Highlights:
Smartphone growth is slowing.
Global Internet use continues to grow at 10% year over year, with 3.4 billion people on the Internet as of 2016. [QZ]
Advertising is about visuals (pics/vid), measurement, mobile and engagement. UCG (user generated content) is back.
Growth in Internet population is slowing, but growth in online ads is accelerating.
Combined, Google and Facebook accounted for 85% of the total internet ad revenue growth between 2015 and 2016. [QZ]
Amazon Alexa and other voice assistant devices are disrupting Brands as well as text based search. That is going to effect advertising revenue on one hand. On the other hand, Alexa is pushing Amazon house brands over better known quantities in order to push up margins. And they are winning at it!
Customer Service is about real time customer conversations. The Holy Grail used to be single call resolution that was hampered by silos and technology. Today with AI, Cloud, omni-channel contact center, we are closer than ever to that goal.
Retail has some bright spots but requires strong community and specific target market (slide 58). Or Subscriptions. [Funny, I say the same thing about UC/Hosted VoIP!]
For Restaurants, Eating Out is now Eating in with restaurant delivery. Grocery shopping is also about personal and delivery. Do you see where this is trending?
I am skipping Gaming, China, india, except to say that Gaming is a skills school and the old time the phone is put away (as another tech toy has your attention).
88% of U.S. consumers use at least one digital health tool.
"The rise of fitness trackers and health apps are collecting more user data than ever, while hospitals are sharing more health care information with patients. The average hospital holds 50 petabytes of health care data, and the total amount of that data is growing by 48 percent a year, Meeker says." [venturebeat]
What happens online in 60 seconds: HERE.
]]>There is an interesting article on Business Insider about Facebook making switches and routers for themselves. But now a number of telcos globally are trialing the gear. That doesn't help Cisco at all.
At the same time, the carriers and just about every other managed services provider is offering SD-WAN. These deployments are white boxes. Cisco, Juniper, ADTRAN and others are being replaced at the edge of the WAN by white boxes.
It is also hurting VADs like Tech Data, because these boxes are NOT going through distribution. They are being distributed by the carriers like EarthLink and TPX directly.
ADTRAN is making moves to stave off extinction with hardware as a service, managed wi-fi, and SD-Access.
It's interesting because Amazon's Chime is competing against Webex on the collaboration space. Carriers are competing on the WAN CPE space. It's VAR channel is modeled on hardware sales and installation. Selling software is not nearly the same business model as hardware.
This is just an observation - and it will be interesting to watch as these things shift.
]]>Even Fairport, acquired by RLEC Consolidated, is upgrading its network for higher speeds. Some of this is due to the fact that cable is winning the broadband war. Some of it is powered by USF Reform whereby broadband is the metric for dollars. Add in the Connect America Funds (CAF) and other federal and state incentives for broadband and middle mile fiber deployment. AT&T, Verizon, Windstream and CenturyLink have all talked about upgrading the broadband infrastructure. (BTW, this flies in the face of the new FCC Chairman's claims that investment went down after Title II.) It comes down to revenue - and DSL was not cutting it.
Fiber deployment is tough (just ask Google). Many providers use a mix of technologies. TPX (formerly known as TelePacific), Windstream, XO and Google Fiber use fixed wireless for broadband. Thousands of WISPs in America have been utilizing wireless to deliver broadband for years. The bigger guys are now jumping on the bandwagon. To be fair, the technology is not only better, but cheaper.
This from DSL Prime: (from Sail Internet in Fremont California) "George Ginis used Mimosa's super Wi-Fi to connect a customer a customer with 435.74 down, 331.83 up, and 4 ms ping. 5 GHz Mimosa is designed like a mmWave network but a heck of a lot cheaper than 28 GHz. Interesting alternative."
DSL Prime has an ad from Sckipio about Virtual fiber. "Extend your fiber with 100-300 meters of single-port G.fast. It can save expensive trenching for cell towers, small cells, basement fiber, commercial customers and others. A very thin management layer allows operators to keep their existing GPON management layer. Sckipio makes it effortless to add G.fast to any GPON network." G.fast uses copper like VDSL2. We'll see if it gets adopted in the US like it is in Europe.
Also on the copper side is trials by ASSIA for Terabit DSL. See here. Companies are at work to extend the life of wireline broadband to satisfy the consumer appetite for downloading videos. On the business side, the same technologies will be used to feed the business appetite for cloud apps - fixed wireless, 4G/LTE-A/5G, DSL/T1, cable modem and fiber. SD-WAN will be layered on top for metrics, failover/resilience and more. Interesting times.
]]>The real buzz came from Amazon that launched Amazon Connect - Customer Contact Center in the Cloud. GE Appliances is one of Amazon Connect's initial customers (and shared the stage at EC17 with them). Last week, they launched contact center tools. Before that, they launched Chime, a web conferencing app.
"Amazon Connect is a self-service, cloud-based contact center service that makes it easy for any business to deliver better customer service at lower cost," according to the website. It got a lot of coverage (telecomp and techcrunch, to link but 2).
Chime was launched in conjunction with Vonage who will be handling the consumer and small business market. Level3 partnered with Amazon on Chime for Enterprise, which partners will get to sell soon.
In both cases, Amazon is entering a crowded field with a self-service, low priced offering that hangs off of their massive computing infrastructure. It is mainly price disruptive, but that doesn't mean it won't shake up Wall Street which will re-adjust valuations for the likes of Cisco, Citrix, Genesys and Avaya.
GENBAND partnered with IBM Watson for AI chatbots in its Kandy wrappers. The Kandy wrappers are pre-packed programs like a customer service chatbot that can answer FAQs and detect when the caller is getting agitated. It then takes the call transcript and sends it to a live rep, who if all the back-end works would be able to take over the call in continuum. The demo was great. Implementation will be difficult, but I would like to see Florida Blue jump on board and give it a try because they have horrible customer service systems (maybe on purpose).
West showcased the new version of Spark with Hybrid Voice.
Sprint had a robot running around their booth but I don't know why.
Counterpath demonstrated its new capabilities for what was once just a softphone. Now there is a good amount of reporting and analytics on users and calls. One user experience across multiple platforms (phone, tablet, laptop, Mac, Android, PC). It layers on top of existing UC, so Broadsoft providers can get better reporting, analytics and user experience without having to upgrade their investment. Counterpath also added a Salesforce plug-in so that interactions inside the Bria app can be captured in a CRM record. And you get screen pops!
BTW, "Voice is still a customer's number one choice when dealing with a customer service issue." [twitter]
"Cloud computing: Are these the hurdles that trip you up? More companies are using cloud-powered services, but it's not without pain. Here are some of the common complaints." Interesting read on ZD.
One thing that seemed to be a theme: User and Customer Experiences Matter.
]]>They are jumping on the bandwagon for a number of reasons.
One is Consolidation. The new landscape of Ethernet is cable and ILEC. The CLECs are mostly all gone. You have to expand the catalog beyond just network operators and VoIP.
The other reason is price pressure. Pricing across all telecom products - mobile, bandwidth, Ethernet, VoIP - has been declining about 3-10% year over year, creating a problem for the operators and partners. When pricing craters, you have to sell more and more and more to maintain the same commission level. At some point, just selling network isn't going to work because you can't close enough deals or even fill a funnel fast enough.
When 1GB pricing is less than what 10MB pipes were just six years ago, think about how much you have to sell and how fast.
Even the current price war in VoIP/UC isn't helping. Because there isn't enough Demand for UC - the demand is for POTS replacement and dial-tone - the price per seat has dropped. It hovers just below $20 right now.
I understand that the customer wants the cheapest price - and it is easier to take the order when you find the lowest price - but you have also just lowered your commission.
Providers are starting to cut commission points when they lower the price. Partners and Channel Managers aren't happy. Well, then sell it at rack rate.
So carriers consolidation means fewer vendors and pricing compression means less overall commission. More vendors are needed. Luckily over 600+ vendors have entered the space in the last three years while more than one-quarter of the partner channel have moved on. Retirement, M&A, and business shift/pivot have resulted in a lot less sales partners at a time when there are so many more vendors to choose from.But to be realistic choosing a UC vendor among the 2000+ available is like picking Red Delicious apples at the grocery store. They all look the same. How many do you want to smell and test for firmness before you pick one?
The cloud computing piece, as we found out two weeks ago, is owned by Amazon. AWS and S3 are hosting about one-third of the web!!!! Rackspace, CenturyLink, Azure, Google Compute, IBM/Soft Layer and the others haven't really stepped up their marketing game (even in the wake of Amazon's outage.)
Businesses are moving to SAAS, IAAS and other computing environments. Partners are in a position to offer assistance to businesses in this regard. It is uncharted territory for many, but the business model has shifted to wallet share. If you want to survive (and thrive), it is about getting more wallet share from the customer. That means selling them email, Office365, VoIP, colocation, security and more on top of the network and bandwidth that makes up the typical sale.
We have seen a number of press releases in the last 4 months about SD-WAN - mainly about SD-WAN providers signing up with carriers and with master agencies. SD-WAN the new UCaaS!!! This technology could be the next big thing, but they said the same think about IP Centrex (VoIP) over 15 years ago and about WebRTC.
Our biggest problem: We push Product. That's right. We are a bunch of Product Pushers. We would make ideal drug dealers because we don't create demand, we just push a product on someone who wants it.
We don't sell Solutions. We don't even offer Solutions. The vendors don't offer solutions either. They pimp products. It makes all of this really hard to sell.
]]>I spoke to five people in the VoIP space familiar with Fonality and none of them had much insight on why this move happened. Well, one answer: scale. Inorganic growth.
At one time, Fonality had a big dealer network with training on the expo hall floors. The HUD (heads up display) was a product spotlight. Voicemail in the cloud was ahead of its time. (I guess you were ahead of Star2Star with the hybrid/premise model.) Then POOF! Fonality wasn't at expos anymore and the noise/attention died down.
Last year Fonality made an exclusive master agent agreement with the Alliance. Hard for that to pay dividends with an industry ARPU of $400 in less than a year. Next thing I know, I get the embargo notice about the merger with Telekenex aka Netfortris.
I'm not a fan of embargo news because it always slips out (like this did). The merger news made Facebook just after I agreed to the embargo. After it hits the social networks, it isn't worth writing much about - unless it is big. I told the PR firm it was only going to be a line item and a tweet. And apparently that was upsetting to Fonality. So they replied via the PR firm.
Marty Williams, head of product marketing for Fonality, wrote via a PR firm: "While Fonality does provide premise PBX solutions for customers who want it, the bulk of our business is cloud telephony and UCaaS. Fonality's top-rated UCaaS platform and its telephony management network are internally developed. Owning this intellectual property and the opportunity to expand IP development for the future is critical to leading the evolution of state-of-the-art, secure cloud communication and network services that increases productivity for our valued customers."
Fonality was founded in 2004 and grabbed "$50.4M in 6 Rounds from 6 Investors". It looks like they were at $45M in revenue in 2015. Fonality has over 200 employees. The deal was probably worth right around $100M because hardware revenue is worth less than recurring service revenue. It also begs the question how did Netfortris finance it?
Yeah, I am a skeptic. If this IP was award winning and awesome, why didn't you knock it out of the park? You were ahead of the pack a couple of times. Did you get tired? Discouraged? It sounds like money men wanted to cash out. (Nothing wrong with that.)
Again, yeah, I am a skeptic. The VoIP industry is more than 15 years old and is still just a dial-tone replacement. Billions in investment in this industry and it takes non-VoIP companies to do interesting things with it (thanks to the technology of WebRTC).
Even Microsoft has done more in the UC space in a short time with Skype4B than most providers have done with their product bundle in ten years.
There are over two thousand me-too companies offering up pretty much the same Hosted PBX service. RingCentral wrote, "The promise of UCC needs to go beyond multi-modal communications in one place. Rather, it should be about what the cloud can do to transform the way people work. I've said before , that it's about unified experiences, not just unified communications. Our vision of this is coming to fruition by combining best-in-class UCaaS, team messaging and collaboration, video and web conferencing, cloud contact center--all served on an open platform, at global scale."
There is a distinct difference between selling basic voice service and selling UC. When selling UC, you are selling CHANGE. And selling Change is F***ing HARD. People hate Change.
But for a business to improve in productivity and efficiency, they have to do things differently; they have to Change some habits. They need to leverage the technology that our industry has made available to any business anywhere and any time. That is the Magic the cloud is offering. It isn't about the cheapest seat price to get the deal. That's dial-tone.
Look at that chart above. No one is crushing it. How many Cisco partners are there*? How many Microsoft partners? (They are doing better than shown here.) Metaswitch has over 700 customers. Broadsoft has over 400. Why hasn't the pie been eaten yet?
Despite the Avaya bankruptcy, premise PBX sales have only dropped roughly 3% per year. That isn't a whole lot of rip and replace with cloud comms!! It's kind of embarrassing.
In the Tidbits article, I mentioned that the most interesting move I saw was Atlassian buying task management provider, Trello. Now you have Project Management with collab and chat via Hipchat (like Slack). Voice and video calling can be done via WebRTC. Even screen sharing. All that is needed is a Dropbox. That kind of bundle is more interesting to me. Consolidating 2 of the 2000+ just isn't interesting to me. I understand that scale is important; and consolidation in this space is needed, but that doesn't make it interesting - to me.
SIDE NOTE:
In 2014 there were 70 Silver and 20 Gold and 2000 partners at the Cisco event that year. No clear total number. Microsoft's online directory lists over 30K partners.
]]>Google Fiber stopped over-building fiber to the home (FTTH) to give fixed gigabit wireless a chance. This isn't even 5G. This is current non-millimeter tech.
AT&T is trying to get BPL (broadband over power lines) to work with Project AirGig. Will it work this time? The power infrastructure is still pretty old/antiquated, ut technology has gotten better.
API isn't talked about like that. Integrations are. UCaaS as a stand-alone platform is not that impactful to the employee work day. Integrated with CRM, email and other work day applications is. [All About API is at ITEXPO.]
Intelepeer just announced a platform that integrates with Cisco Spark. Hope they demo that at ITEXPO.
The IDEA Showcase is Thursday evening. I always get amped at startup events because there is great energy (hope, promise, excitement) that we kind of lack in telecom.
If you like startup stuff, the week of Feb. 13 is Startup Week! Techstars runs that globally.
Channel Vision Expo is collocated with ITEXPO again. This is the first channel partners event of the year. And it is collocated with MSP Expo. Should be interesting because more and more referrals and indirect sales are making a difference for cloud providers. 8x8 notes, "New monthly recurring revenue (MRR) sold to mid-market and enterprise customers and by channel sales teams accounted for 60% of total new MRR booked in the quarter."
I don't understand Blockchain. (There I said it!) Maybe I will get a chance to see what that is about on the show floor next week as well at the Blockchain Event.
WebRTC is still a thing, according to Andy Abramson. We'll see as Real Time Web Solutions has a section of the ITEXPO as well.
Most of the noise in my email is about HPBX/UCaaS, SD-WAN or IOT. The IOT Evolution is happening at the same time in Ft Lauderdale but it is a separate show. Verizon, Amazon, Gogo, Sprint, T-Mobile, Cisco (but no AT&T) are speaking and/or exhibiting.
That is a lot of tech to take in at one time, but it also in one place. Where can you get that much info/demo/prezo in one place?
Some interesting stats from 451 Research Group.
Overall IT Spending vs. Cloud Spending. Cloud spending remains strong, and the growth rate continues to outpace overall IT spending. A total of 44% of cloud users expect spending to increase over the next 90 days, while 4% expect a decrease. In comparison, 38% expect an increase in their overall IT spending vs. 11% expecting a decrease.
Cloud Adoption. SaaS (64%, up 1-pt) remains the most popular type of cloud computing in use, followed by Infrastructure as a Service (43%, up 4-pts) and On-Premises Private Cloud (34%, down 2-pts).
On-Premises Private Cloud Vendors. The most popular vendor for on-premises private cloud is VMware vCloud (65%), with Cisco (33%) and Microsoft Cloud OS (30%) a more distant second and third.
Key Attributes. The most important attributes for on-premises private cloud vendors are Platform Reliability (66%), followed by Value for Money/Cost (47%) and Technical Expertise (36%).
If you are in Ft Lauderdale next week, let's grab coffee! Or join us for dinner on 2/7 HERE.
]]>This topic has been on my mind for some time. The fraternity of telecom seemed to boil over last summer. We just had a presidential election cycle where one candidate played the gender card as several right media outlets put it, while also being maligned because of her gender. That played out on a national level.
Having run startup and tech events in Tampa for years, it is still largely a male dominated space. Just 18% of Computer Science Degrees go to Women. How many Entrepreneurship degrees go to women? Probably less.
In the last year, there have been a number of articles like this one about Why Women Quit Tech. To address this and have a good discourse, a panel of distinguished women was chosen from volunteers:
As one female CEO wrote me, "You know what is interesting is that a lot of this article is exactly what Sheryl Sandberg wrote in "Lean in." For the most part women in Tech are in marketing and operations. They aren't in the "driving" positions." True enough, because as I look at the Board of Women in Channel, half are in marketing and half are in channel sales. (Also, not certain how many expo attendees have read or heard about Sandberg's book.)
Come join the discussion in Ft Lauderdale!
]]>This is where Big Data is going: watching your every move and analyzing it. Dave and I don't see eye to eye on whether this will be used like a carrot or a stick. People don't quit companies or jobs; they quit their bosses. Listen in as we talk about his new startup and the implications.
If you can't see the podcast player, you can download the mp3 here.
]]>Companies hire me to visit, talk to their employees, listen, poke, prod and report back what I am seeing. This gives the business owners an extra set of eyes without the filter of the familiar (you see it everyday so you may not recognize it, like paint on the wall).
Here are some pieces of advice for non-startups (or companies that want to re-energize or act like startups):
Present clear mission and vision statements. Why? Exactly. As Simon Sinek says, Start with Why. People want to work with purpose, for more than just the dollar. You give them a Why with a clear vision and mission.
"No matter the state of the current fundraising environment, presenting a strong business plan can be the difference-maker that convinces someone to take a chance on your business." I often hear mentors say that a business plan is a waste of time. Huh? You need one to take to the bank. The whole underlying purpose of business planning is to be strategic, get clear and think through the idea. That is never a waste of time.
Zeroing in on customer needs. This is the tough one. We just saw a fiber company go BK because there just wasn't enough customer demand. You have to sell something that people will buy from you. In Hosted PBX, it took almost ten years to get traction.
Mentoring helps. Coaches, mentors and master mind groups are all designed to help you grow. "Wealth is a team sport," says Loral Langmeier. You can't do it alone.
Now this may be aimed at startups, but it is solid business advice: "Barring a broader economic slowdown, we don't expect a secular decline in venture capital markets. That being said, we would encourage every tech startup CEO and decision-maker to tread carefully in the months ahead. To succeed long term, the name of the game will be financial prudence, careful growth and a customer-focused approach to innovation," from Jaidev Shergill, Managing Partner, Capital One Growth Ventures.
Ben Evans writes, "There are very strong deterministic forces that drive the industry forward - Moore's Law, network effects, economies of scale, migration of value up the stack and so on. But there's also a strong element of chance and luck. Great talent and execution and great ideas are part of the mix, but sometimes you're also in the right place at the right time." Timing is just as important !!!!
Looking at the failures at RIM and Nokia, Evans says that the failure was a decision made 5 years earlier as they mapped out what the company would do / become. That decision is what missed the boat. Interesting because he mentions AOL and Yahoo falling asleep for 10 years. And I look at the ILECs to see how they made a pivot to cellular not realizing cable was going to eat their lunch. Bell Labs was gone. They were busy consolidating, not watching their ass or planning for the future.
Good luck!
]]>Did you see that Apple had a revenue problem? Not as many iPhones are selling. "Benedict Evans (@benedictevans) says the mobile wave, which is split between mobile phones (voice/SMS) and smartphones, is coming to an end, and the next obvious market for growth is cars." Ben's blog is here and the slide deck is here.
The Autonomous car has big investment from everyone from GM to Apple to Google to Tesla to hundreds of other companies. It is where we are heading. (It is just another robot!)
Robotics. Global investment in robotics doubled from 2014 to 2015 to almost $600M, according to Financial Times. Robotics is going to replace a ton of workers.
Life Science (or biotech) is still healthy. From cancer treatments to testing, investment in this sector is still good, largely because R&D spending at Big Pharma has shrunk in total dollars due to consolidation. Also, Big Pharma drug pipelines are lean; they tend to buy new drugs, treatments and tests these days.
The ancillary to this is the IoT Healthcare sector which saw a rise of 20% in 2015 investment, according to CB Insights. One problem being faced is clinical efficiency, which is tracking treatments to boost the effectiveness of healthcare providers as well as to improve the delivery of healthcare in hospitals and clinics via connected devices/objects. That takes us into wearables, ingestables, brain sensors, home monitoring and more. A lot of cool stuff in this space, especially happening here in Tampa Bay.
In Colorado and California, cannabis startups are the rage. Legal marijuana sales are tracking at 3x Coke's bottle water sales.
Education technology is also seeing investment, but our education system sucks, so I am ignoring it for now.
CHATBOTS, PERSONAL ASSISTANT and Other forms of AI
Matt Swanson, Paula Bernier and others think that "chatbots will cause a near-term disruption in how businesses interact with consumers, and a long-term paradigm shift in how people interact with machines." See Matt's article on VB.
Paula writes about Facebook, chatbots and customer service here. Thomas Howe wrote, "As alternatives to websites and to mobile apps, Chat bots, digital assistants and intelligent agents are the quick and efficient way to connect your employees and customers to your business." Companies like BizTexter and KISST are already shipping services (and they did it before Facebook!)
Financial Technology is looking good. When there is a best of list of conferences for a sector, you know there is money there. The Fintech startup scene, according to CB Insights, has been healthy for a while. Pretty much the way Craigslist sucked a lot of revenue out of newspapers, banking startups will suck some profitable lines of business from Wells Fargo and other large banks. Hopefully.
BTW, Payments startups saw a shift in the last two quarters. Digital wallets like Apple Pay are here. Investments will slow as winners start to emerge (like in the ride sharing space).
SIDE NOTE:
Latency Arbitrage is why latency matters to anyone in financial. Listen to why. ]]>From James Altucher: "Automation is eating the world. Every time a line of software is written, a job is lost." VR, 3D printing, AI and robotics will make us all unemployed soon. what then?
Sports Authority is closing all its stores. Macy's, Sears, K-Mart and B&N have been closing stores for a couple of years now. Retail - even luxury retail - is declining. Not all of it is online shopping. In the future, what do malls look like? Basically entertainment and food courts.
Dollar stores are taking share away from even Wal-Mart.
The rise of the minimum wage is supposedly a problem for business owners, but all of the complainers have cash stockpiled and executive pay has flourished. Hmmmm... The amount of money available to keep the economy spinning is lagging.
We have an economy that runs on two elements: service (consumer spending) and technology/The Internet. [Good read here by Dixon on the Internet Economy]
As most businesses and consumers consume the Internet, the number of subscription services we pay for is increasing. Our monthly spends are going up with our bandwidth consumption.
The number of contractors or freelancers has increased to more than 35% in the US. As that keeps increasing imagine what happens to annual income, stability, savings, retirement...
I will just leave it there.
Research on the brain is cool. What words do to your brain HERE.
Two things that people talk about are ecosystems and blockchains. These are two systems that investors look for in startups.
"Consumers don't hate advertising; they dislike how the advertising is distributed." "According to an April 2016 report by Accenture, 84% of digital consumers complain that advertising too frequently interrupts their content consumption, 40% plan to remove these interruptions either via paid subscription or ad blocking software in the next twelve months." from mynfo, a Tampa startup that just closed $6.8 million in Series A financing!
Most business models - newspapers, magazines, car companies, schools, VARs - have not changed much in the last 20 years. So as change comes (not IF, but WHEN that change comes) it will disrupt most of the players.
Rovi Buys TiVo in $1.1 Billion Deal. Is Roku next?
Verizon's brand is taking big hits due to 3 things: (1) the strike; (2) vandalism of systems creating big outages; and (3) Frontier taking over a large chunk of FiOS customers. Frontier's take over was a cluster, like every other take over has been. What shocked me the most is how few people outside the industry actually knew that Verizon had sold off its assets to Frontier. Even fewer knew that Bright House was being bought by Charter. Telecom is at the very bottom of what people think about.
Already seeing UC providers moving away from Polycom since the merger announcement with Mitel. Fuze/thinkingphones went with Yealink. Birch is hollering about Panasonic. A few smaller players are testing out Grandstream. The move away from Polycom has started. Add in a move to softphones and mobile apps and what is MITEL buying?
Sangoma launched a line of phones for FreePBX and its newly launched PBXact UC, a premise based UC&C appliance.
"I never expected to witness the slow suicide of a country, a civilization. I suppose nobody does." [The author is talking about Venezula] "Hate, as a political strategy. Law, used to divide and conquer. Regulation used to punish. Elections used to cement dictatorship. Corruption bleeding out the lifeblood in drips, filling the buckets of a successive line of bureaucrats before they are destroyed, only to be replaced time and again." <- sound familiar?
]]>We then did a podcast with the panel because it should have been recorded. You can listen to that here.
At ITEXPO in Fort Lauderdale, we did the panel again with a lot of audience participation. Alan Percy recorded the panel and put it up on Soundcloud. Listen to it here.
]]>Seeking Alpha wrote, "RingCentral's move upmarket is substantially increasing their revenue per seat and allowing them to drive the top line." Well, same thing at 8x8, which raised its ARPU to $369 from $305 last year. Yet it only took a couple of really big sales (one being Netsuite's 2400 seats) to move that needle. Like I have said before one big sale is the same as 10 or 20 smaller sales, which is why everyone looks up-market.
Seeking Alpha continues with RC, "The added revenue per seat is generating more cash flow that is being reinvested into their sales and marketing effort which will continue at 40% to 45% of revenue. The return on those marketing dollars spent is not accurately reflected in the share price given the lifetime profit and revenue generated." That means that RC - and its other UCaaS brethren - are pouring 40-45% of revenue into the cost of acquiring customers! That includes commissions, SPIFFs, free phones, ads, pay-per-click campaigns, websites, etc.
SA also notes, RC "Shares continue to trade at a significant discount to the high-growth SaaS peer group due to overblown competitive fears." It is hyper-competitive, but the market for UCaaS is set to explode according to every single analyst. We are at less than 15% penetration and the IP Transition has only just begun.
Unfortunately, there are some factors that will get in the way. One is most people are going all mobile, all the time. So they won't need a UC seat. Also, other folks will just be swapping a PRI for a SIP Trunk. No UCaaS seats there either.
The other big factor is the technology and engineering mindset that most of the ITSPs have. Founded and run by engineers who are enamored with the tech. Like they are going to out-tech the next guy.
Let's look at some things. One, most users utilize less than 7 features!!! So who are you building all these widgets for? Call Quality is still an issue -- THAT is what you should work on.
Two, it becomes too complex. Too many features, not enough user design, so people don't use it. No one reads the manual. No one asks for directions. So Simply it!! The Genius can simplify stuff; anyone can make it complicated.
Look at the apps that are popular - Kik, WhatsApp, Skype, Snapchat. Why are they popular? Simple to use. Told a story users wanted to believe. Network Effect. Many features, but one main function.
If you think you have the killer function - the next Kik - then your story should be a lot like Slack - 2 million daily users in just 2 years.
Box.net came before Dropbox. Similar stories, functions, etc. Dropbox hacked growth with a network effect of users getting users for them with a simple referral plan and s stupid simple interface (like Google's home page versus Yahoo's home page).
Three, RC and 8x8 are the big names because they Market! They spend on Branding and PR and marketing. And the rest of you really do not. It isn't even about out-spending them; it IS about smart spending.
Lastly, stop being a tech company. Your customers want you to provide technology, take it out of their hands. To do that well, you have to be in Show Business (see last post). I have said it before, when 8x8 changed out the C-Suite they transitioned from a tech company to a Sales & Marketing machine -- and that is when they took off with 20%+ growth every year.
So if you are hobbled for growth, stop playing with the tech and start marketing to get sales, before some other company takes over your market.
]]>The move to the cloud is about being agile and competitive. Good things. However, it doesn't happen in silos.
Gartner writes, "Organizations are undergoing major transformations - to shift to digital business, become more customer-centric, and keep pace with regulatory changes. Any transformation impacts business processes, often requiring dramatic changes to how people work. Yet over 70% of transformation initiatives fail. Process management practitioners can change that and directly contribute to the success of their organization's initiative by applying the latest process thinking, techniques and technologies to innovate and drive change."
You see, you don't get competitive and productive by moving the software from a server in the back room to AWS. It doesn't work that way. Certainly, moving your email to Office365 or Hosted Exchange or Google for Work means less headache and your IT department gets a break. But the productivity comes from time saved.
Email and shared calendar are one thing; but what about an EMR system or HRIS system or a practice management system? In telecom, service providers are looking for a softswitch based on features and integration into existing billing systems. Everything touches everything, right?
Packaged software is long gone. Businesses making decisions about the cloud have to consider a number of options: private, public, hybrid, PAAS, IAAS. Most likely a combination of these will be adopted in most environments. This leads to other issues - like Integration.
Integration is the Bane of software deployment. It is one thing to have all of the latest applications, but quite another for these apps to share information. Quite another for these apps to improve workflow.
Many service providers build out CRM, billing and provisioning systems themselves. They want it customized. They don't want to pay a million for it. The shrink wrapped versions need too much customization. That customization is integration, work flow, user experience. Those 3 factors are what make the business agile and competitive.
After SAAS in the string of services comes BPaaS - business process as a service. This is a service oriented delivery of not just an application but a system or work flow. For example, there are a couple of companies that offer provisioning systems to overlay on your Broadsoft softswitch to allow for a single data entry point to flow through to billing and CRM. That is a business process as a service.
For years, you have seen the ads for UPS as Big Brown, the logistics experts. It is BPaaS. UPS and its army of experts are not just doing the shipping, but the logistics, the transportation and the efficiency studies for companies like COSTCO, Ford, Frito-Lay.
As Adweek explains, "UPS went public at $50 per share--the biggest IPO Wall Street had ever seen. Its corporate pockets suddenly bulging with $5.47 billion, the company went shopping, snapping up a slew of finance, brokerage and international trading firms. Eventually 40 companies melted into UPS, a consolidation that transformed the corporation from a package-delivery brand into a behemoth of logistics (a fancy term for moving both goods and information through a supply chain)."
BPaaS doesn't have to be that extensive (or outsourced). Broadsoft is trying to deliver on more than just a hosted softswitch with BroadCloud. IDEA2 is deploying more than a SugarCRM replica with its Sasquatch.
The next step isn't to just jam your software in a cloud computing environment and call it done. The move to cloud should be the opportunity to improve on the business, getting efficient, re-imagine, digitize and innovate the customer experience and the employee experience. What do you think about that?
The clash of titans we are seeing is the one side (A) replace what we have with a cheaper version in a cloud clashing with (B) most software deployments fail to delivery desired outcomes. Disruption in every industry is happening while companies deal with talent (human resources) acquisition/retention, technology (deployment, skills, training), sales, price/revenue compression, Wall Street demands, and much more.
You are doing yourself a disservice if you simply take your current software and jam it into a container in a data center. This is the time to examine your processes, work flow, systems to see what can be done differently, better, efficiently while matching business goals with user experience (customers and employees). Tall order. A Collision of Titans.
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