Most UK comms providers will note that 2016 created a lot of uncertainty in customer buying decisions due to Brexit and various other economic challenges. However, it appears that the market might have more than just currency to battle in 2017.
Historically in the UK, business communications vendors have either sold indirectly, and/or via distributors, allowing for value-added resellers (VARs) to the direct selling, ongoing support, and installing on the behalf of their clients. However, as a result of new UCaaS platforms being launched by telecoms vendors a new way of working is emerging. It’s not that resellers are being cut out of the picture. Rather, it seems that the traditional telecoms model is evolving and starting to move in a different direction.
An analyst reported recently that more than half of new orders for business communications systems would be cloud hosted (UCaaS) by 2020 versus on-premise solutions. If these estimations are accurate, it means that the reseller role will change quite rapidly in the next 3 years.
Take a Look at the Evidence…
Think about it, if the vendor is responsible for the data centre build-out, setup, maintenance, upgrades and offers a simple to use web based interface – what is there left for the reseller to do? Cloud based apps across the technology sphere are becoming simpler to use, almost self-deployed to a degree. What’s more, in the Unified Communications as a Service (UCaaS) world, the same trend is emerging.
Consider BroadSoft, for instance. They’re the largest UCaaS player in the world and the reseller engineering course lasts just one day! RingCentral and 8×8, our North American friends, are now competing in the U.K market and their model is ultra-simple, feature packed and low cost, too. Their workforces are relatively small in comparison to traditional vendors such as Avaya and Mitel.
Many more service providers are now jumping into the unified comms arena and as far as we can tell the technology is very quickly being de-skilled. What are our tech teams going to look like in the future? Will they be techs or customer service agents?
Interestingly if you take cloud’s simplicity and modern digital marketing and communication methods you get pretty much a self-help platform like Salesforce.com or WordPress. In other words, massively successful SaaS & PaaS software vendors, where partners work with end users to help maximise results. The partners make little or no money from the vendor’s product sales, however thrive on delivering that ‘value-added’ service that the vendor cannot offer, does not want to offer or struggles to provide to their clients.
Let’s Examine the Reseller Market
Looking at the UK Telecoms reseller market a bit closer we are seeing pockets of resistance to cloud-based telephony. Very few traditional resellers have embraced cloud 100%, and many are still offering hybrid and on-premise solutions. Still often, providers are selling cloud based telephony solutions as a last resort, largely due to the lack of upfront capital. Making the switch to cloud commercially and financially can be risky if there is a lack of cash in the bank to support the shortfall as revenues switch to a monthly model.
Many IT companies are now selling unified comms solutions too. Due to cloud communications being relatively straight forward to on-board and support (it’s just another application on a LAN), the amount of IT VARs now selling telephony solutions has approximately doubled in the past 5 years. To our reckoning, there are potentially twice as many IT resellers in the UK selling voice apps than Telecoms companies today.
The telecoms market has always changed year on year, but in the last five years, there has been a fundamental shift to cloud based communications and the appetite of the market is cloud phones and unified apps over hardware and plastic phones.
We believe that 2017 will be hyper-competitive. There’s a lot more consolidation yet to come and significant market opportunity for UCaaS vendors like Microsoft, BroadSoft and RingCentral. Although there’s plenty of opportunity to switch out traditional voice to UC, the problem may be that there are too many providers trying to offer the same thing.
Are you in Telecom or IT sales, is it getting tougher maintaining a competitive edge? Let us know in the comments below…
