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November 2006, Volume 9/ Number 11
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The Shift to Managed and Hosted IPT Services

By Max Schroeder

An interview with Allan Sulkin, Founder and President of the TEQConsult Group and a member of the Enterprise Communcations Association (ECA) Board of Directors. Sulkin has more than 25 years of telecommunications industry experience and is recognized as the foremost market analyst for premises voice systems and applications.

Max: Network hosted services have been around for some time, dating back to Centrex. They then entered a prolonged slow period. Why the resurgence of interest in these services?

Sulkin: From a telephony perspective, one key reason is the complexity of managing an IP communications system. Initially, it will be more difficult than managing a traditional circuit switched telephony solution because it is more susceptible to LAN/WAN failures. Also, there is a scarcity of in-house technical expertise because this market segment is expanding rapidly, which makes third party service options very attractive. Other incentives include the following:

• Lowering their total cost of ownership while leveraging third party expertise.

• Increased security and reduction of business risk with a 24 x 7monitored solution.

• Refocusing attention and resources on core competencies.

Max: How big is the managed services market?

Sulkin: End user spending on all types of managed services for telephony systems was estimated to be slightly greater than $3.3 billion during 2005 and is likely to double with the next six years.

Max: How do you define network-provider hosted services?

Sulkin: Network hosted IPT is an IP-based management/maintenance service usually bundled with network transmission services.

• Call telephony servers and trunk gateways are housed in a service provider’s operations center.

• Core system is scaleable, shareable across many users.

Network Hosted IPT delivers PBX (News - Alert) -like functionality as a service, available over the Public Service Telephone Network (PSTN) and/or the Internet.

• Fundamental functions of a hosted service are similar to those of hardware systems installed at the user’s premises.

• Primary difference is that hosted IPT customers don’t buy, install, or maintain any PBX equipment.

• Early targets have been SME customers with KTS/Hybrids or Centrex services.

Another new alternative is a CPE provider hosting offering such as Avaya (News - Alert) ’s Avaya on Demand (AOD) that is distinguished by two key differentiators:

• Avaya provides all customer premise equipment (e.g., telephones, media gateways).

• The offering is not bundled with network transmission services.

A third, new alternative is an integrated telephony system/managed services solution such as the NEC (News - Alert) Managed IP Telephony (MIPT) solution which consists of CPE equipment managed by the vendor.

Max: What is the target market or “sweet spot” for Hosted Services?

Sulkin: The demonstrated sweet spot for network hosted services has been small business customers (i.e., fewer than 100 employees). However, medium and large customers are now being targeted by products like Avaya on Demand.

Max: How then do you define managed services?

Sulkin: A true Managed Services Provider (MSP) is capable of assuming responsibility for either one task (e.g., maintenance services) or the entire system operation (i.e., planning, design, installation, operations, administration, and maintenance). Managed Services can be provided for the core telephony system and/or any communications application.

Max: What is the target market or “sweet spot” for MSP Services?

Sulkin: To date, the MSP sweet spot has been large enterprises with relatively complex communications requirements.

Max: What is the opportunity for a VAR in this market?

Sulkin: The biggest opportunity for VARs is to offer a selection of managed service offerings to supplement traditional system solution sales.

If you would like to obtain additional information on this subject, please note that Allan Sulkin is the author of the 2006 ECA Converged Communications Systems (News - Alert) Market Report ( The 2006 ECA Converged Communications Systems Market Report is the industry’s most definitive and independent report on the converged communications market and covers the Managed Services market in much greater depth. IT

Max Schroeder is the SVP of FaxCore Inc. ( and a member of the ECA Board of Directors. As chair of the ECA Media Communications Committee, he is also the liaison for TMC. If you are interested in purchasing reprints of this article (in either print or PDF format), please visit Reprint Management Services online at or contact a representative via e-mail at [email protected] or by phone at 800-290-5460.

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