Today I was at a media lunch hosted by IP telephony company Nexon to promote their new cloud based unified communications service.
One aspect of the Nexon Absolute service is the company offers a Service Level Agreement (SLA) for customers, while I’m always suspicious of SLAs they are essential in making business clients comfortable with buying cloud services.
For Nexon, those SLAs are huge risk as they are reselling other company’s products. If Microsoft and Telstra fail to deliver, then it’s Nexon who carries the can with their customers.
While Nexon undoubtedly has their own SLAs with their suppliers, a major outage will see the company carrying the bulk of the refunds or rebates to their customers.
Essentially Microsoft and Telstra have outsourced much of their business, continuity and even reputational risk to Nexon and their other resellers.
For a reseller, even a substantial one like Nexon, that’s a risk they can’t control — what’s more, the finger pointing between suppliers in the event of a major outage could take years to resolve.
All of this suits major suppliers fine as it shifts risk and work from their businesses.
The IT and telco reseller game is not an easy one as margins fall and risks increase, one has to applaud the courage of the investors and entrepreneurs who want to play it.