Trends For the New Year

Hope you’ve had a good start to the new decade. Ever since late December, magazines and blogs have published thousands of articles summarizing 2009 or perhaps the whole decade. Instead, lets focus on the days and months ahead. What are the technologies and trends that will shape our communications world in 2010 and beyond?

Cloud-based Communications– The notion of delivering communications capabilities via the network as a service will be a major market force as the customers will continue to demand OPEX based solutions. Vendors will “jump in” and forge relationships with service providers all over the map. The challenges will be bountiful, with transformations of sales models, delivery model and support. What role will the indirect sales channel serve in a cloud environment? Can it evolve quickly enough?

SIP Trunking – My assumption is that every product release going forward will have been architected to support SIP. The value proposition of managing call control as well as reduce the dedicated PSTN lines (PRI) through SIP is too good for corporate businesses to ignore. This will be the year SIP Trunking will take off and drastically reduce PSTN traffic.

Social Media – No question, social media is here to stay but the applications of how to drive business value through social media has to evolve before corporations will invest more. I believe there will be a huge focus on integrating social media applications with communications and CRM platforms to capture online interactions. The need to define the social media universe into different types of connections and networks based on different context will drive much innovation. An important question for the industry is whether social media vendors can employ a business model that is not advertising funded. I wonder?

Mobility – 2010 will be the year of the smart-phone. Google, RIM, Nokia, Motorola, Apple, Samsung and many other vendors will double down on the smart-phones. With the explosion of apps for anything and everything, the smart-phone will become the computing platform of choice. With already several different ways of integrating and managing call control between fixed line networks and mobile networks in existence, business users will only need one number and one telephone device. My guess is that many “information workers” will opt for a smart-phone device for most of their communication needs.

We will see what happens!!

Happy Holidays to you all...

Cheers!

First of all I want to thank all of you who have been reading and contributing to Ubiquitous Connections this past year. I appreciate your feedback and commentary as I have learned a lot from listening to many of you.

As 2009 draws to a close, it's time to slow down and spend some quality time with family and friends. Same goes for me, I plan to spend Christmas in Sweden and New Years in south of France. The focus will be to eat good food, hang with the people you love and to rest & recharge the batteries for the new year.

Happy Holidays & Happy New Year!

It seems like there is a good chance for a white Christmas in many parts of Europe and North America this year.

I look forward to catching up with you in early 2010! Until then, have fun and enjoy!

Channel Sales Performance

As we’re approaching the end of 2009, I wanted to revisit the red hot topic of channel sales performance. This is a topic I covered in July in the whitepaper Unified Communication: Capturing the Growth Wave.

So, the question was, and still is: Are the manufacturing vendors in the Unified Communication (UC) market sufficiently tuned-in to have an affect on the sales performance of their indirect sales channel?

As you know, the assessment back in July was a resounding “No”. The main reason being, that the vendors were not sufficiently engaged at the field level to offer the proactive support the resellers needed. The economic crisis had a strangle hold on the market, which accelerated the market disruption and the vendors were unable to keep up. UC vendors turned inward to sort out their own problems, while their VAR’s were at the epicenter of the economic downturn, experiencing severe problems with shrinking margins, poor cash-flow and limited access to new capital.

So where do we stand now? Well, much has happened in the last 6 months:

• In a market with increased demand for OPEX based solutions, the customer’s focus has shifted away from product features and towards the operational details and proficiency of the solution provider. As such, leading vendors, including Cisco, Avaya, Siemens EC, Mitel and Shoretel have announced new products or changes to existing product roadmaps, which are more aligned with these demands. Examples of these include, focus on software and standards (SIP) based voice applications, focus on data center integration and virtualization for scalable service delivery, and focus on integration with standards based collab and social media services.
• Lots of intense recruitment activity. Vendors have been trying to “steal” resellers away from their competition.
• The customer demand for OPEX based solutions has made cloud-based communication capabilities more viable than ever. As such, there has been an influx of new players coming into the market offering hosted or managed communication services. It’s predominately classic network providers (wireline & wireless) that are moving higher up in the value stack, monetising their assets through more services.
• Several vendors have also been busy re-launching their partner programs. Hopefully with simplicity in mind.

Unfortunately, newly recruited resellers, new products and new or simplified partner programs generally don’t have much affect on the business for existing channel partners. No, in order to improve sales performance of the indirect channel, vendors need to find ways to have meaningful impact on their reseller’s sales capability and loyalty. What has been done there?

Are the vendors actively making progress in:

• Developing and transforming their channel partner’s business, to where the market is today?
• Driving continuous demand for OPEX based UC solutions, for the indirect channel to fulfill?
• Developing new commercial assets and marketing automation tools that drive channel commitment and loyalty?

What do you think, which vendor is winning market share due to effective channel development and demand generation? Please add your comment below as I’m very interested in hearing from you.

Cloud Based Communication Services - Part 3

In part 3 of the blog series Cloud based communication services (See Part 1 and Part 2) I’m shifting the focus over to the vendors and voice manufacturers. Those of you who have followed Ubiquitous Connections over the last few months know that I firmly believe that the vendor’s position in the value-chain is changing significantly. The premise for my claim is of course that IP telephony and associated voice applications are largely becoming:

• Software and standards based
• Device independent
• Network independent

Furthermore, sales efforts and campaigns during the old CPE days, I mean pre-economic meltdown in 2008, were largely based on feature comparisons of the vendor’s products. In a market with increased demand for OPEX based solutions, the customer’s focus has shifted away from product features and towards the operational details and proficiency of the solution provider. Thus, providers of voice & UC in a service model will advance in the value-chain, while the vendor of discrete products will likely do the opposite. This will have a huge impact on the vendor’s product and channel strategy.

As an example, cloud-based delivery offers the potential of increasing the ratio of customers per physical infrastructure deployment, shielding sales organizations from integration and deployment complexities. Thus there is increased demand on vendors to optimize their products for data center deployments. These developments have disrupted the product strategy and vendors are hurrying to realign and take advantage.

I believe Mitel’s new strategic direction has a lot of merit. Mitel has not only embraced the shift from hardware to software head on, but is also supporting cloud-based delivery by investing heavily in applications and virtualization. Its strategic relationship with VMware enables customers to run Mitel’s voice applications in a virtualized environment, building scalable clouds. With increased focus on data center integration and virtualization, Mitel is driving much of the change and market disruption themselves. If Mitel’s new strategy proves to be a recipe for accelerating growth of cloud-based communication services, its decision to drop its distribution partners in favor of direct reseller relationships may prove to be a hugely important one.

Mitel’s main challenge will continue to be the development and alignment of its indirect sales channel. To support its new strategic direction and drive sales growth, Mitel will need a massive channel overhaul. The current channel simply won’t adapt fast enough. Thus, Mitel needs to augment its channel with new types of channel partners and resellers. What I’m talking about here is for Mitel to forge relationships with key service and infrastructure providers and jointly develop a sales channel for driving demand of their communication services. It also needs to revamp and align its channel program and incentives with its new channel focus. Having said that, they can’t afford to divest or reduce focus on their current channel partners. Mitel is still financially dependent on its traditional resellers, so it will need to tread carefully.

With its new product and channel strategy Mitel is one of the few vendors that has fully embraced its position in the UC value-chain. So is anything missing? Not really. I guess it all comes down to channel execution. But if Mitel can succeed in enabling a new type of sales channel through key service providers, I believe Mitel will gain significant market share in the small and medium sized business market.

What other vendors are making the right channel investments and why? I’m very interested in your opinions.

Channel Marketing – Failing to Deliver?

As you know, I have been quite critical about the UC vendor’s Channel Marketing efforts over the last few months. Apparently, I’m not alone… Sam Trendall published the article, Vendors Failing to Equip Resellers in CRN, highlighting some key findings from a channel study conducted by consultancy Demuto:

• Less than one in 10 VARs feel they have a "relevant account plan" with their vendors
• Less than one in 10 claimed vendor marketing material was always suitable for use with clients.
• Two-thirds of VARs claim they have no input into channel strategy.

Although this is very alarming data, the vendor’s have had the criticism coming for a while. During the summer I published the whitepaper, Unified Communication: Capturing the Growth Wave, where I criticized many of the UC vendors for how they managed and supported the channel during the economic downturn. I also came out swinging in the blog post, Who is speaking the language of the customer? Reviewing several of the vendor’s sales collateral or web sites at the time, it was clear that vendors weren’t paying attention to how the market had changed.

In August, I wrote a article about UC vendors needing to recruit and develop new sales channels. Surely, technology disruption and hard economic conditions had a negative impact on the indirect sales channels, yet nothing was really happening.

But there is progress as well... I’m actually seeing more Channel Marketing activity by several of the vendors now than just a couple of months ago. A few of them have launched a new and simplified version of their partner program and there has been a lot of recruitment activity. But, I’m still critical about the resources and efforts dedicated to developing new or key reselling partners. Vendors need to claim ownership for what their markets are and lead their indirect channel to it. The resellers will merely fulfill the demand.

What do you think, is Channel Marketing delivering enough value to the channel?

Cloud Based Communication Services- Part 2

Greetings,

Thank you for all your comments and email messages in response to my blog post Cloud Based Communications Services. As a follow up I wanted to elaborate a bit on one service provider (part 2) and one vendor (part 3) I believe are making the right moves in the voice and unified communications market. Of course, the premise for these articles is that the focus on cost control and increased customer demand for OPEX based solution will continue to drive adoption of cloud based communication services.

In a world where communication capabilities are offered as a service, service providers of different types are poised to benefit. I for one think that Vodafone’s entry into Europe’s enterprise communications market is a very interesting and exciting development. Quite frankly, as mobile and IP based communication technology converge, this is a natural yet bold move by Vodafone. In the case of Vodafone, its primary objective is not just to monetize its mobile network infrastructure but to deepen the commercial relationship with the enterprise market. Through its acquisition of Central Telecom, a multi-vendor solution provider and system integration firm, Vodafone will be able to provide customers the full range of unified communication (UC) capabilities, either as a service or as CPE. Its inherit ability to bridge the gap between the mobile and fixed IP networks is yet another differential value proposition. With its recent hosted UC service, Vodafone OneNet, targeted at small and mid-sized business, Vodafone can offer business customers both simplification and cost reduction for their communications needs. Down the line I’m convinced that Vodafone, together a fixed line provider, will be in a position to attract larger enterprise customers with managed UC services as well.

The biggest challenge I see for Vodafone is its ability to develop an attractive channel proposition such that other businesses which can thrive and prosper by selling and enhancing its communication services. Vodafone needs a well functioning eco-system of different types of business partners, such as value added infrastructure and application providers, system integrators, resellers and influencers, to further its business and cover all distribution paths to the customers.

So, is Vodafone going to become a dominate player in the enterprise communication market? I think the word dominance is too strong but they will likely be a contender. With cloud-based delivery gaining momentum, the benefit Vodafone and other service providers have is that they already have much of the costly operational and business support infrastructure in place. So, if cloud model for aggregating, delivering and consuming voice services, voice based applications and infrastructure takes holds, Vodafone has a fair chance at grabbing meaningful market share. However, Vodafone will not be able go it alone. Whether they can build a channel proposition and develop an indirect channel capable of aggregating, influencing and selling, remains a question. But so far, I’m certainly impressed with its strategy.

What do you think... As a consumer focused mobile network carrier, will Vodafone have the "market permission" to deliver a wider range of communication services to the enterprise market?

Reseller Dilemma

Folks, it’s becoming increasingly clear to me that cloud-based IT and communications delivery will become a major threat to reseller serving the small and mid market customers, unless they adapt and quickly augment their business models. David Pratt, the COO of ThinkGrid, recently wrote a very insightful article for CRN called; What future lies in the Cloud, where he discussed the reseller dilemma in “cloudy conditions”.

To capitalize on the cloud wave, resellers must master the art of selling capabilities and value as opposed to selling gear and software. Have you heard that before? Of course you have, but a reseller’s ability to fully embody this becomes pivotal when there are choices in delivery models. What I mean here is; as a reseller of unified communication, the whole organization needs to be fully prepared and able to deliver those capabilities as a service OR as premised based equipment and software licenses. This is where complexities set in. Transforming a business model and its organization which is hard-wired to sell customer premised based solutions into a service based business is quite daunting. Every corporate function of the business needs to change and adapt in order to be successful in the cloud.
Mr. Pratt also makes a great point when he says that the hosting and cloud infrastructure companies don’t typically have the customer relationship and unique customer knowledge that the resellers have from years of serving a particular market. As such, the hosting and infrastructure companies are potentially great partners for traditional resellers entering the cloud.

The resellers in the voice and data space have gone through demanding transformations before. However, the business transformation required to adapt to cloud-based delivery will perhaps be their biggest challenge yet.

Are there resellers out there willing to share their experiences or comment on the challenges?