The Network Hub

Aug 8 2014   5:04PM GMT

Smaller vs larger MPLS service providers?

Robert Sturt Robert Sturt Profile: Robert Sturt

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I recently read a couple of good article UK MPLS & Global MPLS which got me to thinking about the differences between large and small service providers and how they serve the market differently.

The default for the Enterprise is to typically progress their MPLS proposal with the larger end of the market which is understandable. An Enterprise requires the stability of a service provider of equal stature in terms of size to provide comfort in stability. On the flip side, smaller organisations (think SME) are always avoiding the larger service provider in favour of the agility and focus which smaller providers typically offer.

I personally worked for a large service provider in the mid 2000’s and recall a strategy change where the CEO decided to effectively segment their business. In short, the provider decided they were expending way too much of their employees time supporting SME businesses which represented a fraction of their revenue. As a business decision, it was probably the right one to make but I imagine the SME’s being given the news that they were effectively being forced into a different support channel were not impressed. Within the same provider, they also launched a new program of professional services where the large enterprise would be expected to pay for service and project management – i.e. these resources were no longer being provided by default. I’m not judging their decision and in many ways the service and support increased for their Enterprise clients which probably had the budget.

The smaller SME therefore should be wary of entering into contracts with the larger providers since they may not achieve the focus and service of the larger paying clients. I appreciate this is a broad statement to make and larger service providers are making strides into changing how they support the SME market. An an example, BT have launched a specific product which is dedicated to the SME market but the release is early days so we will have to see how things pan out.

Let’s look at some of the comparisons.

Clearly larger service providers have huge revenue streams which offers stability associated with similar institutions to themselves. This said, profitability is still very important as we have witnessed large providers such as WorldCom enter Chapter 11 so size is not always a given from the perspective of stability. However, all things being equal, a large stable company provides long term comfort when signing WAN contracts. The smaller providers are often good profitable organisations but they very much have a shorter way to fall if things should go wrong. We know of companies which are reliant on a  few contracts for the source of their income and profitability which clearly is a risk. And there are some which have a good broad range of contracts so are more stable and further along their business growth path. It is also true that smaller providers are more prone to strategy changes. In any given month, they may decide to invest which changes their financial position and increases risk.

Staff and coverage is also an area which requires clarification. Using another example, a provider we worked with under a consultancy arrangement had only two main POP’s (Point of Presence) in the UK with only a few staff. We asked how they would support offices over large distances and they said “We would put replacement hardware in a van and ask one of the engineers to drive it over”. Whilst this approach may work, it’s clearly not a particularly robust support process.

The coverage of a provider is very variable with smaller providers. Our experience ranges from companies with hardware in an office (yes really) through to a couple of core POP’s up to well engineered networks. I always recommend IT Management looking at procurement to clearly understand the true MPLS coverage of services providers.

Over and above coverage, process for adds, moves and changes very much varies when comparing the larger organisations vs the smaller companies in the market place. In my experience, smaller represents agility with larger service providers often creating more bureaucracy.

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