January 2005

CASP Rebirth

BY MARC ROBINS

The current mass mindset regarding the CASP (communications application service provider), or outsourced communications, space seems strikingly familiar to the positions most people now hold with respect to the dotcom space. The widespread negativity spawned by the crash and burn of 2001 that blinded many to the viability of such endeavors has dissipated, and there is a new sense of rebirth, optimism, and opportunity.

It’s clear the Internet is here to stay, and people are not going to stop communicating and needing access to information and services. Indeed, the concept of outsourced communications services is even more valid today as it was four years ago, given the proliferation of “last mile” broadband access. Granted, market conditions have affected the way such businesses are set up and run, but market conditions are also setting the stage for some CASP offerings to flourish.

One only has to look as some of the players to see reason to cheer. From passionate regional outsourcers such as M5 (www.m5net.com) in New York to the growing adoption of service platforms such as those offered by Sylantro (www.sylantro.com), there is a new flurry of activity in the space.

M5 typifies the CASP of today: Young, aggressive and full of technological vim and vigor. The company serves the Metro New York area with Hosted IP PBX and data communications services, and was founded in 2000 by the same management team that ran Interport Communications, the ISP pioneer for New York businesses. Today, the company serves over 300 New York area businesses, and is embarking on an aggressive expansion plan to enable it to grow its customer base into the thousands.

Indeed, I believe there is a solid rationale to M5’s optimism. Let’s review some of the key reasons why outsourced communications services are (still) worth believing in.

Outsourcing Helps Control Costs. Cost cutting is a legacy from the recession that is here to stay: Managers are constantly under pressure to rein in costs, and to control expenditures on new technology, new marketing initiatives, and new hires. By outsourcing communications services, enterprises can eliminate a number of capital expenses, and many related costs associated with the acquisition of new communications technology.

Outsourcing Lets Businesses Focus on Their Core Competencies. The need to effectively compete and gain competitive advantages hasn’t been affected by the bumpy economy. Outsourcing the care and feeding of communications systems can free up staff to focus on tasks that directly contribute to improvements in productivity and profitability. With fewer “distractions,” companies will find their time-to-market with new products or services is reduced, and they become more agile competitors.

Outsourcing Provides Freedom From Obsolescence. All outright technology purchases have a limited lifespan. Phone and messaging systems generally last longer than PCs, but even in telephony the pace of change has been accelerating to the point where new generations of products — especially IP-based solutions — are appearing every six months. Outsourcing can insulate a business from the pain of dealing with obsolete technology.

Outsourcing Lets Businesses Take Advantage of New Technologies and Applications. Many legacy communication systems lock users into static feature sets, and are extremely difficult to upgrade. By outsourcing, businesses can add new features and capabilities to their communications arsenal — often times preserving their investment in existing systems. In addition, users are able to immediately enjoy the benefits of new, advanced services as new technologies and applications are implemented by their service providers.

Outsourcing Alleviates Staffing Woes. Outsourcing communications services can reduce or eliminate the need to hire and assign dedicated staff to manage and maintain in-house systems, perform upgrades, handle moves and changes, etc., especially with new services that provide Web-based management and provisioning capabilities.

Certainly, there are many other ways an outsourced communications strategy can aid a company’s bottom line. What’s clear is that in a time when many companies are hesitant to spend money, the value proposition for CASPs is ascendant. Business managers are eager to investigate the cost advantages an outsourcing strategy enables them, and are wide open to alternatives.

Marc Robins is Chief Evangelism Officer of Robins Consulting Group, which offers an array of services to the IP telephony industry. He has been involved in the telecommunications industry as a reporter and analyst, trade show producer and publisher, and marketing executive and consultant for more than 24 years. For more information, call RCG at 718-548-7245 or e-mail [email protected].

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