Public sector joins the race
It may have the reputation of lagging behind the private sector in terms of taking up new technologies, but the public sector is now making up lost ground with its adoption of converged solutions, writes Martin Lynch in part four of our five-part series
Under pressure. Just like the song, the public sector is under pressure from all fronts. It is expected to change: to become more efficient, more open, more costeffective, more secure, more flexible and more communicative.
These aims may sound conflicting, but there any number of government initiatives underway to improve the public sector. But the one thing most of the initiatives have in common is that they will be using technology to help achieve part or all of those objectives.
Near the top of the list of required technologies are converged solutions. These range from a myriad of IP-based communications to mobile solutions and newer hybrid fixed/mobile offerings. Still, convergence requires a fundamental shake-up in how things are done, and the public sector tends to embrace change slowly.
On the whole, it has never been the quickest of markets to adopt new technologies, lagging behind the private sector, often by years. Not all of the public sector moves at the speed of a snail, but much of it does, because IT skills tend to be stretched, buying controls are very tight, and the decision-making process is longer, because making mistakes in the private sector does not create a fraction of the embarrassment, anger or media frenzy that wasting taxpayers’ money does.
Add to that an entrenched way of working and many layers of management red tape, and you have a many-headed beast that is simply not built for speed. Converged solutions, on the other hand, are at the cutting edge of technological development, undermining everything that is seen as safe. So how open is the public sector to converged solutions?
“It is becoming a lot more open now,” claims Dave Willet, director of public-sector business at vendor Avaya.
“Traditionally the public sector is seen as a ‘laggard’ in the market in general, but it has been fairly rapid to pick up the slack.
“It hasn’t been particularly slow to catch on in convergence and has been quicker when it comes to IP telephony and CRM than other applications. In those areas the market is moving very quickly. But it’s a lot to take on, because the public sector is going through a leapfrog phase: going from very simple and old telephony systems to the modern IP-enabled systems of today.”
Matt Dibben, channel manager at voice over IP (VoIP) software vendor Swyx, agrees that the public sector is very receptive to converged solutions.
“It seems to be very open,” he says. “The associated benefits of the technology have driven the public sector’s take-up, and allowed it to achieve other goals. It has not been slow on this front.”
Dibben says that in his experience, the private sector is more wary than the public sector, and it tends to shop around a lot more.
He adds: “For some years the public sector has recognised the value of certain technologies: overhauling data networks for instance. Many public-sector customers have already put in robust LAN and WAN infrastructures in recent years, so adding voice on top of this is not that difficult. So far, VoIP is definitely the most popular converged solution.”
Rob Bamforth, principal analyst at research firm Quocirca, still believes that the public sector does, as in other areas, lag behind the private sector in convergence take-up so far.
“It’s not that there’s less money to spend [in the public sector] – sometimes there is more – but quite often there is a lack of knowledge, expertise and experience,” Bamforth says.
“There are often limited IT departments, and they spend a lot of time fire-fighting on day-to-day problems, rather than looking forward. This limits the amount of time they can spend on looking at new technologies and how much time they can spend doing comparative work.
“Also, the roll-out of mobile technologies is happening, but not at the rate of what’s happening in the private sector.”
Jim Robertson, sales manager at distributor MTV Telecom, believes things have picked up quickly this year in the public-sector convergence space.
“From the feedback we get, VoIP is certainly growing quickly,” he says. “It’s opened up a lot over the past 18 months, and in the past six months we’ve seen a very sharp increase in VoIP sales in both the private and public sector.”
Robertson adds that in government organisations and health authorities a co-ordinated take-up of convergence technologies is now taking place.
He says: “[These areas of the public sector] are implementing converged solutions in their vertical-type markets, whereas in the private sector this is happening right across the board, and mainly in SMEs because, in part, they have little investment in traditional telecoms infrastructures.”
In technology terms, VoIP seems to be the one that has been embraced the most, although others are set for wider acceptance in the coming years.
For some time wireless data communications have taken off strongly in the public sector. Thanks to the growing proliferation of Wi-Fi networks, devices such as PDAs and laptops have become truly mobile, letting staff stay in touch while on the move.
With the arrival of widespread broadband and IP technologies, the merging of voice and data functions, as well as the migration of voice services onto the internet backbone are well underway. The Holy Grail for many companies is the merging of phone, IP, data and wireless offerings into one, but this is still some way off.
“Mobility, as an umbrella term for different technologies, has become a growing market,” Bamforth says. “Whether local authorities are extending their technology out to where people are actually working, or health authorities are implementing mobile communications via Wi-Fi, there is more emphasis on converged solutions.
The public sector is under pressure to reduce costs and cut spending, so technologies such as VoIP are seen to help, Bamforth adds.
He says: “Whether this is true for all customers depends on their level of investment in the underlying infrastructure, like broadband bandwidth. In the remote networking concept, VoIP can help by integrating home-workers into the network easily, by saving on the lack of infrastructure costs.”
VoIP is the current star of the convergence market and will be used as the platform for many other converged solutions. A quick glance at the sales of IP infrastructure equipment shows that the current and long-term shift is towards VoIP.
Research company Infonetics Research recently published first-quarter figures for the network, IP and telephony markets. Despite a seasonal lull in Q1, the writing ison the wall. Sales of IP-PBX revenues are up and there is a steady move away from circuit switching technology to packet switching technology.
Annual revenue in the combined PBX market is forecast to grow to $11.4bn in 2009, driven by strong IP-PBX sales as organisations move to VoIP. The analyst forecasts that between 2005 and 2009, IP-PBX revenue will jump by 82 per cent, while Time-Division Multiplexing revenue will plummet 88 per cent.
Broadly speaking, VoIP can reduce hardware, administration, training and maintenance costs, as well as the follow-on reduction in phone charges through a partial or total switch to VoIP transmission. But obviously, you need to know what you want to achieve first.
Bamforth says: “VoIP can drastically reduce costs, but you need to know where your telephony costs are coming from before changing anything. They need to know whether they are mainly internal calls, branch calling costs, local or international calls, although international calls are less of an issue in many areas of the public sector.”
According to Robertson: “There are a lot of VoIP implementations going on now, with real sales growth in the soft switch VoIP market. Broadband carriers will focus a lot more on VoIP too.”
Mobile operators will make an impact with fixed-mobile convergence (FMC), and one of the big drivers for converged solutions is BT’s 21st Century Network, which scheduled to launch in the not too distant future.
FMC is seen as ‘the next big thing’ in the converged space. Here, wireline or fixed telecoms services are combined with mobile phone services into one managed service. The market has so far been driven by mobile operators and telecoms companies.
Willet says: “FMC is one of the so-called hottest converged offerings. Whether the user is on a mobile phone, sitting at a desk, working with a softphone, at a branch office, hotel or at home, they have many of the same facilities they would have at their regular work desk. There are some constraints with regard to the actual device used, but the experience should be seamless. It shouldn’t matter how they are connecting.”
And according to Robertson: “The mobile carriers will make an impact with FMC.”
Voice solutions always used to be the domain of voice specialists, but the arrival of VoIP has opened up the voice market to resellers that have networking and internet skills. But is it worth tackling the public sector at this stage? Dibben thinks so, but it’s not all plain sailing.
“There is a fantastic opportunity if it is done right,” he warns.
“Where a lot of channel partners go wrong is that they chase tenders they have no right to be going after in the first place. They are often chasing projects that are too big.
“A reseller’s public-sector strategy has to be a long-term one. You have to build your business by success and referrals. Many public-sector customers will not spend money on projects, even on small ones, with an unknown partner.”
Robertson agrees. “Resellers have to understand that the sales cycle tends to take longer, but what the reseller tends to enjoy in the public sector is that once they are in, the customers tend to show a lot of loyalty,” he says.
“The referral business is quite good. However, you cannot just get into this space quickly. You need to invest. Even some of our smaller resellers are successful in the public sector with some working on lucrative contracts for the past few years, often with larger partners. For the smaller reseller, getting in with a larger player is key as they do not have all the skills they need.”
Willet believes you get out what you put in. “The sales cycle is generally slower because they have to go through due process and prove they are delivering the best value, while contracts above a certain value have to go through certain mechanisms,” he says.
“As long as you work it all through, it will happen, but it is not a ‘quick kill’ space. It needs nurturing. It’s not even a case of presenting this month and getting an order next month, like in the private sector. Even small and medium-sized contracts take a while.”
“It’s a good place to get into for channel players,” Bamforth says. “Vendors are pretty good at understanding their product area, but they are pretty poor in cross-functional areas. They are narrowly focused. The end-user is usually looking at problems they have and solutions to those problems.”
Often end-users need broad solutions, Bamforth adds. Therefore the language they use is broader.
He says: “The channel can fit in here to bridge that gap and tie together different solutions that make sense to the customer.
“The old-fashioned VAR understands the business side of it, more so than the technology. It’s not just technology they need to be aware of, but also business awareness, where they have local knowledge or sector knowledge. The fact that they can offer combined solutions is almost secondary to their skill at communicating directly with these customers.”
And there lies the rub. Resellers that can offer solutions, rather than blitzing customers with a barrage of the latest whizz-bang VoIP tech-speak, will do well. It all comes down to language. The tech-heavy sell might wash with private-sector IT departments, but public-sector customers start with problems or goals that need solutions, not the latest gadget on the block.
According to Willet: “The material coming out of vendor marketing departments is all about increasing sales and getting more calls into call centres.
“These are all bits of language that are alien to the public sector. Resellers need to be talking efficiency and staff retention and serving the public better. They need to use the language that the market understands because they have very different drivers.”
But Willet adds that this situation is changing.
“Some public-sector organisations are very clued up,” he says. “They recruit top staff or are getting educated. You have to take your hat off to those that recruit the right people from the private sector to help roll out good solutions. We are seeing that more and more.”