Branch Office Best Practices Newsletter, By Robin Gareiss, Network World, 10/24/06

In Nemertes’ current research on the virtual office, we’re finding several interesting trends. Among them, many large global enterprises are experiencing a decrease in their IT budgets.

The logic behind this trend relies on the fact that organizations should be able to get more for less when it comes to technology. They’re actually aggressive with new IT projects; they just expect to spend less on commodity items to make up the difference. For example, when the network staff renegotiates its telecom contract, the mandate from the top is to reduce costs for the same services, or keep costs the same for more services.

That leaves carriers struggling to increase margins and innovate with new offerings to keep that revenue from declining.

One value-added offering IT staffs want is managed branch office services. We’re still gathering the figures (the actual benchmark will be available in January; those interested in participating should click here to participate), but early results indicate a growth in both the number of individuals working at existing branch offices and an increase in the number of branch locations.

And…you guessed it! There is no corresponding increase in the number of IT staff members to manage these remote workers.

That’s where the carriers come in. They need to offer a straightforward, branch worker solution, which includes the following:

* Flat-rate, per-user pricing.
* Installation and management of circuits.
* Installation and management of routers, switches, optimization, and other WAN devices.
* Performance reports and access to monitoring portal.
* Solid service-level agreements.
* Hosted applications, including VoIP, unified messaging, and other collaborative applications.
* Storage and redundancy.

I’ll admit, this list is just the basics. And carriers offer bits and pieces of a branch office solution, but they haven’t quite marketed their offerings right to make it easy to price and buy. And, from what IT executives tell us, they are not beating down the doors trying to capitalize on this need at the branch office.

But they need to be! Customers are willing to devote budget to areas that offload their workload. They need to see value, and the carriers need to package these solutions so they’re as easy to order as the value meals at a McDonald’s drive-thru line. Carriers will continue to see declining revenue from their basic, commodity services - and a branch package is one way to retain some of those dollars from their customers.

Still, I expect carriers will see some significant competition from outsourcers, systems integrators, and resellers. I’ll be addressing the role of these providers next week. Depending on what customers need, it may be that these other providers actually have positioned themselves better to offer professional and managed services.