FusionStorm Scores With Carrier Services

Three years ago when Mike Souza, a telecom veteran with 18 years of experience, took on the post of vice president of sales at FusionStorm, he joined a leading VAR with a nationwide presence, a diverse product portfolio, and a solid base of nearly 1500 IT infrastructure-buying clients. Still, he thought the San Francisco-based solution provider could be offering clients even more by adding business connectivity to its arsenal.

’When I came here I thought to myself: this is a fantastic sales team, but they have no clue that everything they’re doing has to interconnect to a WAN in some form,’ said Souza. ’It was at that point I thought we were missing the boat on a lot of opportunities that are very tangential to what we’re doing.’

Souza called in Jason Kraft, a former colleague from his days with Southwestern Bell Company (now merged with AT&T), to help him build a carrier services program to round out FusionStorm’s already vast portfolio of computing, networking, storage, recovery, and unified communications solutions.

Kraft is another long-time telecom sales professional who also recognized the potential boon of adding a carrier services program to the core business of an established and successful VAR like FusionStorm.

’So much of what FusionStorm was already doing ended up touching a gigabit circuit or an Ethernet circuit,’ said Kraft. ’That was a piece of the pie that we were previously walking away from.’

The Pitch

Souza and Kraft had done the math and figured out that, after allowing for a realistic runway, FusionStorm could eventually be turning a 40 percent margin on carrier services. Apart from the salaries of a few experienced sales reps and overlay support, the program didn’t require big upfront investment, but getting the sales team to think differently about carrier services did require a shift in culture across the organization.

Kraft said part of his job during the first six month was to dispel some of the fears his colleagues at FusionStorm had about working with carriers.

’If you’re a rep selling 100 servers every year to a client, the last thing you want to do is sell a solution that takes too long to install and has billing issues. That could negatively impact your relationship with that client,’ said Kraft. ’That more than anything was the fear at the street level: reps were thinking I don’t want to be the person that this guy calls when he gets his bill and it’s wrong.’

But Kraft went on an internal PR campaign to help colleagues understand carrier services and how owning both the equipment and carrier piece of a project could help the solution provider manage those notorious delays.

Covering the Bases

Souza and Kraft wanted to have two anchor carrier relationships, and signed on as direct agents with AT&T and Qwest (now CenturyLink). They also partnered with master agent, Intelisys, to round out their carrier portfolio.

But just signing on to sell services wasn’t enough. In the initial months of the program, both Kraft and Souza put in extra hours networking; they wanted to establish street-level contacts within the individual carriers to ensure they’d have the support of carrier sales and field teams once they started making deals.

’We definitely had to court the market quite a bit. We wanted to be sure that people knew who Fusionstorm was. We were fortunate in the Bay Area most IT-buying customers know who we are, but because it was a new venture, really getting anyone to focus in on telecom was difficult both internally and externally, that’s just not what we were thought of,’ said Kraft.

Once the word was out, the pair said it was important to get a flagship install to demonstrate their know-how to carriers and clients alike.

NEXT: FusionStorm's First Big Job The First Hit

FusionStorm scored its first big sale at a well-known importer of home decor. The nationwide retailer wanted to migrate from a frame relay to MPLS network, and hired FusionStorm’s newly formed carrier services team to help them identify the right carrier and install the service.

To implement the installation process smoothly, FusionStorm hired a project manager to track equipment, manage install sites, and act as a liaison between the client, FusionStorm, and the carrier. The team was able to compress what could have been a very long install of 310 sites down to just a few months, migrating up to ten stores per night.

For Kraft, the project was one of the smoothest installs in his telecom career, and proof that the marriage of IT and telecom could bring out greater efficiencies in the process.

’That client recognized the value of having us be part of the telecom process,’ said Kraft. ’It was a significant deal that we could advertise internally and also that we could take back to the carrier community that highlighted our core competencies.’

Heavy Hitters

Mike McKenny, vice president of partner sales at Intelisys said that FusionStorm is an example of a VAR doing carrier services right by building its program around a team with a deep understanding of the carrier world.

Many VARs are getting interested in selling carrier services, McKenney said, but hit stumbling blocks along the way in understanding needs and quoting the right solutions. VARs without an experienced telecom veteran on their team may run for the hills when problems arise, he said.

’VARs need to have that skill set on staff,’ McKenney said. ’To contract with a carrier and expect to have success without that skill set is dangerous. It’s why we see VARs try and fail.’

FusionStorm was able to start turning a profit on carrier services after about 18 months, according to Souza. But the solution provider has had to have patience as residual revenues build. Three years later, carrier services make up a small fraction of the solution provider’s overall revenues. FusionStorm is a half-billion dollar company, but its yearly telecom residuals are still comparably small at around $600 thousand. And just 51 out of around 1500 FusionStorm clients currently buy telecom services.

Still, Souza thinks they’ve just scratched the surface and that carrier services revenues can grow ten times from where they are now, just by selling to existing FusionStorm clients.

’Every VAR out there has the same goldmine in front of them: they own the ready access to IT infrastructure-buying clients,’ said Souza. ’I think the challenge for a VAR is getting the sales people ingrained with the set of technology to understand telecom. It’s a cousin, but it’s not a brother. It’s distant and complex enough that’s there’s a big learning curve.’

Challenges and learning curves aside, FusionStorm did the legwork and is hitting its stride with carrier services right when demand for cloud and hosted services is reaching a fever pitch.

FusionStorm was ahead of the curve, but Kraft said for a VAR willing to put in the time, it’s never too late to jump in.

’As cloud becomes more and more relevant in the IT world you’re going to see IT VARs come to realize that it’s not all that foreign of a space,’ Kraft said. ’I think this is the year that we stop talking about it and start selling it.’