Qwest Teams with IBM for Mid-Market IP Network and VoIP Management Services

| Jun 18, 2009 | Business Network Services - U.S. | Competitive Intelligence Report

| Analyst: Brian Washburn

Current Perspective: Slightly Positive
Vendor Importance: High
Market Impact: Low

Event Summary

June 17, 2009 -- Qwest has entered into a five-year agreement to offer IBM's network management, unified communications (UC) and managed security services for mid-sized businesses. IBM's UC and network management services are powered by IBM Express Remote Management Infrastructure Service (ERMIS), which monitors data network performance, proactively identifies issues, notifies customers and initiates resolution. In UC, ERMIS provides remote monitoring, reporting and management for deployments of up to 100 IP phones.

Analytical Summary

• Current Perspective: Slightly positive on Qwest’s decision to team with IBM to use the latter’s Express Remote Management Infrastructure Services (ERMIS) network management solution, because the partnership looks behind the services themselves to integration with the Qwest Control portal. The partnership adds functionality the carrier needs to keep up with competitors' managed network services improvements. IBM should be a strong partner, but Qwest has only announced the partnership – actual services are still some indeterminate time away.

• Vendor Importance: High to Qwest, because the carrier benefits from better differentiating its IP services including VoIP in the mid-market. Qwest has succeeded in the mid-size and smaller enterprise segment through a combination of a complete portfolio, low prices and attention to customer service. The carrier wins if, through IBM, it can add managed network and managed VoIP services that let mid-market customers effectively offload IT functions including IP router and/or IP voice administration.

• Market Impact: Low on competing providers because Qwest is playing catch-up to advanced customer portal functionality that AT&T BusinessDirect, Verizon Enterprise Center and Sprint Compass provide. IBM's ERMIS applications appear powerful and potentially feature-rich, but its success hinges on how well the applications are integrated with Qwest's systems and processes, and with the Qwest Control customer portal. Qwest appears sensitive both to pricing, and to giving its sales force strong incentives to push the new, co-provided products into the market.

CLIENTS ONLY

Current Perspective

Competitive Positives and Concerns

Recommended Vendor Actions

| Client access - Full report in Business Network Services - U.S. | More information

Recommended Competitor Actions

• Other carriers should approach IBM to discuss what sort of arrangements the company expects for its ERMIS Network Management Services and Unified Communications Services. Whether or not these carriers see a partnership with IBM as right for their needs, they will gain insight on the agreement between IBM and Qwest, which could be used to help formulate a competitive response strategy.

• Verizon Business, Sprint and AT&T can highlight performance management applications, as well as other applications available as part of their respective customer portals, available right now. These carriers need to make sure that their smaller mid-market/multi-site customers have access to these feature-rich tools; if mid-market customers only have access to AT&T Onward Small Biz and Verizon Small Business Center, then Qwest/IBM ERMIS Network Management Services offers a much more powerful solution.

• Competitors can position IBM ERMIS as applications riding over the Qwest network, with IBM as a value-added reseller or SaaS provider rather than comprehensive service partners. They can caution that IBM and Qwest have only announced their plans: They have not yet disclosed when the service will launch, and there are stumbling blocks between vision and implementation.

• SMB/mid-market VoIP competitors will need to keep an eye on IBM ERMIS Unified Communications Solution. Qwest and IBM have focused the solution on the Cisco Unified Communications 500 platform. Competitors can say that despite the name, it is not a true UC platform, and what customers are actually getting is a run-of-the-mill managed PBX service.

• PAETEC and other providers of managed network services targeting mid-market businesses can show off the personalized touches of their services relative to what an IBM and Qwest might ultimately bring to the table. PAETEC, for example, can tout a top tier of its Managed Router Support service that lets customers correspond directly with engineers at its NOC. This is in contrast, to the IBM/Qwest solution, where even if customers were allowed to correspond directly with IBM's NOC, they are not speaking directly with Qwest.

Recommended End User / Customer Actions

• Qwest and IBM to date only have announced their intent to cooperate to launch services. Until the two companies bring the actual services to market, customers cannot take any action at this time.

• Qwest has a great deal of monitoring and management functionality without IBM. Qwest offers managed IP telephony and managed router services, though to date these services have been directed at larger, enterprise-class customers. Though not cutting edge, the Qwest Control customer portal is quite capable in its own right, with status and network reporting capabilities, a configuration manager and trouble ticketing interface. IBM primarily will extend more advanced monitoring and management functionality to smaller mid-market customers.

CLIENTS ONLY

Current Perspective

Competitive Positives and Concerns

Recommended Vendor Actions

| Client access - Full report in Business Network Services - U.S. | More information

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