Telefónica Chile wanted to offer comprehensive email services to large organizations. The company initially chose a VMware Zimbra–based hosted email offering, but it switched to Microsoft Exchange Server 2010 to make it easier to attract enterprise
customers, who are more familiar with and comfortable using Microsoft technologies. As a result, Telefónica Chile expects to increase its IT services revenue by US$100 million by 2015.
Telefónica Chile provides everything from telephone and Internet service to smartphones. The company has three market segments: residential customers, small and midsize businesses, and large enterprises. Telefónica Chile offers a wide range of IT services,
including data center services, virtual desktops, and backup on demand, to approximately 1,600 large companies.
In 2009, several of those enterprises requested that Telefónica Chile provide other communications services. Chief among them was email. “Customers wanted to outsource their messaging systems to save money,” says Luis Urzua, Business Director of IT Services
and Operations at Telefónica Chile.
Telefónica Chile made the strategic business decision to broaden its IT services offerings and realized that its email service would be the logical entry point with prospective customers. “Very often, our first engagement on the IT services side is for email,
and then customers decide to add more services later, after we have an established business relationship,” says Urzua. “If we did not attract them with a solid email offering, we knew it would be more difficult to open the door to new customers.”
Initially, Telefónica Chile chose VMware Zimbra as the basis for its hosted email offering, but the company did not experience rapid adoption of the service. Two customers—with a total of 5,000 mailboxes—took advantage of the offering. “We realized that
we needed a tool set that was more robust and easier to sell so that we could better expand our market reach,” says Urzua.
Telefónica Chile set out to evaluate its existing email platform along with a newer version of Zimbra and Microsoft Exchange Server 2010. “We believe that Microsoft Exchange Server is the market standard for messaging, but we were concerned that the
cost would be too high,” says Urzua. “Therefore, we wanted to see if we could affordably use it so that we could have a highly appealing, highly functional hosted solution.”
||It would be very hard to achieve our revenue goals using VMware Zimbra, but Exchange Server 2010 is easy to sell and easy for customers to adopt.
Business Director of IT Services and Operations, Telefónica Chile
After meeting with Microsoft Chile representatives, Telefónica Chile decided that pursuing a strategy that included Exchange Server 2010 would be beneficial for both the company and its customers. “We appreciated the business model that Microsoft offered in
terms of a revenue-sharing and risk-sharing partnership,” says Urzua.
In May 2011, Telefónica Chile began working with Microsoft Services consultants to design the messaging infrastructure necessary to support a hosted scenario. Although Telefónica Chile has plenty of in-house expertise regarding Exchange Server implementations,
it sought help building the infrastructure to handle hosting. Careful partitioning of the environment was necessary to ensure that each customer’s information remains safeguarded against access by another company.
Together, the two groups architected a solution that includes 12 physical Exchange Server 2010 computers in hosted mode; these host 30 virtual servers that run the Windows Server 2008 R2 operating system with Hyper-V technology. The groups continued to collaborate
throughout the planning, procurement, and implementation phases and began moving existing Zimbra users over to Exchange Server 2010 in September 2011, a process that is scheduled to be completed in February 2012. After just two months, Telefónica Chile already
has four new customers using its hosted Exchange Server 2010 solution, and it has an additional 20 companies in its sales pipeline. The company expects to host 30,000 to 40,000 customer mailboxes on Exchange Server 2010 in 2012, and it anticipates doubling
that number the following year.
Because it made the switch from Zimbra to Exchange Server 2010, Telefónica Chile has more business opportunities, predicts increased revenue, and can serve its customers in an expanded capacity. The benefits of using Exchange Server 2010 in a hosted
Expanded market opportunity. Telefónica Chile is convinced that it will be able to sell more IT services because of its customers’ high degree of comfort and familiarity with Exchange Server 2010 and Microsoft products in general. “Companies
have confidence in Microsoft products,” says Urzua. “We are also planning to offer our hosted email platform to small and midsize businesses, whose users also are most comfortable with Microsoft products, so that will give us even more growth opportunities.
Plus, we have the option to add a greater breadth of solutions by using a Microsoft technology–based platform, such as Microsoft Dynamics CRM and other tools that would benefit our customers and extend our reach.”
Increased revenue. The company’s projections call for it to boost its annual IT services revenue from US$50 million in 2011 to $150 million by 2015. “We expect to derive 50 percent of our new revenue from customers whose first service purchased
from us is hosted email,” says Urzua. “It would be very hard to achieve our revenue goals using VMware Zimbra, but Exchange Server 2010 is easy to sell and easy for customers to adopt.”
Greater value for customers. One reason Telefónica Chile anticipates such high levels of adoption of its hosted email offering is the affordability of Exchange Server 2010 and the value that the company can offer to its customers as a result.
“Our email offering using Exchange Server 2010 is extremely competitive in terms of price, and we are giving customers greater value because their email can work closely with so many other solutions,” says Urzua.
Strong partnership. Part of the confidence that Telefónica Chile has in its new email offering stems from its positive relationship with Microsoft and the fact that Microsoft stands behind its implementation. “It is amazing how Microsoft
understands what we are looking for and how flexible the company is in meeting our needs,” says Urzua.
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