RAD: The Telecommunications/UC space is changing. It is a lot different than when we both got in during the heyday of the 90s. How will these changes affect channel partners?
CEO: The evolution of Cloud offerings in the UC space is changing the fundamental structure of the type of partners that are required for a successful channel. The classic VAR's face the challenge of a major change in becoming solution focused, not product focused. This also entails a change in the type of technical talent required within the VAR's to execute on their new solution offerings. A market that for more than a decade had only 5 to 10 top providers, now as the shift to cloud continues, has 30 or more providers with UCaaS offerings. With this, VAR's that navigate the change will have to focus on providing solutions that incorporate integrations to other work flows, CRM's and related solutions. On the positive side, it does allow VAR's to truly become solution providers by having the ability to easily offer multiple Cloud solutions, finding the best fit for each prospect."
Tracey continues, "As a result of these changes, many of the providers turned to alternative channels like Master Agents and Value Added Distributors (like CDW and Jenne). This opened a larger market reach than the classic VAR channel, but has compounded the problem of finding resources to deploy and support these solutions as they grow in numbers and scope."
"As we sit today there is a lot of uncertainty in the channel and lots of scrambling for solutions. Channel partners that can adapt and overcome will have plenty of opportunity and the re-occurring revenue streams should provide many opportunities for growth beyond that of the traditional VAR."
"What is really needed to succeed is the technical talent and execution of a top VAR, with the exponential sales growth opportunity of a channel like the Master Agents built for carrier services."
RAD: What have you seen that is a positive indicator?
CEO: "We see growing demand from the providers for an answer to their execution and support issues. The demand for organizations that specialize in UCaaS/CCaaS and have the required skilled engineers to successfully design, deploy and support these solutions will see tremendous opportunity. We also see growing demand for technology in the business space that can improve companies' ability to compete in their markets. We see increase value put on UCaaS and CCaaS solutions as a key for organizations to succeed. It opens lots of opportunities for those organizations that are ready to take on the challenge of these changes."
RAD: How do you see the Contact-Center-as-a-Service space evolving?
CEO: "I see the CCaaS space evolving ahead of the UCaaS space. Contact Centers are often the heartbeat of an organization and its key factors - revenue and service. The more organizations realize that Contact Center productivity is a driver for their business, the more demand we see for the business applications/features to be built in to the Contact Center solution. The line between CRM and CCaaS is blurring as more companies demand integrated access to multiple communication channels and data sources. And today it's true not only for bigger business players but also for SMBs."
"There's a very limited number of competitive premise-based Contact Center offerings in the small-to-medium market. Cloud solutions are stepping forward bringing top-level Contact Center functionality to this market along with the reliability, scalability, continuous software advancement and next to zero hardware requirements. Smaller contact centers now can afford to operate on the same level as business monsters with less risk and more opportunities to grow."
Tracey adds, "We see some big SaaS CRM platforms presenting themselves as Contact Centers to play as CCaaS solutions but they are still lacking lots of expected Contact Center functions and they lack the ability to route interactions from multiple channels effectively. They face a step climb to catch up to the rapidly expanding feature/application sets of specific CCaaS solutions. At this point in time with some many of the CCaaS players offering integrations into these big SaaS platforms and having open API's for continued advanced integrations. It just makes more sense for CCaaS to be integrated into complete CRM than the opposite."
Tracey remarks, "When it comes to the channel, CCaaS business is a great source of MRR revenue. The average CCaaS deal will have a Top Line of 4x to 5x in comparison with UCaaS, and it is still a field with fewer players. MSPs, VARs and Agents who see the writing on the wall about declining top line revenue in their carrier business should really start considering CCaaS as an alternative."
]]>The products that have been launched recently sit in big buckets titled IOT, Cyber-Security, Managed Services, SD-WAN and of course UC (UCaaS, UCC, WCC).
Rich Tehrani has a nice read about AI and analytics transforming companies like Vodafone.
COLOTRAQ has a new IT Risk/Cyber-security Assessment and Planning Service. They even brought in some talent to delivery it in Victor Zamora.
MetTel launched a single SIM for IOT. One VAR I spoke with said that they are going to run with this to the end-user because it is a niche that is almost without competition.
Level3 consistently emails me about selling cyber-security, especially their DDoS Mitigation service.
EarthLink is still around? They launched a secure public Wi-Fi connections with Norton WiFi Privacy (basically VPN). Considering how often businesses use Starbucks, hotel, airport and other public wi-fi, this should be a no-brainer sale.
Panterra rolled out Streams, an ode to Slack, but integrated into a secure, encrypted full unified comms platform.
VZW has One Talk, one of the few mobile UC plays out there.
When TelePacific re-branded as TPx, the highlighted products were managed IT, security, UCaaS and SD-WAN.
Aryaka just rolled out a clientless SD-WAN: "SmartACCESS - the first-to-market SD-WAN for remote access, with built-in dynamic CDN." In the US, Content Delivery Networks are how a majority of users get their Netflix chill on.
Verizon announced that they are selling more MPLS due to SD-WAN. CenturyLink has said that SD-WAN is not a quick fix. So there is a lot of room for expertise and advising in these projects still.
AT&T says that enterprise clients want a hybrid solution to managed services. (Nothing new here). Some of the services will be outsourced to the likes of AT&T and some will remain in-house. That is the way it is for cloud as well - HYBRID, according to an Evolve IP survey. Private for mission-critical, Public (AWS, Azure, SaaS) for mass market stuff and VPS for DevOps. Pulling that together requires some expert help. Is that you?
All of these vendors are just waiting for Channel Partners to pickup the ball and run with it.
It will take more than the Twitter approach to launch. Twitter put there platform out there and waited to see what people would do with it. Years later, Twitter still has no idea what the business case or financial model is. Don't be Twitter!
It isn't about just throwing your toy into the yard so someone will stumble along to play with it.
We want to be spoon fed who IS buying it; why are they buying it; etc. (As I have written about ad nauseum.) It is all about the Stories! Ignoring this means that we will leave that toy alone on the ground over there.
I understand that channel partners have to innovate, change, transition, etc.
With network revenues steadily declining and telecom being a broken mess, partners spend all day selling bandwidth at lower rates - and lower commissions - and then having to navigate the many layers of Dante's Hell that is a carrier today to get it installed (and then fixed - yes I am talking to you ACC Business and GTT!)
In the midst of this mess, on-going consolidation and the accompanying musical chairs is making a partner's job harder, not easier.
Much of these products require new knowledge and some training. That is not time that is always available to partners. I know, Go Make Some Time before you become Extinct. You see, we'll have time when we are extinct.
Besides compelling stories, buyer profiles and the WHY, we will also need new sales skills. Selling dial-tone or network is replacement. Selling Cyber-Security or AI requires a different sales approach.
MSPs understand how to sell managed IT but some VARs do not. (Hence why they are still VARs!)
While many of these products allow a Partner to enter a green field with little competition, maybe the business model for the partner has to be demonstrated as well.
And maybe instead of launching more services, you figure out how to deliver on the ones you have. If you can't deliver the easy stuff (Network), I will never give you a shot at the complex!
Just some food for thought while you wait on the Channel.
]]>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.
]]>By that, I mean, if you can fog that mirror, you are a partner.
Shouldn't partner programs be more like the NFL or NHL draft than an army recruitment office?
Wouldn't it be better to not sign up everyone?
It would certainly help providers' partners if there was demand for the service offering and if there was just a handful of partners to supply that demand. Instead we have little demand* for the services and everyone can be a partner.
That is the VAD theory, because a value add distributor is similar to a store. They can carry anything. They are in logistics, warehousing and distribution. That is all the value they bring. In stock or not?
On the Master Agent side, I just don't understand the signing up of 20+ UC providers, 10+ data center providers and 10+ Microsoft Partners.
For perspective, USLEC had 26,000 clients when Paetec bought them; Cbeyond had 51K when Birch acquired it; 8x8 has 48K. These aren't large numbers. "In 2012, according to U.S. Census Bureau data, there were 5.73 million employer firms in the US. Firms with fewer than 500 workers accounted for 99.7 percent of those businesses, and businesses with less than 20 workers made up 89.6 percent." [SBE] The sweet spot for businesses, according to CompTIA, is 10-100 employees, which represents a 20% slice of the overall market - or 1.8 million businesses. FYI, 50K of 5M is 1%.
What's my point? No one is crushing it (or ever will). A lack of funds, crappy marketing (if any), no focus and flawed strategy that is poorly executed are all factors that mess with success in telecom. If AT BEST you are going to get 50K businesses, do you really need 450 to 2500 partners signed up to hit it?
Wouldn't providers do better with the zealots?
Verizon and BellSouth/AT&T used to be exclusive. Partners could only sell their services. It worked out well for both parties. It meant there was focus, specialization. Co-selling worked too.
By signing up every master agency, vendors think they get access to more partners. They don't. Most partners use 5 (five) master agents. VARs use at least 2 (more likely 3) different VADs. So by signing up more partners, vendors get their logo in more places, but they don't get more partners. In fact, what they DO get is to fork over more dollars for events.
The model can't last much longer. And if they did the numbers over the last even 4 years, they would find that Pareto knew exactly what he was talking about. Also, that the amount of busy work given to channel managers is just piling up. Hard to hit quota when bogged down with recruiting, quoting, selling, reporting, funnel and a hundred other things.
What vendors confuse is exposure for demand; logo placement for marketing.
I've written about it often and enough. Where's the competitive analysis of the marketplace? Who is your target? Why do they buy? Why YOU and not THEM?
It is very different with network. Lit buildings and fiber routes are the factor. You don't have that with managed services or security or cloud. The limiting factor for voice/VoIP/UC is LNP which has mostly been solved (except for pockets of independent IOC territories).
Put up the red velvet rope. Sign up, train, on-board and work with partners who actually want to work with you. And limit that. It builds up the relationships that you have. It makes your partners stronger.
It isn't going to limit vendor revenues, because vendors are probably quoting and saying YES to stuff that they shouldn't be. Vendors are NOT getting deals that they would like to - or that they built for - because they are too busy chasing every single partner and every single opportunity. In the process, the vendors are diluting their message (brand) and wearing out their channel managers. But hey what do I know. I have not only seen this playbook, everyone has a copy of it, and yet no one is winning using it.
*DEMAND = after 15 years, UC has only penetrated to 29% of the market? CLECs have been around since 1996 and can't get more than 1% of the market - in 20+ years.
]]>Think about this: SD-WAN providers use an appliance as the CPE or end-point. This appliance can function as a switch, router and more. It can be a firewall, a wireless access point and more.
Most of the big name LECs (ILEC and CLEC) have added SD-WAN technology to their portfolio. Even lesser known former CLECs like TelePacific, NITEL, Transbeam and AireSpring are offering SD-WAN technology. That means less Cisco boxes being deployed.
Not only is this a problem for the hardware vendors like Cisco, ADTRAN, Juniper, Brocade and Extreme Networks (mentioned because of recent news), but this is a problem for VARs and MSPs.
Long ago, I explained that VARs selling carrier services was like CLECs selling AT&T services - you are fighting against your biggest vendor. Now those same vendors are going to take away the Box Business that floats their business. VARs still make money selling boxes (so do Avaya partners!). The margins have shrunk. The sales have declined a little year over year, but not enough to make many change their lines of business or their model.
EarthLink announced 4000 locations on its SD-WAN as it merged with Windstream. If EarthLink can sell multi-location retail and restaurant chains, the SMB market is in play. The bread-and-butter of the VAR.
I am not throwing around FUD. I'm saying that every industry comes under attack by new technology. The new techis SD-WAN; the legacy business is Cisco and VAR - as this segment moves to a bigger managed services provider and hardware-as-a-service.
The one thing missing from this cloud strategy: business model.
For all the talk about monthly recurring revenue, the commissions off cloud services are tiny compared with the time it takes to sell and support.
Even with the drop in uptime for carriers, the amount of support for network services is small. The sale is easy. The commissions are fair. High ROI.
Microsoft Office365 is starts at $60 per seat per year. That is a commission of fifty cents! If the client calls with just one support call, all of your profit is gone.
In network, almost all carriers deliver services as advertised. There isn't really a big trust issue with the customers. It's plugged in and usually works. Stays up most of the time.
The same can be said of PRI. But SIP trunks? That gets tricky with inter-operability, with porting numbers, with quality of service. There are so many providers that it isn't even possible to do an apples to apples comparison. Easier to sell POTS lines, in my opinion.
UCaaS has been notorious for porting problems; QoS issues; lack of user training; and deployment mishaps. Also, too many features, not enough pain for the buyer to move to what looks like a complex system. At ARPU of about $350, that is a lot to overcome to make a little bit of money. The SPIFF War that pays out up to 6X MRC is getting attention, especially if the partner can just throw a lead over the fence, let the ITSP close it and collect his $200 after passing GO!
The big impact from cloud is the integration. But who is going to do that integration? Who is going to come in and add the Zaps or the IFTTT? Who is going to script together the various pieces of software to get data to flow without swivel chair?
On a client call recently, they mentioned that many IBM A/S-400s are still in service. Those applications don't easily port to the cloud for a number of reasons. There are a number of software applications that won't easily port to the cloud. That's why we have the Hybrid Cloud strategy, right? Which just means that some stuff stays as is, some stuff goes to AWS/MS/IBM/Rackspace, some stuff moves to a private data center. (SD-WAN plays the part of making that network optimized for a hybrid environment, or as I like to call it the usual system.)
I'm not saying cloud isn't here to stay (see here). I am saying that the Business Model for Partners to be Cloud First has not become mainstream yet.
A good Cloud Engineer/Cloud Architect or a knowledgeable Sales Engineer are expensive full time positions. It would take a lot of large deals to begin to offset that investment in talent. There is a new skill set needed for cloud services that wasn't needed for managed IT services. New sales skill set too as the sale transitions from transactional replacement of services (cable for T1 or Ethernet for T1) to consultative selling involving business needs and impact.
"What we've found working with clients who want to begin taking advantage of the cloud's cost and accessibility advantages is that they will start new projects in the cloud, but will leave their legacy systems intact." To find these deals, you would need to be proactive in marketing your firm as a cloud expert (and actually have the chops to pull it off without burning the client and your reputation, which is a real problem that vendors don't want to address.)
Personally, I wonder about the economics of cloud. VDI, UCaaS, CRM and Office 365 are going to cost you ($40+$30+$100+$5) roughly $175 per month per employee. At 99 employees that is $200K per year. Seems like a lot, but if you are the partner and you get most of that share that is $20K per year in commission.
]]>RingCentral's channel head penned a post about the strategy to hit all the large master agencies. I see press releases every week of providers signing on with distributors, because that is what master agents are now. They even call themselves distributors. They are like a brokerage house of vendor contracts.
Agents used to get a reputation as commission shoppers, but in today's environment it is almost encouraged. The Agent Alliance was set up to help volume buy for master agents. To reduce risk by putting a lot deals through one good contract.
Masters pass through sales back and forth all the time. For example, Verizon deals typically go through one of the handful of platinum partners. Some of it has to do with quota and volume needed. Some of it has to do with the one-stop shop experience that they are portraying. Some of it has to do with programs like VZ, AT&T and Comcast needing experts to navigate the programs.
The masters look more and more like VADs such as AVNET or Tech Data. Large numbers of vendors are trying to get their SKUs in the catalog with the strategy of hope that this will be enough. That if we can just get in Jenne's catalog we will be sailing!
There is a big problem with that: sell through.
What happens after you ink the deal with the VAD?
These programs work great for a specific business. One type of business is specialty shop that offers a narrow niche of products, like Fireeye or Juniper (for people that don't want Cisco). Another is a vendor with demand created by the vendor in the buyers' realm, like IBM, Cisco, Comcast, Verizon or Microsoft.
In the case of Microsoft and IBM, software licensing for under 10K seats is a pain in the butt. Better to let a VAD handle that. It is what they are designed for. In the case of hardware like Cisco or APC, the VAD is like a warehouse and logistics partner. Microsoft and Cisco helped create demand by making a certification ecosystem that generated demand through experts who were married to that product line. (Very hard to duplicate.)
Now if you are just one of 20+ VoIP providers in a catalog, how does that help you? It is a commodity game at that rate. To a certain extent, you are hoping for name recognition. For example, if it is LSI, Panterra, RingCentral, 8x8, Vonage Business, Star2Star, Broadview, Broadvoice, ShoreTel, West, Evolve IP, Momentum and say an MSP reselling CoreDial underhis own label. How does a partner decide? Seriously. I would be curious how executives at the ITSPs think that decision tree goes.
Factors that may influence that decision include price, SPIFF, integration, feature set, the channel manager and past experience.
Most VARs have accounts with multiple VADs (TD, Ingram, D&H, Synnex), in case the gear is not in stock near the customer site. However, when moving to white-label or hosted solutions like email, backup, and even software licensing, VARs will be picking one vendor. They won't want to log into multiple systems to see the status of that client's email or license is. One portal. So now those huge numbers of VARs who would buy gear from you just shrank because they are picking a single source for hosting.
Agents don't want to become familiar with 20 provider systems and platforms. They want far less. The more familiar you are with a service and the environment around that vendor (quoting, features, ordering, support), the easier it is to sell. Less unknowns means comfort, means trust. Trust is required for sales. Remember that list of VoIP Providers? Name recognition - the brand - can convey trust.
There is an expensive and time consuming process for sell through. DSCI and TelePacific have been going through that since the merger. National road tours, webinars, numerous master agent events, expos like NextGen Cloud and Channel Partners, promotions, SPIFFs - to tell the story, to get your name in front of the partners. It isn't ink and done. It is ink, then go push that rock up the hill every single day! Hustlin' as Gary Vee says.
The other factor is sales friction. Personally, I never even consider selling cable because waiting 15 days for a site survey is total garbage, especially when the direct side gets it done in three days. There are carriers I won't work with because I have in the past and got burned. (I am not alone here.) The easier you are to do business with the better.
It is getting harder and harder to sell through channel because of a number of factors including industry consolidation; musical chairs; too many vendors not enough partners; Noise and Attention; the cost of sales acquisition during both a price war and a SPIFF war; and buyer budget constraints.
The noise of UCaas, SD-WAN, DDoS Mitigation and cyber-security are getting louder every day. To the point that it is just noise, not a resonating message, but more like when that car pulls up to you at the traffic light with the music blaring drowning out the music in your own car. So you roll up the windows to drown it out. Yeah, that's where we are.
]]>Some are wondering what vendors to look at. Who is real and who is not. Who will be around to pay commissions in three years?
Hint to one data center company: Don't tell partners that you are owned by a private equity firm famous for cashing out. That isn't a way to win our minds or orders. Also, do NOT tell partners at a master agency event that they can go direct with you. WTF?!
In the past month I have been asked numerous times if Microcorp is for sale. The answer: "As a member of the Microcorp Advisory Council, I can assure Microcorp is not for sale but actively looking to buy!
Since the ScanSource deal, a couple of master agencies have announced that they were investing in the business and want your business. (see HERE and HERE.) One sub-agent seemed upset by this and called in fear-mongering. Is it?
The VAD space is in turmoil. All of them are seeing revenue drop. All are trying to figure out how to take advantage of cloud and MRR to shore up revenue erosion. ScanSource gambled on an easy fix - buying Inteisys - except that their stock tumbled afterwards.
If you haven't worked with a VAD, it isn't exactly the same as what Agents know as a Master Agency. VADs are more automated and focus on logistics and distribution of licenses and hardware. Sales isn't about co-selling, but product information. There isn't a whole lot of need to order track a software license or a server. VADs run on co-marketing dollars and razor thin margins. Masters are labor intensive. The hand holding that the agents and VARs will need to navigate selling telecom, cloud and managed services will be a shocker for the likes of ScanSource.
The upset sub-agent must not understand what every Agent I have ever talked to does: Diversify your income streams because everyone gets screwed in this business. . If ScanSource held you to a firm partner contract with quota and activity requirements - or at some point stops paying your commission - what do you do? It will cost you almost a million dollars and years of your life.
It's about mitigating risk. No one has a crystal ball, but you can take steps to give yourselves a safety net. You don't have to, but it is sound business practice.
The other dilemma, which kind of caused all this, is the lack of new partners. The VAR segment has shrunk in the last 4 years. Too long to go into now, but with moves that Microsoft and Cisco made, some partners opted to pivot out of the VAR space. Others made the move to MRR as an MSP with a lot less emphasis on hardware sales.
At the same time, price erosion resulted in commission decline. Meanwhile, not many new faces are entering the channel. At every channel event - I have been to 4 in the last few months - the number of folks under 45 is a fraction of those partners over 45. This business is getting old.
At the same time, more vendors are entering the marketplace for cloud, managed services, IOT, analytics, blah, blah, blah. More vendors but not more salespeople. We are at a point where the channel is the cheaper option for sales for most vendors and carriers. In the UCaaS space half of new mid-market logos come from channel partners. The cost of sales via channel is lower than the cost of a direct sale. But without new blood in the channel, what happens in even 5 years?
More vendors coming into the space with even the same number of partners just doesn't work out mathematically. Verizon is aware of the problem and is working on it with partners. But they seem to be the only one, because it seems many are looking globally for sales right now:
AVANT hires a UK channel manager. Intelysis goes to Europe. Tech Data is buying Avnet's technology solutions group for $2.6 billion to expand into Asia.
]]>Try something new.
Mary Meeker's annual Internet Trends report was released this week. She makes 2 big points:
One: There are now about 3 billion global internet users, but user growth is stalling at about 9% year-on-year. Smartphone sales are slowing, as is the yearly growth in the number of smartphone users, down to 21% from 31% last year. There will still be a market for bandwidth, but the it will not be lucrative. Revenues need to diversify from network.
Two: The rising Snapchat generation: Millennials communicate with text, but Generation Z prefers to communicate with images. There are now over 3 billion images shared daily between Snapchat, Facebook, Facebook Messenger, Instagram, and WhatsApp--all but one of which are owned by Facebook. 55% of Pinterest users use the site to find products they want to buy. Messaging apps are moving from simple text tools to communicate with friends to platforms for commerce. It will make selling simple VoIP solutions difficult, because smartphone and apps beat a Hosted VoIP solution. This will make it even harder on the remaining VoIP Providers.
Other things not from Meeker's report, but from the news.
Ransomware is a real problem for small and large businesses. Even NASA got hit - as did Congress recently. It is so bad, the FBI issued a warning. Selling security is going to be a big market. Data backup is a good solution for ransonware (if set-up properly). So is an anti-malware solution. How many businesses can afford to be down for 2 days?
Have you thought about selling data center? If they have an extensive WAN or MPLS network, a data center may be involved. QTS is turning the Sun Times building in Chicago into a large Tier 3 data center. It will have with 317K SF of capacity, 24MW of power and have fiber connectivity from 5 carriers. If you need help selling colocation, call the experts at COLOTRAQ.
If you want to stick with just bandwidth, how about managed WLAN or managed wi-fi solution for bigger buildings? Cablecos offer it. Some telcos. ADTRAN, Ruckus, Cisco. In a world of IOT and mobile devices, managing the wireless network is a pretty big problem to solve.
Don't want to sell mobile devices? How about mobile expense management? Stay tuned for a podcast on Monday from Wireless Watchdogs.
Have you thought about Microsoft - and riding the wave of hype around Office365, Sharepoint and Skype4B? If you have read any of my blogs, I mention Skype4B often. There is demand for it.
WAN Monitoring is getting louder. Master Agents have added circuit monitoring. AireSpring offers it under the AireNMS service mark. Most VARs and MSPs offer RMM (remote monitoring and management) of desktops, laptops and servers. This is similar.
Colocation, Backup, Security, Monitoring, WLAN and mobile expense management are all items ancillary to what you are selling now. You would be doing a disservice to yourself and your customers by not mentioning them.
There will be a gulf of disapproval. (see diagram) I think that gulf is about 5 years old now. Time to get through the Dip, grab the bull by the horns and change.
]]>Lately, the PBX manufacturers have contacted me. Honestly, I don't think the future of telecom is the premise PBX. In too many cases, companies are trying to get rid of real estate and the associated costs. BYOD, virtual employees and other trends have actually shifted costs from the company to the employee, while shifting the company from a brick-and-mortar office to a distributed virtual environment. More than 35% of the US are freelancers. More and more people are cellular only. So where does a premise PBX fit into that model?
The small business, single location business with less than 99 employees is a large market place and many of them still want a key system, so that is the fit. But as voice declines and people communicate with social media and texts/SMS, how does the key system or SMB PBX help?
Two thousand providers are betting on Hosted VoIP solutions as the answer. AT&T and Verizon are betting on UC&C and cellular.
VARs certainly wish nothing would change, since their business model revolves around box purchases and installs. In addition, quite a few VARs and Inter-connects have the mindset that the SMB is better off economically buying a premise PBX.
Yeastar released a new line of PBX based on Asterisk. I did receive an interesting answer to one question from Yeastar.
Me: With cloud, NFV and SDN, why bring a premise based line of PBX to the market now?
Yeastar's reply: "Although NFV and SDN are very laudable and interesting technologies for the enterprise, they do not fit with 90% of the market, in my view. My experience has been that they either do not have the cash to invest, the expertise to implement, the infrastructure to implement, or a combination of those factors."
"The SME wants an affordable, dependable system that offers advanced features and easy setup." [Yeastar means small business under 99 employees not SME.]
Yeastar continues with, "Cloud is the Emperor's New Clothes! With hosted providers it's smoke and mirrors, like the story of the Emperor's new clothes. The Emperor had two tailors, had wonderful cloth, but was told that only intelligent people could see the cloth. The king could not see the cloth, because there was in fact no cloth, but did not want to appear ignorant, and as he's walking out among these people he's of course naked, and everyone who sees him can clearly see whether the Emperor has clothes on or not, but they also believe that everyone else must be ignorant and that they are not, until a child states the obvious."
Yeastar: "If we go back to the 1980's we used to have something called Centrex. What happened is that AT&T, at the time, had just one mission: they bring a POTS line and stick a phone on the end of it. If you want another extension, add another pots line, add another phone... all the PBX functionality is held in the exchange...that sounds like cloud doesn't it?"
Me: It was the first version of Hosted PBX, hence why it was called IP-PBX at first.
Yeastar goes on, "Okay the technology is different, we are not using POTS lines anymore, we're using IP, but conceptually the model is the same: per extension, per service, per month. Sounds familiar?"
"Then there was an explosion of PBX systems, why? People looked at the model: $20 per user, 100 users, $2,000.00 per month, $24,000.00 a year, and not only did they have cause to push to cheaper on-premise solutions, they also gained control over their communications systems. The Yeastar PBX's aren't even 5% of that, and though I might be standing against the tide at the moment, all of this seems familiar to me, and that things are coming around full circle again. The Yeastar PBX's offer a much more affordable, and power over their communication systems. We wear these lovely clothes that did not come from the tailor."
Of course, the world view of a hardware manufacturer is going to be ... hardware is the answer. Even Cisco believed that hardware was the answer, until the ground shifted under them and they went Hosted then cloud (HCS and Spark).
Shoretel went cloud by first buying M5, then re-vamping everything to Shoretel Connect. Mitel went hosted. There isn't one right answer right now. Some reasons for that are as follows:
Maybe business owners will wake up and decide to buy the latest version of Office, download SugarCRM and put that server back in the closet. Cheaper, more control, etc. As Slack reaches 3 million daily users, it will start to decline, fast -- like Instagram, Facebook, Snapchat, Uber, and other Unicorns. Maybe that will happen, but Google, Apple, Salesforce, Dell, IBM and Amazon bet otherwise to the tune of a trillion dollars.
]]>The VoIP services market is up 5% to $73Bn in 2015, says IHS. Residential makes up 62% of that. UCaaS grew just 6%.
Meanwhile, 8x8 grew 29% YoY for 2 years. ARPU is $369.
Vonage Business grew because of acquisitions. It is yet to be seen how the 4 acquisitions, 3 platforms and large target market work together. From selling to very small business (VSB) with a sub-$200 ARPU to acquiring a company with $4400 ARPU is a wide range. Three of the acquisitions were all about Hosted PBX, but iCore, founded in 2004, was offering their 85K seats Microsoft SfB, IAAS and Broadsoft.
The sales avenues are different too. Telesphere and Simple Signal drove sales primarily through the indirect Channel. That is different than Vocalocity and Vonage, which were focused on inside sales and online sales to generate business. iCore was all direct sales. A lot of different engines. Channel Conflict abounds.
Most startup success, according to Bill Gross, is about Timing. Broadsoft had a long run- 12 years or so - of having to compete against just premise PBX and open source Hosted PBX offerings. Broadsoft and its client providers had ten-plus years to ramp up the market and create demand.
Unfortunately that wasnot enough time to make the market move to where they needed it to go. Selling Change is very hard. Most people buy replacement products. Telecom is a toothache that they don't want to deal with. They stick to what they know.
Salespeople - indirect and direct sales channels - have spent years selling replacement services in a transactional manner. Getting those channels to shift to selling change (cloud) has been slow and is still in-process.
There isn't enough Demand yet. There isn't a Brand driving the market.
Seth Godin writes about Awareness, trust and action. While the awareness for UCaaS may be increasing, the action piece hasn't. Probably because of the Trust piece. And actual awareness of UC, HPBX, UCaaS, CCaaS, ECaaS and other meaningless terms bantered about by the providers probably causes more confusion than awareness. Confusion does not foster Trust. See the dilemma?
Hardware PBX is still selling. Now it sits in a data center instead of on-premise (within easy reach), but still selling. Ask any of these companies if boxes are still moving:
People are staying safe. The Trust Thing Again.
Microsoft and Cisco have what I call Demand. People want to buy it. They distribute through VADs quite frankly because they don't want to deal with distribution to what amounted to 125K resellers in years past. Far easier to let a VAD like Ingram handle it.
Today, we see ITSPs knocking on the door of VADs hoping that it will increase sales. I don't see how that model works, since the ITSP has yet to create DEMAND or Awareness for its BRAND.
A VAD is an online catalog of SKUs. It is not something that you can browse. You have to know what you are looking for. Even searching for a category like a UPS or a switch needs to be narrowed down to size or brand or model. So searching for something that doesn't even lend itself to SKU would be irksome. (Irksome doesn't work. Frictionless works.)
While it, a VoIP SKU, is a billable entity, it has to be consumable like a software license or a piece of hardware. And the reseller has to understand the SKU and how it fits into the solution (what other SKUs are needed to build the solution.) It is more complex than I can describe until you have searched for a SPLA from Microsoft for your specific use case. Now imagine scrolling through that to order a UCaaS solution for a company of 20 employees plus porting numbers and toll-free. Yeah.
[Another visual on this concept, remember how many USOC codes were needed to create a PRI? It was the channel, the PRI card, the loop, and the DID. VoIP is similar. So what SKUs will you need for a seat, a voicemail, an efax, etc.?]
That doesn't even consider how a reseller would know to order your stuff through Ingram - and why he would do that as opposed to going to a master agency or going direct.
Demand and Brand are just 2 key components. Timing, which is required for startups, is starting to slip away. Microsoft and Cisco and other entrenched vendors are tying up the Enterprise space. Lots of room to sell to under 100 seats - a majority of the market - but no one wants the hassle. Cost of sale is high. Cost of support is high. Churn is high. No upside, except that market size they keep quoting in investor prezos consists of mainly the sub 100 seat company. It should be interesting.
]]>In 2006, the shift in targeting went from anyone to a master agent model, where smaller agents rolled up into a larger master agent. The resources were allocated to the masters (and their sub-agents).
In about 2008, the target became VARs. Agents just weren't selling any of the new carriers or new services. Agents weren't selling cloud. VARs were the answer.
That strategy wasn't working as many programs canned their VAR support people and VAR recruiting people. Well, it was a thought anyway.
Next, the chasing of the VAD, the value added distributor [Ingram Micro, Tech Data, CDW, Synnex, Jenne]. Tech Data, despite owning TD Mobility, a cellular master agency, can't seem to get behind the telecom or network, despite tries by Cbeyond, XO, Telovations and Microcorp. Lots of reasons for it.
Now, it is back to Master Agents (while also chasing VARs and VADs -- or as I like to say, anyone who will sign an agreement)..
It is seems to always be about Quantity. As if, more feet equals more sales. How is that "strategy" working out for you?
That points me to a program that has (A) No Vision; (B) No Partner Profile; (C) No Success Plan; and (D) following a model that is borrowed, failed or flawed (not one designed for success for that company, its culture and its service portfolio.
]]>Funny how different vendors are trying different things. Fonality is placing bets on both sides as they announced both a distribution deal with Ingram Micro and an exclusive deal with The (Agent) Alliance. So chasing VARs and masters at the same time.
One master agent is chasing MSPs with MITEL.
RingCentral hired an old Cbeyond exec to revamp the channel to - you guessed it - chase master agents!
This tells me a couple of things.
One is that no one has a magic bullet.
Two, the alignment of the product, the message, the customer target and the partner has not happened yet - except maybe for one provider.
Three, UCaaS just isn't getting the traction every analyst has predicted. I have said before that selling Change is extremely challenging.
Lastly, every partner has a business plan that they are heads down scrambling to work. To switch gears to sell another service - to learn it, digest it, start selling it - is time and effort that they may not want to expend, especially when (1) the price of services is down, so the commissions collected are down. Partners have to sell twice as much to maintain. And (2) the price of the new services - 8x8 ARPU is $369 - is too little for too much effort. And why sell something that may jeopardize your relationship with the client? Also, no one has the deployment down to a science yet [see Dell survey], so that is another fumble waiting to happen. Too much risk, not enough reward.
Agree or Disagree?
]]>It isn't that most partners do NOT want to change. It is that most partners are heads down, entirely focused on survival!
The race to zero isn't helping!
A combination of the cable growth and the bandwidth price compression have forced agents to sell more and more to make less and less. There just isn't time to learn new services and shift gears. AND the SMB market IS consuming what they are selling - bandwidth, cheap voice, wireless.
That isn't to say that partner don't need to learn new services and sell them.
It also might mean that the message, training and collateral aren't nearly hitting the mark the way that carriers think they are. After sitting through 14 meetings this week as well as walking the floor daily, the messaging to the partners is product focused, tired, repetitive, and frankly unappealing.
The job of the carrier is to grab the attention, wow! the partner enough that they go sell the services whether or not there is a spiff.
While every carrier tells me they meet with their partners and have business plan reviews, etc. Are they really listening? Do they actually hear what the partners are saying?
My message is to the carriers: Change or die on your story and marketing.
P.S.
The more that carriers say that VARs and MSPs are better partners - (All we hear is the charge to the VAR brigade) - the less agents will listen to you. #justsaying
PPS
When carrier employees have a vague understanding of the products, it is a challenge for partners to have a good understanding of those products. See UC, SD-WAN, NFV and other acronyms.
]]>Another lesson from Hawk is that in personal branding own your brand and what others can do with it. It can ruin you otherwise.
David McCann, VP of AWS Marketplace, gave a talk that started out pretty informational. I mean, the first 5 slides were great, then straight into the pitch: "Open a browser, let's sign you all up as AWS Partners right now!" Why do people think that I want to spend my money, travel and time for something like that? Really? Would David sit through 20 minutes of me explaining how to be my partner? Unlikely.
The 5 slides amounted to reasons business go to cloud" (1) increased agility; (2) lower cost or CAPEX; (3) Elasticity; (4) Breadth of functionality; (5) Go Global in minutes.
The reason that VARs and MSPs should recognize this is to determine where they want to bring their skill set to bear. Removing the heavy lifting is just one place that businesses need help. Guiding them to the right cloud platform - AWS, Rackspace, Azure, Private, Hybrid, Public, nextgen. A migration stratgey and project management.
In a point, click and deploy world, where do channel partners fit?
Other news: Netwolves was acquired - back in June! - by a healthcare IT company called Vasomedical. In that release, I see that Netwolves was doing about $30M! Didn't know that. I wonder how that will shake out for the channel program!
WOW! Business did a deal with WOW! Business. (No press release available.) Yet you can see them holding hands throughout this event. Hope that relationship works out for both. VAR Dynamics is a white label for Microsoft, Zimbra and Intronis.
On a TCA panel to help bridge the gap for VARs and MSPs to grasp telecom, COLOTRAQ CEO, Dany Bouchedid, mentioned that his master agency is having a banner year due to Hybrid Cloud Projects. These projects combine traditional elements of colocation with IAAS for their own private cloud. Not everyone is ready to go on the big public cloud ecosystems like Azure or AWS. "We are certainly not seeing thatlevel of adoption from large enterprises," says Bouchedid.
In other news, VoIP Supply opened a marketplace for SIP Trunk providers and Hosted VoIP Providers. So in essence, VoIP Supply has shifted to becoming cloud services broker. That should make a few partners really happy to hear.
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