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Windstream Communications CSL Award Write Up

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  • 1. 2011 South African Data Centre Green Excellence Award in Technology Innovation Cybernest 2012 2012 U.S. Retail Carrier Ethernet Services Competitive Strategy Leadership Award© 2011 Frost & Sullivan 1 “We Accelerate Growth”
  • 2. BEST PRACTICES RESEARCHCompetitive Strategy Leadership AwardRetail Carrier Ethernet Services, U.S., 2012Frost & Sullivan’s Global Research PlatformFrost & Sullivan is in its 50th year in business with a global research organization of 1,800analysts and consultants who monitor more than 300 industries and 250,000 companies.The company’s research philosophy originates with the CEO’s 360-Degree Perspective™,which serves as the foundation of its TEAM Research™ methodology. This unique approachenables us to determine how best-in-class companies worldwide manage growth,innovation and leadership. Based on the findings of this Best Practices research, Frost &Sullivan is proud to present the 2012 U.S. Competitive Strategy Leadership Award inRetail Carrier Ethernet Services Market to Windstream Communications (Windstream).Significance of the Competitive Strategy Leadership AwardKey Trends in the Retail Carrier Ethernet Services MarketThe retail Carrier Ethernet services market continues to keep up its momentum, growingat an impressive annual growth rate of 56.2 percent from 2010 to 2011. 2011 marketrevenues exceeded $3.34 billion.Ethernet services continue to gain acceptance as the preferred choice for bandwidth needsof different types and sizes of enterprises, owing to the benefits they offer: scalability,reliability and cost efficient bandwidth.Market demand for the overall service continues to grow, with Ethernet access beingrapidly adopted by enterprises to connect to Layer 3 Multi-Protocol Label Switched (MPLS)virtual private networks (VPNs) and Dedicated Internet Access (DIA) services, and E-Line(EPL and EVPL) becoming the de facto choice of service for replacement of traditionalprivate line circuits. Metro E-LAN continues to see growth in key verticals such ashealthcare, government and education that often need multipoint-to-multipointconnectivity.The market has also witnessed increased demand for long haul Ethernet circuits,particularly for point-to-point connectivity. This is an indication of the gradual marketmigration from traditional private line circuits to Ethernet in the long haul segment.However, demand for Virtual Private LAN Services (VPLS) continues to be modest as mostenterprises continue to prefer Layer 3 MPLS VPNs as opposed to VPLS for multi-siteconnectivity.Communication service providers (CSPs) continue to focus on network expansion, servicelevel agreements (SLAs) and classes of service (CoS) on their Ethernet networks. As part© 2012 Frost & Sullivan 1 “We Accelerate Growth”
  • 3. BEST PRACTICES RESEARCHof their network expansion strategies, CSPs are bringing more customer locations on totheir Ethernet networks in the metro space, and enabling intercity connectivity in the longhaul space, either through partnerships or through capital investment.As enterprise customers seek a cost-effective solution to converge their voice, data andvideo applications, Ethernet—with its completeness of benefits, and cost effective, flexibleand reliable bandwidth—continues to be a winner in the transport services arena.Impact of Competitive Strategy Leadershi p Aw ard on Key StakeholdersThe Competitive Strategy Leadership Award is a prestigious recognition of Windstream’saccomplishments in the Retail Carrier Ethernet Services Market. An unbiased, third-partyrecognition can provide a profound impact in enhancing the brand value and acceleratingWindstream’s growth. As captured in Chart 1 below, by researching, ranking, andrecognizing those who deliver excellence and best practices in their respective endeavors,Frost & Sullivan hopes to inspire, influence, and impact three specific constituencies: • Investors Investors and shareholders always welcome unbiased and impartial third-party recognition. Similarly, prospective investors and shareholders are drawn to companies with a well-established reputation for excellence. Unbiased validation is the best and most credible way to showcase an organization worthy of investment. • Customers Third-party industry recognition has been proven to be the most effective way to assure customers that they are partnering with an organization that is leading in its field. • Employees This Award represents the creativity and dedication of Windstream’s executive team and employees. Such public recognition can boost morale and inspire your team to continue its best-in-class pursuit of a strong competitive position for Windstream.© 2012 Frost & Sullivan 2 “We Accelerate Growth”
  • 4. BEST PRACTICES RESEARCH C ha r t 1 : B es t P ra c t i ces L ev e ra g e f o r Gr ow t h Ac ce l era t i onKey Benchmarking Criteria f or Competitive Strategy Leaders hip Aw ardFor the Competitive Strategy Leadership Award, the following criteria were used tobenchmark Windstream’s performance against key competitors: • Leverage of Competitive Intelligence • Execution of Competitive Strategy • Impact on Market Share • Competitive Brand Positioning (brand strength and unique market position) • Impact on Customer Satisfaction/Value© 2012 Frost & Sullivan 3 “We Accelerate Growth”
  • 5. BEST PRACTICES RESEARCHDecision Support Matrix and Measurement CriteriaTo support its evaluation of best practices across multiple business performance categories,Frost & Sullivan employs a customized Decision Support Matrix (DSM). The DSM is ananalytical tool that compares companies’ performance relative to each other with anintegration of quantitative and qualitative metrics. The DSM features criteria unique to eachAward category and ranks importance by assigning weights to each criterion. The relativeweighting reflects current market conditions and illustrates the associated importance ofeach criterion according to Frost & Sullivan. Fundamentally, each DSM is distinct for eachmarket and Award category. The DSM allows our research and consulting teams toobjectively analyze each companys performance on each criterion relative to its topcompetitors and assign performance ratings on that basis. The DSM follows a 10-point scalethat allows for nuances in performance evaluation; ratings guidelines are shown in Chart 2. C ha r t 2 : P erf o rm a n c e- Bas e d Ra t i ng s f o r De cis i on S u pp o r t Ma tr i xThis exercise encompasses all criteria, leading to a weighted average ranking of eachcompany. Researchers can then easily identify the company with the highest ranking. As afinal step, the research team confirms the veracity of the model by ensuring that smallchanges to the ratings for a specific criterion do not lead to a significant change in theoverall relative rankings of the companies. C har t 3 : Fr os t & S ul l iva n’s 10-S t e p P r oc ess f or I de n t ify in g Awa rd R ec ip i en ts© 2012 Frost & Sullivan 4 “We Accelerate Growth”
  • 6. BEST PRACTICES RESEARCHBest Practice Award Analysis for WindstreamThe Decision Support Matrix, shown in Chart 4, illustrates the relative importance of eachcriterion for the Competitive Strategy Leadership Award and the ratings for each companyunder evaluation. To remain unbiased while also protecting the interests of the otherorganizations reviewed, we have chosen to refer to the other key players as Competitor 1and Competitor 2. C ha r t 4 : D ec is io n S u p po r t M at ri x f or C o mp e t i ti ve S t ra t eg y L ea d ers h ip Awa rd Measurement of 1–10 (1 = lowest; 10 = highest) Award Criteria Execution of Competitive Leverage of Competitive Impact on Market Share Impact on Customer Weighted Rating Competitive Brand Satisfaction/Value Intelligence Positioning Relative Weight (%) 20% 20% 20% 20% 20% 100% Strategy Windstream 9 10 10 9 9 9.4 Competitor 1 9 8 8.5 9 9 8.7 Competitor 2 9 8 8 8 8 8.2Criterion 1: Leverage of Competitive IntelligenceRetail Carrier Ethernet services market revenues continue to grow in double digits as theservice gains acceptance as the preferred choice for bandwidth needs of different types andsizes of enterprises, due to the benefits it offers: scalability, reliability and cost efficientbandwidth. Communication service providers (CSPs) continue to focus on networkexpansion, service level agreements (SLAs) and classes of service (CoS) on their Ethernetnetworks. As part of their network expansion strategies, CSPs are bringing more customerlocations on to their Ethernet network in the metro space, and enabling intercityconnectivity in the long haul space, either through partnerships or through capitalinvestment. Windstream, like most other leading Ethernet service providers, has usedcompetitive intelligence to monitor the market and competitive scenario closely, andintroduced an impressive set of Ethernet service offerings to penetrate the US marketsmuch more effectively than in the past.© 2012 Frost & Sullivan 5 “We Accelerate Growth”
  • 7. BEST PRACTICES RESEARCHCriterion 2: Execution of Competitive StrategyWindstream has followed a combination of organic and inorganic growth strategy to emergeas one of the leading providers in the retail Carrier Ethernet services market.Windstream’s Ethernet network footprint spans its ILEC properties, and is a combination ofEthernet over Copper (EoC) and fiber assets covering over 94% percent of the company’sbusiness customers and prospects. The network coverage is a result of deployment thatbegan over 5 years ago and has driven significant revenue growth for Windstream,particularly in the access space where Ethernet Access for Internet and MPLS continues todrive increased market spending.Windstream acquired PAETEC in 2011, which provided a huge competitive edge to thecompany in the enterprise metro and long haul Ethernet services market, increasingWindstream’s presence from 29 states to nationwide. PAETEC’s impressive network footprint(including the huge EoC and fiber assets it acquired through Intellifiber acquisition) and itsfocus on enhanced customer support have contributed to Windstream’s growth in theEthernet services market.PAETEC acquisition combined with other strategic acquisitions of Windstream (Q-Comm, andHosted Solutions) has helped Windstream emerge as a leading competitor in the businessEthernet services market.Criterion 3: Impact on Market ShareFrost & Sullivan’s recent research on the retail Carrier Ethernet Services market indicates anincrease in Windstream’s market share (as measured by revenues) for the year 2011.Windstream’s initiatives in this market (as discussed in the above sections) have enabledthe company to emerge out of the “others” category and garner a spot in our market sharechart with 6.2 percent share in 2011. While Windstream’s organic growth strategies didcontribute to this increase in market share, the increase in share can be largely attributed tothe PAETEC acquisition.Criterion 4: Competitive Brand Positioning (brand strength and unique market position)The combined Windstream and PAETEC assets strengthens Windstream’s brand positioningin the retail Carrier Ethernet services market. The merger enhances Windstream’s brandvalue in the enterprise market as PAETEC brings an impressive set of nationwide networkassets, Fortune 500 business customers and an established brand value among businesscustomers.© 2012 Frost & Sullivan 6 “We Accelerate Growth”
  • 8. BEST PRACTICES RESEARCHCriterion 5: Impact on Customer Satisfaction/ValueFollowing its acquisition of PAETEC, Windstream is in a better position to serve a largerbusiness customer base in the retail Carrier Ethernet services market. The company cannow reach business customers in 46 states and the District of Columbia with approximately100,000 fiber route miles across the country. Windstream’s enhanced market positioning inthe Ethernet services market is also expected to enable the company to compete better inthe cloud services space with its combined datacenter and network assets.ConclusionWindstream is clearly one of the nationwide leaders in business connectivity markets andhas come a long way from its early days of being a regional ILEC. Frost & Sullivan’sresearch indicates that Windstream holds a significant market share in the CarrierEthernet Services market, which is a testament to the company’s effective competitivestrategy. The 2012 award for Competitive Strategy Leadership in the Retail CarrierEthernet Services Market is presented to Windstream in recognition of its impressiveachievements.The CEO 360-Degree Perspective T M - Visionary Platform for GrowthStrategiesThe CEO 360-Degree Perspective™ model provides a clear illustration of the complexbusiness universe in which CEOs and their management teams live today. It representsthe foundation of Frost & Sullivans global research organization and provides the basis onwhich companies can gain a visionary and strategic understanding of the market. The CEO360-Degree Perspective™ is also a “must-have” requirement for the identification andanalysis of best-practice performance by industry leaders.The CEO 360-Degree Perspective™ model enables our clients to gain a comprehensive,action-oriented understanding of market evolution and its implications for their companies’growth strategies. As illustrated in Chart 5 below, the following six-step process outlineshow our researchers and consultants embed the CEO 360-Degree Perspective™ into theiranalyses and recommendations.© 2012 Frost & Sullivan 7 “We Accelerate Growth”
  • 9. BEST PRACTICES RESEARCH C ha r t 5 : CE Os 3 60- De g re e P er sp ec t iv e ™ M o d el© 2012 Frost & Sullivan 8 “We Accelerate Growth”
  • 10. BEST PRACTICES RESEARCHCritical Importance of TEAM ResearchFrost & Sullivan’s TEAM Research methodology represents the analytical rigor of ourresearch process. It offers a 360 degree view of industry challenges, trends, and issues byintegrating all seven of Frost & Sullivans research methodologies. Our experience hasshown over the years that companies too often make important growth decisions based ona narrow understanding of their environment, leading to errors of both omission andcommission. Frost & Sullivan contends that successful growth strategies are founded on athorough understanding of market, technical, economic, financial, customer, bestpractices, and demographic analyses. In that vein, the letters T, E, A and M reflect ourcore technical, economic, applied (financial and best practices) and market analyses. Theintegration of these research disciplines into the TEAM Research methodology provides anevaluation platform for benchmarking industry players and for creating high-potentialgrowth strategies for our clients. C ha r t 6 : B e nc h ma r ki ng P e rf or ma nc e w i t h TE A M R es ea rc hAbout Frost & SullivanFrost & Sullivan, the Growth Partnership Company, enables clients to accelerate growthand achieve best-in-class positions in growth, innovation and leadership. The companysGrowth Partnership Service provides the CEO and the CEOs Growth Team with disciplinedresearch and best-practice models to drive the generation, evaluation and implementationof powerful growth strategies. Frost & Sullivan leverages 50 years of experience inpartnering with Global 1000 companies, emerging businesses and the investmentcommunity from more than 40 offices on six continents. To join our Growth Partnership,please visit http://www.frost.com.© 2012 Frost & Sullivan 9 “We Accelerate Growth”

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