The telcos are coming!

Working with the new boss

It is worth noting that Orange, Optus and Telstra have the in-house capability to do almost anything.

One telco strategy for the SME appears to be similar to the manner in which Telstra employs contractors to install and maintain phone lines. The customer is Telstra's, but the labour is outsourced. Once independent, resellers could find they have a new master.

Some already have experience at working under the telco mantle. Brisbane-based TT Group Communications won Telstra Enterprise Channel Dealer of the Year for its work with Australia's top 1500 companies in voice, data and AV services.

CEO Bob Bishop knows where his business fits in the gaps between the telco's limitations. "We're a good fit with a telco that has a customer that wants to go beyond the standard off-the-shelf," says Bishop.

TT Group Communications is positioning itself in the twin roles of IT adviser and telco services delivery, as the latter looks like becoming a permanent fixture in the channel, according to Bishop. Telcos ignore IT services at their peril.

"There's no doubt bundling is here to stay. If you're out to sell carriage only and you can't put applications around it, you back yourself into an option on price.

"I've got no doubt the carriers will continue to bundle applications and product with carriage; they'll move into cloud computing where they can control the variables more tightly. But companies need help to find out what's available and then to implement, manage and support it."

While Telstra and Orange are taking the reseller channel down the contractor/installer route, Vodafone is looking for an outsourced sales force. NetStar has an exclusive, nationwide installation and maintenance contract for all Business One systems.

"It's important for us to control the quality of the customer experience. We couldn't have multiple parties doing customer support and installation," says Vodafone's Page.

Business One requires IT resellers to learn not just about selling mobile services; they have to adapt to a different business model. Instead of making money on services such as installation and servicing, the IT reseller receives a big upfront commission and an ongoing trailing commission.

In some cases resellers might appreciate getting paid by a telco as a contractor rather than having to manage an address book of customers. A common weakness in resellers' business models is getting money, says Mathew Dickerson, owner of Axxis Technology, a Dubbo-based reseller.

"A lot of resellers get hung up on admin and billing and chasing bills. If you got 70 percent in your bank account and didn't have to do the billing" maybe that would be a better business model, says Dickerson.

The telcos' transformation is being watched by all elements of the channel, including distribution. Vendors cut out the IT distributor altogether for carrier deals. Samsung and Acer delivered their netbooks directly to Optus and Telstra respectively rather than through their main distributor, Ingram Micro.

Ingram's Miley is unconcerned by the prospect of competing with telcos.

"SME focused products are becoming more commoditised and simpler to use. There will be opportunities for telcos to retail product too or to bundle it with services to that SME market.

"Our retail partners will play a big role in the sales of these sorts of products, as they do now for things like ADSL equipment or SME networking gear. They obviously have tremendous amounts of experience with sales of commoditised products," says Miley.

Waking up one day to find yourself in competition with a multi-billion dollar organisation would not be a pleasant experience for any reseller. Luckily, technology greenfields are opening up every year.

"There's a whole range of applications and services we haven't even thought about or conceived yet," says David Peach, vendor channel manager at distributor Express Data. "That may be what the channel is doing in five to 10 years' time. Anyone dusting off their 2009 business plan in 2015 is going to be in trouble."

But the size and scale of a telco, which makes it such a threat, means it will never be able to move fast enough to fill every IT service.

"The success of our reseller channel is based on their ability to [integrate] solutions with their customers' systems. This is essentially the biggest advantage our resellers have over the telcos," says Miley.

Additional reporting by Brett Winterford.