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Communications ASP Business & Development
March/April 2001

 

la Carte Outsourcing: A Model For The Future

BY JASON MORSE

At its inception the ASP sector was focused on the enterprise market, ranging from small businesses to the Fortune 1000. The essential value proposition of ASPs was that they offered applications such as word processing or image editing, on an as-needed basis, essentially a business of just-in-time, or just-for-a-period-of-time software distribution. The ASP concept was quickly applied to other industries. CLECs, ISPs, and wireless carriers recognized they could gain substantial benefits by partnering with next-generation communication services to develop complimentary and auxiliary voice services.

Within the communications ASP space, there are several segments of service providers that specialize in specific core competencies including billing, customer care, operations support systems, and voice applications. The voice ASP space presents a unique opportunity and challenge. Because the application or service will most likely be used directly by the consumer, the quality of integration must be superior. The benefits for established telecom carriers in partnering with a voice ASP fall into three main categories. First, the financial savings for adding new product offerings is drastically improved. Second, time-to-market, and more importantly time-to-profitability, is greatly reduced. Third, the level of reliability is immediately on par with mature services. However, not all ASPs are created equal. The decision-making criteria used when choosing a partner is key for insuring success.

THE BENEFITS OF PARTNERING
At the close of 2000, traditional telecom carriers came under enormous pressure by investors and analysts to reduce costs and focus on growth markets. AT&T (www.att.com), WorldCom (www.wcom.com) and Sprint (www.sprint.com) have seen their valuations tumble, with some companies looking for ways to divest certain costly business units, even if they provide a healthy revenue stream. Voice ASPs are ideally suited to help with these companies' growth strategies. ASPs' services by nature require zero upfront capital expense associated with equipment purchases. System capacity is purchased as usage thresholds require. Carriers are ultimately interested in offering value-added services to their customers and the ASP model is the lowest-risk, highest-reward option. An easy analogy would be a deli interested in providing sandwiches to customers. Buying an entire farm to produce the meats and cheeses served would be an option, but it would be an incredibly inefficient one.

In addition, there is no new training required for existing employees nor is there a need to hire additional workers to deploy, maintain, or support the service. In most cases, the communications ASP willingly accepts responsibility while maintaining its core competencies. No additional hosting real estate is required, nor do any additional OAMP or OSS systems need to be developed.

Once the service is deployed with an ASP, the carrier transfers the risk of buyers' remorse and obviates the concern that the technology will be obsolete by the time the first service patch is released. The second key benefit offered by ASPs to telecom carriers and ISPs is the tremendous reduction in time to market. The architecture of the ASP business model mandates that flexibility and custom branding are quick to develop, implement, and launch. This highlights the ability to seize market opportunities while telecom carriers and ISPs are in their infancy, creating greater differentiation and market penetration. Shorter time to market translates into immediate incremental revenue and reduction in churn. Top-tier ASPs structure their offerings to blend seamlessly with existing services in a natural and architecturally pure manner -- similar in concept to an la carte menu. Whether it is adding voice mail to a long-distance offer, or dial-by-name speech-recognition service to a wireless company, ASPs can graft the adjunct service quickly and efficiently.

Finally, the platform and software that drive the ASP service will have proven scalability, capacity, and reliability. For the carrier, this results in deployment with zero beta testing required -- only functional areas require testing -- as well as peace of mind knowing that there will be no system downtime which would certainly result in customer dissatisfaction and lost revenue. System and capacity limits are constantly being forecasted by, and in conjunction with, the ASP, enabling carriers to add customers when wanted without worrying about licensing issues or availability of equipment. All of this is bundled with mandatory operational excellence.

PARTNERING FACTORS
Once the decision to work with a voice or communications ASP has been made, there are several factors to consider when selecting a partner. Whether or not the provider has a core background and understanding of the market segment is paramount. Other key questions to consider: Have they deployed similar systems in the past? Have they successfully marketed the same or a similar type of service under their own brand? These issues must be addressed before any contract is signed or finalized.

Another vital area for the provider to consider is selecting experienced personnel and management with a history of proven success. The review must extend not only to the general management of the company -- which points to viability of the business -- but also to the background of the operations and support personnel who will ultimately be responsible for handling the relationship.

The capability of the ASP to customize their system quickly to meet the demands of the carrier is key. One aspect of this evaluation is to determine how much of the system is off-the-shelf software and hardware versus custom, internally developed technology. The greater the amount of custom software and proprietary technology, the greater the likelihood the ASP will have the ability and understanding to implement minor or major tweaks required to meet the needs of the carriers' customers.

Another factor to consider is the ability of the ASP to blend with the telecom carrier's existing technology. Understanding carrier business practices and operation support systems should be matched with a willingness to listen to the needs of the customer and ability to adapt the platform and systems accordingly. The inherent flexibility of the platform should cover most integration scenarios.
The final point to consider is the viability of the partner. Has the ASP clearly distinguished itself and the niche it serves broadly enough to remain in business but not so broadly that it tries to serve every customer in every market? The best partner will have a solid business model but also remain flexible to market conditions, taking advantage of new adjunct opportunities as they arise.

Partnering with a voice or communication ASP can bring valuable rewards for established telecommunication companies in every market segment. The right partner can help lower the costs associated with developing new products and services. This adds new revenue streams to increase customer retention and differentiation in the marketplace as well as provide peace of mind associated with deploying tried and true reliable systems. Selecting an ASP by using the described criteria will ensure the relationship starts and continues with the least amount of effort and maximum benefit. A partner that understands your business' potential will assure fruitful, long-term satisfaction for both parties.

Jason Morse is the director of product management at eVoice, Inc. eVoice, based in Menlo Park, CA, is a provider of enhanced telecommunications services to CLECs, IXCs, ISPs, and wireless carriers. eVoice's nationwide distributed voice messaging infrastructure is built on the firm's patent-pending extensible and scalable network technology. Additional information is available at www.evoice.com.

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