The emergence of convergence

One of the advantages of a technology such as convergence is that you can argue about what it means. Finding a definition for a platform means never having to explain yourself.

So what does this mean for convergence and the SME market? Today the market is still in its gestation phase, and like a lot of other IT markets, such as business-to-business ecommerce, there is not so much a market there as the promise of a market.

Small UK businesses like the idea of applications that can be delivered anywhere and at any time. They like unified messaging, they want to listen to their emails and read their voicemails. They want to video conference with their local plumber, but they don't want to have a converged server sitting in the corner of their office running their data, fax, financial and communications systems.

It's bad enough that non-technology SMEs have to go to bed every night having nightmares about all of their customer accounts disappearing into the ether, but at least when that happens they will be able to phone a reseller and beg it to put things right.

Service with a smile
So for the SME market, convergence is likely to remain a service based proposition. It is something that will increase as the application service provider (ASP) market matures, with services being delivered by the likes of BT and Cable & Wireless.

Scott Fletcher, managing director of Associated Network Solutions, thinks it is a very difficult sell with a number of factors mitigating against it. "There is little call for convergence at the moment," he said. "The market will really kick off in about 12 months' time. Then it will be driven by IP telephones that can plug straight into the network. At the moment, you have all the telephony guys looking at the network and all the networking guys looking at the telephone. The telephony guys haven't the skills to tackle the network and the network guys like us are waiting for the prices to come down on the kit and the daily service rates to go up."

Fletcher believes that the idea of running a PBX over an NT server is far fetched today because of reliability concerns.

The other thing working against SME sales is the fragmented nature of the market. In the US, even small companies employ between 20 and 30 people, with the resulting support infrastructure that is necessary to support this. In the UK, there are 150,000 small businesses, and the majority of these are one- and two-man bands. These companies are not interested in convergence, but they are interested in the hosted services they can exploit.

These sentiments are echoed by Duncan Crook, managing director at Equinox. He said: "Data users buy equipment, usually by brand, but when it comes to voice, who has ever heard of a switch manufacturer? They never buy on brand, they buy on service. They ask themselves 'Do I want to take an asset and technology risk?' Unsurprisingly, the answer is usually no."

The problem, and the reason the market hasn't caught on yet, is that most IT companies come at the convergence issue as if it was a technology problem. Although this may be a reflection on the industry as a whole, in convergence this can be a particular problem.

Improving the business
Businesses are interested in fixing real problems and are becoming wary of technology fixes for problems that they didn't even know existed. So the real issue with convergence is not defining what it is, but what applications will come with it to improve the business.

Unified messaging exists today in call centres up and down the country. Remote access exists today. You can dial up your email through services from companies such as Viveo, and although there are gaps in the service, it is effectively free. These are the applications people want. But what they are most likely to react against is being told they need a new IT infrastructure for the sake of an extra application or two.

What will spark the SME market? The world is inching towards widely available broadband access and there is no doubt about commitments from suppliers, but there are hurdles to be overcome.

This month, Oftel named the 14 local loop trial operators that will deliver broadband services via BT exchanges. In September, the companies will install equipment in selected BT exchanges, with services due for delivery by July 2001 or sooner.

The 14 selected operators are: Colt, CWC, Easynet, Eircom, Energis, Fibernet, First Telecom, Global Crossing, Kingston Communication, MCI Worldcom, NTL, Telewest, Telinco and Thus. Belfast, Edinburgh, Leeds and London were the locations chosen to test the strategy.

David Edmonds, director general of Oftel, said: "The significant progress made in a wide range of areas is a reflection of the strong commitment by the industry and Oftel to introduce local-loop unbundling as soon as possible."

Edmonds' sentiments are echoed by Will Kennedy, technical manager at ShiftF7, but he remains impatient for things to accelerate. "The demand isn't there at the moment. The rental of carrier equipment is far too expensive for the SME market. The technology is there, but asking someone to pay between £10,000 and £12,000 for a leased line connection is too much. Unbundling the copper loop will drive costs down and services will define the market. Future demand is there and we are looking at what we offer. Services such as integrated content management, database services, tracking and tracing and access are deliverable, and data is viewable from anywhere. Also, it isn't only large enterprises that want to determine call costing and production rates."

Another boost is the formation of the Broadband Content Delivery Forum (BCDF), also announced this month. The forum will address internet infrastructure and content, and look at service providers such as BT, the BBC, Hewlett Packard, AT&T, Sun Microsystems and AltaVista.

Anthony Alles, general manager at Nortel's IP Services and group leader of the BCDF, said: "In an era of free access, internet services will drive the business case for broadband providers, and soon personalised services will be a multibillion-dollar industry. To realise this vision, today's industry leaders must come together to build tools and technologies."

Moving Broadband Access to the Next Level, a white paper prepared for BCDF founding member Nortel Networks, identifies the SME market as one of the three biggest markets for broadband services. It says: "One point to remember is that three specific customer groups will benefit most from deployment and usage of broadband access over the next two years: residential, SMEs and telecommuters."

Going the ASP way
The paper recommends taking the ASP route to deliver services such as proactive IP security, customisable content filtering, priority IP traffic and premium virtual private network services.

Other opportunities will emerge from existing suppliers. In an initiative which is soon to be announced, Cable & Wireless (C&W) is partnering with Compaq to provide ASP services to SMEs. The companies plan a virtual IT department that will give SMEs access to a range of IT solutions for a monthly fee. Compaq is investing capital and personnel into the initiative, and will be providing the core infrastructure for the C&W data centres. The data centres will be located on the east and west coasts of the US, and in the UK.

While C&W and Compaq have teamed up to provide the data centres, IT infrastructure and service levels are necessary to compete in this new kind of ASP environment. Bill Whitehair, who is in charge of channel development for C&W in the US, says there is a huge opportunity for more integrators. "They can do a needs assessment and test customers' environments and get them to be ASP-enabled, converting their current applications and other services," he says.

C&W will initially choose integrators from Compaq's reseller sales organisation, and will also look at Compaq's accreditations as a starting point. Integrators will be paid on an agent-like basis, and there are plans to develop an authorisation process.

But Forrester Research claims the big risks are in the mobile space. In its report, Mobile's High-Speed Hurdles, it found that asked when they will roll out high-speed mobile data services as part of their business, 53 per cent of executives interviewed said that it would depend on market readiness, while 19 per cent said that they might not use it at all.

Lars Godell, an analyst at Forrester Research, said: "Hype from vendors such as Nokia and operators such as Orange indicates that European firms will get 2Mbps speeds on mobile devices and connect anywhere at anytime - all by 2002. But the reality is that gradual, uneven bandwidth upgrades will creep along and only city areas will see 2Mbps bandwidth speeds by 2007."

Enabling a high-speed future
In a call for mobile standards, Forrester believes that Europe's high-speed mobile future will be enabled by a series of mobile network technologies such as General Packet Radio Service and a universal mobile telecom system. These technologies will transform the way corporations serve customers, reach business partners and communicate internally, but only after they are widely standardised and implemented.

Of course, while the vendors talk up the market, the users will remain sceptical. But once the market starts to grow, networking professionals will have the big lead in this because IP will govern everything from SMEs to large corporate enterprises.

The applications that will emerge to capitalise on broadband access, and the scope for services, partnering, skills translation and extended markets, all point to one thing: if you are looking for a way to move out of product shifting and into services, start talking convergence now.

Conclusions:

• The market for selling convergence to SMEs is currently in its gestation phase
• Some observers say it will take off in about 12 months
• Unified messaging and remote access services are the nearest thing we currently have to SME convergent applications
• Ultimately, convergence will be a good source of service revenue for VARs looking at the SME market
• Vendors are prone to talking up the market