Bell Canada is culling staff members from its enterprise-business workforce in an attempt to bring costs down. But, the move has one industry observer scratching his head.  "If you’re serious about the enterprise market, you don’t cut a third of your customer-contact people," says Ian Angus of Angus TeleManagement Group Inc. in Kemptville ON.  Bell chopped about 60 positions from its enterprise group last month – middle managers that generally provide customer support on key big-company accounts.  "It’s all part of the initiative to create the cost structure we need to survive and compete in the environment we’re in," a Bell Canada spokesperson tells Network Letter. He points out that Bell battles a number of competitors for large companies’ business, and sometimes reorganizing is the only way to keep ahead. The cuts come at a crucial time for the incumbent telco as Bell faces a new competitive landscape for the lucrative enterprise market. Large companies increasingly turn to systems integration firms, including IBM Corp., for telecom equipment-management and servicing. Meanwhile Bell is also embroiled in a trend that sees big businesses turning to competitors for basic connectivity, especially in the global market.  According to a Yankee Group study from last year, AT&T Corp. is winning the largest slice of Canadian multinational companies’ spending on data and IP links; IBM has the second-largest piece, and Bell the third. IBM’s second-place status suggests systems integrators have penetrated the data-IP services market, the Yankee Group report said (NL, Oct. 26/05).  That changing competitive situation spells new priorities at Bell. "We’re no longer just a connectivity company," the Bell spokesperson explains. "We’re ICT: information communications technology. The network is the lifeblood but the applications are what the customers are looking for. We’ve done things like Bell Security Solutions and put our resources there." But while Bell has created new businesses specific to network security, storage and other IT areas, questions remain about the carrier’s prospects in the enterprise field. In the third quarter of 2005, which Bell reported last November, the telco recorded a revenue increase of just 5.3% year-over-year in its business segment. Most of the revenue came from the small- to mid-sized business (SMB) market (2.8%), whereas the enterprise business market contributed just 1.7% of the income boost. The remaining 0.8% came from other Bell endeavours. Bell attracted more data and wireless business, but the firm’s legacy wireline revenues eroded due in large part to competition. "It’s going to be an operational problem for them over time," Angus says of Bell’s enterprise struggles. "They are doing well in the small-to-medium market. Of course, those customers are less likely to call up IBM to take care of the phones. But in the large, national accounts, they’re hurting badly. And they don’t seem to have a way to deal with it other than laying people off." Bell says the picture isn’t as bleak as that. "You’ve seen some of the big customer wins we’ve had: Aéroports de Montréal, Kingston General Hospital, Manulife…As part of the ICT play, we have the building blocks through Elix, our contact centre arm, Infostream, our storage arm, and Bell Security Solutions…You will see in the coming months strong progress within enterprise. Transformation takes time. We want to do it right," the spokesperson says.  Demonstrating it’s not a has-been, Bell announced on January 11 that it had inked an IP telephony implementation agreement with RBC Financial Group. Financial terms of the deal were not revealed, but the incumbent telephone company will work with Cisco Systems Canada and IBM Canada to implement a managed IP telephony solution converting approximately 8,400 phone lines into VoIP.  "The agreement, once again demonstrated that Bell’s strategy to become the leader in Canada is working," enterprise group president Isabelle Courville said in a news release.  But is Bell taking the smartest steps? The company certainly faces some heavy-hitting systems integrators these days. One of its investments, Montreal-based IT management outfit CGI Group Inc., seemed to be the service provider’s best bet for that battle. But in December Bell sold its share in CGI for $859 million. "It was no longer strategically essential for to hold an investment in CGI, given that Bell Canada’s focus is on providing network centric managed services and applications," reads a press release. "BCE and CGI agreed that their ongoing relationship – and the significant mutual benefit it represents – could be secured through commercial agreements." Angus says the enterprise market is challenging for service providers. Large companies command a lot of clout at the bargaining table, and sometimes the result is thin margins for the carrier. Sympathy aside, the analyst isn’t convinced the latest headcount reduction makes sense. "I don’t think Bell is a stupid company. I think this latest move isn’t smart."