On Rad's Radar? - cloud computing Archives

What Does Your Customer Want?

2013-05-16T19:26:20Z

A great read in INC magazine. What does your customer want? "The reason that they're turning to you and your firm is that they're stuck and need your help. Therefore, you must be able to bring something new to the table."

Most CLECs have an extensive catalog of services. Maybe too extensive for the average sales person. Opportunities get missed.

What companies want from the consultative salesperson is someone who LISTENS, not just for buying signs, but about the outcomes the business needs and how the solutions will affect the business.

Cloud services are not just replacement services. Cloud changes the way information is stored and accessed. It many cases, cloud services mean a change in how employees work. Are you able to explain these changes? Will there be training? Is there online help? Will there be a project manager or point person before and after the sale?

"It's not enough to "connect the dots" between customer needs and your company's offering. You must also connect with the individuals who will be affected by your offering, and understand how buying from you will satisfy their personal needs, like career advancement and job security." Well said, Geoffrey James.

BTW, sales training live in Atlanta on July 22, 2013.

Interesting Links for Your Consideration

2013-05-14T17:11:47Z

There have been some interesting articles lately. I can't get to all of them, but here are some good reads.

Death of the Telecom VAR in 2013 - How an entire sub-industry will be wiped out in the next 24 months by Jeff Hawkes. "Traditional telecom VARs or value-added reseller businesses- those that derive the majority of their revenue from the sale of on-premise PBX equipment to business customers- have ridden one of the longest product life cycle waves in recent technological history and combined with an emerging threat from hosted phone providers and a professional background that leaves most ill-prepared to run a business larger than a few employees is threatening to wipe-out or dramatically alter an entire sub-industry in the next 24 months." He writes like me.

Not telecom - but patent law - Monsanto wins a big case. "The court ruled unanimously that an Indiana farmer violated Monsanto's patent on genetically modified soybeans when he culled some from a grain elevator and used them to replant his own crop in future years."

Infonetics scores Comcast, Verizon, 8x8 and XO top North American business VoIP providers. SIP Trunking is the big winner. Revenues are the big loser as SIP trunk is used as a low price dial-tone replacement.

Blair Pleasant is "still not convinced that the cloud is the long-term panacea."

Doug Mahoney reports that HD Voice is Experiencing Unprecedented Growth globally.

YorkTel's VideoCloud integrates with Microsoft. So I wonder how Skype feels about that.

lastly....

The Cash Cow is Dying: Mobile Networks Face Bleak Future (based on SMS and LD revenue). Lucky for cellcos that Metaswitch just released Clearwater, an IMS implant.

Business is a Thinking Man's Sport

2013-05-09T17:11:53Z

When I heard Mark Sanborn call business a thinking man's spot, it made me smile and then think. Oddly, most of these news items have all fallen in my lap today. It made me re-think how the value added distributors (VADs), like Tech Data, were going to morph.

Tech Data is the 2nd largest VAD at $26 Billion after Ingram Micro (at $37.8 Billion in sales), but TD is located in Tampa Bay, where I reside.

Tech Data has a long standing sales agent agreement with XO. Next, it established a cellular master agency with TDMobility, which also offers MDM. Then last year, TD inked a deal with master agency, Microcorp. Tech Data has long dabbled in telecom, without actually embracing it.

CDW has a telecom division that is doing very well.

SYNNEX has a $180 million per year telecommunications division, according to an executive bio I read today.

Ingram Micro inked a deal with TWC and CenturyLink.

Adam Edwards at Telarus thinks this is great. I think it is the beginning of the shift for distributors to take over for most master agencies for network services. For straight telecom services, the distributors are in a better position to automate the process for the channel and for the carriers. In fact, for cablecos who lack the automation for channel sales, working with a VAD may actually enhance their channel opportunity.

When stuff becomes a commodity like T1, broadband, cellular, voice, hosted email, web hosting and hardware, margin comes from efficiencies. I see much of this, especially in the small business marketplace becoming something you buy at Amazon or Best Buy fairly soon. The more savvy VAR's will have a check box for each service to insure that the customer has it taken care of -- and to see if she can take it over under her billing or management. The total wallet share idea.

Where does that leave Master Agencies? They will have to morph like some of them are doing into either an extension of a carrier's channel sales division or a cloud service brokerage. Unfortunately, even in both those realms, they will be competing with VADs. SYNNEX, Tech Data, Ingram Micro and Arrow have cloud platforms. Sprint is making a play in this space as well, utilizing its Parallels system to sell cloud services to its wholesale and retail customers. APNI and VoIP innovations both rolled out private label Hosted PBX services as well. It seems we have come full circle in VoIP - white label, wholesale, retail, wholesale, white label.

I think cloud will be the sticker service. Once you start selling even Hosted Exchange or Sharepoint, are you going to want 2 vendors for this or just one?

Everyone seems to be scrambling to figure it out - masters, carriers, CSBs, VADs - and even the Agents and VARs, who are the ants marching in this scenario. It takes some real thinking to figure out the next move and then the next one after that.

Some Tidbits About Cloud

2013-05-06T15:30:02Z

Carbonite says that SMB accelerates - http://talkincloud.com/cloud-storage/carbonite-ceo-small-business-cloud-momentum-accelerates-0

Comcast opened a Cloud Services Marketplace, which sells cloud services like Carbonite data backup.

Apparently, cloud services brokerage is growing as Citrix just launched a program for cloud aggregators. There is even a referral and affiliate program with Citrix. I think this represents the cloud being like CLECs, "Please anyone sell my stuff!!! Please!"

Interesting tidbit, the global CRM market grew faster than other software and 40% of that market is SAAS, according to Gartner.

Rackspace has 50 employees devoted to the channel.

EarthLink sales dipped this quarter due to the sales cycle. "Our bookings in the second half of 2012 were soft as we saw extended customer decision cycles despite a growing sales pipeline that we've talked to everybody about. This caused the 2013 entry point and resulting financial guidance for this year to be lower than many of us had hoped it would be," according to EarthLink CEO. It demonstrates that hype is still growing, but sales are slow to come. I think the low hanging fruit is and will continue to be low cost, because integration, productivity and business outcomes are difficult to deliver, deploy, implement and show on a spreadsheet.

SIDE BAR

Good article about the Year of Hell for a SAAS CEO.

The Cloud is like Chicken Wings

2013-04-25T19:16:09Z

I presented a webinar for Cloud Services Community today about Selling Cloud Services as an agent. The take aways were as follows:

Where do I start when thinking about selling cloud services?
Is there criteria for choosing a cloud vendor?
What pitfalls are there in cloud for an Agent?
How to choose a cloud provider?
What steps to take as you move to cloud services?

Can agents even sell cloud services? Sure but as a sales engine, not an install and deployment shop. That will be the hard part: who does all the pre-sales and post-sales engineering if an agent just wants to ink contracts for you?

That being said, if you can afford to paid for a VAR or IT shop to do the provisioning and also pay the agent, it might work out well. The cloud provider will need to have a thorough order form and pre-sales packaging though.

Do agents even want to sell cloud? Not really. It's like chicken wings: a lot of work for a little bit of meat and it's messy. But it's just bar food.

Thoughts on the Channel in 2013

2013-04-16T15:56:56Z

There is this article with four opinions about the Channel in 2013. Reading them, I am almost certain that they are not only viewing the channel from differing sides but that they are discussing different channels.

I do like the statement from Ian Moyse, "We are seeing the same swathe of change as we have seen in other industries with providers who ignored the changes in customer buying choices (take Kodak, Blockbuster Video and the big record shop chains such as Tower Records and HMV). This change will be a contributor but not the only cause to the start of a new re-shaping and re-sizing of the channel with resellers facing new competition from Telco's, Xsp's and a new breed of reseller and potentially vendors themselves."

I also find it interesting that after VZ re-boot sits channel, Verizon's Executive Director Cloud and IT Services Product Managment and Product Engineering (big title) is quoted on twitter at an expo: "Joe Crawford confirms that SMEs are not self provisioning. Sales channel critical #telcocloud"

In the Wall Street infused pressure cooker that is the C-Suite at many vendors, the channel is tolerated today because they have to increase sales any way that they can. The CEO's stock options depend on it. (I am only being a little witty there.) The debt load that many vendors carry is heavy. It is dependent on sales revenues since the debt is tied in some ways to the stock price. The stock price is tied to revenue and dividend. So the channel is looked at as a tool - a sales tool.

Unfortunately, right now, agents, VARs, inter-connects and even MSPs are worried about getting their own ship in order as the changes occurring around them are affecting their business models. So while they try to keep their own plates spinning in the air, the last thing they can handle is another desperate vendor who doesn't understand the channel nor truly wants to support the way it needs to in order to be successful.

Channel Shifts, Moves, Adds and Changes

2013-04-09T21:17:42Z

There is a lot of noise coming out of the channel. Personnel changes left and right and center. Who's leaving, who's joining, who just signed an agreement. Bzzzzzzzz It's just noise for the most part.

Funny that one master agent who fired their VP at Channel Partners and is famous for press releases didn't announce that. Or a hosted provider who pumps out PR like it was printing money didn't announce any of its personnel changes either.

VZ overhauled their channel program. Again. And people will still sign up for the temporary cash and the continued uncertainty.

AT&T launched a Partner Exchange.

Lots of cloud service providers announcing expanded channel resources. well, going from 1 to 2 is a huge expansion.

But seriously, I think most executives have under-estimated how much support the Channel would need to quote and sell cloud services, especially UC.

Solera got into the channel. I remember when they were pitching CALEA boxes.

One big problem for VARs is that not only is selling hardware easier and more comfortable for them, it allows them to cash flow. Sure a VAR may have $2M in revenue but $1.7M of that goes to Tech Data for goods. However, they need the upfront money to continue their business model. It isn't always feasible to shift to a recurring revenue model. The only way to change that is to finance the contract and pay all the commission up-front -- but there is a lot of risk there.

Another problem is channel conflict. NoJitter has a good read about it. Channel Conflict is just one more reason that VARs worry about telecom.

All the moves and changes in the channel means a couple of things - (1) It isn't as easy as anyone thought; (2) a lot of executives think that going channel is a way to get a free sales force (WRONG!); (3) reality hasn't sank in yet.

I am always available for consulting on channel strategy, just give me a call at 813-963-5884.

Growing Out an IT Business

2013-04-08T13:32:44Z

This is a slide from EarthLink's earnings presentation. Basically, telecom spending is flat and it is roughly 11% of what companies spend on IT services. So if you were looking for growth where would you turn? Oh, yeah, IT services.

These have been the 4 segments -- the 4 drums really - that EarthLink has been beating for a while now - MPLS, IP, IT and Hosted Voice.

When you look at the broader picture, MVNO is not a high margin business. It is the new UNE-P. And as I have repeatedly said - Layer 1 or Layer 7 - either own a network or own the applications.

With the onslaught of the cablecos on the SMB market with their triple-play, CLEC's have to pick up the pace on sales. Not only do they have to sell more, faster, they have to retain their customers, too.

CLEC's need to get sticky. It doesn't have to be your own services either. Partner with someone. Speed to market is more important than owning or building. And if you partner with someone, they should have the deployment formula down pat.

Deployment is where the relationship begins. On-boarding is like the first date. When that impression is bad, there is no second date. There are rumors in the schoolyard about how awkward and weird you are. Today that school yard is social media.

Not every provider has the skills in-house to offer security, desktop, RMM and other IT services. Leverage a strategic partners' skills.

The key to stickiness is to be the one throat to choke. It was a lesson I should have learned working in the VAR business, but didn't get until I was an Agent. It is far easier to sell more to your current customers than it is to continually find new customers to sell one or two services to. And if a customer has 3 or 4 services with you, no one can take them away unless you screw up.

I'm not saying become a cloud services broker, but a model similar to that will work. You just need to have a small piece of all of the services that your clients use.

Eat the Dog Food

2013-03-30T15:03:07Z

It is very difficult to sell cloud services -- any cloud services, including cloud communications - unless you use them yourself.

You have to drink the kool-aid. You have to eat the dog food. How can a prospect buy something from you if you don't believe in it enough to use it yourself?

Is the Channel Too Lazy to Sell Cloud?

2013-03-29T12:31:56Z

Talking with channel managers lately in the Hosted UC space, well, has been depressing to be honest. No one is having fun - or knocking it out of the park. Yes, there are pockets of success - mostly from verticals or niches (surprise!).

So one CM made the comment that channel partners are too lazy to sell cloud. "It is much easier to sell network or a box than it is to sell cloud." There is some truth to that.

VAR's and Inter-connects have a similar business model that is centered around selling a box, installation and support. So cash flow comes from selling the box. They receive a chunk of money upfront. I am not certain that any of them survive off can recurring revenue yet.

To remedy this, some master agencies and vendors are looking to pay some of the commissions upfront, but this requires risk and financing, which devalues their own companies (and makes an exit harder).

From what I have seen and heard, most channel partners - agents, VAR's, Inter-connects - sell Hosted PBX as a third option after all else fails -- and typically sell it as cheap VoIP.

To me, this means that the service providers and the CM's have done a poor job of training and communicating who the target customer is, why they should buy UC/HPBX/Cloud, and what the value proposition is. Am I surprised by this? Not in the least. Why?

For one, many cloud companies have too many executives from the CLEC world where it has always been about Arbitrage - "Let me save you money!" And, let's face it, CLECs know nothing about marketing or positioning or branding - and neither do most cloud providers.

The other big problem is that most of these companies are enamored with their technology - as if the market gives a crap about their technology. People have iPhones and tablets and a bazillion apps. You think your tech is cooler than that??

This was a problem that ISP's had too. All techies that just like to be techies. The reason that 8x8 has grown is because some where along the way they switched from being a tech company to being a sales and marketing company. Most cloud providers are not there yet.

It is also very challenging to sell cloud services, especially UC, with its myriad pieces and components. What channel partner is going to remember all the stuff about your UC product and about the other 10-12 services that he also offers???? Um, not very many.

The flip side to this is that most cloud providers don't really sell direct. They dapple in it because it is expensive. However, if you haven't sold it, you don't know how to train or coach others to sell it either. You don't have the sales process and questions in place as tools for the channel partners.

There is another challenge right now: sales sizes are too small to cash flow for the provider or for the channel partner - so that will grind things to a halt sooner rather than later.

My CM pal also mentioned that partners don't want to explain all the features of HPBX/UC, do an ROI or TCO, check the WAN and LAN, etc. It is far quicker to just sell network or a box - and move on.

The reason that UC is stuck is because it is not exactly like what people have now. So there is training and education needed to the customer and her employees (as well as to the channel partners). This could be fixed IF the channel would actually eat the dog food. Not many channel partners actually use cloud services. If you drink the kool-aid how do you sell it to someone else? (Sales is about the transfer of emotion - if the partner isn't excited about your product, why would the customer be?)

There are a number of reasons that UC isn't selling. (Another is too many providers that all look the same.) As my brother tells me, "But, bro, Lync is selling!" Sure as part of Office 365 or to Fortune 100. And mid-sized businesses with more than 250 employees are buying UC, but are they buying it from the channel or from one of the top carriers?

Another trend is that smaller, unknown cloud providers are losing deals to better known companies - like Comcast, EarthLink, etc. WHy? Trust factor. Brand is a trust factor. So it comes back to marketing.

So is the channel too lazy to sell cloud? Or have the cloud providers just done a really poor job of picking partners and/or marketing?

BTW, there are certainly channel partners selling cloud, but they are dedicated to doing so. They drink teh cloud kool-aid.

Transitioning to Cloud is Hard

2013-03-07T18:24:14Z

Making the business decision to migrate to offering cloud services is hard.

It is also expensive. The capital expenditure for data center equipment, services, software, routers, SANs, backup, bandwidth, licensing, etc. is only the beginning. Then you have to float labor. You need a new set of skills so that means new talent.

After all that, you have zero revenue! (That's why companies buy rather than build - they get talent, gear, and some revenue.)

The transition is so painful - even after buying companies - that Dell is going private. The Street (Wall Street, the bankers) will destroy them while they make the transition from hardware to cloud.

CenturyLink, EarthLink, Windstream, Verizon and TWC have all made cloud or data center buys in the last 2 years. Everyone is banking on cloud services, but the payout is smaller and slower.

Replacing Copper With Gold

2013-02-13T08:34:43Z

CenturyLink is in a race against time, according to both analyst Jeff Kagan and the Star Tribune. It isn't just the number 3 ILEC in the country experiencing a declining revenue stream from legacy copper. Fairpoint, Frontier, Windstream and many IOC's are all suffering revenue losses from landline replacement. Customers are switching to cellular or some form of VoIP - like cable voice or a Vonage like service.

This leaves the LECs with a big dilemma: How do you organically replace declining copper revenues? And how do you do that quickly to offset the landline decline that has been occurring for the last 3 years?

For some IOC's, it is a matter of adding new services over the copper, like these services, building some wireless services for wi-fi roaming, or adding cloud services, like hosted email, data backup and the like.

In some markets, carriers are using broadband (xDSL) and TV to counter landline losses - hoping that they can replace old revenue with new revenue. Wireline revenue is also highly profitable.

Windstream, TDS and CenturyLink have CLEC operations that bring in revenue out-of-region with business services - telecom, cloud, Hosted PBX and data center.

Will these carriers be able to sustain their business (including servicing a heavy debt load) with this replacement revenue? That is the question.

CenturyLink cut its dividend in order to start buying back stock and paying down debt. The stock took a 22% hit! Analysts talk about how the dividend for C-Link and Wind are the only reason people hold the stock. And we saw what happened when the dividend was cut. These companies are now dancing in the same that Level3 has been for some time.

Everything is Changing, No One is Happy

2013-01-25T15:08:19Z

Belkin is buying Linksys from Cisco, who is exiting the consumer business. What are they doing with the Scientific Atlantic set-top boxes?

Logitech is dumping some of its product lines as it re-vamps.

Andy says that Yahoo Voice is shutting down.

Microsoft sales of Office365 are decreasing.

Intermedia is acquiring Telanetix, which does business as AccessLine, for about $55M.

EarthLink is laying off as they realign.

So much is changing - and so fast.

You know what else is changing? The role of Master Agents and VADs (like Tech Data and Ingram).

Dell knows that hardware sales will continue to decline, which is one reason it is looking to go private. Microsoft knows that its best days are behind it. WinTel used to dominate the computing space. Then Apple iOS starting winning laptops and smartphones - and definitely the tablet sector. Android is the O/S for smartphones and tablets, but Chrome laptops are also in the market.

When everything is wireless do you need switches and cables?

Level3 just revamped its Channel, but the masters are wary of signing it. XO has a new contract out that masters also are balking at signing. Why?

Qwest/Savvis/C-Link stopped teaming agents with directs, but Level3 instituted something like teaming. There is a commission hit for teaming. Here's the dilemma:

One, prices keep dropping, so commissions are lower. Agents have to work harder to make the same money.

Two: Current customers want to lower the bill with every contract renewal, which means that commissions dip (or disappear) unless the Agent switches its customer base to a new provider.

Carrier Quotas keep going up, despite No. 1 and 2. So Masters can't hit the quota, lose commissions and can't pay the agents.

Everything is cloud, but revenues are much smaller, the sales cycle is longer, and the sale is more work for the agent. For less money.

Telecom - you know, the network - transport and transit - are still selling, and agents still want to sell it, but the carriers don't (or can't maybe) pay commissions on straight network sales. So Agents look for carriers that will pay them to sell transport and transit. Masters don't get this business. Carrier Channels sales dip. The cycle spins.

Most Cloud services providers don't work with Masters, so those sales don't go into the Masters revenue. Lost revenue.

VADs like Tech Data and Ingram are selling cloud, cellular, network and hardware.

VADs already have a relationship with VARs. VARs are comfortable with their relationship with the VADs. Why would they switch to the Masters?

Gartner's Bova likes to talk about the transformation of Agents but she misses two key points: Agents are on a hamster wheel and can't just jump to a new one because they need to keep the cash coming in to satisfy quota, bills, churn, etc.

Point 2 is that there isn't an easy transformation path for an Agent to become a cloud services broker. A billing system, integration with the vendors, cash flow, liability, and other factors all get in the way of an agent becoming a CSB.

Despite what the Carriers want - more sales, more VARs selling their stuff - and what the Masters want - pretty much the same thing - the cogs in this wheel - the Agents and VARs - are not yet ready or in any position to make sweeping changes to their business to satisfy Carriers or Masters. The VARs and Agents have a business model that they are running with every day. They have customers that they are trying to satisfy every day. The added pressure from carriers and masters to transform, while also sacking their current revenue stream is a catalyst for disaster.

Look around - Intel, Microsoft, Dell, Cisco, EarthLink, Cbeyond, Logitech - these are just the companies TODAY that I see in turmoil. All of these sell via a channel distribution model, so if they see revenue hits what do you think is happening to their channel partners????

DUH

SubOut is the Best of What Cloud has to Offer

2013-01-23T00:15:30Z

The transportation industry is more efficient due to a new start-up that launched. SubOut.com is a subscription-based communications exchange enabling transportation companies to source business, buy and sell parts, and streamline subcontracting via a secure, easy-to-use interface accessible from any web-enabled device. [PR]

"SubOut.com is an innovative web-based tool that streamlines the subcontracting process for the bus and limousine industry", said Thomas Howe, an award winning communications software architect and one of SubOut.com's founders. "This easy-to-use platform uses the most up-to-date technology to reduce the overhead produced from charter booking processes by allowing charters to be posted and accepted online, in real-time."

SubOut is a vendor management platform for faster, stickier coordinated bus and limo transactions. Transportation is still largely inefficient and analog. This platform allows for the layering of communications on top for ease of use and to speed up the bidding process for tour operators (and the like).

Programmers and telecom insiders forget that many people do not sit in front of computers all day. This is a framework for those types of businesses to leverage technology for business process improvement -- the holy grail of cloud computing. Subout.com adds instant communication. This results in filled buses, sold charters, and reduced idle time - and increased revenue, notes Anthony Vaccarello, President of Transportation Partners of America. In some respects, this is like Craigslist or elance for the transportation industry.

Good luck to Thomas Howe and his company. Howe has won awards for creating telephony mashup apps before. It looks like he is getting back to roots.

Find SubOut on G+. Watch the video for a thorough explanation of SubOut.com

Parallels, Cisco, Google and Panda

2013-01-22T04:07:30Z

If every day feels like you are on a hamster wheel, maybe you are examining the wrong metric.

An interesting announcement today two weeks before thier customer summit, Cisco bought a stake in Parallels and gets a Board seat.

Parallels is the middleware for many cloud providers, customers that Cisco would like to sell a lot of stuff through. This might be a response to the cooling relationship between Cisco and VMware, according to reports.

Alltel is completely gone now. AT&T grabbed the leftover assets (customers 500K+ and spectrum) of Alltel for $780 million per VZW's divestiture of Alltel after their 2009 sale.

Google updated Panda again. SearchEngineLand has this to say: "Google has announced a new Panda refresh, making this version number 24. This refresh has a noticeable impact 1.2% of English based queries according to Google. The previous confirmed update was #23 and it impacted 1.3% of English queries on December 21, 2012. Prior to that was a refresh on November 21st that impacted 0.8% of queries. It seems like Google is now rolling out these updates every 4 weeks or so."

Panda is Google's algorithm for search results to " helping people find high-quality sites in Google's search results."