2 December 2008

The network and infrastructure built to serve Comcast customers was leveraged for the small business market

Small businesses represent a great opportunity for cable companies, says Bill Stemper, president of Comcast’s business services division. For many years, small businesses had limited options when it came to accessing leading edge technology and communications solutions. Now they have more choice than ever before.

In terms of their IT and communications needs, small businesses often ride the fence, sometimes paralleling consumers and sometimes with the same sophistication of large enterprises. Few small businesses employ staff with comprehensive IT skills, and rarely do they have the capacity to invest large sums of money in the kind of systems that enable bigger firms to automate key processes. Rather, they have in the past tended to make do with whatever they can get hold of at a price they can afford, and to depend heavily on service providers to support the basic communications systems they do have.

Actually, the small business has much in common with the home user from the perspective of the service provider too. At the enterprise level, IT suppliers have built a sales model that generally demands a big investment of time and resource even before a deal is concluded, and then requires still more effort to implement the finished solution. This is viable because the value of the deal is typically large enough to support the sales effort. But at the small business level, this isn’t the case. Service providers from the enterprise sector who have tried to crack the potentially lucrative small business market have found their sales model too costly for success.

This is why, as the idea of hosted applications and software as a service (SaaS) becomes more widely accepted, telephony and cable providers around the world are looking at the small business sector as an obvious target for growth. BT in United Kingdom is one such company, as our cover interview with Jerry Thompson showed in Connections issue 3, December 2007. And American cable TV and telecommunications giant Comcast is another.

Bill Stemper is president of Comcast Business Services, the company’s recently expanded business services division. “About two years ago, we took a strategic position to invest in serving business customers,” he says. “We took an entry position of going after small customers, really leveraging our existing network and infrastructure. We asked ourselves: if we can serve customers at home with sophisticated Internet, voice and platform services, what would be the next logical extension? That’s when we decided to go after small businesses. We’ve always said that we viewed that as businesses with less than 20 employees, and we felt that was a logical progression and extension of our robust network. We started by offering our Internet services, and most recently we’ve built out and deployed business voice services, to bring choice to these customers with the attributes — the speed, the reliability, the security, the features that businesses want.”

Stemper says that building a big sales resource across the US has been a key part of this development. Although suppliers seeking to target the small business sector need to concern themselves about the costs inherent in their sales model, at the same time it is not possible to sell services to businesses by the same methods as to home customers. “We’ve built out a sales organisation of well over 1,000 people,” he says. “This is a combination of feet-on-the-street sales people, knocking on doors, serving and building face to face relationships with prospects and with customers, as well as people in an inbound telemarketing centre for those customers or prospects that find it more convenient to pick up the phone and reach out to us. It’s also meant building a delivery and operations model where the services that our customers buy can be implemented and served to our customers in a way that they are not only used to, but at the quality of service levels they need to successfully run their businesses. We’ve built and integrated an organisation that has the products and capabilities to call on small business customers, find out their needs, determine how we can best help them, implement the services, and then manage and maintain them in a way that gives them the value and the expectation for why they bought our services to begin with. So we’ve really built a company within a company. We have a terrific common platform as far as the network goes, but the services and technical support that are provided, and how those services are provided to different customer demographics, is where the differences are.”

Small businesses, Stemper says, are in a better position today to access advanced technology than they have ever been. A combination of market deregulation and technological advancements (such as the introduction of SaaS) means that such businesses now have real choices of providers, in a way they never had before. “These small customers have never really had a choice,” he explains. “They got their power from the power company, their water from the water company, and their telephone and Internet services from the telephone company. They haven’t even thought about a choice because there’s never been one available to them. So what we’re able to do first and foremost is bring them a strong, powerful, dependable choice for Internet and telecom services. Nobody else has been able to do that. So the first piece is choice — we really give them another consideration. And then with that, we bring them a value. We bring them a very distinct value proposition that has unique feature functionality that our competitors do not offer, and is bound with a price-bundle advantage. When compared to the competition, looking at features and value, that is an outstanding value proposition. That’s why we win.”

We’ve built and integrated an organisation that has the products and capabilities to call on small business customers, find out their needs, and determine how we can best help them

Bill Stemper, Comcast That said, small and medium-sized businesses (SMBs) aren’t necessarily used to shopping around in this way, and there is a big education job to be done by providers like Comcast who want to build a presence in this market. “We’ve invested — and will continue to invest — our time, in building awareness of choice,” Stemper says. “It happens in three ways, probably many more, but three that come to mind. Clearly, one is advertising and positioning — making people aware. The second is our feet-on-the-street sales force that is knocking on the doors of these businesses and introducing themselves, and clearly letting them know that they have a choice. Third is our base of business customers beginning to tell other colleagues of the choice they made, and providing references based on their satisfaction. That takes time; that’s brand building. Whether a business owner is moving to a larger facility, changing locations or opening a new business, we want them to think of calling Comcast for their phone, high-speed Internet and video services.

Still, getting into a new market of this kind is a big challenge for any service provider. Stemper says that, given Comcast’s previous focus on residential customers, partnering with Microsoft has been a significant benefit for the company. Because of this partnership, announced late in 2007, Comcast’s SMB customers have been able to access ‘Microsoft Communication Services from Comcast’, which includes enterprise-class services in terms of hosted e-mail, calendaring and collaboration solutions.

“About two years ago, we made a strategic decision to get into business services,” says Stemper. “Traditionally, until that point, Comcast had been a company that was outstanding in serving residential consumers at home, so the announcement and the dedication to go into business services was uniquely timed with the agreement to bring in Microsoft and the Microsoft Communication Services platform as a toolset to be integrated into our services. So immediately we say we’re going into business, and we’re going to use Microsoft as a key delivery set of features. This brought credibility and attention, because Microsoft is a brand that is not only terrific at home, but also really known for its productivity enhancement to business customers. That helped us get out of the gate faster. At the same time, it gives us a set of tools that allows us to help small customers who don’t have the technical resources or the wherewithal to get access to the types of capabilities in the Microsoft Communication Services platform. That kind of functionality has mostly been reserved for larger companies with their own IT departments. So we’ve been able to really bring large business productivity tools to small customers, to make them more productive, and give them the same advantages and strength as the big guys.”

For small businesses, Stemper says, there is a huge and obvious benefit to be gained by accessing enterprise-class solutions of this kind. “Clearly, there is a real attachment to these capabilities, and it’s helping the small customers navigate their way through what they really are able to do,” he explains. “We have married the best Internet data services that a small business can get with the best productivity tools available, and it’s really helping the customer take advantage of all those features and functionalities, and when they do, the stories are terrific.”

Given the current economic turmoil, and the unpredictability inherent in running any business in such times, any new service has a steep jump to make. Small businesses, because of their budget constraints, are a tough sell at the best of times. But Stemper says he believes the services that the Comcast and Microsoft partnership is offering can generate productivity improvements that will be compelling to SMBs, even in tough times. “When I think of productivity, I’m really thinking of quick access to accurate information that allows me to be pinpoint precise in my decision-making,” he says. “That’s productivity to me: I can get the information I need quickly, I can assemble it, and I can make a decision, small, medium or large, against that very quickly. So we give our customers the fastest and most robust Internet product, we give them the tools that really allow them to work, not only with their fellow employees. If we think of these small customers, that might have five, ten or twenty employees, they’re really part of a very carefully developed ecosystem of clients, partners, key suppliers. It’s about bringing them together and considering how a small company might use these services to communicate and share information, not only with their own employees, but also with their key suppliers and partners, perhaps even with key clients; and it’s about allowing them to move information very quickly. Today, more than ever, the added uplift and ability to do that, and to do it in a cost-effective way, is critical for success.

“To our customers, this is one service they can get from Comcast. They get the fastest Internet, more security, loaded with features for collaboration and sharing. That is what they are buying from us, as just one solution, and it’s available wherever you are, if you have access to the Internet.”

“Now we are looking at the new capabilities that customers want, delivered over the next data service, referred to as Metro Ethernet,” he continues. “We are now on the board of the Metro Ethernet Forum, which is setting the standards of a new and very powerful data information capability that really serves the next size of customer, larger than the segment that we have been going after so far. This is very important, because now we’ll start to be able to serve the needs of larger customers, and this is the same technology that not only moves data, but starts to support IP PBXs that the customer may purchase on their own, but now they need efficient access for their information. This next-generation technology of Metro Ethernet, which is becoming available throughout the world, is very important to us in being able to serve the medium sized segment of customers. With that, there is probably an untold need of applications. I’m certain our Microsoft suite will be integrated as a part of that, because those customers will want it too. In some cases they might have a terrific IT department so it’s not so important, but for many it will be important. If we can offer it and make it part and parcel of our core services, if you can get this from Comcast, we could change the way medium-sized customers think about how they source things like Microsoft Communication Services.”

For Comcast, an established provider of cable telephony, Internet and entertainment services, this move into hosted IT applications is a key strategic shift. Stemper is well aware that the SMB market is challenging: the sheer number of such firms, and the record of the many IT companies that have tried and failed to target the segment before proves it. But he is enthusiastic and confident about the group’s prospects. “We have a terrific market opportunity that has really been untapped. It’s right in the cities and towns that we operate in today, and the services that are required by business customers really are a logical extension of what we’ve done as a core company for decades,” he says. “In the US, cable companies have only recently started to serve business customers. We’re probably one of the later entrants in doing this, as our company had been busy building itself through acquisition of other cable entities, putting in place for our residential customers terrific Internet and voice products. Now that that has a firm footing, Comcast said, ‘OK, we’re now ready to step up and serve businesses.’ Companies like Cox, Time Warner and others have been doing this a little longer than we have, so we’ve been a fast follower in that case, and we’re uniquely positioned to serve the small business customers that other competitors just aren’t in a place to do, because they don’t have the network and technology that we or other cable entities have.

“Comcast’s top leadership has made a strategic commitment to serve and to bring value to business customers. With that passion and support at the very top of the company, we are really committed to doing that. Through our core products of data services and voice services, and wrapped together with productivity services and capabilities like Microsoft Communication Services, there is a serious commitment from Comcast to bring new value and additional choice to business customers that they’ve never had before, or have never had from a reliable supplier. We’re committed to doing this, as part of our core competence, and as a company that is well positioned for future success.”

This article first appeared in issue seven of Microsoft Connections in Communications magazine.

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