Abbott charts Mitel's move to services model

Mitel’s EVP for Global Sales & Services Todd Abbott has urged UK channel players to embrace the reality of disruptive subscription models as customer demand for collaborative communications services escalates and agile cloud centric companies move into the sector.

 “If you are a reseller with an installed base of customers you need to get educated and equipped because people are attacking your installed base with cloud offers,” he said.

“If you are not leading a cloud discussion, I guarantee there will be start-up companies reaching out to your customers and educating them on this technology before you. They are one step ahead.”

Todd said rationalisation of Mitel’s channel had taken place before the company’s sale to investment group Searchlight and would accelerate the company’s move towards enterprise sales of cloud services.

He also warned of the emergence in the UK of Master Agents like Intellisys - now owned by Scansource -  which are set to manage cloud implementations from technology superhubs, threatening traditional distribution models.

Mitel has already reduced its European distributor base from 60 to 20 and, as Abbott confirmed, the move will give distribution partners like Westcon the finance required to ramp up their support for smaller resellers willing and able to move into cloud service sales.

“The fundamental reason why we are going private is to accelerate the move to service models," he added. "We were having great success being the number two UCAAS player in the world, but we needed to be much more aggressive in our investments to drive innovation and international expansion. This really allows us to double down on those growth plans.

“We have spent too much of our time on small transactions, propping up channels that did not make the necessary investment in technology to be able to quote and demo our products. 

"Distribution partners are much better at handling small transactions from the standpoint of supporting partners and quoting, configuring and shipping. Those are things that we are just not world class in.

“Reseller partners will of course be anxious that they will receive the same level of support from disties as they used to get from us, so the first step was to put enough money into Westcon and our other distributors. 
"They now have enough revenue to have skilled bodies that can help support partners and make the move into cloud services.”

Abbott said he was pleased by the amount of UK resellers embracing recurring revenue models but feels they must have the finance and mindset to completely transform their business to the cloud.

“I think we would be hard-pressed to not find a partner in our ecosystem that hasn’t had an engagement or request from a customer for a cloud solution," he added. 

"The challenge they have is a capital issue because when you go from a capex model to a monthly recurring revenue basis it typically takes a minimum of two years to get a return from the upfront investment.

“You have to have the finance and psychologically you have to want to make that shift. It’s a three to five-year investment in time and effort and there are partners who just may not want to make that leap. 

"In the US a lot of the PBXs VARs are consolidating. The bigger players are buying the smaller ones who don’t have the wherewithal to make that long-term investment.”

 Todd admitted that the transition to the cloud will be slow - Mitel ships over one million on site seats a quarter and 50,000 to 100,000 cloud seats – but believes those figures will start to change soon.

“I think the inflection point is about to happen here in the next six to 12 months,” he said.

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