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.