Loyal Blog Readers: Please enjoy this sneak peek at my upcoming Mind Share 2.0 column (more like a mini-whitepaper) — co-authored by Cbeyond CTO Chris Gatch — that will be running in the April issue of Internet Telephony magazine:
Managed Services Providers: Delivering on the Promise of High-Value Services
As the IP communications industry continues to evolve and mature, an array of new companies offering highly reliable and robust new products and services have made their way to market, providing users with an uncommon wealth of new productivity enhancing communications capabilities at extremely competitive prices.
Foremost among these new entrants to the marketplace are a breed of companies commonly referred to as Managed Services Providers, or MSPs. These MSPs represent a special type of service provider that leverages new Internet technologies to combine the best of Web service and network service models to deliver a whole new class of hosted services to users, and also represent a new genre of investment opportunity to Wall Street.
MSPs typically provide a unique bundling of various hosted voice and data communications services and applications, often coupled with quality of service guarantees, robust security measures and Web-based administrative features. But what exactly is a managed services provider, and what differentiates an MSP from a Web services and network services company?
The Two Types of Integration
Service providers establish their unique identity through integration – using process and technology to make distinct systems work together for the benefit of their customers.
When one examines the concept of integration with respect to an IP-based services provider, there are really two distinct types of integration to consider: network integration and application integration. In fact, the types of integration that are practiced in large-part determines whether a provider is a network services operator, Web services provider, or an MSP.
The matrix represented in Figure I to the left illustrates the differentiation between these two types of integration as well as the progression of derived value as the degree of integration increases across the two planes.
For example, a basic html-based website represented in the lower left-hand quadrant functions rather autonomously and displays little or no integration with other network resources or other applications running on a network.
As integration with other network resources increases, such as in the upper left-hand quadrant, services such as POTs, Fax-to-Email and other network integration-based services are enabled.
It can be said that if a service provider is high in network integration, but doesn’t pursue application integration, then this provider fits into the Network Service Provider paradigm.
For example, a Web hosting company rates high in network integration: In practice, they’re abstracting infrastructure for their customers, but they don’t really integrate with anybody else. In effect, they outsource the hardware function of running a Web site on behalf of their subscribers.
With respect to a high-degree of application integration as represented by the lower right-hand quadrant, Web-based companies like Ebay and Yahoo! are prime examples. In these cases, it can be said that if a service provider is high in application integration, but low in network integration, then it fits into the Web Services paradigm.
With respect to an MSP, the utilization of both types of integration is a prime differentiator that distinguishes it from a Web services or Network Services provider. In fact, a managed services provider combines both planes of integration, which allows it to provide a number of higher-value services such as CRM and unified messaging – services that rely on the integration of both networks and applications.
In order to fit into this MSP paradigm, it’s not enough for a provider to have a high degree of network integration, because that would still qualify it as a network services provider, and it’s not enough to have a high degree of Web integration – a true MSP has to exhibit both attributes.
The fact that everything is coming down to a common denominator of IP allows a network to support an array of applications in an integrated fashion, and this integration is happening on the information layer as well. Indeed, since most everything now rides over IP, the constraints that affected the types of integration one would have wanted between various applications and network services are rapidly disappearing.
Key Attributes of a Managed Service
Now that we’ve defined an MSP as implementing a high degree of both network and application integration, let’s try to tackle the question about how an MSP must reach beyond integration to create high-value managed services.
We suggest that an MSP delivers new value to users by offering a unique combination of integration, and personalization. An application that exhibits personalization stores personal user data, their preferences relative to the service, and it may even allow them to customize the service itself to meet their specific requirements.
The matrix represented in Figure I to the left illustrates the differentiation between these two types of integration as well as the progression of derived value as the degree of integration increases across the two planes.
For example, a basic html-based website represented in the lower left-hand quadrant functions rather autonomously and displays little or no integration with other network resources or other applications running on a network.
As integration with other network resources increases, such as in the upper left-hand quadrant, services such as POTs, Fax-to-Email and other network integration-based services are enabled.
It can be said that if a service provider is high in network integration, but doesn’t pursue application integration, then this provider fits into the Network Service Provider paradigm.
For example, a Web hosting company rates high in network integration: In practice, they’re abstracting infrastructure for their customers, but they don’t really integrate with anybody else. In effect, they outsource the hardware function of running a Web site on behalf of their subscribers.
With respect to a high-degree of application integration as represented by the lower right-hand quadrant, Web-based companies like Ebay and Yahoo! are prime examples. In these cases, it can be said that if a service provider is high in application integration, but low in network integration, then it fits into the Web Services paradigm.
With respect to an MSP, the utilization of both types of integration is a prime differentiator that distinguishes it from a Web services or Network Services provider. In fact, a managed services provider combines both planes of integration, which allows it to provide a number of higher-value services such as CRM and unified messaging – services that rely on the integration of both networks and applications.
In order to fit into this MSP paradigm, it’s not enough for a provider to have a high degree of network integration, because that would still qualify it as a network services provider, and it’s not enough to have a high degree of Web integration – a true MSP has to exhibit both attributes.
The fact that everything is coming down to a common denominator of IP allows a network to support an array of applications in an integrated fashion, and this integration is happening on the information layer as well. Indeed, since most everything now rides over IP, the constraints that affected the types of integration one would have wanted between various applications and network services are rapidly disappearing.
Key Attributes of a Managed Service
Now that we’ve defined an MSP as implementing a high degree of both network and application integration, let’s try to tackle the question about how an MSP must reach beyond integration to create high-value managed services.
We suggest that an MSP delivers new value to users by offering a unique combination of integration, and personalization. An application that exhibits personalization stores personal user data, their preferences relative to the service, and it may even allow them to customize the service itself to meet their specific requirements.
The matrix in Figure 2 at left illustrates the progression of service value as the concentration of personalization and integration increases.
For example, early Web-based applications were basically autonomous pursuits – they allowed a user to perform various basic functions such as a database lookup or numeric calculation such as that found in lease rate estimators found on automotive websites.
Other websites pursued complex machine-to-machine integration with other services and data sources and simplified the number of steps involved to solve a complex task.
For example, a site that provides background checks may integrate data from a wide variety of sources, thereby decreasing the time necessary for a thorough background check.
Further up the food chain, some websites began to add additional value by allowing personalization. A good example of such a site is Delta.com, which allows users to tailor individual choices based on their stored profiles – in this case selecting flight itineraries, seating and food preferences, payment methods, etc. Delta.com in effect personalizes user information and enables a transaction — namely the booking of a flight — to occur.
As we follow the progression of value to the upper right hand quadrant, we see that some companies have succeeded in combining both personalization and integration to deliver higher value services to their users.
A great example of such a site is Salesforce.com. This unique service outsources the infrastructure demand of managing a CRM system, provides intuitive Web-based configuration of the platform, and extends their platform with a network of almost 400 Web-based partners under their AppExchange partner program.
Now you may be asking, what does this have to do with VoIP? We stated that personalization includes not only personalized data and preferences, but control of the service by a user. An MSP provides the ability for users to conduct transactions – in terms of allowing users to subscribe/unsubscribe to services, and enable/disable various service features and functions.
In effect, users are provided with a high degree of control regarding what services and features get delivered to them and what network resources they have access to – but the upshot is that this control not only includes access to information but it also includes customization of the service itself, including real time communications services.
The key point we are trying to make here is that the same degree of personalization and customization that is occurring in the Web services realm is being enabled in the real-time communications services realm, and it’s at the junction of both that MSPs are leading the charge.
Web Information and IP Communications Mashups — The Network as a Web Service
With the wealth of new Web 2.0 and IP communications technologies currently available, there is an incredibly rich opportunity for MSPs to combine a variety of services to create even more valuable and meaningful “super” services for users. By employing Web 2.0 access to information and application resources, while simultaneously relying on communications networks as a key resource, MSPs are making telephony (voice and video) an integral part of the mash-up phenomenon (see sidebar “Web 2.0 Technology Toolbox for Managed Services”.
In fact, we believe that the combination of network-based information and applications with other content and applications makes the managed services opportunity almost limitless.
For example, XML by itself is an invaluable Web 2.0 tool as it provides an easy mechanism to describe and label data being exchanged between two Web-based entities. In effect, it offers up a standard format for presenting Web-based content. Furthermore, there are numerous examples of standardized XML schema that allow one to easily digest more common forms of data such as contacts (vCard-XML), secure identity (SAML) BLOGS (Atom), etc.
There are many examples of useful information available in the standard XML formats including Yahoo! maps, e- Bay auctions, professional sports teams game calendars, etc.
Beyond the revolution in content and data, we believe service provider networks will eventually be accessible via web services APIs. This includes wireline and wireless networks, as the progression of VoIP standards promises to make the network an accessible resource of higher programming languages. Today, VXML is a good example where basic call and IVR functions can be accessed on a service provider network using a basic markup language.
Many other service provider networks already support call control or other resource manipulation through RPC type APIs. Some modern platforms like the popular Broadsoft Broadworks Application Server allow subscription to call information and manipulation of calls via a Web Services API.
While examples in this arena are not as plentiful as content examples, one need only look at some interesting developments like Voxeo’s IVR services, Cbeyond’s SIP trunking and converged fixed-mobile services or AOL’s plan to expose network call control to developers to gain an appreciation of the potential that exists for the managed services industry..
Conclusion
We believe that if a provider is simply building on the information of other providers, they’re a Web services company, not a true MSP. For example, in our view an eBay is a great Web Services company, but not an MSP. AT&T is a network service provider of tremendous scale, but it is without an application strategy, and therefore not an MSP.
To truly qualify as an MSP, a provider must provide both network and application integration, and in most cases will extend broad capabilities of service configuration and personalization to the users of the service. This demanding distinction makes MSPs a rare breed among service providers.
The good news is we are truly on the leading edge of a golden era of high-value managed services. The unique combinations of technological building blocks and new combinations of services – the mash up if you will – has created a new platform for the creation of new services and new capabilities. While the current list of companies one should consider a true MSP is limited, expect to see this change in a dramatic way in coming years.
Technology Toolbox for Managed Services
A host of new technologies are making new types of integration and improved user interfaces possible. These technologies present a ripe opportunity for managed services providers because they provide a programmatic way to use the resources of the underlying network (for example, like SIP does for the network integration plane.)
It’s not essential for a company to use all of these technologies or only these technologies to qualify as an MSP, but from our perspective these are the most interesting developments that are fueling innovation.
IP
Stands for Internet Protocol. A common network protocol that makes the convergence of disparate media (voice, video and data) on a single network infrastructure and the combination of many services into a single managed services bundle possible. It is the “lingua franca” of today’s network infrastructures.
SIP
Stands for Session Initiation Protocol. A simple, text-based protocol for IP communications session establishment that makes the creation and enhancement of voice, video, IM, gaming and other session-oriented communications possible.
XML
Stands for Extensible Markup Language. A simple and extensible means of communicating information between various Web-based applications and services – a standard way to describe information that’s exchanged between Web services. XML is extremely powerful because everything from calendar information to contacts to emails to documents can be appropriately labeled in an XML schema.
APP
Stands for the Atom Publishing Protocol. A replacement for Really Simple Syndication (RSS), APP is a simple HTTP-based protocol that allows one service to subscribe to another and automatically receives new, relevant information when available.
REST
Stands for Representational State Transfer. An emerging new tool, an architectural principal that represents the various states of an application in a standard URL format that can and often is combined with XML. This technology represents a replacement for an older generation of “APIs” that were based on remote procedure calls (RPC). Consider an e-mail platform based on REST: every e-mail on the server is represented as a unique URL with the content set forth in a defined XML schema. REST makes the use of that information very easy in other enhanced services.
AJAX
Stands for Asynchronous JavaScript and XML. AJAX is a web development technique for creating interactive web applications. The intent of AJAX is to make web pages feel more responsive by exchanging small amounts of data with the server behind the scenes, so that the entire web page does not have to be reloaded each time the user requests a change. This is meant to increase the web page’s interactivity, speed, and usability.
AJAX brings it all together with a whole new set of capabilities that allows an MSP to produce desktop quality web interfaces.
(About Chris Gatch)
Chris Gatch is the CTO and a founder of Cbeyond (NASDAQ: CBEY), a small business focused managed services provider that started in 1999 and is now publicly traded on the NASDAQ. Chris is a contributor to the industry effort to standardize SIP Trunking and serves as an editor of the SIPconnect technical specification published by the SIP Forum. He has served on the Service Provider Board of the International Packet Communications Consortium (IPCC), and he presently serves on the Board of the SIP Forum.
I just received a troubling message, sent by Pandora CEO Tim Westergren to the Pandora user community, about the fact that the Copyright Royalty Board has just dramatically increased the fees Internet radio sites must pay to the record labels. 
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