Reed turns to Sirocom in €17m virtual network deal

Sirocom has won a €17m, three-year deal to supply converged voice and data networking to recruitment business Reed Managed Services.

The agreement follows a lengthy contest against other, better-known telcos and the ousting of Vanco - another virtual network operator (VNO) - which had held the Reed account, for data networking only, for three years.

Sean Whetstone, head of IT services at Reed Managed Services, which runs as a profit centre running IT and other services to the now private arms of the Reed group, explained that choosing Sirocom is part of a plan to cut 20 per cent of IT costs over the next two years. He said the company should save some €5m over the life of the new contract, which will cover more than 3,000 staff at 300 sites across the UK and Ireland.

Whetstone said: "We wanted to build a 21st century infrastructure. Price is very important to us but flexibility was the top reason for choosing Sirocom."

Analysts typically identify three main selling points of the VNO model, namely lower prices - helped by over-capacity in the market right now - a big commitment to customer service, helped by having no infrastructure to maintain, and safeguarding against a provider going bust or being involved in a disaster. In the case of the latter, a VNO simply switches the telcos which it piggybacks on.

Peter Hall, a research director at Ovum, said: "Contracts changing hands between competing VNOs is a new thing but there would seem to be more room for players like this if you look at the growth figures of Vanco."

Vanco was not available for comment on the Reed contract.

Reed's Whetstone described Sirocom - who until about 18 months ago he hadn't known about - as simply a "better fit".

Originally Reed Managed Services received applications for the contract from some 27 telcos and ISPs. Sixteen made it to the meeting stage, with six making a shortlist. BT, Bulldog, Easynet and Energis are believed to have been in the frame.

Whetstone added: "Before [with Vanco] our traffic still ended up going through BT about 95 per cent of the time but now it's truly multi-vendor."

Sirocom, which stresses it is making voice over IP a reality for Reed as well as the use of Citrix thin clients, is using Global Crossing, MCI, Tiscali and other carriers.

A simple, single bill is one selling point of the VNO model.

Whetstone said: "I wouldn't want separate relationships with lots of different companies."

Other high-profile Sirocom customers include Abbey, BSkyB, HSBC and JD Sports.