Wake Up Call

ISPs have traditionally been suppliers of bandwidth. As aresult, they now find themselves victims of shrinking margins and stiffercompetition from the large national and international backbone providers. Theneed of the hour is to expand services beyond the framework of bandwidth.

ISPs need to understand where they stand in the market-placeand ascertain means of increasing their value. "Getting morecustomers" would be the obvious answer. But this is better said than done.The key is to understand where these new customers will come from. There areonly two sources–those not online yet and those online with someone else.Those online will need high satisfaction levels to re-purchase and those withother ISP’s need excellent marketing efforts to be swayed. ISPs need to lookat the entire marketing mix in totality to be ahead in the race. Good service iscritical to retaining customers–which, in turn, are critical to attracting newones.

The Future of ISPs

Many predict that ISPs, especially medium-sized to smallones, are doomed to irrelevance by the big national and international backboneproviders and telcos. They will not be able to live off the increasingly slimmargins afforded by merely providing access to the network. ISPs have begunadapting by providing services in the form of web hosting, outsourcing, and thelike. Even this will not give them enough margin to stay above water. Innovatorswill eventually crush the non-innovative ISPs.

ISPs can increase their customer base by two folds.

• Front-end task–ISPs need to understand the customer purchase behaviour and try to address it by appropriate marketing strategies.

• Back-end task–they will have to back these strategies by building infrastructure to meet the customers demands.

• Efforts need to be made on all the following fronts to add more value.

• Customer interaction–ISPs need to educate customers on the various service offerings, especially in case of business clients where technology is changing fast. This can be through CDs, road shows, etc. ISPs also need to make the process of getting on the Net simpler. This means streamlining and simplifying the entire procedure from registration as a user to delivery of the account to the customer. ISPs should also look at good post sales efforts (call centre services, customer support, etc.) to retain customers.

• Services–brand loyalty in ISPs is very low. They should focus at creating services, (thus value) and delivering them well. Build a strong architecture and then choose the right technology and come out with innovative strategies to market these services.

• Infrastructure needs–broadly speaking, ISPs need to offer reliable and scalable architecture, standardized applications, providing value-added services beyond basic access, offer high-speed access to business information, online database access, e-transaction capability, performance and security. Solutions and services need spread across a spectrum of activities making the ISP indispensable for a user.

• Improve your web presence–there is a need to ensure that the site follows the simple rule of three clicks to the information. This calls for customer oriented information architecture. This is apart from providing the customer with sticky content. This alone will make the customer feel the need/inclination to return and use the service again.

What Services to Offer?

For ISPs their service portfolio depends on what kind ofcustomer base they are targeting. For home users their offering should be builtaround personal services like chats, mails, instant messaging, web pages, etc.Personalization plays a key role.

Business-oriented ISPs should be able to provide a completesolution to the company, including equipment and a portfolio of
services.

Equipment

ISPs recognise that most small companies do not have thebudget or staff to support such expensive and maintenance-intensive equipment.They should maintain the servers/firewalls required for services (Web hostingand e-commerce) and also provide the small-business routers that reside in anoffice.

Services

A complete service offering is important because businessusers should feel sure that their ISP can help the business grow. Value addedservices will play a very important role here.

E-mail hosting–this means an ISP stores a company’se-mail on his servers. This is valuable for small businesses because it ensurescontinuous access to e-mail, without having to buy, install, or maintain theirown e-mail server.

Web server hosting–with Web hosting, the ISP owns andmaintains a company's Web server and supports all traffic. A business user doesnot have to invest in expensive server hardware or worry about high-speed leasedlines to support the Web traffic, or provide support personnel to run a Webserver.

E-commerce hosting–this is a more advanced offering thanWeb hosting. E-commerce makes a web site an electronic storefront wherecustomers can log on to view the product offerings and make purchases via securecredit card transactions.

Virtual private network–an access mode is useful if acompany has remote offices to support, and there is a need to provide them withconnectivity to the information technology resources at the main office.

Other services–depending on the demand in the market-place,ISPs may offer long-term services such as fax over the Internet, voice over theInternet (VoIP), or multimedia (videoconferencing) over the Internet.

Infrastructure planning, architecture, and implementation arekey to successful delivery of services. These activities would take the majorchunk of resources of the organization, if not planned properly, resulting inloss of focus on the services to be offered tocustomers and adopting customer-oriented approach.

The alternatives available are limited–increase themanpower or outsource back-end integration and infrastructure development.

One solution is to increase the manpower to take care of theinfrastructure issues without losing focus on marketing. This definitely cuts into the profits, as properly planned scalable infrastructure solution is aone-time investment with minor addition to scale up the business. The additionmanpower becomes a liability to the organization.

The second option is to outsource infrastructure developmentto full service providers of scalable and reliable solution. This allows the ISPto focus on marketing its services and providing better services.

What Is the Ideal Solution?

It is not possible for ISPs to provide their most valuedcustomers over-provisioning for the worst of hit storms. Over-provisioning ofservices and computing power is expensive and can be extremely difficult tomaintain. The ideal solution would be to deliver a first level control at theservice provider’s end and in turn partner with technology experts forcomplete back-end services. This can be done by partnering with network/systemintegrators to monitor and maintain complete infrastructure or by completeinfrastructure outsourcing to data centres.

The key element in creating this next-generation ISP will bethe ability to flexibly extend services in the fluid environment of the Web.Value added services play a very important role in bringing such ISPs intofocus. The next two years will mark the arrival of the first in a series of newtechnologies that will give ISPs an entirely new set of service offerings aswell as the tools to manage and reduce costs.

Outsource or Not . . .

Infrastructure and services directly related toinfrastructure are very often overlooked. Many ISPs these days are turning tooutsourced technical support. It is important to understand the magnitude of thetask ahead and outsource if it cannot be handled in-house.

QoS & SLAs

The term Quality of Service (QoS) has undergone an evolution–froma descriptive phrase, to a quantifiable attribute of what ISPs sell to theircustomers. It is usually expressed in a percentage of uptime, such as 99.9percent, or as "how many 9s". Many business customers are now lookingfor Service Level Agreements (SLAs) that commit one to a specified QoS level–andoften mandate a monetary refund for failing to meet that commitment. Do you knowwhat your QoS level is? Even if your customers don't demand one, one should makea SLA. That is, commit oneself to providing a certain level of service. Itshould cover uptime, busy signals, throughput, and many other technical issues.

ISPs must focus and provide value to customers. This will come with smartbusiness model, front-end marketing activities backed by good infrastructure.The option is to handle all activities in-house or focus on the core expertisein-house leaving other activities to the experts.