The high volume of industry chatter on the cloud has drowned out clear thinking about the business case for hosted solutions, according to TalkTalk Business which has embarked on an aggressive growth strategy based on a cool headed and sentient analysis of a hosted future.
TalkTalk Business launched its hosted proposition during an education seminar for channel partners at the Grand Connaught Rooms in Covent Garden, London. The telco made a point of turning down the volume of noise around the cloud, replacing the rhetoric with a specific and simplified definition that enables resellers to better grasp the concept and its relevance today. Putting aside the noisome distractions, Andy Lockwood, Product and Marketing Director, said: "The problem with the cloud is that it's unspecific and ambiguous. Cloud is an unsatisfactory term and it doesn't allow resellers to develop a strategy. Being specific about the cloud means resellers can specify and act. Cloud is simply a series of components that make a hosted solution. Stop calling it cloud - it's a composite solution."
Lockwood was addressing 150-plus delegates who descended on London to witness first hand the launch which signals the third phase of TalkTalk Business' development, encapsulated by the watchwords, ‘Hosting: The Future of Business Grade Communications'. The new hosted UC portfolio is based on the Mitel Communications Director (MCD), an IP-PBX software solution. The hosted enterprise PBX will be included in a larger collection of channel offerings, each of which will be integrated into TalkTalk Business' Next Generation Network. The kit bag of channel solutions includes Hosted Contact Centre, Hosted UC, Hosted Call Recording (a fully managed, secure call recording solution that helps support PCI compliance) and Hosted Data Centre (a scalable modular data centre campus with next generation network connectivity).
Also taking centre stage was Managing Director Charles Bligh who pledged his commitment to an aggressive strategy in the hosted space and an energetic expansion of the hosted story. He also pledged to move a greater percentage of the total business through partners and invest heavily in simplifying the business, tripling investment in IT and systems as part of an overall plan to double revenues in five years, and make the business more reliable, simplified and scalable. "Our strategy will be based on voice and data solutions that are disruptive in the marketplace," Bligh stated. "Underpinning all of this is our commitment to partners who are the DNA of the business and at the forefront of our strategy."
Consumerisation, web development, smart devices, mobile and distributed workforces are all combining to drive hosted solutions, and high speed affordable reliable and secure connectivity means that building rich media applications is a realisable ambition. Shoehorn in the fact that 70 per cent of IT budgets are supporting legacy equipment and there is little wonder that the opex transformation has started to impinge. "End users are changing business models to get more for less," noted Lockwood. "They are looking for managed services, opex and leaner structures. These business factors are driving the cloud forwards."
TalkTalk Business recently conducted a Channel Cloud Survey. The study found that hosted propositions were considered the biggest revenue driver by 41 per cent of resellers. Meanwhile, 70 per cent also agreed that over the next 12 months these solutions would experience the greatest level of demand from end users compared to any other in the channel. "It promises to be a big year for the cloud," added Lockwood.
Each solution in the portfolio offers enterprise-class functionality with the promise of quick and easy integration within an existing infrastructure. Each presents possible recurring revenue streams, as resellers retain management of a solution as well as opportunities to cross-sell with high margin complementary solutions. Lockwood said: "It's clear that resellers will benefit from a market disrupting, standout product portfolio which will secure excellent opportunities for recurring revenues. It's our most comprehensive cloud offering yet."
A key goal is to help partners develop a cloud strategy but first they must break loose from legacy tendencies. Andy Hollingworth, Director of Wholesale at TalkTalk Business, said: "We must enlighten partners that the grass is greener on the other side. There's more margin and stickier customers to create. When selling a hosted solution it's not about one product because there's applications, hosted PBX or contact centre for example, as well as business grade connectivity. This unlocks the potential for growth. The new hosted UC offering follows months of integration development and testing and takes advantage of our NGN which offers great reach, and the scalable power of our new £80 million data centre based in Wiltshire."
TalkTalk Business has built a broadband portfolio, an Ethernet portfolio, next generation voice and is now in the third phase of its strategy, developing a hosted portfolio that offers value add, UC services, higher value, higher margin and stickier customers. The business case is as strong as the technology, creating a value add future for resellers. "For partners with a medium to long-term objective the hosted environment and solution selling is absolutely where they've got to go," added Hollingworth. "I respect that the transformation is huge. It's our job to make the journey as easy and insightful as possible.
"I can't ask partners to make the leap of faith without giving them the right infrastructure and support to make the transformation. It's a brave journey for partners to go on because they want to protect legacy revenues - not just calls and lines but large service management contracts. In the new world that doesn't exist. But how long will the legacy revenue last? Resellers won't achieve an exit strategy based on legacy models with diminishing return."
In April last year TalkTalk Business put together a three tier account management structure with a remit to help and encourage partners to transition from a commodity sell to a solutions sell. The team includes a commercial account manager who is supported by a hosted and data centre specialist. These experts examine the opportunity and qualify and design a network application for each customer. "We design a WAN, go back to the partner with our recommendation based on applications, connectivity and data centre," added Hollingworth. "In this way we lead partners through their transformation."
The three tier system is already paying off. Since April last year TalkTalk Business totted up £10 million in first year contract value, with a significant 90 per cent of the total on a three year contract. The company's account management support helped partners to secure £27 million on typical margins of 30-40 per cent. "These figures are the real acid test," pointed out Hollingworth. "The focus is on opex. We're not saying go in and sell hosted PBX tomorrow, but we are encouraging partners to sell the business grade connectivity to get started. A hosted WAN is the foundation of application delivery. Partners can add more and more applications to the customer, who then has a solution and is more sticky. Rivals will therefore find it difficult pick the client off on price. Hosted is the way to go, offering increased margin and solution-led sales that lock out competitors."
Lockwood's three stage plan to get started:
1) Understand your rivals, customers, products, challenges and opportunities, skills, investment.
2) Evaluate the options: Partners, solutions, business case.
3) Take action: Make the first step now.