5 Reasons Why IT Solution Providers Will Crush Telecom VARs

There once was a symbiotic relationship between Telecom VARs and IT Solution Providers. For years this symbiotic relationship has been slowly eroding and turning into an all-out war, each differing entity actively trying to steal clients away from the other, while attempting to offer their competition’s services to their own client base.

This battle has produced winners and losers on both sides, but for the most part, IT Solution providers are better positioned to swallow the Telecom VAR’s products and services. Here is why:

1. The Traditional PBX Industry is Dying

The days of PBX based phone systems are numbered. They are too expensive, the upfront cost is usually not worth the cash flow savings of VOIP; both for the system and for savings on long-distance and toll costs. VOIP allows huge flexibility in scalability (up or down), and in distribution between offices. These savings reduce CAPEX and give businesses much more operational and financial flexibility. VOIP is IT based and therefore gives the IT solution providers the upper-hand in making sure the network is reliable and configured properly for QOS and other needed protocols and measures.

2. SIP Trunks Rule over Analog and PRI

PRI and analog lines have nothing over SIP trunks. SIP trunks offer huge cost savings and eliminate the need for PRI, ISDN BRI, and PSTN Gateways. While many PBX phone systems can be outfitted to work with a SIP trunk, this mostly falls under the realm of a true VOIP phone systems.  SIP trunks usually (not always), require some knowledge of IP and networks.  Another beauty of SIP is that they can usually encompass (at least partially) the bandwidth requirements to supply data connectivity within a network.  Plus you can get DID’s for just about any US location. All this, gives the IT Solution provider a slight upper-hand.

3. Telecom VARs Business Model is Volatile

Most telecom companies I have worked for are extremely volatile. They live and breathe by the continued system sales, add/moves/changes, and service tickets. Basically they survive when something breaks or a company grows out of their phone system. It is not a fun environment to start each month not knowing if you will have the money to make it to the next. IT Solution providers have been selling recurring revenue for years. They understand the model and their model is safer in order to work their way into other markets (like telephone systems).  They have recurring monthly revenue that reduces their clients CAPEX, while increasing their own cash flow and profitability. A telecom VAR that is struggling each month to get by, will have a much harder time gaining the skills and resources to offer other services.

4. Knowledge Path is Easier from IT to Telecom

I have seen scores of IT Technicians learn to install traditional and VOIP based phone systems, yet very few that traditional phone system technicians that have moved to installing VOIP or have been able to grasp the network and IP technologies in order to make sure VOIP is installed in a reliable manner.

5. Solution Providers Have The Tools

To remotely troubleshoot and work on most PBX systems you usually need some kind of add-on card to the phone system, and even with that, usually the remote access is via a dial-up modem. VOIP systems or IP-based systems can be accessed and monitored via remote management tools such as Level Platforms.  Level Platforms and some other monitoring platforms can even monitor PBX based phone systems as long as they utilize SNMP.

The Telecom VAR vs IT Solution provider battle will go on for a while still. There are some locations in which bandwidth constraints or SIP availability hinders the adoption of VOIP. But if I had to throw a bet, I would bet on solution providers to rule the day. But don’t get too complacent, there are a few innovative and well-funded telecom VARs I know that are making the transition in a big way.

What do you think? Leave a comment below to share your thoughts or concerns.