Why are enterprises off late switching to System Integrators (SIs) over Telecom Providers for managed network services?
Oct 17, 2023

Why are enterprises of late switching to System Integrators (SIs) over Telecom Providers for managed network services?

Balasubramanian Panchanathan

In recent years, there has been a growing trend in the market, characterized by a rise in the number of RFPs for Managed Network Services aimed at serving large enterprises. These enterprises had previously relied on Telecom Service Providers for decades. In the end, we observed the clients ended up splitting their WAN and Managed Services contracts and awarding the Managed Services contracts to System Integrators. Now, let us break down why this trend is increasing and what an enterprise ideally should look for when choosing a managed services provider.

Before we start analyzing the trend, let us see how a Telecom Service Provider and a System Integrator differ in their basic cultural construct to deliver managed network services.

Traditionally, Telcos operate on a productized services model where a pre-defined set of rules, framework, platforms, and SLAs are fundamentally required to roll out an offering in the market. Once this framework is established, they onboard all customers to that common platform of operations.  Re-orienting this framework to suit specific customer needs necessitates a shift in culture because Telcos have traditionally relied on their extensive operational experience to develop products like Leased Lines, VSAT, MPLS, etc., and bring them to market. It is like asking Ford or Toyota to manufacture a customized car to fit our requirements.

Contrary to this, System Integrators have it in their DNA to create customized infrastructure or software solutions catering to individual customer needs. Their mindset is in the form of building something that is best suited for individual customers leveraging industry best practices such as ITIL, and ISO standards. Going by the same analogy, they have the DNA of building premium cars that are customized to individual preferences but built on standardized platforms. With this mindset, System Integrators exhibit the following qualities.

  • Specialization and Expertise: System Integrators often focus on providing specialized services in network integration and management. They have a deeper understanding of various networking technologies and can design custom solutions tailored to the customer's specific needs. Telecom Providers, on the other hand, may have a broader range of services but may not possess the same level of expertise and customization capabilities.
  • Vendor-Neutral Solutions: System Integrators are typically vendor-neutral, meaning they can work with a variety of networking equipment and technologies from different manufacturers. This flexibility allows them to select the best-in-class solutions for the customer's unique requirements. In contrast, Telecom Providers may have partnerships or be tied to specific vendors, limiting their ability to offer unbiased solutions.
  • Personalized Services: System Integrators often provide more personalized and hands-on services. They collaborate closely with their customers to understand their specific business needs and design tailored network solutions accordingly. This level of attention and customization may be perceived as more beneficial than the standardized offerings provided by larger Telecom Providers.
  • Agility and Responsiveness: System Integrators are generally more agile and responsive to customer demands due to their smaller size and focus on specific services. They can adapt quickly to changing network requirements and implement solutions promptly, which is crucial in today's fast-paced business environment.
  • Better Customer Support: Customers may switch to System Integrators because of the perception of better customer support and a closer client-vendor relationship. With a smaller client base, System Integrators can dedicate more time and resources to promptly address customer issues and concerns.
  • Cost-Effectiveness: System Integrators may offer more competitive pricing for their services compared to large Telecom Providers. They often have lower overhead costs and can offer a variety of cost-effective solutions to choose from various vendors, which leads to overall savings for the customer.
  • Integration with Existing Systems: If a customer already has specific IT systems or infrastructure in place, System Integrators may be better equipped to seamlessly integrate the new managed network services into the existing environment. Their expertise in handling complex integration scenarios can be an advantage in such cases.

While both Telcos and System Integrators have displayed these attributes for an extended period, the shift in customer business dynamics is noteworthy. Over the past decade, traditional competitors have increasingly been supplanted by start-ups and emerging technologies, driving enterprises to re-evaluate the level of flexibility required in their operational models. Modern enterprises are less inclined to adhere to rigid platforms, which has led to a preference for System Integrators over Telco providers, giving rise to the observed trend of such RFPs.