A round table debate hosted by Six Degrees Group in association with Comms Dealer tested the channel's ability to deliver single instance PBX virtualisation. Six Degrees argues that there is too much loose talk around the cloud and the value of hosted propositions cannot always be taken at face value unless clear lines of definition are established between SaaS-based hosted telephony and fully virtualised PBXs.
Talk of the channel's power to transform end user organisations with vanilla SaaS-based hosted telephony solutions is sheer industry vanity, according to Campbell Williams, Group Strategy and Marketing Director at Six Degrees Group, who says a 'lift and shift' approach to virtualising single instance PBXs in a cloud-based infrastructure environment is the real game changer and by far the biggest mid-market opportunity. But as long as resellers and SIs are unwilling to offer themselves to this end, the chances of them succeeding in the multi-tenant SaaS world are minimal, claims Williams, who has labelled the current state of the market as 'Third Generation Convergence'. "Voice and data convergence began with VoIP when there were low expectations for its success, but it took off," he explained. "Then we saw voice over IT as organisations moved their PBXs onto industry standard server platforms running alongside other applications. Now we are seeing demand for PBX and IP PBX instances to be moved into the cloud."
Therein lies an industry problem. Conversations about cloud-based telephony are generally interpreted as signifying an IP Centrex type environment, but that's only ever been ten per cent of the market, noted Williams, who believes that the industry needs a targeted response to this confusion in the language of hosted telephony. "In the past, comms resellers have mainly supplied on-premise systems, single instances that give customers their own slice of the world," he stated. "Now, customers are asking for their CPE to be virtualised in a cloud-based infrastructure environment because that's how they are running the rest of their IT.
"Is the channel prepared for customers who want to virtualise their PBX equipment on, for example, Amazon Web Services, Microsoft Azure or a VMware private cloud? Does the industry have those skills and do sales people have those conversations? Larger players in the channel may have these capabilities, but most don't. It's important to differentiate the single instance virtualisation of PBXs from reselling someone else's hosted multi-tenant platform. That's never been mainstream and it's not where we see the IT market."
The best argument for resellers and SIs to stay ahead of the game is to formulate an authoritative solutions practice in partnership with IaaS partners such as Six Degrees Group which has taken a leadership role in the mid-market virtualisation space. The company works with industry heavyweights such as Softcat, Advanced 365 and Dell, and its objective is to further develop its partner engagement with a strong emphasis on the mid-market opportunity supported by a major funding boost to drive growth.
"We have a large ISV channel but want to work with a small number of additional channels that want to go on the cloud journey," added Williams. "They may be at an early stage and need a partner to provide a full stack of services, or they may have capabilities in-house but need data centres in which to build cloud solutions."
The impact of virtualisation is already strongly felt. Its spread is predictable and according to Ricky Nicol, CEO at Commsworld, the virtualisation of IT and voice is unstoppable. To think otherwise would be like trying to hold back a tsunami with a little finger. "We're seeing staggering growth in our network coming from IT support companies," he commented. "The critical aspect for an IT director is the stability of the umbilical cord that links them to the cloud. We've supplied 2,000-plus telephone systems and recently sold one with 10,000 phones on a virtualised network. Voice is critical, it has to work, and the umbilical cord is also critical. Companies are now driven by technology and cloud services. When customers buy a telephone system from us it will always be virtualised."
Perhaps the most significant aspect of virtualisation and the adoption of IaaS has been the speed with which end users are demanding it. Responding to this demand Azzurri built its own hosted platform to provide services to customers. "It supports 10,000 seats with 6,000 more in the pipeline over the next quarter," explained Rufus Grig, CTO at Azzurri. "We have a VMware platform with Mitel software and plan to introduce Skype for Business and Avaya IP Office. Because of our voice background there were many new tricks to learn in terms of VMware."
Alternative Networks has a long history of selling branded boxes but more recently moved to virtualisation, building its own platform and operating various data centres and a network to connect them. "We're still scratching the surface in terms of use cases for the technology and platforms we have," stated Justin Collins, Business Development Director at Alternative Networks. "Whenever I speak to customers they want to use our platform for something slightly different than when we conceived it."
The days of predictable market demand are over and the drive for virtualisation has left no time to stumble through technological evolution. Solar is another 'old world' PBX reseller that has grabbed the bull by the horns and is now undergoing a business transformation that has been prompted by customer push combined with leadership observations of the changing market. "It's time to take the PBXs we support on-premise and virtualise them as a private cloud offering," commented John Whitty, CEO at Solar. "Our smaller customers may move to a multi-tenant platform. I come from a managed service background and we're in the process of evolving Solar into a managed service provider. The question is whether we build our own infrastructure to host PBXs in the cloud, or whether there's no need for that investment and we focus on selling."
Strategies, knowledge and skills have to be constantly updated, but the resources available may not be enough to align with the evolving requirements of end users who understand how technology can change working practices. "IT departments are shrinking, meaning that organisations want to procure more IT as a service and the buyers have outcomes in mind," commented Williams. "They know how they want to manage their technology, and suppliers that cannot respond to this agile approach will be left behind. SIs that align their strategies with the needs of customers will be taken in the right direction. But if all they can talk about is on-premise and capex they are vulnerable to the inroads of rivals with the flexibility to assess where end users are on their journey and can handhold them towards the brave new world."
Collins first noted this trend towards end user pull-through with tablet computing and BYOD, along with the advent of more stakeholders in the buying process. "Now it's harder for a sales person to identify who they should be targeting," he added. "They may be in a meeting with someone who is notionally a decision maker, but in most companies there is a layer above them who are not technical but set the general direction of the company. In our experience, they can have strong opinions about the cloud, whether it should be used and to what extent. It's a challenge for people on the front line to know who is making the decisions."
The difficulty is a lack of any previous narrative. The industry really is blazing a trail and the go-getters are determined to press ahead with a new generation of customers and technology. Pat Botting, co-founder and Managing Director of Freedom Communications (established 27 years ago this month), for a long time operated as a traditional dealer selling PBXs but more recently invested in the data and UC environment. "We've moved to a consultative approach rather than a product sale," he stated. "Larger organisations are happy to invest in consultancy and proof of concept. Our revenues are moving away from product towards professional services. Customers want a safe pair of hands to lead them to the new world, and they pay for the expertise rather than worry about the cost of the product. The value customers gain from this consultation is the way forward."
A common theme of the round table debate was the vulnerability of many resellers and SIs to pressure from IT buyers who have done their homework, are driven by outcomes but need help to realise the change they desire. Buyers are more sophisticated, they use the Internet and peer groups to inform their buying decisions, and they can be over 70 per cent of the way through a traditional sales process before even engaging with a supplier. "Buying behaviour is based on research and reputation far more than the views of a sales person," noted Williams. "The industry doesn't fully understand digital buying behaviour. This will potentially put some resellers out of business if they are not aligned with their buyer's preferences."
Industry trends demand action, and any thinking person must know that the only response to these challenges is a well-equipped sales and engineering force. But standing across the path of action are skills shortages in areas such as UCaaS. "Our conversations with customers are not about products, we discuss business processes and how they need to look in the future," stated Steve Ellis, Managing Director at 365iT. "Technology is the enabler. We see organisations that in the past would have wanted an on-premise refresh now opting for opex. But we have a problem finding UC skills. We are now trying to get apprentices into the company."
The lack of UC skills in the industry, both sales and engineering, exposes the channel's fragility, and Six Degrees's campaign to bolster partners with know-how and full support is a responsibility that should be applauded. Mark Roach, Head of Channel at Six Degrees Group, explained his strategy. "We already have a channel team and are now formulating a new approach to expand our partnership activity with resellers and SIs in the mid-market, and developing our on-boarding process and partner engagement model. We conduct workshops with partners to better understand their plans and requirements, and we follow these up with a plan of education linked to how we tailor packages for partners. We blend our portfolio with theirs and understand how UCaaS sits in the overall strategy."
Six Degrees's network of channel support specialists play a crucial role in helping partners change business models based on well-directed strategies designed to help mid-market organisations, those with 200-500 seats upwards, overcome their problems. "These companies have legacy challenges, multiple applications, a complex environment, security concerns and compliance issues," explained Williams. "They want sales people who understand their business and the direction its leaders want to take. Sales consultants must leverage horizontal skills to build a technology environment that will keep the customer's business running, secure, and compliant with industry regulations where necessary - and do it for a price that is reasonable."
To this end Six Degrees Group has developed a thriving ISV channel. Its partners take applications, then do some development work around them and layer on infrastructure elements using Six Degrees' data centres and networks. "There may be a minimum of 20 applications in a medium sized enterprise, but we know some with 90-100 applications," said Williams. "Our partners don't talk to customers about infrastructure and plumbing, they want to sell 'application down'. By default they get the platform, the infrastructure, the network, the desktop, the devices etc. Their engagement with the end user is based on keeping their business running, understanding what keeps them up at night and providing virtualised solutions that make them sleep better."
What industry messages should be drawn from this round table discussion? Communications technology has rarely enjoyed greater status and customers are in thrall to the possibilities. So this is no environment in which to peddle spurious expertise. But to thrive in one of the most innovative sectors is fraught with challenges, and there is no place for patchy remedies to the industry obstacles discussed. And with virtualisation accelerating at great speed, there is no time to lose. "Does the channel have the skills to lift and shift?," asked Williams. "If you don't do it, someone else will."•