Lots of Room for Revenue in UCaaS

According to Synergy Research Group, the UCaaS market continues to grow in the US at an astounding 29% a year.  Retail UCaaS services account for well over 80% of the total market. The UCaaS market is now generating revenues exceeding $400 million per quarter and approaching $2 billion annually.

While the big guys like Ring Central, 8×8, Mitel, Broadsoft, and Vonage continue to duke it out at the top, there is plenty of market share available for those resellers who deliver a more personalized service to businesses in their local area. This is particularly true as smaller businesses, who have little or no dedicated IT personnel, migrate to UCaaS and Hosted PBX. This is becoming an under-served market as market leaders move to serving larger businesses and enterprises.

“UCaaS continues to provide a richer and more cost effective collaborative communication system for businesses globally,” said Jeremy Duke, Synergy Research Group’s founder and Chief Analyst. “We are also seeing an up-market acceleration of UCaaS adoption, moving from serving mostly smaller sized organizations now to gaining traction in businesses of over 100 seats and over 1,000 seats. Given that the displacement of premise PBXs remains low today, there is ample ground for UCaaS to find strong growth in displacing these legacy systems over a long stretch of time.”

M&A Can Ultimately Hurt UCaaS Partners and Customers

The consolidation in the hosted PBX and Unified Communications as a Service space continues with Windstream acquiring Broadview Networks last week. Late last year, Mitel acquired Shortel, and just a few months ago, NetFortris acquired Fonality. While we all realize that M&A in the space is a good indicator of a healthy sector, this kind of activity can shrink the serviceable market for smaller providers and impact both their end-users and channel partners. End-users have fewer choices and less flexibility, while channel partners may lose opportunity as programs are consolidated and requirements raised for participation.

When I mention smaller providers, I’m not talking about companies that have a home-grown solution running on a server or two in the back room. This is more about the mid-tier providers that have a substantial regional or national footprint and solid partner programs.

Impact on the Partners

The first risk to channel partners of the acquired company is that they may simply be dropped from the program due to low sales volume. Another possibility is that partners may be put into tiers, with only the largest partners getting the most leads, opportunities, and highest margins. There may also be new competition because of geographic overlap within the merged partners.

Impact on End-Users

The biggest issue is that customer service may suffer. In the first months (or even years) post-acquisition, the customer service departments may remain separate, but eventually there is always an effort to consolidate functionality. This often results in customers getting short-changed on the level of personalized service they were used to before their hosted PBX or UC provider was acquired.

The available feature set and the pace of innovation can also be impacted when a larger company acquires a smaller UC provider. Smaller companies are often nimbler than a larger company. This means that new features can be integrated quicker and important feature requests get to the top of the priority list faster.

Finding the right balance

Whether you are looking to purchase hosted PBX or UCaaS, or starting a new business selling these services under a white label or agent program, it important to understand how and from whom the service is ultimately provided. Purchasing from or partnering with a large national provider (or someone who is large enough to be an acquisition target for large provider), you run the risk of getting a service with limited options and poor customer service. For partners, you may get a very restrictive partner program that is more focused on your upstream partner’s success than on your own. Purchasing or partnering with a provider that is too small can result in unreliable or low quality service.

Ultimately, both customer and resellers need to find the right balance between the extremes of too big and too small. Resellers need a partner that allows them to truly own their own customers and determine their own pricing while delivering outstanding service and all the tools the reseller needs to grow their own business. The end-user should look to purchase their service from a qualified reseller who can provide the local support, training, and service while the service is ultimately delivered from a partner with the resources and network to deliver a consistent and quality service.

Don’t Do It Yourself: Fighting the rising cost of UCC

In a recent industry survey of over 300 companies for its annual UCC Total Cost of Operations research project, Nemertes Research found that complexity was one of the main reasons for rising operational costs of Unified Communication and Collaboration systems. As user adoption increases, the need to integrate more features continues to drive up complexity and cost of UCC implementation and operations. It seems that those who start down the Do-It-Yourself path using less expensive or open source solutions may see a short-term gain, but often quickly become victims of their own success.

However, companies that leverage offerings from vendors specializing in Operations and Performance management see a 59% reduction in their operational costs and a 34% increase in user adoption. In other words, using a vendor that provides Unified Communications and Collaboration as a Service (UCCaaS) fights the rising cost of maintaining a Do-It-Yourself UCC solution. There is also the added benefit of moving costs from Capex to Opex.

This is exactly the roll that SkySwitch and our ecosystem of technology partners and resellers fill. SkySwitch focuses on integration of best-of-breed solutions into our platform and the operation of the platform. Our resellers focus on training, support and the customer experience.

As shown in the study, using UCCaaS from a vendor whose focus is on best of breed solution integration and operational excellence can greatly decrease the cost and increase user adoption.

Coca-Cola Deletes Voicemail

Screen Shot 2014-12-26 at 4.36.32 PMIn a move that has generated a lot of buzz in the UC industry, Coca-Cola recently decided to get rid of corporate voicemail at the company’s Atlanta headquarters.  According to an internal memo from Coke’s Chief Information Officer, Ed Steinike, the move was made “to simplify the way we work and increase productivity.”

Although the end of voicemail (like the demise of faxing) has been predicted for many years, the decision by Coca-Cola represents the most visible example to date of this trend at work in corporate America.

The decision by Coca-Cola was explained in terms of improving productivity.  But, as noted in a 2013 article in the Harvard Business Review, many managers view voicemail as a liability instead of a productivity tool:

For most organizations, the only people who matter going into voicemail are customers and clients! How smart and customer-centric is that?! Not very. Voicemail’s technical flaws and shortcomings reveal something very important about the customer engagement future. Nobody wants to be put in voicemail anymore and it’s quite likely that customers and clients aren’t listening to your voicemail messages either.

While the perception that most workers don’t use voicemail may be true, I have a slightly different take on the issue.  People don’t use voicemail because, frankly, it sucks.   I believe that the problem is not about voicemail as a productivity tool, but rather the fact that most voicemail systems today are not user-friendly in the way that smartphones have led us to expect.   Who wants to take the time to navigate through a voicemail options menu by pushing buttons?

The answer, is to transform the voicemail user experience into something that works like, and is integrated with, all of your other communications.  Smartphones are off to a good start.  Unlike your typical corporate desk phone, smartphones show a list of names next to voice mails, similar to text messages, making it easier to choose which ones to ignore, and some UC systems can even convert voice-mail messages into texts that can then be sent via e-mail.

There is a place for voicemail in the enterprise communications landscape, just like there is a place for email, text messages, and video calls.  The trick is to combine all of the various media into a single user experience that is efficient and easy-to-use.