RingCentral lands shots in cloud battle

RingCentral CEO declares on-premise UC technology “dead” with customers forcing partners’ hands on cloud

Last week RingCentral’s founder and CEO, Vlad Shmunis, took to the stage at the Unified Communications-as-a-Service...

(UCaaS) company’s ConnectCentral event in San Francisco and declared on-premise UC technology was dead.

“The future of the industry, at this point, is clear and not even controversial. Legacy is dead, long live the cloud. That’s the future,” he told attendees.

Taking aim at rivals Cisco, Avaya and Mitel, Shmunis said legacy vendors’ technology was only capable of addressing problems from the 1990s – “that is people going to work and sitting behind their desks.”

Organisations today, he said, are distributed across multiple locations, and staffed by remote workers, and for that, you need the cloud. Indeed, the vendor said it is the customers themselves driving the growth of cloud.

“In the last two years the European market has taken a leap; we’re finding more large enterprises are making transition, Sahil Rekhi, managing director, RingCentral EMEA, told Microscope at the event.

“Digital Transformation is a more embedded concept in Europe. I have not had a conversation in the last 18 months where I have had to sell a prospect on why they must move to cloud; it doesn’t happen, especially upmarket. Customers are asking for it.”

However, Rekhi noted that “traditional legacy partners are not necessarily doing this out of their own design; they are having their hands forced by customers.”

“I call it the ‘bubble up’ effect; customers are proactively going to their partners and saying, ‘bring me a UCaaS solution’ because they’ve heard about what’s going on,” said Zane Long, RingCentral’s SVP global channel sales.

Long said partners risk losing their customers if they don’t provide a cloud-based UC alternative: “We call that the pain incentive, losing the customer that they thought was theirs.”

Potential challenge

RingCentral views itself as a leader in the pure cloud UC space, a position reinforced by Gartner’s UCaaS Magic Quadrant.

The analyst forecasts that “By 2021, 90 percent of IT leaders will not purchase new premises-based UC infrastructure — up from 50 percent today — because future cloud UC offerings will be far ahead in terms of features, functions, portals, analytics and dashboards.”

According to its Q318 results, RingCentral’s revenue increased 33 percent year-on-year to $174 million, with enterprise Annualized Exit Monthly Recurring Subscriptions (ARR) increasing more than 100 percent to $146 million, reflecting its current focus on winning larger customers.

However, RingCentral said it recognises the potential challenge from the likes of Microsoft and Cisco.

“Microsoft has a bigger global reach, and more people on the ground. If and when they put their mind to it, they will have a big army [of partners] to ramp up. Are they going to do that? I don’t know. Microsoft has been talking about cloud PBX for years, but it has never materialised,” said Rekhi.

“Cisco is a bit of a halfway house. They’re trying to get their act together with the Broadsoft acquisition, but right now Cisco doesn’t have anything meaningful. They haven’t streamlined their portfolio with Broadsoft.”

Regarding Cisco’s announcement last week that it was integrating Webex with its BroadCloud Calling phone system, Shmunis joked that “they were both fine products for their time, but you take two anchors, you tie them together, and maybe you float, maybe you don’t.”

Channel harmony

The company says the channel is “an integral part” of its pursuit of the enterprise, or ‘upmarket’ customers. Indeed, the firm has added “three or four” $1 million contracts from the UK during the last five quarters, with half of the business coming from the channel. This includes customers like Ladbrokes Coral and the Financial Times through partner Cloud Technology Solutions (CTS).

As well as having what it describes as ‘National Partners’ – including the likes of SHI, Insight, Netpremacy and CDW – RingCentral has also signed up global Avaya partner AGC Networks.

Long said RingCentral’s partner program is built on ‘channel harmony’ – a “collaborative effort between our direct sales organisation the partner community and my organisation”, which includes a hundred percent compensation on a deal for each party, “so there’s no conflict.”

The company also takes a different approach to many traditional vendors in that after a partner registers an opportunity, RingCentral will handle everything with the customer, through signing, implementation, provisioning, upgrades and contract renewal.

“The partner will continue to sell all kinds of things [and] care for the customer…All we’re doing is executing for them. Kind of like we’re hired guns,” said Long.

RingCentral doesn’t break down how much business goes through partners but says its channel programme is showing 100 percent year-over-year growth.

“Everything’s moving to cloud,” said Long. “And so, our advice to our partners are take advantage of the programme.”

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Cloud has disrupted market after market and comms is the new battlefield. Legacy vendors, as in other sectors, have too much to protect of their legacy base and channel models, a ball and chain around the ankles. Churning their own base to a cloud model is costly, where new entrants have all to gain and all is upside. We have seen this in other cloud areas already and in UC we can expect to see some painful casualties in the traditional brand name space.
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