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VPN Customers Spoilt by Choices

Light Reading
News Analysis
Light Reading
11/24/2003

Last week’s announcement by MCI (Nasdaq: MCIT) of a new managed virtual private network (VPN) service has raised an issue that may come to haunt carriers -- customer confusion.

MCI’s new VPN service targets the retail industry, giving companies a way of connecting large numbers of stores or branch offices via DSL or cable connections (see MCI Launches IP VPN Service). However, it's one of seven VPN services offered by MCI. Prospective customers also have other options, including deploying their own VPN solutions.

Jeff Wilson, an analyst with Infonetics Research Inc., says customer confusion could be one reason that nearly 85 percent of enterprise customers are still choosing to implement VPNs themselves rather than outsourcing to carriers (see VPN/Security Market Grows Strong).

“Carriers like MCI are selling between four and 10 different managed VPNs,” he says. “That’s why it’s been so hard for them to sell these services over the past couple of years. Not only are the customers confused, but it’s got to be hard for the sales people to know which service to push.”

Even some carriers admit that customers could be grappling with too many choices.

“I think that customers are confused,” says Ralph Montfort, director of access products for MCI. “There are a lot of services to choose from.”

But Montfort says that carriers need to offer customers choices. “It’s a competitive marketplace,” he adds. “You can’t force customers into one or two choices. Some customers are religious about the technology. If you just offer IPSec you’ll miss some sales opportunities, and if you just offer MPLS you’ll miss others.”

MCI already offers five IPSec VPNs: two remote access services, a broadband service, and two dedicated services. It also offers two MPLS VPN services: managed and unmanaged. It will be offering another VPN offering in early 2004 when it announces its Secure Sockets Layer (SSL) service.

AT&T Corp. (NYSE: T) also has several IP VPN offerings, as do its competitors, including SBC Communications Inc. (NYSE: SBC), BellSouth Corp. (NYSE: BLS), Qwest Communications International Inc. (NYSE: Q), and Verizon Communications Inc. (NYSE: VZ). These carriers offer everything from IPSec VPNs to MPLS-based VPNS using Layer 3 and Layer 2 technologies. And now more of these carriers are starting to roll out remote-access VPNs based on SSL technology, as well as VOIP services over VPNs (see Service Providers See Green in SSL and RBOC VOIP Coming in 2004).

Montfort admits that too many services can be a problem. “If you go much beyond five or six choices, it’s hard to differentiate them.”

But Rose Klimovich, vice president of global IP VPNs at AT&T, says that customers are not confused. She believes customers are simply trying to figure out which services they want. Whether they outsource or do it themselves has more to do with the bottom line than with confusion, she adds.

“It really comes down to whether or not the customer has the expertise to manage the service themselves,” she says. “The total cost of ownership needs to be compelling. Some customers will always want to do it themselves, while others will look for strong service provider partners.”

— Marguerite Reardon, Senior Editor, Light Reading


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straightup
straightup
12/4/2012 | 11:13:43 PM
re: VPN Customers Spoilt by Choices
....good thing they aren't spoiled by choices.
materialgirl
materialgirl
12/4/2012 | 11:13:43 PM
re: VPN Customers Spoilt by Choices
Perhaps rather than offering a car kit, the service providers should offer a car. Call it: Secure IP connections anywhere. Keep the alphabet soup hidden under the cover.
fw23
fw23
12/4/2012 | 11:13:40 PM
re: VPN Customers Spoilt by Choices


>Perhaps rather than offering a car kit, the >service providers should offer a car. Call it: >Secure IP connections anywhere. Keep the >alphabet soup hidden under the cover.

This isn't a real issue for service providers.
The reason multiple different types of VPN
services exist is because the customers are
trying to solve different problems.

The way it works is that customer calls in, you
talk to them and figure out what car they need
or want. And then sell it to them.

If they know what they are doing, they will want
a solution they can control themselves. If they
don't know what they are doing, they will move
toward a solution that involves them having as
little control over it as possible.

There are always customers who don't want to
see under the hood and there are always customers
who want to rebuild the engine. The multiple
VPN services is no different than internet
feed customers who choose between default routing
or BGP peering with the service provider. There
isn't one solution that everyone will be happy
with.

If they have a very small number of sites, they
get IPSEC tunnels. If they have a big multisite
topology, they (usually) get something else.
But in the end, its up to them what they get.

optical_man
optical_man
12/4/2012 | 11:13:40 PM
re: VPN Customers Spoilt by Choices
Author: straightup Number: 2
Subject: VPN Spoilt by Choices Date: 11/24/2003 3:24:59 PM
....good thing they aren't spoiled by choices.

sraightup,
probably just a missed ache.
let's just hope they don't become upset and cry over spilt milk.
BobbyMax
BobbyMax
12/4/2012 | 11:13:38 PM
re: VPN Customers Spoilt by Choices
Various choices are needed to target various customers and market segments. Both IP Sec and MPLS provide remote access, Currently the managed VPN services are provided by AT&T, Qwest, Spirint, MCI and others. Their equipment come from different vendors.
straightup
straightup
12/4/2012 | 11:13:38 PM
re: VPN Customers Spoilt by Choices
Optical_man
Agreed!
Iipoed
Iipoed
12/4/2012 | 11:13:37 PM
re: VPN Customers Spoilt by Choices
Booby-So your point is?
lastmile
lastmile
12/4/2012 | 11:13:37 PM
re: VPN Customers Spoilt by Choices
BobbyMax:
This is the first time that you have made a statement. Usually you ridicule anyone and everyone. Are you the same BobbyMax? or have you sold your patent at a loss to different vendors.
glad2Bgone
glad2Bgone
12/4/2012 | 11:13:34 PM
re: VPN Customers Spoilt by Choices
Bobby Max

All your poor grammar and misspellings are belong to us....
lightreceding
lightreceding
12/4/2012 | 11:13:33 PM
re: VPN Customers Spoilt by Choices
and they don't seem to know how to sell either. Customers don't want MPLS or IPSEC or SSL. They want reliable, cheap and fast connectivity. If those technologies deliver it then fine. But at the business level the customer probably doesn't care what the technology is. Maybe the tech guys care but they are just trying to select the technology that delivers reliable, cheap and fast connectivity. Nobody is going around saying I need MPLS because MPLS rocks my boat.

Anyway if MCI is offering 6 choices and then saying that the customer is confused, it is really MCI that can't sell. They need to determine the customer requirement and then offer the right fit and describe it in business benefits and not confuse their customers management with the technical details.

Even with the technical staff they should offer choice one and a backup choice and leave it at that. MCI has to know for themselves what works and what the customer needs. For that matter how can MCI manage to maintain 6 different services and keep their staff trained. They seem really confused to me.

At least the woman from AT&T made some sense. She understands that customers look at the bottom line. The reason why customers are not adopting managed VPNs is because service providers can't demonstrate the cost benefits. Why should customer get rid of anin house VPN that is working and paid for unless a really clear cost savings can be shown to them.

Most customers are still satisfied with FR and ATM and many more are still happy with leased line. Why should they change unless the new service is cheaper, faster and more reliable.

I think it is the vendors trying to sell new technology that are pushing VPNs on the carriers and then the carriers are pushing the service on the customers because of competitive pressure. Vendors see a chance to develop IP based technology and take market away from FR and ATM vendors, but IP is still an immature technology. IPSec and MPLS are being developed to overcome shortcomings and inefficies in IP. So far IPSec is still expensive and complicated and MPLS is immature and lacking in features and SSL only benefits web enabled applications.

No wonder customers are not jumping on these services.
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