Case Center and Syracuse Technology Garden present:

The Syracuse Technology Roundtable

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For years now, the rally cry to the creative has been…

“Think Outside The Box”

My message …STOP THINKING ABOUT THE “Box”!

My prediction …In 10 Years “Hosted Everything” will be the way businesses acquire technologytechnology--based servicesbased services

My belief …We are witnessing the birth of a new industry

…the HSP (Hosted Services Provider)

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Presentation SummaryPresentation SummaryChances are you have heard the term Hosted IP Services touted as the latest voice and data technology…what are they?

How do Hosted IP Services relate to the controversial ideas put forth by Nicholas Carr in his article “IT Doesn’t Matter”?

Is this just another Fad fostered by vendors to generate new business or is there something more going on here?

We’ll discuss what services are available today, where the industrymay be headed and some things to think about back at the office

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Presentation SummaryPresentation SummaryChances are you have heard the term Hosted IP Services touted as the latest voice and data technology…what are they?

How do Hosted IP Services relate to the controversial ideas put forth by Nicholas Carr in his article “IT Doesn’t Matter”

Is this just another Fad fostered by vendors to generate new business or is there something more going here?

We’ll discuss what services are available today, where the industrymay be headed and some things to think about back at the office

Expanding The Definition of IT ..to include CommunicationsInformation Technologies often refers to hardware and software that support a computing infrastructure. To fully understand what is happening in the Converged Network, we must

expand that definition to include Communications as well…or what I call ITC

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What are Hosted Services?What are Hosted Services?

What Are Hosted Services?A 'hosted service' is one in which the application is run on a central server and accessed by users over a broadband pipeRemotely delivered application services using shared resources The primary advantage [today] is that no capital investment or technical expertise is required from the businessThe HSP provides all operational aspects including security, software upgrades, server admin, backups, and fallback procedures

A Hosted Service Provider is a business that delivers a combination of traditional IT functions over the Internet or other wide area networks

Enables customers to consolidate and outsource much of their IT needs for a predictable recurring fee or subscriptionprovide economies of scale, delivering the same software and services to many customers at once

Communications

Infrastructure

Computing

Information

Hosted Services

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The The ““Shock JockShock Jock”” of Technology Changeof Technology Change

Nicholas G. Carr is a consultant, business writer and speaker whose work centers on strategy, innovation, and technology

In 2003, then Editor-At-Large for Harvard Business Review, he wrote an article entitled “IT Doesn’t Matter”

His views roiled the Information Technology industry, spurring outcries from executives of Microsoft, Intel, H-P and other leading technology companies

“Don’t listen to this guy…keep the faith in IT…”- Steve Balmer

Microsoft's Paul Flessner says: "It's just silly to think that there's no competitive advantage in IT. It's insanity in my mind."

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““IT DoesnIT Doesn’’t Mattert Matter””

The Central Theme: “There is nothing all that special about information technology”

He argues that IT has been commoditized…that its become practically invisible; that IT no longer matters

“Does IT Matter?"

He argued that the strategic importance of information technology in business has diminished as IT has become more commonplace, standardized and cheaper.

"The End of Corporate Computing"

That in the future, companies will purchase information technology as a utility service from outside suppliers.

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““IT DoesnIT Doesn’’t Mattert Matter””

The Central Theme: “There is nothing all that special about information technology”

He argues that IT has been commoditized…that its become practically invisible; that IT no longer matters

“Does IT Matter?"

He argued that the strategic importance of information technology in business has diminished as IT has become more commonplace, standardized and cheaper.

"The End of Corporate Computing"

That in the future, companies will purchase information technology as a utility service from outside suppliers.

“When a resource becomes essential to competition but inconsequential to strategy, the risks it creates become more important than the advantages it provides.”

- Nicholas Carr

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So What? ..That Was Four Years AgoSo What? ..That Was Four Years AgoFour years later, the controversial subject still generates heated debate regarding its accuracy and relevance…

“Nicholas Carr” returned 2.1m Google hits

“IT Doesn’t Matter” returned 126m Google hits

The provocative issues and incendiary rhetoric in this piece ignited a worldwide debate on the strategic value of information technology in business

With his follow-up books, blogs and articles Carr has renewed and deepened that debate and become one of the business world’s most significant voices

“Carr’s article just won’t stay debunked.”- Robert Metcalfe

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What I Believe He Was SayingWhat I Believe He Was SayingThe title is misleading…Carr is not arguing that Information Technology doesn’t matter…of course it doesAs IT Technologies mature, spread and become more standardized, the strategic advantage any individual company can gain from that technology diminishes

You only gain a strategic edge over rivals by having or doing something can’t have or doToday, most IT-Based competitive advantages simple vanish too quickly to be meaningful

Many IT Technologies are no longer a potentially strategic resource…they are being transformed into a commodity factor of production

Essential to competitiveness but inconsequential to strategic advantage: that's why certain technologies are best viewed (and managed) as a commodity

To help explain this, he introduces the concept of two categories of technology

Proprietary and Infrastructural

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CarrCarr’’s s ““Two Technology TypesTwo Technology Types””

Pro

prie

tary

Tech

nolo

gyIn

frast

ruct

ural

Tech

nolo

gy

Technology Curve

ProprietaryCan be owned by a single companyExclusive rights, patentInnovative way to employ a technology Competitors find hard to replicateCan be a foundation for long term strategic advantages

THINK: Google Search

InfrastructuralMore mature & widely availableGuided by standardsViewed more as “plumbing”Part of the general business infrastructureMore value when shared than when used in isolation

THINK: Ethernet / IP

In addition to enabling new, more efficient operating methods, infrastructural technologies often lead to broader market changes. Here, too, a company that sees what’s coming can gain a step on myopic rivals.

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CarrCarr’’s Underlying Conceptss Underlying Concepts……not new stuffnot new stuff

What Carr was talking about or predicting is actually the confluence of a number of existing theories:

The Law of Disruption and The Disruptive Innovation Model

First introduced in the book “Unleashing the Killer App”• Moore’s Law + Metcalfe’s Law + Coasean Economics

Further developed in “The Innovator’s Dilemma” and “The Innovator’s Solution”• The dichotomy of Sustaining vs. Disruptive innovations

These theories are playing themselves out today in the ITCIndustry…fueling the rapidly growing concept of Hosted IP Services

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The Type Types Of InnovationThe Type Types Of InnovationSustaining vs. Disruptive

Sustaining innovation improves the performance of existing products along the dimensions that mainstream customers valueDisruptive innovation will have characteristics that traditional customer segments may not want, at least initially

Early on, such innovations will appear as cheaper, simpler and even with inferior quality if compared to existing products, but some marginal or new segment will value it

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TodayToday’’s Infrastructural Technologiess Infrastructural Technologies

Wide Area Access NetworksBoth voice and data

Business Voice SystemsPBX’s & Key Systems

Core IP InfrastructureLayer 2 & Layer 3 devices

Voice & Data ServicesLocal, LD, 800, Internet, VPN, DNS, etc

MessagingEmail, voicemail, fax, IM, etc

Data StorageOnline, offline, backup, archival

SecuritySPAM, Firewalls, IDS/IPS, etc

Business ApplicationsMS Office Suite, SFA, CRM, ERP, etc

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The Business End of Hosted ServicesThe Business End of Hosted Services

The great thing about Hosted Services is that it maps very well to business initiatives such as

Cost Savings - reducing system acquisition & management costs Improving worker productivityFlexibility - facilitating User/IP mobilityRisk Management & Disaster Planning - maintaining business continuityIntegration & Control - Unifying Communications

Other business services can be built around vertical industries like healthcare, education, hospitality, government, law firms, professional services, etc.

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Example Example –– MultiMulti--Site Unified NetworkSite Unified Network

SITUATIONA High-Tech Mfg is growing quickly via acquisitions and needs to integrate operations quickly and cost-effectively. Also, their culture is steeped in “Work-Force Flexibility” requiring creative use of technology

SOLUTIONSIdentical phone sets, features & Interoffice DialingSingle IVR, Voicemail and ACD SystemGeographic Abstraction of Telephone NumbersHot-Desking and Cell-TwiningRemote Office Solutions• Remote Call Centers and Agents• Regional & Small Office/Home Office

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Example Example –– User MobilityUser Mobility

SITUATIONA Sales-focused company with 40+ professionals on the road calling on regional clients relies heavily on communications between its clients, sales force and HQ

SOLUTIONSSingle Number Service – Simultaneous RingMulti-Number Service – Personalized AgentFind Me/Follow Me – Unified CommunicationsCell Twining and Cell CloningTelecommuting with Voice & Data VPN’s

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Example Example –– Hosted MessagingHosted Messaging

SITUATIONA very large Community College provides extensive information to its students using a premise-based IVR. However, it frequently is unavailable due to high call volumes and can also block in-bound & out-bound voice calls. Very antiquated and needs to be replaced.

SOLUTIONSHosted Messaging – IVR & VoicemailNumber Portability – No need to changeBurstable Voice Bandwidth – Virtual expansion for high trafficManagement Portal – Web interface from anywhereService Creation Environment – Object based changesReal-Time Schedule Integration – via simple vXML

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What the Early Adopters Are SayingWhat the Early Adopters Are Saying……

"We can focus on our core business.”Smart companies focus on growing their business and not on managing complicated office systems.

"We can easily add/manage office locations."Hosted IP systems are designed to treat multiple locations as one office…for example, the ability to share a centralized receptionist and use four-digit dialing between locations.

"We're guaranteed access to the latest technology." Hosted IP providers handle software upgrades at no additional charge.

"Hosted IP satisfies our business continuity & disaster-recovery needs." Hosted providers house their equipment in carrier-grade collocation facilities with high levels of resiliency, back-up power and advanced safety features. An IP PBX resides in the client's office where it is susceptible to emergencies such as fires, floods or natural disasters.

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Hosted IP Services Hosted IP Services -- Stages Of ValueStages Of Value

Stage 1 Stage 2 Stage 3

Cost & Control

Productivity & Convenience

Business Enablers& Growth Drivers

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Hosted ServicesHosted Services……the key messagesthe key messages

is the business of housing — and managing — the Infrastructural Systems that run a business

is NOT a Fad…it represents a Fundamental Shift in the ITC Industry• There are several immutable technology and economic laws at

work

are Evolutionary…not Revolutionary• This is NOT an “All Or Nothing” proposition

are NOT “Futures”…• You can use them to create completely new services…Today!

Are you ready?

Hosted IP Services…

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One Final ThoughtOne Final Thought……

“Decide what is CoreCore to your company --absolutely critical, strategicstrategic…

Your Competitive Advantage -- and then

outsource everything else”

- John Turner (Aug, 2007)

Q & AQ & AJohn Turner

EVP and Chief Strategy OfficerUSA Datanet

jturner@usadatanet.com

318 S. Clinton St.Syracuse, New York 13202

Phone:315-579-7105Fax:315-579-7201