Small telephone solutions (or when small really means big)

It is some while since we reviewed the market for telephone solutions with 1-10 extensions.  In an earlier blog "Selling into the SMB market"  we focused on the small business market and suggested that end user market is not homogenous and could be thought of as splitting into three niches;

• basic
• value
• professional

What we said then still holds true.  Here we take another look at the market and give you an update on our experiences but now look at small telephone solutions used by big and small business.  

Small solutions:  In the 1-10 extension niche ICON distributes the TalkSwitch small business telephone solution and the Wave IP solution. 

TalkSwitch is a product for the value market niche.  Enquiries for TalkSwitch come in almost equal measure from dealers looking for a low cost solution and from end users themselves.  Many of the end users are looking for a self service solution with no dealer/reseller involvement and want an out of the box plug and play fully featured IP-PBX solutions for a start up / small business

We are of the impression that in this market there is more willingness to use VoIP – it seems that the small business with less legacy or no legacy solutions are prepared to invest in more cutting edge technology quicker than mid range sized business.

Small solutions for big business:  Nowadays, a “large” business can need only a few employees to manage it and it is important to bear in mind that few extensions does not necessarily mean a small or unsophisticated business model.  Advanced solutions such as the Wave IP offer very sophisticated out of the box UC and telephony services in the sub 10 extension market space. 

This solution is typically required by a business which, because of financial structure and/or the complexity and sophistication of its business model, requires a sophisticated UC and telephone solution. 

Examples of such businesses are healthcare surgeries and companies in the financial sector.  These businesses typically need a solution with call centre capability, remote (home) working, call recording and UC productivity features.  

A increasing key requirement of many of these small company’s with large sophisticated business models is remote working and on-site mobility and many are integrating the all in out of the box solutions such as Wave with the small business VoIP mobility solutions from Polycom – typically the KWS300 DECT solution.

Value for the Channel Partner:  With a customer base which is cost conscious and a product line such as the TalkSwitch (which is as close to out of the box as you can possible get) the value for the dealer is in providing the supporting services.

Products in this market such as TalkSwitch and more so the Wave IP are ideal value solutions for the telecoms reseller channel.  IT and data  resellers who are managing a company’s IT and LAN can quickly get up to speed with the skills required to install and set up the TalkSwitch or Wave solution and because they are already maintaining the IT the sale is 100% marginal profit.

The Cloud, SaaS, IaaS, PaaS and distribution in the channel

Much has been written and said about cloud computing and its various forms (SaaS, IaaS, & PaaS  -  See here ) but what does all this mean for the distributor and reseller trying to make a living in the marketplace. 

Threat or non-Threat: The emergence of the cloud and the SaaS model is unlikely to be a significant threat to the traditional distribution model.   Albeit there will be some realignment of the telecoms distributor’s customer base to focus more on the data IT reseller channel but it will be business as usual at the distributor level. There is more likely to be a shake up in the channel itself as traditional telecoms resellers see their market coming under attack by the data and IT solution resellers who are expanding their range of solutions to include telephony.

Why is ICON of this view?  It comes down to how you see the cloud SaaS products developing in the long term.  At ICON we do not ascribe to the view that the cloud SaaS solutions are the displacement technologies which many pundits imply they are going to be.  We do not believe that they will totally displace CPE solutions in telecoms or replace software ownership as CD’s did for vinyl.

ICON distributes a CPE and a cloud based version of the Unified Messaging solution MESSAGEmanager and there is currently no evidence of a trend for the market shifting wholeheartedly to the cloud based solution.

Cloud SaaS solutions increase the choice for the end user in the market. They are another product option with their own peculiar benefits which sit along side the CPE and on-site software solutions but do not displace them. .

Some firms may see strategic value in owning the assets whereas others may prefer to fund the service from revenue rather than have a wasting capital asset on their balance sheet.

Growth niches: In some product niches, far from being a threat to hardware distribution, the uptake of hosted telecoms solutions could be a positive spur to growth.  No matter what solution the customer chooses hosted (cloud based) or CPE they are going to need endpoints.  With the increasing focus on mobility in the workplace the demand for on-site mobility solutions such as the KIRK and SpectraLink for connection to a hosted cloud based telephone solution is expected to grow.  The nature of these solutions means that, except in the case of solutions requiring only a few handsets, there will still be requirement to get the services of a professional installation and support partner. 

The convergence of telephony and IT may mean that the focus of distribution will change from the traditional telecoms reseller channel to the data or IT solutions resellers but it will essentially remain an equipment distribution model.

Changing skills:  Channel partners selling CPE or on-site software solutions against cloud SaaS solutions will need to become more skilled at the total solutions sale if they are going to win business especially when negotiating the larger enterprise type sale where the commercial aspects of a deal will come under more scrutiny. 

There will always be organisations which conclude that they will benefit from an on-premise solution just as there will be organisations which conclude that they need a cloud SaaS solution.  Their choice of solution will be influenced by non technical and non features based issues.  The decision to opt for either will depend on

·      The business’ financial structure and/or policies,

·      Balance sheet issues – do they want to take on a financial commitment or are there advantages to capital spend.

·      What is the firms attitude to risk – is the service of such importance to its business that it cannot risk outsourcing it,

·      Its skill level – can it support a CPE or on-site software solution. 

What this means for the reseller is that the winning features of a sale move away from the feature and benefits of the solution and become more focused on the commercial benefits of renting versus buying.