Changing Needs Sharpen Service Providers’ Focus on Business Model

UC's traditional model has been to sell systems according to the number of seats that will use the service

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Changing Needs Sharpen Service Providers’ Focus on Business Model
Unified Communications

Published: July 31, 2020

George Malim

UC’s traditional model has been to sell systems according to the number of seats that will use the service. However, prior to the pandemic about 80% of workers globally were deskless, working in jobs that do not typically require sitting in one place. Now, with remote workforces as the new norm, the traditional seat is even harder to understand as a value proposition than a session which takes account only of the usage of the platform by the end user.

Service providers had limited control of their business model when their supply chain dictated how they go to market. UC platform vendors decided for them that service providers are locked into a cost-plus pricing model when the vendors charged them by the seat. This allows only limited scope for service providers to package and bundle specialised offerings and drive margin.

For service providers, number of seats is an arbitrary measure that doesn’t take account of the true utilisation of their service. Recent data from netsapiens, a leading Unified Communications & Collaboration platform provider to service providers which has over 1.3 million users on its platform, shows that typically only 4% of seats are active at any one time, demonstrating the wastage and inflexibility of the traditional vendor pricing model. Service providers are asking themselves: Why am I paying for the 96% who don’t use the seat at any point in time? However, these conversations have fallen on deaf ears since the inception of the UC industry.

“We’re different to 99% of platform vendors out there who charge in the traditional way because we charge per session – per active call,” explained Scott Goodwin, the senior vice president of market development EMEA at netsapiens, “Our pricing is anchored around the utilisation of a person and every function is incorporated within the usage. This means service providers no longer pay for the 96% of the seats that aren’t being used at any point in time, exponentially boosting margins and putting the power squarely back in the service providers’ hands.”

“netsapiens’ combination of universal licensing and session-based pricing extends total control to the service provider to maximise revenue opportunities whilst optimising margin”

Goodwin added, “Combine this with a broad and deep API that allows the service provider flexibility to offer differentiated services and develop their own look and feel, building value around their brand.”

Scott Goodwin
Scott Goodwin

Building that brand value in the current climate is hard because practically all UC&C offerings provide the same feature set. The opportunity to differentiate within UC itself is limited but there are opportunities in service offerings, care and support and adjacent technologies that service providers can access if they can decouple UC from the constraints of per-seat pricing.

Breaking free from the shackles of per-seat pricing gives service providers scope to carefully tailor their offerings and introduce disruptive pricing models of their own to the market. By freeing themselves from the restrictive per-seat cost model, service providers can redefine their offerings and address a wider market because they have the flexibility to refine and adapt their offerings so they can generate margin and serve customers with more targeted solutions.

“Service providers don’t need to pay their vendors by the seat,” confirmed Jason Byrne, the senior vice president of products and marketing at netsapiens. “They can shift to the disruptive cost model and disconnect the costs from their pricing. This enables all sorts of opportunities and pricing from aggressive pricing to drive into new markets to high margin pricing for addressing specific market segments effectively. There’s also complete flexibility to address all points in between.”

To learn more, visit netsapiens.

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