RealTime IT News

Alliances Offer ISPs Big Roles in Small Business

International Data Corp. reported this week that Internet service provider sales to small businesses are booming, due largely in part to multifaceted alliances and partnerships to channel value-added services to small business.

Through alliance building, ISPs have learned that they do not necessarily have to possess in-house telecommunications experts to sell advanced services directly to small businesses.

"As the primary providers of Internet access, ISPs are gaining footholds in small businesses as providers of advanced or enhanced telecommunications services," said Jeannette Noyes, research manager with IDC's Residential and Small Business Telecommunications Services programs.

"ISPs have the opportunity to expand their portfolios to include services such as high-speed access, virtual private networks, e-commerce, remote-access solutions, and even voice services."

ISPs develop relationships with communications and computer equipment suppliers, value-added resellers, competitive and incumbent local exchange carriers in order to create new services to distribute locally.

"Distribution alliances provide ISPs with an entree to these organizations' technical expertise and existing relationships with small businesses," Noyes said. "There will be an increasing trend to develop partnerships among all players in the channel--ISPs, distributors, VARs, hardware or software vendors, and LECs."

Midsize and small ISPs have begun aggressive marketing and sales programs to carve out a niche in the small business market. As part of their marketing and sales plans, ISPs and their channel partners recognize the growth patterns that small businesses exhibit and develop their strategies around them.

According to IDC, in the beginning of a small businessess' life cycle, the business entity buys directly from wholesalers or distributors. As the small business begins to grow, it turns to channel partners to provide the technical expertise to facilitate growth and to take advantage of bundled products and services to solve specific business problems.

"The channel members that succeed will increasingly emphasize service as a critical piece of the marketing mix," Noyes said.

The IDC report profiles the distribution channels of leading ISPs and looks at channel development among data CLECs and traditional hardware and software developers.