1. Navigating the Globe: The Rise
of Regional Service Providers www.yankeegroup.com
by Camille Mendler and Agatha Poon | January 2009
Executive Summary
Running a multicountry operation isn’t a trivial matter for any To maintain the growth momentum, businesses must align supplier
business, whether it employs a few hundred or a few thousand capabilities with their business objectives. As shown in Exhibit 1,
employees. But the global interconnectedness of commerce— Yankee Group identifies four major business objectives that
particularly to and from Asia—is now a constant. Success in global enterprises want suppliers to help them with:
business relies heavily on the effective use of communication tools. • Growing the business
Among European and North American businesses, for example, every • Simplifying the business
1 percent rise in the value of bilateral trade with Asia triggers a 5 • Protecting the business
percent volume boost in interregional data communications traffic, • Supporting the business
according to Yankee Group estimates.
It’s never been more critical to identify the right technology partner.
The good news: Businesses can find multiple vendors offering global Global economic challenges are driving many organizations to
IT and networking services to support growing communication needs. reconsider international investments. A winner-takes-all approach of
The bad news: Choice can be bewildering. Not least, working with a giving international business to a single supplier may not be a wise
well-known name at home may not translate well internationally. move. This report examines why enterprises should consider using
regional service providers to reduce the risk to their global
operations and increase quality of service, and discusses navigation
tools required to plot an enterprise’s bearings on a compass.
Exhibit 1
Aligning Supplier Capabilities to Business Objectives
Source: Yankee Group, 2009
This custom publication has been sponsored by SingTel.
© Copyright 2009. Yankee Group Research, Inc. All rights reserved.
This Yankee Group Report is published for the sole use of Yankee Group clients. It may not be duplicated, reproduced or transmitted in whole or in part without the express permission of
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All rights reserved. All opinions and estimates herein constitute our judgment as of this date and are subject to change without notice.

2. Navigating the Globe: The Rise of Regional Service Providers
Table of Contents
I. Globalization Erases Boundaries to Business Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Businesses Large and Small Go Global . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
II. Supplier Procurement Options Fail to Satisfy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Adopting a Best-of-Region Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
III. Aligning Business Objectives with Service Provider Attributes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Proof Points for Goal-Oriented Regional Supplier Choice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
IV. Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
I. Globalization Erases Boundaries to Business Growth Businesses Large and Small Go Global
Doing business internationally is now common practice, regardless of
There’s no doubt about the link between telecommunications and the
a company’s size. Today, three-quarters of major multinational
acceleration of global trade. Exactly 150 years ago, the first
corporations (MNCs) headquartered in Europe or North America have
transoceanic cable was launched. Then, the 99-word message from
connectivity needs into Asia. Smaller enterprises are also spreading
Queen Victoria congratulating U.S. President James Buchanan took 16
their ambitions globally. According to the Yankee Group Anywhere
hours to transmit across the Atlantic. Today, modern communication
Enterprise—Large: 2008 IT and Managed Services Survey, 60 percent
from much longer distances takes only milliseconds.
of European midsize enterprises (typically employing between 500
The death of distance has had profound effects on commerce between and 2,500 people) operate between two and nine offices abroad. The
Europe, North America and Asia. As Exhibit 2 illustrates, the value of proportion rises to 63 percent among North American midsize enterprises.
bilateral trade with Asia is growing more than 8 percent per annum. In
Even if economic challenges persist, trade patterns are now firmly
data traffic alone, the multitrillion-dollar trade between Asia and its
established—although pressure to reduce costs is now acute. The
European and North American trading partners has boosted Asia-centric
survivability of global infrastructure remains a perennial concern.
data communications volumes in excess of 40 percent per annum—a
Earthquakes, tsunamis and cuts in submarine cables are highly
trend that Yankee Group predicts will continue at similarly aggressive
damaging to businesses whose communications suppliers do not have
rates through 2012 and potentially beyond.
backup plans.
Exhibit 2
Networked Economies: Bilateral Trade with Asia and Telecom Traffic Flows
Source: Yankee Group, 2009
2 © Copyright 2009. Yankee Group Research, Inc. All rights reserved.

3. January 2009
But that’s only part of the challenge for enterprises going global. The • The winner-takes-all approach: This approach involves
thornier issue is ensuring good supplier performance during the entire contracting with one service provider for all international
life cycle of the relationship, for day-to-day operation and not just the technology services. Typically, the choice defaults to the same
organization that provides domestic services in the company’s
dramatic. That means setting the right goals and expectations from the
headquartered country.
beginning.
- Promise: Potentially familiar with the business and its
needs, offering management simplicity and negotiating
II. Supplier Procurement Options Fail to Satisfy
power to buyers through volume discounting. Handles
What’s the best approach to choosing an international service
downstream negotiations with local suppliers in required
provider? According to the Yankee Group Anywhere Enterprise—
geographies and manages all service delivery.
Large: 2008 IT and Managed Services Survey, the average contract
- Reality: Built on the incorrect assumption that the sole
length is 5.5 years. With that in mind, it’s important to get it right.
Procurement trends have ebbed and flowed considerably during the supplier is consistently resourced and knowledgeable,
years. That’s because dissatisfaction with the options available has irrespective of global geography. In practice, this approach
prevented businesses from anchoring their approach. does not guarantee the global supplier deals with the best-
of-breed vendor in each country or obtains the best pricing
Until recently, enterprises have churned through three principal
terms. Service quality standards may be contractually
procurement options:
consistent, but often down to the basic service level. The
The consortium approach: Ten years ago, telecom operators were
•
relentless push for a regional footprint by a handful of
busy building global multivendor alliances with ambitious names
global service providers suggests that their worldwide
such as Unisource, Concert and Global One. They claimed they
resources are far from adequate. Global deals also risk
could deliver and manage seamless communications in any corner
supplier lock-in due to the complexity of disengagement.
of the earth.
- Promise: A tempting offer of management simplicity,
service consistency and vast volume discounts across
Adopting a Best-of-Region Approach
multiple operators’ networks. A fourth approach—the best-of-region approach—is building
momentum. Among the largest European and North American
- Reality: A promise unfulfilled; all global consortia have
multinationals that Yankee Group has surveyed during the past five
now collapsed—partly due to management squabbles. They
years, 49 percent make purchasing decisions centrally, charging back
never delivered service consistency or holistic
costs to regional divisions. A further 27 percent specify requirements
accountability. centrally, but devolve purchasing regionally.
The piecemeal approach: As its name implies, the piecemeal
•
According to interviews with CIOs that Yankee Group conducted for
approach means selecting a single vendor for each country where
this report, central purchasing divisions are increasingly open to
operations exist.
spreading risk by carving out networking and IT investments
- Promise: Potential to obtain the best-of-breed option in regionally. In part, this is a response to continuing poor levels of
every locality. service delivery and support. According to Yankee Group research,
more than 60 percent of international connectivity outages are the
- Reality: Difficult to scale; complex and costly to manage
fault of a local access provider. By choosing a regional service
a multiplicity of service providers, with minimal power to
provider (RSP) with physical proximity and regional familiarity,
negotiate preferential discounts. Service quality across global enterprises expect to exert better control and responsiveness.
service providers is inconsistent. This approach is also risky Indeed, CIOs that Yankee Group interviewed that have moved to a
because of the need to keep a direct eye on all moving parts best-of-region approach say the differences are clearest in account
of the company’s global communications infrastructure. management quality and responsiveness.
3
© Copyright 2009. Yankee Group Research, Inc. All rights reserved.

4. Navigating the Globe: The Rise of Regional Service Providers
The best-of-region approach requires the selection of a single best-of-
breed supplier that is responsible for all in-region needs. This strategy
III. Aligning Business Objectives with Service
will not work in every geographic region. To demonstrate well-
Provider Attributes
balanced regional capabilities such as management skill and service
Just as explorers such as Marco Polo relied on the sextant and the
quality of a supplier in all countries against competitive strengths in a
astrolabe to navigate international waters, successful global businesses
single or few geographical locations, an underlying requirement is the
also need effective navigation tools to select the right service
existence of healthy interregional trade and market competition. But
provider. Think of the navigation tools as bearings on a compass.
where the market conditions are right, the best-of-region approach can
There are four bearings that a service provider must have to live up to
outrank others, as Exhibit 3 suggests.
its promise on meeting enterprise requirements:
The best-of-region approach is valid in Asia because interregional
• Value: Assessing the true value of services on offer involves a
trade is growing fast, stimulated by both a domestic economic drive
detailed review of internal business costs using appropriate
and international investment. This has triggered strong demand for
performance and financial metrics. Those metrics may be unique
and investment in robust communications infrastructure. Today,
to a particular company, but the RSP should be able to map its
multiple RSPs are competing to deliver on the needs of regional
service intelligibly to them. Discussions with the RSP’s bid team
businesses and global MNCs that require reliable regional support.
should begin with a definition of business goals and then a road
The best-of-region approach shows great promise by lowering risk to
map of how to achieve them.
out-of-region customers with a local presence in the region because
delivering service in the region is a core business activity for the RSP. • Security: Choosing to work with an RSP should involve either an
Also, it offers “one throat to choke” on a regionalized basis, which acceptable business risk or a reduced exposure to risk for the
has proven to be a more manageable option than a piecemeal contracting enterprise. This includes disclosure of infrastructure
approach with its multiplicity of vendor relationships. Strategically, redundancy, certified skills, subcontracting parties to reach out to
the best-of-region approach enables enterprises to maintain
highly regulated markets such as Vietnam and China, and not
competitive tension and prevent the supplier lock-in that is commonly
least, supplier financial strength in a given region.
seen in a winner-takes-all context. Comparatively speaking, best-of-
region RSPs are nimble to demonstrate their service reach, superior
service levels, responsive support and preferential pricing through the
right mix of direct investment in regional network infrastructure and
support centers, as well as a deep and active network of local
partnerships to serve in-region customers.
Exhibit 3
Assessing International Procurement Methods
Source: Yankee Group, 2009
4 © Copyright 2009. Yankee Group Research, Inc. All rights reserved.

5. January 2009
• Accountability: The RSP must have world-class, end-to-end Exhibit 4
reporting processes and tools with a transparent governance Linking Business Objectives to Supplier Proof Points
framework for alerting and responding to issues. Typically, Source: Yankee Group, 2009
accountability is defined and governed contractually through
what’s known as a service-level agreement (SLA). It’s also seen in
the process certifications that the service provider maintains—for
example, routinely audited and certified skills in project
management and IT governance such as Six Sigma, ITIL and
COBIT, coupled with ISO quality accreditations. Contractual
commitments must be managed via trained customer service teams
and online customer portals that are accessible around the clock.
• Agility: During a multiyear contract, business priorities can
change and needs fluctuate. The relationship with the RSP should
be flexible enough to anticipate and plan for change. That’s a
factor related to the contract structure and the supplier’s
investment commitments, but also to the quality of the account
management team assigned to the relationship. Actively
participating in industry groups developing next-generation
services such as the Metro Ethernet Forum is a proactive way to
demonstrate service commitment.
Proof Points for Goal-Oriented Regional Supplier Choice
The core business objectives of most enterprises have nothing to do
with technology, but the right application of technology can ensure
they are met. At their core, these objectives include:
IV. Conclusions
Successful global businesses must be able to navigate calm or
• Growing the business: Ensure that the RSP is committed to be troubled waters. If they can’t predict the weather, they can at least
technically and strategically world class to support the enterprise’s growth. ensure that their operations are agile enough to adapt. That’s why the
choice of business partner for communications infrastructure services
• Protecting the business: Ensure that the RSP is transparent about
is crucial. The choices of approaches to handle international needs
its technical operations and commercial commitments. Real-time have been unsatisfactory or even risky for many years. But the
performance reporting tools that display a customer-centric view competitive landscape—coupled with robust infrastructure
of activity enable an enterprise to correctly assess its risk investment—has now matured to offer a wider range of options to
management profile. businesses with global operations.
• Simplifying the business: Ensure that the RSP invests in global The potential to work with an experienced regional partner can offer a
preferential balance between management simplicity and risk as well
standards and certifications to validate its ability to provide
as value and best-in-class performance. Businesses still must ensure
productivity-enhancing solutions to the enterprise and facilitate
that their regional partner’s capabilities are aligned with their specific
smooth global technology migration and communications with
objectives. But by following the right bearings, they will achieve their
other suppliers.
business goals effectively.
• Supporting the business: Ensure that the RSP has a well-
structured cross-border sales program to address diverse business
requirements regionally and globally. The 24/7 help desk and
customer support center are considered table stakes. A key
differentiator is the platform and tools for customization,
integration and business process management.
As shown in Exhibit 4, linking these business objectives to supplier
attributes requires scrutiny of several proof points.
5
© Copyright 2009. Yankee Group Research, Inc. All rights reserved.

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