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What’s selling on the networking front? The answers may surprise you. Leading network integrators are succeeding with unique Voice-over-IP (VOIP) strategies, targeted wireless LAN initiatives, new software partnerships, and virtual sales forces that span multiple companies.
Written by Joseph C. Panettieri, Contributor
When Networld+Interop pulls into Atlanta this week, thousands of attendees will search the show for signs of an economic upturn.

It may not be a pleasant trip. The economic slowdown has derailed dozens of networking companies in recent months. 3Com (4,200 layoffs), Cisco Systems (8,500), Lucent Technologies (40,000) and Nortel Networks (30,000) all have slashed staff to restore profits.

Despite stealth networking initiatives from companies like NEC, few industry pundits expect a quick recovery. Cisco CEO John Chambers says business is finally starting to stabilize, but 3Com CEO Bruce Claflin is very pessimistic about a near-term economic rebound.

Time for an exit strategy? Not quite. Although money is tight, customers continue to embrace initiatives that offer a quantifiable return on investment. "It’s not as if IT spending has gone from billions of dollars to zero," quips Janet Perna, general manager of data management software solutions at IBM. So, what’s selling on the networking front? The answers may surprise you. Leading network integrators are succeeding with unique Voice-over-IP (VOIP) strategies, targeted wireless LAN initiatives, new software partnerships, and virtual sales forces that span multiple companies.

Follow the examples below, and you might get your business back on track long before the economic slowdown ends.

Much like the dot-com implosion, VOIP networks have generated lots of hype and little profit. Sources say high schools and colleges in California, New York and Texas all have scrapped VOIP pilot projects because traditional voice networks proved far more reliable.

Still, VOIP will get a lot of attention at NetWorld+Interop, and the technology certainly has a place in corporate America.

Just ask Expanets, an integrator that has worked on several successful—and rather unique—VOIP projects, notes Christina Allen, a regional marketing director who works in Expanets’ Amityville, N.Y., office.

"So far, our revenue is roughly flat compared to last year," says Paul Anthony, VP of sales at Expanets. "July was a great month, and August came along nicely. I think we’ll see an upturn in Q3 and Q4, because we have a big pipeline [of work to perform]."

One of Expanets’ current projects, for the State Bank of New York, calls for a VOIP network spanning 18 offices. Instead of focusing on the desktop, the bank embraced VOIP for its wide area network (WAN) connections. Using this approach, the bank won’t need costly point-to-point T1 lines for its interoffice phone systems. Instead, the VOIP system will consolidate voice traffic onto the bank’s frame-relay network, says Peter Marquis, regional director of data solutions at Expanets.

The Bank used CSI Group, an independent consulting firm, to handle the RFP process. Early options included VOIP systems from Avaya, Cisco and Nortel, but none of them fits the bill. Avaya proved too costly; Cisco’s Avvid technology failed on reliability; and Nortel failed to meet the bank’s bandwidth requirements, according to a source close to the RFP process.

Enter a PBX phone system from NEC, known as the 2000 IVS2. Using NEC trunk cards, Expanets linked the PBXes with the bank’s Cisco 2600 and 3600 routers. Six branch offices are on the VOIP system; two to four more sites are expected to come online within a few months, according to Expanets’ Marquis.

All told, the NEC solution cost about 30 percent less than Avaya’s alternative and was far more reliable than Cisco’s product line, says one consultant who took part in the RFP process.

As you seek to master VOIP, be sure to spend some time evaluating your software partners. The reason is fairly simple: Without applications that crave bandwidth, network integrators are a useless bunch.

Amir Sohrabi knows that fact well. As executive VP for strategic alliances at Managed Solutions Planning Xperts (MSPX), Sohrabi is inking partnerships with niche application developers, which promise to drive demand for MSPX’s network solutions.

Smart move. The applications market has held up fairly well during the economic slowdown. Year-over-year sales of IBM’s DB2 database, for instance, have grown roughly 20 percent in recent quarters, according to IBM’s Perna. That success can be traced to strong sales of DB2-based apps from PeopleSoft and Siebel Systems.

"Application developers don’t want to get their hands dirty with networking stuff," says MSPX’s Sohrabi. "That’s where we come in. When a developer wins a contract for an application, we’re on board to provide the network plumbing. The trick is identifying the right developers with which to partner."

Located in Vienna, Va., MSPX works closely with niche vertical-market software developers. But MSPX’s alliance strategy doesn’t end there. The company also has close relationships with Compaq Computer (for servers and storage systems), Enterasys (network switches, wireless LANs and security), InfoLibria (content management) and 3ware (storage over IP).

Going forward, MSPX hopes to create a virtual sales team that spans each of its vendor partners. For instance, MSPX sees natural synergies between 3ware and Enterasys, because 3ware customers need Gigabit Ethernet pipes for their storage networks. "Ideally, we can aggregate all three sales forces to go after new business," says Sohrabi.

In this market, nobody wins alone.

Of all the technologies on display at NetWorld+Interop, wireless LANs will likely grab the biggest spotlight.

Despite some lingering security concerns, customers are flocking to wireless LANs because of improved standards like 802.11b, which guarantees basic interoperability between multivendor products. Sales of wireless networks are expected to grow from $1 billion last year to more than $3 billion by 2005, according to International Data Corp.

Wireless LAN evangelists include Catalyst International, a supply-chain software specialist that works closely with Symbol Technologies.

Catalyst isn’t immune to the economic slowdown—Q2 sales fell 30 percent to $7.8 million—but the company was lining up some promising wireless LAN contacts as this story went to press.

Catalyst develops warehouse applications that help major retailers move and track products through their supply chains. SAP holds a 10 percent stake in the company.

"We’re clearly in a slowdown," concedes Jim Treleaven, CEO of Catalyst. "The quality of prospects in our pipeline remains good, but the buying cycle is longer."

In order to shorten that cycle, Catalyst is targeting its existing Fortune 500 customer base with new services, rather than minor network upgrades. "If it’s a minor upgrade, most customers will delay the purchase and make do with what they have," says Treleaven.

Most of Catalyst’s big customers have large warehouses with open floor space and no interior walls in which to run network cabling. As a result, 802.11b wireless networks often are the only way to deploy Catalyst’s supply-chain software to mobile warehouse workers.

The Latin American market remains particularly strong for Catalyst. CEO Treleaven says the company won a major 802.11b deal in Latin America a few months ago and expects to secure an even bigger deal in Q3. Many projects like this involve Symbol’s wireless LAN hardware, he adds.

Catalyst is working overtime to maintain its close ties to Symbol. Jeff Frailey, director of enabling technologies at Catalyst, speaks with his Symbol counterpart two or three times a day.

"On large deals, we’ll solicit sponsorship from Symbol," says Frailey. "That has helped us win business, particularly with a customer in Brazil. We’re typically working on several projects with Symbol at any given time."

Catalyst isn’t alone in the wireless market. Integrators like Select Inc., Advanced Technology Solutions (ATS) and Luna Communications each report strong demand for wireless LAN solutions.

ATS, for instance, recently won a contract with a major manufacturing company that needed mobile network access in one of its plants. "We recommended a Proxim Harmony 802.11b wireless network infrastructure for the entire facility," says Larry Hicks, director of ATS’ network and systems integration practice.

Luna Communications is winning similar contracts. The San Jose, Calif., integrator works closely with Proxim and Cisco to target the health care, financial services and enterprise markets.

Given the current economic climate, Luna is keenly focused on its existing customer base and is aggressively seeking new partners. "But we’re much more selective when it’s time to ink a formal partnership," says Luna CEO Gary Moon. "We want to make sure they’ll be around for the next two years."

In this economy, only the smartest networking partners will stay on track. II

  1. Get certified to install 802.11a or 802.11b wireless LANs. 3Com, Cisco and Proxim all offer training in this area.
  2. Partner with niche software developers. Many developers win customer contracts that require outside network-integration skills.
  3. Speak with your five closest partners every day; explore new business opportunities with those partners at least weekly.
  4. Hedge your data networking bets; explore partnerships with voice veterans like Avaya, Lucent and NEC.
  5. Explore potential business in Central America and Latin America, where networking sales remain strong. For basic advice, attend Comdex Mexico (June 4-7, 2002).

Integrator: Expanets

Specialty: Voice and data network integration

Key Partners:Avaya, Cisco, Lucent, NEC

Revenue: US$1.4 billion

Employees: 4,000+

Recent Victory: 18-office network for State Bank of New York

Winning Tip: Deploy VOIP on data backbones to eliminate costly T1 lines

Integrator: MSPX

Specialty: Cradle-to-grave network solutions provider

Key Partners: 3ware, Compaq, Enterasys

Employees: 80+

Recent Victory: Wireless 802.11b network for medical customer

Winning Tip: Partner with software developers to network custom apps

Integrator: Catalyst International Inc.

Specialty: Supply-chain solutions provider; software developer

Key Partners: Hewlett-Packard, IBM, Oracle, Sun, Symbol

Revenue: US$42 million

Employees: 250

Recent Victory: Wireless 802.11b networks and applications for major Latin American retail warehouse

Winning Tips: Target Latin America; speak daily with core partners

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