Savvis focuses on simple service

SAVVIS IS A provider of managed network services that has been especially successful in the financial service arena. In an interview with InfoWorld Editor in Chief Michael Vizard, Savvis CEO Rob McCormick outlines in the wake of a global telecommunication crisis his company’s plans to compete more aggressively as a business-class ISP that is focused more broadly than just its core financial services customer base.

InfoWorld: What exactly does Savvis provide?

InfoWorld: There’s a lot of turmoil in the ISP space these days. How has that affected Savvis?

McCormick: We just closed $158 million in new funding in March, so unlike the other guys in this space, we’re very strong on our balance sheet and we have very little debt. And we’re in 44 countries around the world, so it’s a single global network. Our view is whether we’re selling against a big guy like AT&T or WorldCom or one of the new players like Genuity, the financial side of the coin has flipped in our direction pretty rapidly recently. It used to be that it was clear that a big guy like WorldCom was a more stable provider than a small guy like Savvis. But that’s not clear to people anymore because Savvis does not have the debt load that WorldCom does. We don’t have the issues with legacy voice revenue going away. And we’re very focused on a single set of products that are what people need today and we are cash-flow positive. From a stability of company perspective, we think we compare very well to those guys and based on our sales, I think that’s starting to be obvious to people.

InfoWorld: What is at the core of the service?

McCormick: We have a Layer 2 ATM core and then at the edge of the network is where the IP intelligence happens. That runs on the Nortel Shasta platform that is basically a virtual routing service switch. What it does is mesh with an ATM backbone so you get these guaranteed bandwidth pipes, and then it applies policies on all your traffic from there out to the edge on your own tail circuit. If you were to move to an all-router network today, you can’t get the same level of traffic guarantees that you can with a hybrid of IP and Layer 2. Somebody could buy a frame relay network, but that doesn’t understand what IP is. So the key is to have a hybrid. Then we have these sophisticated operation systems that handle the end-to-end provisioning automatically when the orders come through. They handle the proactive management and probe the network looking for instantaneous packet loss and buffer problems. To run a network at the type of availability that we do, it turns out that it is very complicated. There are other people that have bought Shasta, but nobody’s put it together in the type of package that we have.

InfoWorld: Why are companies interested in a VPN service versus rolling their own network?

McCormick: People find that the existing solutions based on traditional frame relay managed routers and the IPSec VPNs don’t quite meet their needs. Our intelligent IP product is intended to address those concerns and we’ve been pretty successful in doing that.

InfoWorld: What exactly does the service do?

McCormick: We put a box at your site that is fully packaged. Let’s say you want to hook up your 10 offices. We put a box at your site, it hooks right onto your LAN, and you don’t need any routers or firewalls. Then in the core of the network, we turn on virtual routing services, firewalls, stateful firewall services, network address translation, or IPSec security if you need it. All the complexity is handled in the core of our network. That’s what makes us a lot different than the other solutions that you’ve seen out there. We like to say that we take the complexity off your site and put it into the network and we’re the ones that have to worry about it and not you. Because it’s all automated and software provisioned in the core, you can tell me a list of policies that you’d like from a security and traffic management perspective, and we just turn them on.

InfoWorld: How costly is this approach?

McCormick: Our pricing model is also very much simpler than everybody else. Everything is included and price is determined by three things. The first is what service level do you want? Do you really need the highest level service where you can run voice and video over it, or can you live with what we call service level 4 which is more of a best effort? The second is what bandwidth do you need? So you just tell us what size pipe. And then the last thing is how far from our POP are you? Based on that, we can literally price the network for you in five minutes. And then on your bill, if you have a 10-site network or a 4,000-site network, it’s one line item per site, so your finance department has a much easier time processing the bills. Our two biggest clients have 7,000-site networks and literally it’s 7,000 line items where any other competitor would have massive amounts of billing. We believe that pricing model works well from the very small guy all the way to the very large guy. And by the way, there is no capital up front. We bundle in the hardware. So there’s no up-front cost for the box we put at your site, it’s just part of the monthly recurring. It’s a pretty compelling fiscal argument on top of being a much better performing network than what you could buy somewhere else.

InfoWorld: How hard is it to integrate your service with an existing network?

McCormick: It’s pretty straightforward because what we look like to you is a router. We drop off a device that sits on your Ethernet and you can static route to us like you would with a normal LAN or we can send you dynamic routing updates. So it’s pretty straightforward. Our installations literally take matters of hours per site, and we roll out 80-site networks in 25 to 30 days. That’s really what makes us so much different than the big guys. And AT&T will come in with four or five consultant-type guys and build a very complex solution. In our view the world has moved past complex solutions for IP, they just want it to be there and they want it to work.

InfoWorld: How much interest is there in VOIP (voice over IP) and related telephony applications?

McCormick: If you look at your corporate enterprise, the first way to save money is to outsource the management of the network. But most midsize and large firms have a data network, they have a voice network, they have Internet connections, and it’s all on different providers with different circuits into the sites. So convergence at the IP level is certainly something that there are good economic incentives to do. The hardware and software to do that exists today and has for awhile. The VOIP equipment is good and the new SIP standard is getting better and better. The problem has been that the IP networks of yesterday do not have the availability that your phone network does because they run at maybe 3.5 nines or 4 nines of availability — meaning 99.9 or 99.95 while the phone network runs at 99.999 percent. Our network is one that we think is uniquely suited to run voice and video because we’ve been running real-time financial transactions over it for 10 years. So we are in the process of adding those types of services with the goal being not to sell them ad hoc, but to be able to provide a single pipe into an office that carries everything, because the financial savings there are very compelling.

InfoWorld: What impact will next-generation applications using Web services have on networking?

McCormick: What’s going on in the IP network space today is a move from best-effort networks to business-class networks. The first IP networks that were built were just running some e-mail or they ran some intranet sites or they had to get to the Internet. Now enterprise applications are trying to converge on the same IP network and they need to have their own guarantees of priority. So the network that you use has to be able to guarantee application-level quality of service. My voice call goes ahead of my SIP session, which goes ahead of the big Web download. Our core that we put together, including those network-based switches that do the firewalling and all the virtual routing, enables us to do application-level quality of service. We can allow you to fine-tune application performance across the whole enterprise which allows you to consolidate all this down to one network which is where the huge cost savings is. The other platforms that are out there — again, the frame relay and Internet-based platforms — don’t allow you to do that today, and it is the very large differentiator for us.

InfoWorld: How would you compare your service to the services offered by larger rivals?

McCormick: Those guys have what we call first- or second-generation products. They are cobbled together from different pieces and parts, and there are hundreds of different packages they can sell you. What we’ve done is optimized for exactly what the business wants, and that’s to take IP networking off their hands so they can focus on their applications. The amount of applications that are really mission-critical that are now wanting to run on the IP network is a lot bigger than it was a few years ago. If people really start to look at it, they’ll find that they can outsource their IP network and focus on the applications and save some money.

InfoWorld: So, if you could have one wish granted, what would it be?

McCormick: For people to start having some faith in their providers again. To me, the biggest problem that we have is that it’s not that people are afraid of Savvis, they’re afraid of everybody. I think that’s bad for the whole industry. My wish would be for customers to return some confidence in the fact that every provider they have isn’t going to go out of business.