Verizon Business’ managed services hold key to its future

And in order to improve its managed services capabilities, Verizon Business has invested over $150 million in its Impact management platform, one of its major assets in managing customer network services, over the past two years.

Currently, Verizon Business manages over 3,700 customer networks in more than 140 countries, as well over 250,000 customer communications devices worldwide. The company has rolled out several new management services over the past two years, including telecom management services, a managed WLAN service and a WAN optimization service. And just last week it rolled out VoIP migration services for business.

Additionally, the company has acquired Cybertrust, a global security firm that specialized in services such as identity management, managed security services, vulnerability/threat management and security certification programs.

Security is king

For Verizon Business, the Cybertrust acquisition has been a key to promoting its managed network services, as managed security is expected to be a key market for managed services for many years to come. Data published by business research and consulting firm Frost & Sullivan projects that the managed security services will exceed $6 billion by 2011. Additionally, a poll conducted earlier this year by CompTIA showed that nearly one-third of 322 organizations surveyed planned to make new investments or increase spending on managed security services.

“Security is an issue where companies might not have the resources to comply with newer electronic data storage requirements,” says Amy DeCarlo, a principal analyst at Current Analysis. In particular, DeCarlo says that many companies have gotten major headaches from trying to comply with the electronic storage requirements for the Sabarnes-Oxley Act accounting regulations, for the Health Insurance Portability and Accountability Act (HIPAA) and for the new Federal Rules for Civil Procedure (FRCP). In those cases, says Nancy Gofus, Verizon Business senior vice president and chief marketing officer, having a group of longtime security professionals added to the Verizon Business team has been a definite benefit to the company.

“We’re finding that global enterprises, even if they don’t have to comply with U.S. laws, want to hold themselves to these standards,” she says.

Gofus also thinks that the Cybertrust acquisition has given Verizon Business a “global reach” in the managed security services market that they didn’t have before. Noting that two-thirds of Cybertrust’s employees work outside of the United States and that two-thirds of revenue generated by the Cybertrust division comes from other countries, Gofus says that Verizon Business can now provide “more complete” services to its global customers.

Forrester analyst Lisa Pierce shares Gofus’ view that the company’s investment in more security infrastructure is paying off, although she notes that Verizon “still doesn’t have the kind of security infrastructure that AT&T has.” A Forrester report released this summer also said that while the Cybertrust acquisition gives Verizon “a competitive offering” in the security market, the company “still has a long way to go before it can compete with a global presence” on par with competitors such as Symantec and IBM.

A question of managing LANs

Of course, security is only one of the managed services that analysts see as an important emerging market. With many companies switching from their traditional wire-line services to VoIP over the next few years, it will increase the challenges of running LANs. Because of this, says Gartner analyst Phillip Redman, many more companies will be looking toward the managed LAN services market, which Insight Research projected last year more than quadruple its revenues over a five-year span, going from $2.6 billion in 2006 to $11 billion in 2011.

Last summer, Verizon began offering its own managed WLAN service, which manages the performance and usage of the WLAN, monitors to help prevent unauthorized access or the attachment of rogue devices, and reports performance metrics. Additionally, Verizon followed companies such as Time Warner Telecom, Yipes and Broadwing in offering a virtual private LAN service (VPLS) that gave its customers access to a several of its WAN services, including its Internet and MPLS-based private IP VPN, as well as its Ethernet virtual private line and E-VPLS.

Getting into software as a service

DeCarlo thinks another key emerging product in the network management market over the next few years will be software as a service (SaaS).

“Software companies want to find new ways of delivering software to their clients, and they’re really taking to the SaaS model,” she says. “I’m betting that we’ll see Verizon Business getting into the SaaS market, and that AT&T will be doing a lot of work in that area as well.”

Earlier this year, Verizon Business launched the first offering in its SaaS portfolio by announcing that its Data Center Services arm would support Now Solutions‘ emPath application, a human resources application that lets businesses perform personnel functions over a hosted service. Gofus says that Verizon Business’ current function in the SaaS market is working as a back-office enabler for other companies’ software services. She says that the company does offer some software as services, such as a managed e-mail content provider that scans for viruses and inappropriate content, but that it doesn’t necessarily label those services as SaaS.

Managing mobility on deck

Gofus thinks that one area that will merit Verizon’s attention over the next few years will be managed mobility, as more and more companies will be relying on high-speed mobile broadband to transmit data. Currently, says Gofus, companies take many approaches to managing their devices, and many of them have greatly different protocols for password-protecting their devices or for wiping them clean of data in case they’re lost. Because managing several different mobile devices can be a major pain point for many companies, she says that many of them are asking carriers and others managed services companies to do it for them.

Brian Fenimore, director of global infrastructure for global transaction-system manufacturer MEI, says his company currently has no effective way to manage the security and network performance for its mobile users. A Verizon Business managed services customer since last June, Fenimore says that MEI has been very satisfied with Verizon’s managed WAN, LAN and security services, but adds that he’d like to see Verizon come out with a more comprehensive for mobile network optimization.

“If there was a way that we could more proactively monitor our mobile user experience, then that would be a help to us,” he says. “We really don’t know how to gauge the performance of mobile users other than having them come to us and telling us the network could be faster.”

Gofus says that while Verizon Business has been making strides in the mobile management market, she thinks the company has a long way to go before it can make a truly competitive offering.

“Today we don’t have as holistic a managed mobility offer as we’d like to,” she says. “No one’s doing this very well right now, and it’s still an emerging area.”

While Redman agrees with Gofus that managed mobility is a growing area, he’s skeptical that carriers such as Verizon are ideal for delivering such services. For one thing, he notes, many companies have mixed services that span many carriers. It would be difficult for Verizon to put up third-party offerings for managed mobility if their prospective clients already buy wireless services from several carriers.

Keeping up the good work

Overall, the analysts and customers give Verizon Business high marks for their enterprise managed services portfolio, both in terms of its product development and its marketing. Fenimore says that Verizon’s managed LAN, WAN and security services have been a great help to his company, which he says has a relatively small internal team of around 660 people. In particular, he says that Verizon’s managed network services have been crucial in optimizing his company’s WAN performance and freeing up additional bandwidth to make the network run more smoothly.

“We solicited bids from a lot of different companies, and Verizon won for a number of factors,” he says. “It wasn’t only their implementation of the services but their management of the services after the fact. Their expertise seems to be right on where we want it.”

DeCarlo thinks one of the company’s primary triumphs has been retaining so many former MCI employees, many of whom have expertise in managed network services.

“The way they’ve been able to pull together so many separate pieces has been very good,” she says. “Where the company hasn’t had the proper pieces in place, they’ve worked to go out and acquire them.”

Pierce, on the other hand, calls the company’s services and marketing “very effective but not perfect.” On the plus side, she shares DeCarlo’s view that Verizon has done a good job of incorporating several former members of MCI’s sales and management teams into its own business. On the minus side, however, she thinks that Verizon’s business contracts are both overly long and “treat the customer as the enemy,” and says in particular that the contracts’ pricing information is “full of language designed to protect Verizon from its customers.”

Looking forward, Verizon is expecting to expand its managed services portfolio to manage not only LANs and WANs but also other key pieces of IT infrastructure. As the rise of high-bandwidth applications makes managing IT more complex and expensive, and as high-speed mobile devices increase security risks for protecting corporate data, Verizon Business is betting that the demand for a broad array of managed services will continue to rise.

“Our message is that we’re managing so much more than just the network,” says Gofus. “We’re managing all endpoints, we’re managing security and we’re even managing applications themselves to make life easier for CIOs who are struggling with limited time and resources.”