Service Provider Shares Risks, Rewards, and Revenue with Major Convention Center | Article

convention constructionWhen the 540,000-square-foot Connecticut Convention Center (CCC) opened in Hartford in June 2005, communications provider Total Communications’ relationship with the CCC officially shifted from construction contractor to manager of the center’s state-of-the-art communications system as an outsourced service provider.

However, as a strategic development partner before and during the construction phase, Total was actually an outsourcing partner since the relationship began.

In an innovative revenue-sharing arrangement with the CCC, Total now assumes responsibility for maintaining its vital communications infrastructure, something center managers knew nothing about, for “a piece of the action.” And the CCC will end up saving about a million dollars over the life of the almost nine-year service agreement.

The facility was designed and constructed during a huge metamorphosis of technology, says Ben Seidel, then Executive Director of the Connecticut Convention Center.

“Wireless was a vision in beta testing back in 2002 when we were laying out plans, but an absolute necessity by the time we opened the building,” he says. “It was critical to have a multi-purpose backbone, which we could expand and manage properly to accommodate future technology.”

This led Seidel to local service provider Total Communications, a Cisco Premier Certified Partner, which specializes in development, management, and expansion of small/medium-sized business (SMB) communications networks.

Yankee Group analyst Sandra Palumbo notes that such outsourced options are enticing to the growing number of enterprises with “tight capital budgets” that restrict their ability to invest in new technology–“even if the expenditure might improve business efficiency.”

“Working locally and understanding a small business are big advantages for us, says Tom Donahue, Major Account Representative for Total Communications. “Although the convention center was a huge project, if you take away the square footage, it’s really a small business with 104 employees.”

Provider Helps Plan, Build, Maintain, and Plan Some More

Exhibitors at the new $271 million convention center not only have VoiP (Voice over Internet Protocol) telephony and high-speed and wireless connectivity at their disposal, they also benefit from Total’s onsite management expertise and support for all their voice, data, and video needs. Total, in return, earns a piece of the revenue every CCC event generates.

“For us, revenue-sharing means that we go on the other side of the table and join the customer,” said Jeff Nyland, Director of Multiservices at Total. “Together with the CCC, we’re a core team where we both need to be competitive to make the customer happy.”

But what makes this relationship unique is its visionary properties. The primary goal during development was assuring that the communication system would be state-of-the-art when the CCC opened for business two-plus years out.

During the planning phase, Total Communications’ team, including Donahue and his Cisco associates, had numerous planning sessions with Seidel to determine how the provider team would supply technology available a few years down the road, while accommodating diverse communication needs of not only the center’s management group but also firms attending conferences and trade shows.

By prioritizing and focusing on key desired features, they planned the communication backbone. They identified other future needs and solutions of the network to ensure continued redundancy and resiliency in all contingencies and numerous floor plans. “Logistically that took many hours to work out,” says Nyland.

Today, “Total Communications knows the technology in this building intimately,” says Costelli. “With their strong relationship with Cisco, they can solve issues efficiently and help ensure that all our technology demands are met.”

Richard McLeod, a Director for Cisco’s Worldwide Channels Team, stresses that the Cisco-Total-CCC outsourcing relationship is about commitment to support the customer beyond planning and deployment. “It’s an approach we definitely like to see.”

Large Tech Firms Partner With Local Outsourcing Providers

This pre-planning and teamwork from design to build-out provide the convention center flexibility to support any variety of exhibitors, regardless of communication or multimedia demands. The integrated fiber-optic data, voice, video network, and wireless communications enable exhibitors and guests to link to the Internet from anywhere in the building and power video screens. Total technicians provide daily service and management support.

Cisco strives to take best practices and share them with its partners; McLeon says Cisco “is there for Total with continuous design and support.”

Mike Costelli, current Executive Director of the CCC, notes that his operation saved about $300,000 in up-front costs “and between $75,000-to $100,000 annually in maintenance fees. Plus, we have a partner who specializes in this, so we can focus on managing conventions, our core.”

Watson Murthy, a Senior R&D Manager at Cisco, says his firm embraces outsourcing as a way to leverage and expand its engineering/product development and IT capabilities. But he also notes that outsourcing enabled Cisco to shrink its governance budget and improve its service levels. “We save millions of dollars in overhead costs just by not growing the management team proportional to the partner headcount growth,” he says.

Morningstar analyst David Kathman notes that Cisco remained competitive as a supplier of networking equipment after the market fell out from under it by using the “local boots on the local ground” outsourcing model to broaden its reach into the SMB market. “Companies just stopped investing” directly with Cisco, “especially SMBs that everyone thought would.”

Lessons From The Outsourcing Journal:

  • Large capital construction enterprises benefit by outsourcing development and day-to-day management of some services (communications, utilities, etc.) to providers that have specific expertise in areas the owners do not.
  • Often, revenue-sharing between supplier and buyer is a characteristic of these outsourcing relationships.
  • Another advantage of outsourcing for such capital-intensive enterprises is the mitigation of risk to the property owner that the technology involved in their secured service won’t become obsolete during the life of the structure.

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