Outsourcing Support and Services for UC Vendors
The business communications industry is a continuum of innovation and transformation. While much of this comes from the very large players, increasingly smaller vendors are providing key parts of the overall transformational solution. For these smaller vendors, the challenges of participating in the market are daunting. Not only do they have to innovate to create differentiated product offers, they also have to staff to deliver those solutions to enterprise customers that expect a high level of availability and service.
Over the years, new industries have developed to reduce the barriers to both entry and sustained positions in the market. Beginning in the mid-1990s, the actual manufacturing of hardware components for a business communications solution moved from vertical integration to horizontal components in a multi-vendor solution. While many of the telecom vendors made this transition, for many new high-tech companies the use of a partner for manufacturing has been the business model from the beginning. As large outsourced manufacturing companies like Foxcon, Sanmina, and Flextronics increased their volume across all electronic manufacturing, the advantages of using a manufacturing partner became significant. In fact, the vast majority of hardware in business communications is manufactured using a partner today. While companies used to operate manufacturing themselves, the new term is "Supply Chain Management," having a partner with scale and volume capability to positively impact the operations process and increase margins and profitability.
The next stage of partnering for scale is the movement of the delivery process to a partner. Companies like Avnet enable their partners to outsource the actual delivery process, with Avnet taking on the sourcing, inventory, configuration and delivery of components. This allows the vendor to focus on the key differentiators of software and innovation. Where managing the manufacturing process is Supply Chain Management, for vendors the new capability is managing the distribution chain from the finished product to the customer. This new partnership is being defined as an overall Design Chain Partner Management.
The value in partnering with a Design Chain Partner like Avnet extends to the post-delivery support as well. After a product or solution is delivered, on-site services are required, in addition to traditional support activities including problem solutions, escalations, bug fixes, warranty, and support releases. Just as the high tech industry has moved to provide manufacturing and now delivery, support is also being incorporated into these partnerships. I recently had a conversation with Avnet's John Marinick, Director, Solution Services - Embedded. John is actively working with a number of business communications companies to take on their entire support services infrastructure, from warranty through tier 4 problem escalation. He believes there are key advantages to using a company like Avnet to provide these services, such as 24/7 support. His team has the depth of expertise to manage support issues in the increasingly multi-vendor and multi-technology world of today's solutions.
The evolution of the support aspect of the business to a partner continues the transformation of the overall design and delivery chain from a vertically-integrated system to a system incorporating key partners. In the past, entering a market required an organization and substantial investment to manage all of the delivery aspects. The new emerging model is an overall design/delivery process comprised of three key components: supply chain, distribution chain, and support chain. By partnering in each of these areas to deliver an innovative technology or solution, companies can focus on the development and innovation rather than the traditional business process steps. By having an overall Design Chain Partner, the entire process can be managed by an organization with the scale and relationships to maximize results while minimizing overall costs.
The value of using an overall Design Chain Partner is clear. The scale of the providers enables smaller companies to enter the market quickly, while enabling larger companies to manage costs. The success of outsourcing the supply chain is evident in the overwhelming percentage of products produced through this model. The acceleration of using an overall distribution chain is becoming more evident in the number of vendors making the transition. The value of the support chain will be defined by the quality of service and resulting customer loyalty.
The key question is whether the scale attributes of the potential partners will outweigh the challenges of being one step removed from the actual company. The keys to success of this emerging model are twofold: the companies providing the service must have the scale of capabilities and knowledge to provide outstanding support, and the vendors using these services must provide the same level of management of these new support chains as they have for their supply and distribution chains. The impact on end users, the channel, and consultants should be more innovation, new companies, and hopefully, better overall support of the resulting solutions.
This paper is sponsored by Avnet.