The company is not abandoning its agent relationships but is currently focused on recruiting partners it characterizes as "cloud centric".

April 20, 2012

5 Min Read
Cbeyond No Longer Recruiting Traditional Agents

By Josh Long

Cbeyond Inc.  is no longer recruiting traditional telecom agents as the company seeks to develop relationships with partners that can further its cloud strategy.

“At this particular juncture, we are not recruiting new telecom agents … so no more voice and data-type agents are being recruited to our program,” Zane Long, Cbeyond Vice President of Indirect Sales, said last month during an interview at the Channel Partners Conference & Expo. “And that’s also true for no more telecom channel managers to join my program. They will have to come from and look and feel like” a “cloud-centric type individual.”

Atlanta-based Cbeyond is pursuing a strategy to focus on small and medium-sized businesses in need of more sophisticated networking and cloud services.

The company is hoping to significantly upsell nearly half its base of 62,000 customers because it believes that 46 percent of its customers are “tech dependent”, Cbeyond Chief Executive Jim Geiger said earlier this year during a conference call with investors. Its strategy is beginning to pay off, as illustrated by an announcement Thursday that Community Management Associates has engaged the company to provide a package of cloud PBX, enterprise-grade network and virtual server solutions. CMA already had purchased phone and data services from the company.

Headquarters: Atlanta
2011 Revenues: $485 million
Total Customers: 62,169 (as of 4Q 2011)
Employee Headcount: approximately 2,000
Stock Symbol: CBEY (NASDAQ)
Cloud acquisitions: In 2010, Cbeyond entered the cloud computing business through the acquisitions of MaximumASP and Aretta Communications. Cbeyond acquired the assets of MaximumASP on November 3, 2010 and the stock of Aretta Communications on October 29, 2010.
Trust: Forbes Magazine named Cbeyond one of America’s most trustworthy companies.

Traditional Agents Still Important

Cbeyond’s new focus, though, doesn’t mean the company plans to abandon its relationships with traditional agents. The indirect channel is responsible for a significant book of business at Cbeyond. The telecommunications provider reported $485 million in 2011 fiscal year revenues, and its indirect channel generally accounts for roughly 20 percent of those monies.

“We can get a lot of cloud products sold through our telecom partners but we also understand that we need cloud-centric partners” as well, Long told Channel Partners. “In fact, we are encouraging our telecom agents to begin to recruit … web developers and systems integrators. They need to start partnering with them to build on their own technical expertise so they can in fact get on the cloud train.”

Earlier this year, Cbeyond held cloud training events in a number of U.S. cities, including Atlanta, Chicago, Arlington, Texas and Newport Beach, Calif. More than 400 agents attended the “Get your head in the cloud” training events, Long said.

Cbeyond Focuses on Cloud

Long emphasized that Cbeyond is being rather selective about the new partnerships it enters.

“We’re counting on these independent software vendors and web developers and … systems integrators to compliment what we do and so partnering becomes critical for us and quite frankly critical for those partners to partner with the right entity so they can start moving … away from what we call the physical server and moving into the cloud.”

Cbeyond also is relying on its direct sales force to further its new cloud strategy. The company earlier this year announced plans to hire 125 sales reps to sell exclusively to businesses that it classifies as tech dependent. Cbeyond has hired more than 60 of those sales reps and is ahead of its plans to bring everyone on board before the end of the year. The company also revealed plans to hire cloud sales engineers and professional services talent to help its customers migrate from reliance on onsite infrastructure to cloud services.

It’s little wonder that Cbeyond is focused on the cloud. The company has found that customers it classified as tech dependent spend more than $2,000 on combined communications and IT infrastructure and consulting services, Geiger said earlier this year. That’s more than twice what customers purchasing traditional communications services spend at Cbeyond (less than $700 per month), he said.

Last month, Cbeyond introduced a Remote Migration Service that helps SMBs migrate to the cloud. Through the offering, a Cbeyond engineer will get on the phone with a customer to help the business migrate data and applications running on local servers like QuickBooks as well as customized software, said Terry Corder, cloud sales engineer with Cbeyond, in an interview. The service costs $250 for four hours of Cbeyond’s time and $400 for six hours.

“Those two options give them [businesses] a very inexpensive way to get into the cloud and we work with their IT vendor and let them know, ‘look we are not trying to replace you. We are trying to help you get your customer into the cloud so you can support them worldwide'”, Corder said.

Data Security is Paramount

Cbeyond wants its customers to rest assured that their data is secure in the cloud, and the company reported late last year that it was one of the first providers to complete a Type II SOC 2 audit that demonstrated compliance with security and other criteria.

“When you show a government entity that you are a SOC 2 compliant data center, they look at that as a positive,” Corder said, “because they know you have been audited to say, I keep my network redundant, I make sure that everything stays up and running all the time, I have multiple layers of redundancy on my power, on my Internet connectivity, on my cooling, on my servers.”

Most recently, Cbeyond completed a SOC 3 examination of its data center in Louisville, Kentucky, in what the company said reflects its standing at the “forefront of cloud compliance requirements.”

For more details on Cbeyond’s cloud strategy, stay tuned for its next earnings call, which is presently scheduled for May 2.

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