Verizon Business battles 'network' perception

CHICAGO – The loss of millions of US jobs in the current economy has cut into voice and long-distance revenues for companies such as Verizon Business (NYSE: VZ) but the economy has also presented new opportunities in conferencing services and managed services, Francis Shammo, Verizon Business president said Wednesday.

In Chicago to host a bi-annual meeting of an end-user advisory board, Shammo said the primary challenge for Verizon Business is to make its expertise in managed services more widely known and to handle the challenges of competing with established systems integrators and even Web companies for new strategic services business in unified communications, collaboration services, managed security and more.

"We are better known as a network company," Shammo said. "Our biggest problem is that perception. We are now doing solutions-based sales, with 2700 professionals deployed worldwide. We are starting to gain more attention for that as we've won some large customers."

Verizon Business grew what it calls "strategic services" – hosted and managed data and IT services, unified communications and applications including managed security – by 7.5% in the first quarter of 2009, even as other business offerings contracted, Shammo said. "We saw double-digit growth in worldwide markets," he said. "We're gaining ground in the global market, gaining momentum in Asia, Western Europe and especially Australia."

Selling managed IT services has brought Verizon into competition with major systems integrators and even Web and software giants such as Microsoft and Google, Shammo said. Verizon Business is now seeing some momentum from its Accenture partnership, announced in January, Shammo said, particularly in unified communications.

"We are gaining momentum with the partnership, particularly in the last 60 to 90 days," Shammo said. "We are jointly going to customers and we are able to show them Accenture has the expertise on the front end and we have the expertise on the back end." Together, the two can offer a managed service that doesn't require capex or on-site expertise from the customer and allows them to pay a flat monthly fee.

The Verizon Business advantage in competing against systems integrators is its ability to manage and control the network, Shammo said. "I have the network, I built it, I operate it and I have secured it – systems integrators can't manage the network when they don't own it."

As part of its strategic shift, Verizon Business also for the first time is organizing around five vertical markets: health care, manufacturing, retail, utility and other, in addition to its specialized government unit, Shammo said. Its global sales and global services organizations will team up to directly address these verticals, with experts from the services organization working with sales people to design solutions targeted to the specific set of customers.

"We are about halfway there," Shammo said. "This is a major change for us – MCI was never in verticals."