Making the Most of Value-Added Partnering 

Almost all CLECs are seeking an extra edge that will distinguish them from their competition. One such potential edge is to take advantage of value-added partnering, which we discuss in this column.

At the recent Fall Internet World conference held in New York City, there were more than 1000 exhibitors showing their wares. Many of these companies represented possible value-added partners for CLECs. However, the task of sorting through the many exhibits was daunting, and frankly, nearly impossible.

With whom MIGHT you wish to partner?
A good place to start is to understand the needs that you want to address through value-added partnering. I define value-added partnering as using other companies to fill in your product and service lines for your sales force. For example, in addition to offering T-1 access services to your customers, you may wish to provide a bundle that includes Internet connectivity and Web hosting. In this case, an outside partner such as Verio, Exodus, Genuity, or others may provide the Web hosting portion.

Let's start by considering your clientele. Who are your customers today? Can you segregate them by industry or SIC code? Geography? Size in terms of revenues, personnel, customers or some other measurement? By considering who your existing customers are, you can then attempt to find complimentary products or services from value-added partners that can complement your offerings. Remember that the best source of new revenue is existing revenue. Your customers already do business with your firm, and new services that they had not previously considered may be attractive to them.

After you have analyzed your existing customer base, further consider the concentrations in the regions that you serve. For example, in certain regions, there may be a large number of pharmaceutical companies, or publishers. What communications services are these companies seeking? This can be determined through a variety of means including participation at local Chamber of Commerce meetings, telephone surveys, or simply gathering information from your sales force.

As a CLEC, you have the ability to evaluate potential partners, try out their products and services, and when appropriate, create an arrangement whereby your firm can private label the services to your customers. The advantages are clear - you do not need to "reinvent the wheel," you add value to the services that you already sell to your customers. In this way, you can respond to their business needs rather than selling simple commodity services, and can generate added revenue.

Once you have an idea of what might serve existing and potential customers, you can begin to identify groups of products or services from which to seek value-added partners. Some of the categories that I believe are most interesting to CLECs include collaboration tools designed for interactive sessions between internal and external customer groups, e-commerce partners, and network security.

Collaboration as a Value-Added Service
The Internet has impacted businesses in many ways, but arguably, one of the most significant is the opportunity that it affords for people to remain remote rather than needing to be located at the same facility. Electronic mail and the ability to exchange files is a part of this, but real-time interactivity is still essential.

Collaboration tools have been evolving over the past several years, starting with ones like Netscape's Collabra and Microsoft NetMeeting. Those have been followed by today's generation including those from WebEx, Evoke Communications, and others. Vialog Web Conferencing allows businesses to collaborate, conduct meetings, make presentations and share software applications in real-time, without the need for costly travel or special facilities. With these services, product teams, research groups, and executives can work more efficiently with co-workers and share visual materials, documents, and audio/video files, and control these collaborations via the Web. Overall, collaboration and Web conferencing tools can be an excellent addition to your portfolio.

E-Commerce
Electronic commerce covers a very wide range of potential offerings. These include Netscape commerce servers, IBM Domino, and many others. It also may include on-line storefronts, auction sites, and e-commerce streaming from companies like e-Media.

Another major e-commerce issue facing larger online sites is the interface between the Web and the mainframe computing environment. This is typically referred to as "middleware" and some of the companies addressing these issues are Bluestone Software, BEA Systems, and IBM.

Electronic commerce can be tremendously valuable to CLECs as a value-added service. Once again, the key is to identify what e-commerce means to you and your potential customers, and then select the right partners.

Network Security
We have discussed network security before in this space so we will not go into great detail on it here. Suffice it to say that network security represents multiple opportunities for CLECs to partner with value-added partners. These include consulting organizations that provide network security policy and planning services, hardware providers (including firewalls, authentication tokens, biometric scanners, etc.) and software providers offering encryption, certificates and so forth.

Keep in mind that you may be able to offer these services on a per unit basis or by subscription. The latter is referred to as managed security services and allows you to charge a regular monthly contractual fee. This can be an easier way to offer security services for your customers and obtain a continuing source of revenue. In any case, network security represents a substantial untapped opportunity for additional revenues.

Concluding Thoughts
Simply picking good products or even good partners will not guarantee success. You must start by understanding your own organization, markets, and objectives. Once you have done this, the potential Internet-related partners are there for the picking. The key then is to pick the right ones for your company.

Joel Maloff is founder of Maloff Group International, an Internet business consulting organization. Maloff has been an executive in local exchange and interexchange telecommunications since 1973, and has been involved in various aspects of the Internet since 1987. Maloff is the author of four books and hundreds of articles regarding Internet.