trusted partners" that brought the deal to the table in the first place. This issue of how many vendors have your clients' names and what they do with those names is the subject of our cover news analysis this week.

Vendors that have benefited from partners incurring the high cost of new-customer acquisition should not be making any such direct entreaty unless it is a renewal or upgrade opportunity. In such cases, the partner's name and phone number should be listed front and center as the primary contact. What's happening is that vendors frustrated with software licensing and maintenance renewal rates are making a direct grab without even informing the partners that made the deal in the first place.

Certainly, even a direct sales bigot would concede that it is bad business and sneaky at best to try to take such a deal and move it to a direct relationship without a partner's input. Any such play is confusing to customers, who look to solution providers as their trusted advisers/outsourced IT departments. Those that doubt this is the case are living in the channel dark ages. It violates all tenets of rudimentary SMB economics for vendors to think they can cost- effectively go direct to the SMB market.

Vendors must adopt clear, printed channel policies that give the solution providers that made an initial license/maintenance sale a set deadline to obtain the renewal. Whether that is 30 or 60 days before the contract is up should be decided between the vendor and its partner. These policies then should be updated annually. In addition, vendors must adopt a no-nonsense set of rules guaranteeing solution providers that customer names will not be shared with other vendors, affiliated companies or even solution provider competitors. That's just a good, standard privacy policy.

Of course, more than a few vendors would prefer to operate in the shadows with no printed policy on when and under what conditions they will contact an SMB customer. All the better to pull the rug out from under their "trusted partner" so they can take the deal direct.

Service plays to solution providers' strengths in network integration
Many small-business VARs may never have had access to phone revenue before because they lacked experience selling PBX solutions. But the game is changing.

Hosted VoIP services are not only opening the doors to IP telephony sales, but play to the channel's core strengths in network integration and management.

And now, Microsoft's new Office Communications Server, which will allow VARs to integrate VoIP services with Office applications, promises to open additional avenues for VARs to add value around VoIP without having to wrestle with PBX switches and custom integration work.

In this Solutions That Work, we look at some of the key ways solution providers are adding value to hosted VoIP solutions and how Office Communications Server will enable them to take those solutions to the next level.

Hosted Services Lower Barrier To Entry

PBX is dying, but it's a slow death. For small businesses, their investments in PBX systems were so high that many are reluctant to toss them out and invest in a new infrastructure.

But a hosted service can remove that barrier. With PBX systems, customers often pay for excess capacity, winding up with idle investment. With hosted services, customers can add new phones as they grow so they only end up paying for what they use and need. And as the number of connections go up, the price per user will go down because service providers offer volume discounts.

So all customers need to do is plug the VoIP phones into a network. Well, not quite. They will still need a solution provider to make sure their network can optimally handle the converged voice/data traffic and ensure they have enough bandwidth from their broadband carrier.

In the past, networks were expected to have some latencies and even function with packet losses. Solution providers used to plug in switches and routers, run cables, do some simple bandwidth tests and the job was done. Customers were satisfied as long as data was able to pass across the network most of the time, and quality of service meant having enough bandwidth for P2P traffic.

Quality Of Service Is The Starting Point
To be successful with VoIP, solution providers first need to manage the quality of their customer's network by shaping network traffic. Tools such as Bandwidth Controller, NetEqualizer and Cisco Systems' P-Cube are crucial in determining the level of service across a network.

However, figuring out how network devices should perform requires a deep understanding of resource distribution across each device. These tools can only help identify some of that throughput.

The best course may be convincing customers that they need to get rid of their dumb hubs or at least figure out a way to circumvent them. These devices don't function well in a converged network because they cannot track or guarantee packets. The next step is installing QoS routers and switches.

Fortunately, with a hosted service, solution providers don't need to worry much about the service backbone. VoIP service providers can add more bandwidth at their end if and when a customer requires it. A hosted VoIP service just becomes another network device for solution providers to manage.

Solution providers only need to worry about two factors that affect a hosted VoIP solution—not having enough broadband Internet bandwidth and attempting to place the phone system on too large a network, which complicates matters considerably.

When it comes to broadband capacity, you need to check with the service provider. Packet8's Virtual Office only uses about 30 Kbits of bandwidth per concurrent call. This is an extremely small footprint that shouldn't impact Internet access for most small businesses.

Broadband Reliability Is Important

But solution providers also need to worry about the reliability of the Internet service provider.

"The biggest issue we're looking at in small business is how reliable their Internet carrier is," said Mike Russell, division merchandise manager for the Business Solutions Division of Office Depot, a Packet8 reseller. "If the Internet goes down, their phone goes down. That's always a concern."

When it comes the customer's network, priority should always be given to voice. The old rules of setting up networks can apply here. For instance, if e-mails are delayed, the impact is minimal. But if the bandwidth is low and users start absorbing the bandwidth dedicated to voice, it is immediately detectable by the human ear. That is not acceptable.

While solution providers can put prioritization on VoIP, they do not have to lock down the network. They just have to guarantee that the bandwidth is there when VoIP needs it. The limits must be well understood before deploying this solution. For instance, adding hosted VoIP on a 128-Kbit DSL network with five users surfing the Internet all day will not produce a reliable voice service.

Customers have to be willing to upgrade or be willing to starve the network pipe to get high-quality audio. Since packet prioritization is a service that many small solution providers are offering nowadays, it is easy for them to analyze their customers' networks before offering a hosted VoIP service on top.

Complications can arise when trying to put VoIP services on a large network because then you have to take into account bandwidth requirements of all the applications and devices. And many advise keeping the network to a minimum of 15 or so extensions. That's often not a problem for small businesses. Those companies with more than 15 employees are often working out of multiple locations, which simply means working with a number of smaller networks that can easily handle VoIP service.

In addition to ensuring network and broadband capacity is in place, solution providers have other opportunities for adding value. For instance, hosted VoIP solutions can lead to videoconferencing, which would require more bandwidth and more network services.

Microsoft Ups The Value-Add
But what may really change the game for solution providers in the near future is Microsoft's Office Communications Server 2007, which is now VoIP-ready, opening up the potential for integrating various client applications with VoIP services.

Office Communications Server 2007 will provide users with the ability to communicate between Microsoft Office applications. For instance, whenever users look at e-mails in Outlook, they will be able to see presence information on the senders. They also will be able to see whether other users are available on the network. By simply getting presence information from Outlook, users are able to jump right into voice conversations.

Presence information comes embedded in most Office applications, but Office 2007 apps offer the best integration capabilities. For instance, users can easily identify the status of co-workers by looking at icons on Outlook 2007, and the new Office 2007 ribbon has features that allow users to send instant messages or make direct calls.

Out of the gate, VoIP service providers will not be able to directly connect via Office Communications Server to VoIP handsets. Microsoft is working with LG-Nortel and Polycom on the next-generation phones that will come bundled with presence awareness so, for example, users will be able to receive text messages on the phone's LCD or get presence information from the network.

In the meantime, savvy solution providers would be able to merge these technologies by developing solutions with the Office Communications Server APIs, and Microsoft is making code samples available at MSDN.

Microsoft out of the box has integrated Office Communications Server with its OneNote application to enable users to make notes during conversations. OneNote can collect contact names in the call and even make available the history of conversations from Outlook. Office Communications Server also can facilitate multiparty audio-conferencing, as long as audio-conferencing is available from the VoIP service provider. Customers running Active Directory, which Office Communications Server relies on to maintain presence information, will be able to use these presence capabilities right away.

Unified Communications A Key Incentive
Alex Freund, president of 4IT, a Palmetto Bay, Fla.-based solution provider, said he thinks unified communications will be a major incentive for businesses to get Office Communications Server. "Under the VoIP banner, everything is going to fall into a PC-based file," he said. "Someone who is working out of their main office in Colorado will be able through Outlook Web access to get their e-mail, their voice mail."

But Freund also said that the technical demands of Microsoft Office Communications Server may lead to a cost barrier for many small and some midcap businesses. "You can deploy it in the SBS market, but you're looking at another copy of Windows Server 2003, another box and another application product that has to be put on the box. It's not an insignificant financial investment," he said.

That may be. But VARs that may not want to jump into IP-PBX deployments will still be able to find plenty of ways to add value around hosted VoIP and, as costs come down, opportunities around unified communications are likely to grow.

by Steven Burke, CRN