En­ter­prise Agility Is New De­mand Driver

Striv­ing to be­come more re­spon­sive to their cus­tomer needs, en­ter­prises opened up more to the Eth­er­net and MPLS so­lu­tions and de­liv­ery mod­els like cloud

Voice&Data - - CONTENT -

The con­tin­ued global fo­cus on In­dia as an emerg­ing econ­omy, de­spite a slowed GDP growth rate in the re­cent years, cou­pled with a grow­ing do­mes­tic mar­ket across var­i­ous ver­ti­cals, kept the en­ter­prise data ser­vices in good health, though growth was not ubiq­ui­tous and al­ways a given.

The eco­nomic pres­sures weighed on the en­ter­prises, which drove en­ter­prises to do more with their net­work in­vest­ments. The un­said need to trans­form and be­come more ag­ile and re­spon­sive to the de­mands of their cus­tomers, in turn, made en­ter­prises fa­vor the more dy­namic data con­nec­tiv­ity op­tions over the rel­a­tively fixed ones.

This im­plied that wher­ever pos­si­ble, en­ter­prises pre­ferred to go for con­nec­tiv­ity ser­vices based on MPLS and Eth­er­net tech­nolo­gies that could serve more band­width op­tions to suit the dif­fer­ent bud­getary con­straints of en­ter­prises, as com­pared to the op­tions like TDM-based leased lines that of­fered rel­a­tively smaller range of band­width choices. More­over, the cir­cuitswitch­ed na­ture of legacy ser­vices made them less ag­ile and cost ef­fec­tive for en­ter­prises than the packet-switched na­ture of the new-gen­er­a­tion ser­vices.

Lead­ing Play­ers

En­ter­prise ser­vices are a rel­a­tively smaller but also less crowded business seg­ment for ser­vice providers. The key telcos fo­cused on this seg­ment are Bharti Air­tel, BSNL, Re­liance Com­mu­ni­ca­tions and Tata Com­mu­ni­ca­tions. Their suite of of­fer­ings in­clude: do­mes­tic leased cir­cuits, in­ter­na­tional leased cir­cuits, MPLS VPN and Eth­er­net-based ser­vices, among oth­ers. Most of th­ese play­ers also of­fer a wide range of third­party data cen­ter ser­vices and have also been work­ing to strengthen their cloud ser­vice port­fo­lios.

Some of the lead­ing IT ser­vice providers, ISPs and pure-play data cen­ter ser­vice providers like Sify, Wipro and Net­magic also com­pete with the telcos in var­i­ous sub-seg­ments of en­ter­prise data ser­vices, most of which can be of­fered in two fla­vors—as stock ser­vices and as man­aged ser­vices.

For Air­tel, the quar­ter ended De­cem­ber 2013 was par­tic­u­larly good and rep­re­sented a growth of 13.9 per­cent to Rs 1,69.5 crore as com­pared to Rs 1,421.9 crore in the cor­re­spond­ing quar­ter last year. EBITDA stood at Rs 413.9 crore dur­ing the quar­ter as com­pared to Rs 215.4 crore in the cor­re­spond­ing quar­ter last year, a growth of 92.1 per­cent. The in­crease in EBITDA dur­ing the quar­ter was also helped by a one-time set­tle­ment with other car­ri­ers and bad debt re­cov­er­ies from cus­tomers. Dur­ing the quar­ter, the company said, it also tac­ti­cally re­duced the lower mar­gin voice business.

Tata Com­mu­ni­ca­tions also per­formed well dur­ing the year. Tata Com­mu­ni­ca­tions had said in an ear­lier fil­ing that rev­enue from leased cir­cuits (in­ter­na­tional and na­tional) and In­de­fea­si­ble Rights of Use (IRUs) in­creased from Rs 1,301.5 crore in fis­cal 2012 to Rs 1,644.6 crore in fis­cal 2013. The in­crease was pre­dom­i­nantly due to growth in rev­enues from other ser­vice providers and the ad­di­tion of new cir­cuits, it said. In­de­fea­si­ble rights of use refers to the company’s right to ex­clu­sively use a sub­stan­tial por­tion of the ca­pac­ity in the ca­bles for sub­stan­tially all of the eco­nomic lives of the ca­bles.

Rev­enues from In­ter­net leased lines had in­creased from Rs 589.8 crore in fis­cal 2012 to Rs 726.5 crore in fis­cal 2013. The in­crease was pre­dom­i­nantly due to growth in rev­enues from en­ter­prise cus­tomers and the ad­di­tion of new cir­cuits. Also, In­ter­net data cen­ter rev­enues grew to Rs 378.1 crore in fis­cal 2013 from Rs 350.3 crore in fis­cal 2012 mainly due to an in­crease in the company’s data cen­ter ca­pac­ity glob­ally and in­creased sales to cus­tomers, it had noted in the fil­ing.

Re­liance Com­mu­ni­ca­tions boasted of a cor­po­rate clien­tele of over 39,000 In­dian and multi­na­tional cor­po­ra­tions, in­clud­ing small and medium en­ter­prises and over 830 global, re­gional and do­mes­tic car­ri­ers. The en­ter­prise cus­tomer base of the company in­cluded 880 of the top 1,000 en­ter­prises in In­dia, it said.

In next 3-5 years, RCom had noted in its last an­nual re­port that it would be lin­ing up a host of high end prod­ucts for in­ter­net con­nec­tiv­ity for spe­cific in­dus­try seg­ments, like BFSI and re­tail keep­ing in view vary­ing needs of var­i­ous seg­ments. It also said it was in an ad­vanced stage of launch­ing a unique IPV6 so­lu­tion in the mar­ket.

RCom also said it would con­tinue to strengthen its fo­cus on the SMB mar­ket, to pro­vide cost op­ti­mized and ef­fi­cient con­nec­tiv­ity op­tions to SMB and en­ter­prise cus­tomers. It used a strat­egy to setup a fo­cused unit for the Gov­ern­ment seg­ment, which it said had paid off well and would con­tinue to be a growth driver, given that the gov­ern­ment is ex­pected to con­tinue in­vest­ing in au­to­ma­tion and dig­i­ti­za­tion.

What Next?

Go­ing for­ward, the role of data cen­ters is ex­pected to be­come more and more im­por­tant in the de­liv­ery of var­i­ous en­ter­prise data and con­nec­tiv­ity ser­vices. Next-gen­er­a­tion mod­els like Cloud, Net­work Func­tion Vir­tu­al­iza­tion and Soft­ware De­fined Net­work­ing would help make data cen­ters play a piv­otal role in the de­liv­ery as well as man­age­ment of the ser­vices.

As data cen­ter and cloud-based de­liv­ery mod­els ma­ture, en­ter­prises could be look­ing for­ward to au­to­mated pro­vi­sion­ing of ser­vices though web-based dash­boards, among other such of­fer­ings.

As such, telcos would be look­ing at their data cen­ter busi­nesses more strate­gi­cally than ever be­fore. Play­ers like Tata Com­mu­ni­ca­tions and Bharti Air­tel were un­der­stood to have con­sid­ered plans to grow their data cen­ter busi­nesses into sep­a­rate en­ti­ties, though there have not been any con­crete an­nounce­ments from them in this re­gard. Nev­er­the­less, this con­tin­ues to be a strong thought process in the top ech­e­lons of the in­dus­try.

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