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Virtela's unbundled approach plays in WAN space

The wide area network outsourcing market has been a tough one to crack, but one company has a strategy that may prove successful.

The wide area network outsourcing market has been a tough one to crack, but one company has a strategy that may prove successful.

As many as 75% of companies handle their own virtual private networks (VPNs). When they look for wide area network (WAN) services, they often just want the connectivity and little else. Now one company, Virtela Communications Inc., has decided that it will not fight other vendors for the remaining 25% but will instead give enterprises what they want.

Last week, the Denver company announced its decision to untether these services from one another and offer them as individual services. A customer can now purchase just the connectivity, just the VPN services, just the management services or even just use Virtela as a consultant, said Jeff Phillips, Virtela's director of marketing.

The company had offered bundled WAN services that included its own WAN connection cobbled together through relationships with 150 access providers in 190 countries, using multiple backbones. The bundle included VPN services, network monitoring, and troubleshooting, and consulting services. With all of those services bundled into one offering, Virtela was competing for a small piece of the market with big players like AT&T.

Virtela's new strategy may give it a leg up in the market, said Zeus Kerravala, vice president with the Boston-based research firm Yankee Group. By offering a series of tools that can help companies manage WAN connections themselves, Virtela is getting its foot in the door with companies that have previously done VPNs on their own. If those companies have a good experience with Virtela, the company may be able to move them over to a full-service WAN offering in the future, he said.

In addition, companies have varying opinions of how they would prefer to handle their WAN services, said Steve Harris, a research manger with the Framingham, Mass.-based research firm International Data Corp. "When asked about [WAN outsourcing] in surveys, we hear the whole gamut of replies," he said.

Fuddruckers Restaurants, a chain of 114 casual eateries, recently transitioned from having dial-up connections at each of its locations to broadband connections. The company made the move to enable more efficient credit card processing.

Fuddruckers considered procuring and managing the connections on its own with its relatively limited IT staff. But doing so would have meant the time-consuming task of dealing with numerous carriers to cobble together a WAN, said Frank Gomes, IT systems administrator at the Beverly, Mass.-based company.

Fuddruckers went to Virtela, but it did not buy the entire bundled service offering. It only purchased the connectivity and network monitoring. The network monitoring service has worked so well, Gomes said, that he often get alerts about network problems before he hears from any of the outlets.

Fuddruckers, however, is not purchasing VPN services from the company. It already has those services from a remote data center in Denver. Virtela's flexible approach has worked well, Gomes said.


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