The unified communications (UC) and collaboration space is a growth market for the channel, with plenty of customers looking at technology as a means of improving their internal operations as well as increasing the quality of the customer experience they deliver.
Although it’s clear that this provides a wealth of opportunities for the channel, there are still discussion points around just what makes a compelling sales pitch. There are also historical issues, with comms and data being purchased by separate buyers and often sold by different types of resellers.
Research carried out by TechTarget indicates that this is broadly a market split between those who are looking at cloud, contact centres and comms as budget-neutral or a chance to save costs, and those who are using unified comms to generate more long-term return on investment (ROI) benefits, plus more channels to communicate.
Q: UC appears to be broadly split between two camps. Is that something that you have seen out in the market?
Keith Bartlett: It depends on segmentation and verticals. There are a few vertical laggards – for example, the construction industry is struggling to embrace digital unified communication technologies.
I have been working in this industry for a year and I’ve noticed that changes can happen very slowly in this sector. This is partly because of the lack of digital skills, but there are also plenty of legacy technologies that make it difficult for construction companies to transition to cloud-based platforms.
In comparison, major telecoms companies, the media industry and retail, for example, are at the forefront of digital transformation and have derived ROI benefits accordingly.
It would be interesting to see where the split is and map it to the size of the company. Most vendor organisations target enterprise customers with thousands of employees, and if everyone’s playing in this same space, this is where you see a plateau.
Andrew Lilley: Where we’re seeing a lot of the spending is on legacy infrastructure, so people will have to refresh at some point. But what’s driving a lot of that spend is around improving customer experience.
If you look at the fact that 35% of the current population working are millennials, the way that they want to interact with businesses is very much a mobile app-driven culture. That’s driving a lot of the innovation, a lot of change, because if you don’t get that customer experience right first time, customers will go somewhere else. We are living in an app-driven world where people have choices.
Vaughan Klein: When Cisco published its annual results the publicised line on collaboration came in at $5.8bn, growing at 15% – that’s the fastest growth rate we’ve seen in that business for many years. Looking at what transpired in the EMEA market place, every theatre, segment and product category group saw growth. So there is something going on in the marketplace around the desire to invest in collaboration.
I recently went to a well-attended Gartner workplace event. They told me the attendance had doubled compared to the previous year, and it’s probably a good indication that when people are spending their time on understanding how to educate themselves, it shows it is a very hot topic.
There are certainly chequebooks coming out to make those investments. I would suggest that those involved in the provision of these technologies should be involved in the investment cycles from customers in collaboration.
Rick Hawkes: The customers are responding to our investment dollars and we’re investing a lot more money in simplifying and creating compelling offers that mean people really want to use it. So if you can bring multimodal communication together – whether it’s video, or voice, or it’s messaging – and bring it all into one place really well, then people respond to that. That’s why maybe you’ll see a shift.
Q: What other dynamics do you feel are contributing the most to this category?
Vaughan Klein: There needs to be an enterprise-class business capability that mimics what is possible in the consumer world. The technology adjacent to this is about security and the other thing that is considerable is wireless technology – no-one is plugging in anymore.
Andrew Lilley: Over the past few years, all the technology stars have aligned. We have an app-driven culture, 5G networks, the ability to do everything from a mobile phone and the uberisation of customer experience.
So, what I’m seeing in some of the research we’ve done is that millennials – and other age groups as well – want to do everything through an app and want to do social media, messaging and video, so a unified solution is what they need in the workplace as well.
Keith Bartlett: Software-defined wide-area networking (SD-WAN) and its associated security policies have had an impact on the backbone of IT infrastructure, especially on unified communications and collaboration (UCC).
Five years ago, the IT department almost prevented you working from home. The best you could do is access emails outside of the office. Today, employees are encouraged to work from anywhere. They have easy access to any applications and knowledge portals in any location as if they were in the office.
Olen Scott: I agree that there’s a security element and it’s the performance gains that SD-WAN delivers that have an effect on the proliferation of UC. Older applications are not built to work or developed to work in this environment.
Rick Hawkes: What people are engaging with is the last mile and the apps. It is incumbent on us to make them work together and make sure we’re as open as possible so that we can accelerate that opportunity. All that will happen is the market will respond ever more quickly to that.
Andrew Lilley: The other thing I would add is around the operational and organisational flexibility and commercial flexibility that companies have now. We’re in the game of cloud services or software as a service (SaaS), and how you consume and how you deliver that technology, so we need infrastructure partners in place to make sure that we do that.
Organisations have woken up over the past few years to realise that it doesn’t have to be like it’s always been and they have the operational flexibility to consume some of these technologies that gives them access to a lot of innovation very quickly.
Q: Digital transformation and customer experience are two of the main factors driving change, according to TechTarget customer surveys. How are you having conversations with your channel about offering tools that can enable business benefit?
Vaughan Klein: If you look at companies such as Netflix and Spotify, and the structure they put around tribes, guilds and chapters and what we all know to be the agile organisation, that methodology is now mainstream.
Agile is about speed to market and innovation, and big organisations want that. The question is, however, what are you going to provide as a technology layer that is going to enable that?
Quite often the first endeavour of an organisation will be to try to do things differently, which tends to crash into the rocks because they have not changed their IT infrastructure. There’s a recognition here, particularly around employee experience and productivity, that they’ve got to change if they want to match what they are trying to achieve in the first place. They want to be more agile, but they need to have a new set of tools to make that happen.
Rick Hawkes: Avaya has commissioned our own research and we see the same thing. It’s funny how clients seem to think that customer experience is actually lower down the list of priorities. Companies are looking at their people to step up first, and if they are not able to then they are trying to get the right tools and get control of that.
Keith Bartlett: The problem with digital transformation is that people have been talking about it for a long time. I often ask our partners what it is that they are trying to sell to a company. Companies are made up of people, and the everyday users are the key people you need to get buy-in from to make real change happen. People have a tendency to use the same technology that they are familiar with.
Managing cultural changes can be difficult, but the benefits outweigh the short-term pains. The key thing is to help employees understand how new technologies can solve their current challenges and help them work more effectively. In other words, tell them what’s in it for them, and help them see how they can benefit from better user experience.
Olen Scott: What I’ve seen is that the customers who are adopting this and are really slick with it are around 10% of the companies. Most of them are in consumer services. When most businesses talk about digital transformation, what they are talking about is their journey to cloud.
Andrew Lilley: A lot of what is driving infrastructure initiatives is things like analytics and artificial intelligence (AI) and how you can use the data. A lot of organisations have put UC systems in place, but effectively they’re moving the problem somewhere else and not using it in the most efficient ways.
If you can start to mine some of that internal and collaboration information, and layer analytics on top of it, that’s where it gets really interesting, because then businesses can measure the efficiencies they are getting from using this technology.
Rick Hawkes: Isn’t that part of the problem? Some of our larger clients have these pools of data and are struggling to pull them together in some kind of coherent form that they can label and synthesise, and that they can use to gain some insight. There is a big opportunity here for partners.
Olen Scott: Consumer services, for instance, is gathering massive amounts of data, and they want to get out of the data information and actionable information. That’s certainly a challenge for them.
Q: When you look at deployment models, there are hybrid, public and private cloud options. Is there a dominant option and are you seeing managed service providers (MSPs) emerge as the main source of information for customers?
Vaughan Klein: We would say that the predominant deployment model is hybrid, but there is a general stated desire to get that to the public cloud and they are on that journey.
There are some regulatory environments across Europe that make the cloud model difficult, but this is slowly being solved and you need to make the investment in existing infrastructure. But we are seeing the architectural models move from hybrid towards public cloud.
Keith Bartlett: It depends on the vertical and the size of the customer. For many small businesses, there often isn’t even an on-premise option, which can be economically out of reach, for the functionality they require. Some are being held back by uncertainty and the fact that they have not done it before, but sooner or later they will take the leap of faith and invest in the applications and infrastructure needed to serve their customers and employees.
Rick Hawkes: Segmentation does make a massive difference and we see that with our channels. We have the entire portfolio covered – everything from too few users right to tens of thousands. What they want to do is get all the agility of cloud, but they want all the privacy and the customisation, and the data sovereignty and everything else that goes with that of a private cloud.
The reality is that private cloud, when you look at anything above three or four thousand employees, has a really big role to play. This is particularly in the contact centre, where people are migrating and want the surety of being able to bring the data forward, and get some agility – and maybe some digital transformation opportunity – with that new agile platform. But they also want to be able to retain their data and integrations to some of these older legacy applications that just won’t go away.
We see that in terms of our some of our bigger wins – we recently announced in the third quarter a $400m win, and it’s a private cloud. Commoditised is a strong word, but it has definitely got to the stage where the simplification of the dollars we put into those solutions has created confidence in the users. Hybrid is an interesting question and is here for a little bit, but I get the point about making the move to cloud.
Andrew Lilley: In my pitch, I would talk about cloud that’s going to give you the ability, with flexibility, of constant innovation. But I agree that there are some people that say they won’t do it over their dead bodies and won’t let the data go into someone else’s datacentre.
I would say, however, that we have seen significant growth across all sectors and are now seeing organisations that were more risk-averse moving their solutions into the cloud. If you invest in the right infrastructure and have the right security standards, and you tick all the right boxes, I would argue that potentially you have a more robust and secure situation.
Olen Scott: There is no doubt that the big behemoth contact centres will be the last to go. There is a level of integration and call flows and a level of complexity in that space, and the risk of breaking something is just enormous in those enterprises.
Q: Have you seen MSPs starting to get more involved in this UC market?
Olen Scott: We have been saying this for years and we are seeing customers outsource the management. There is a huge appetite for managed services around all things IT and cloud.
Rick Hawkes: I agree. What’s really interesting is that in the mid-market, some of our channels are turning themselves beyond just the commodity, and they’re trying to chase value back up again by adding that managed service and that surety. There are customers out there willing to pay a little bit more for that level of comfort.
Vaughan Klein: The challenge for value-added resellers (VARs) is to work out where they fit with public cloud or hybrid. The contact centre industry has the juxtaposition of multiple workflows into a central console. There is certainly opportunity there if you’re able to bring those things together, whether that’s in a public cloud or hybrid environment. The opportunities for VARs are no longer in a margin on environment, it’s about subscriptions on services and you need to justify that and continue to justify it.
Rick Hawkes: We are noticing consolidation in our channel with resellers buying each other. People need to get the business and the skills and we are seeing that.
Vaughan Klein: It is fair to say there has been consolidation in the collaboration industry towards service providers. Is that going to turn? I suspect it may, and there is a moment coming for VARs that can see them reclaim some of that last market share.
Rick Hawkes: We are starting to see master agents gaining traction here, where traditionally it was a US thing. The US used to sell connectivity 20 or 30 years ago as a line card item. It obviously took off big time for UC in the US, and we’re starting to see that creep in over here. That is a real challenge for our partners, but it’s also a great opportunity for vendors because it could open up new partners to all of us.
Vaughan Klein: We have a large and sophisticated network of VARs that we have invested in.
Olen scott: It’s a double-edged sword and we play in both of those spaces in Europe. There is a higher bar to entry and there is a little bit more commitment there on the partner side for the VARs. They might have two or three unified-communications-as-a-service (UCaaS) players. But master agents might have 14 or 15, so you are earning your mindshare every day with master agents, and that’s maybe the downside. But the upside is that they’ve got an enormous reach. We believe in that model because you have access to an enormous group of two- and three-person companies that are maybe lifestyle businesses. That’s an interesting space, it’s a little different than distribution and I am enjoying watching it take root here.
Rick Hawkes: The reason it is relevant to this is that it is driving a lot of activity and VARs might change because of it.
Keith Bartlett: The whole channel ecosystem is becoming quite complex. Organisations such as Ingram have built their own channel infrastructure business, while the likes of Westcon has an UCaaS service that competes with many service providers. It is going to get interesting.
Andrew Lilley: We pretty much remain agnostic, but we’ve also made significant investment in our own infrastructure globally. The key thing that customers want to see is an end-to-end service-level agreement (SLA).
Q: It feels like the future will be competing on an ecosystem to get the channel to engage with that approach. Are you beefing up your alliances and partnerships?
Olen Scott: You have to develop and differentiate your ecosystem faster than the other crew.
Rick Hawkes: We have an AI partnership – DevConnect and a lot of partners are in there – and a lot of that is about trying to develop traction around certain elements that add value to your platform, service or to your solution.
I’ve noticed at Avaya over the past few years that we do have great technology and platform, but we might not have the best AI in a specific spot. We may acquire one, but typically we will partner. The only way you can do that at a level that makes any sense is to pick one or two and get them in the basket and then help your partners to recognise that. That’s what I’m focused on primarily at the moment, and I see it as a way for our channel to add value.
Olen Scott: That’s why I quite like the master agents, because they are changing things and it can take quite a long time for traditional businesses to change their time to value.
Rick Hawkes: That’s the tension right there. There will be some clients that are prepared to wait a little longer for the best thing, but there are other clients that are less willing to do that.
Olen Scott: You will see some consolidation in companies, they are doing the same thing and you will see that in the next 12 months.
Rick Hawkes: Some UCaaS companies are going to go out of business.
Andrew Lilley: There is a lot of consolidation and the sector is really hotting up around merger, acquisition and partnership activity. If you look at it from a customer perspective, it’s very difficult sometimes to work your way through the noise and understand the best approach. Everyone says they do it cheaper and faster. However, what we have seen is tremendous traction working the whole partner ecosystem. Partners, and importantly their end customers, want to move to the cloud and we’re very happy to help them on that journey.
Keith Bartlett: In the past year, LogMeIn acquired Jive communications and integrated this very quickly into our GoTo product set, launched as GoToConnect. We now have an exciting portfolio of GoTo solutions and services that are highly suited to vertical integrations. In my opinion, specialised UC services are going to be the next biggest tranche of acquisitions across the industry
Look out for the second part of the roundtable next week looking at unified comms and communications with the focus moving to the contact centre world.