Verizon strengthens its utilities bond with National Grid managed services win

Sean Buckley, FierceTelecomVerizon Business (NYSE: VZ) struck an interesting coup this week when it announced that it won a managed communications services deal with electric and gas utility National Grid.

The deal has a couple of implications for both Verizon and for National Grid--but before you start getting excited about smart grid opportunities, this isn't one of them.

Instead, it's about helping the energy company which has grown through various acquisitions both domestically and in the UK, get some sanity around the diverse IT networks.

Although end-users typically aren't always amenable to talking directly about their service provider deployments, we were lucky enough to talk to National Grid's Doug Chapman, VP, IS Service Delivery Transformation about the new agreement with Verizon Business.

Doug told me that although its various acquisitions of other energy utilities (both gas and electric) in both the U.S. and the UK allowed the company to gain greater scale, it came with a diverse set of IT resources--all of which operated on their own separate islands.
"As the result of all of the mergers and acquisitions, the IT estate over time has become a bit more fragmented than what we would consider the most efficient design, which was a feature of bringing different IT estates together that was serving the former companies."

But in order to address future business challenges, Verizon Business realized it needed to drive standardization throughout its IT islands so it responds better to customer and business needs.

One of the positive aspects about the new Verizon Business deal for National Grid is collaboration. As one could imagine, all of these distinct IT environments made collaboration, even on the basic voice side, challenging.

"Today, we have a mix of telephony environments that don't all seamlessly operate together, making it difficult for departments to collaborate with one another," Chapman said.

By migrating over to Verizon Business' hosted IP telephony service, one that will run over a common IP/MPLS network, Chapman added that "the IP telephony environment will allow any of our employees to seamlessly communicate anywhere across the globe."
While we continue to see Verizon Business signing a number of enterprise accounts, the National Grid deal illustrates the service provider's ongoing movement to craft solutions for industry verticals.

Gaining the trust of utility companies, a segment that's been known for reliability with systems that were largely proprietary, takes a broader understanding of how the utility works. Only recently have utilities begun really embracing more open IP-based network elements that include greater security and flexibility to drive, in this case, greater collaboration.   

In addition to having a dedicated team targeting the utility vertical, Verizon has been working with the Utilities Telecom Council to develop a study that will better understand the needs of utility industry.
Jimmy Lewis, Industry Partner Verizon's Global Energy & Utilities practice, Verizon, said the relationship creates a stronger bond between two similar, yet disparate industries.

"This is a new kind of relationship because we no longer look at them through the customer/vendor lens, but we are now partners," he said. "We have to make that network work for them and make it work and by doing so we gain a greater strategic seat at National Grid."

Yes, it is true that Verizon Business isn't unique in offering targeted utility solutions. But as service providers face an even greater competitive environment of alternative players trying to win large business customers, they can differentiate themselves from the competitive pack by developing solutions that do target needs of specific verticals like utilities.--Sean