Ready or Not – Here They Come!

Last week Ericsson and Cisco announced a “next generation strategic partnership” that will enable collaboration and cooperation in the definition, delivery and support of business services in the enterprise. In the interest of full disclosure; the briefing that was given to analysts didn’t emphasize enterprise services as the impetus for the partnership but the speakers did share the elements of the agreement and from what I’ve seen this arrangement clearly puts the partners in a position to target the enterprise.

Even the agreement, not an acquisition or a merger but a partnership, speaks to the desire to  accelerate time-to-market for new business services without having to wade through lengthy regulatory reviews or the always painful merging of assets. These companies want to go to market now. 

And enterprise customers are tired of waiting.

Every one of the 1003 enterprises from around the world that were surveyed by ICT Intuition want to buy digital services, yet only 14% are actually buying those services from traditional telcos or network operators. Buyers are looking everywhere and a slight majority are choosing IT vendors because they deliver the applications, but then there is the systems integration and maintenance and licensing required to pull it all together. And businesses don’t want that. They want to buy a fully formed service that includes everything they need – no IT, no expensive integration, no infrastructure to maintain and no hassle.

To date, the challenge for enterprises is that the communication service providers that they trust (98%) are only offering pieces of a solution. So here comes Ericsson and Cisco with a real alternative because they understand how to serve enterprise customers at scale:

• The companies have global scale for operations, sales and support
• The companies understand how to scale both the network and IT elements necessary to build end-to-end digital services
• The companies already manage large scale IT and network operations as-a-service
• The companies are well established and well regarded
• The companies have agreements in place with nearly every network operator, data center operator and systems integrator

Granted, these are not the only two companies that can put together an alliance to sell business services but since they come from the network discipline they pose the most immediate threat to legacy service providers and network operators. And the other big IT and network companies aren’t far behind.