If the telecom business had an anthem it would surely be David Bowie’s Changes. Even 18 months ago a small VAR could make money selling a small key system, CAT 6 cabling, an Ethernet switch and some SIP Trunks. While margins and more importantly, gross profits, have been sliding for years, the sales opportunities were still there.
In just a short period the cloud has dramatically disrupted the sales cycle. In 2016 many VARs will be forced to sell new solutions with new value propositions and different revenue models. They will either have to get in the cloud UC world or risk being run over by it. The recent announcements that Microsoft will bundle dial tone and Skype for Business PBX features into Office 365 is sure to accelerate that change. Instead of competing with the reseller down the street, VARs are now competing with Microsoft (and many others) in the cloud. Instead of making money on SIP Trunks, dial tone is included.
The Client: Replacing the Phone as the Go-To Buying Criteria
Any seasoned telecom VAR will tell you that good phones sell the deal. Customers are not telecom experts so they focus on what they can see, the phones. Well-made phones give buyers confidence. Suddenly, cloud UC offers are getting prospects to focus on desktop and mobile clients. Even customers that may not be installing clients are still using the client UI to judge the solution quality. Customers focus on what they can see – polished clients give buyers confidence.
VARs selling traditional, phone-centric, key systems won’t be in a good position to respond. Sure, phones are still important, but in 2016 they will no longer dominate the buying decision.
OTT Player are Making Themselves the First Point in the Value Chain
Look at many of the Over-the-Top (OTT) cloud UC offers and the first thing you’ll notice is that the entire transaction is direct. Plug-and-play hardware along with well-designed web administration makes it possible for customers to install their own phone and updates. No hardware margins, no professional services revenue, no maintenance contract. At best you may get called for some cabling and an inexpensive PoE switch installation. The customer that used to call you to add a phone is now filling out an online form and getting their new phone drop-shipped.
Act Now, Don’t Lose Your Installed Base
It’s not all doom in gloom though. Today you still own the customer relationship and while customers may like the price of a do-it-yourself phone system, many won’t like the hidden cost of troubleshooting issues or adding new employees. The real challenge is to be ready to compete on a new playing field. There are a number of cloud UC services that are VAR friendly. GENBAND’s Nuvia cloud (www.nuviacloud.com) is one example. The key is to proactively start to change your business now before your customers start shopping your cloud competition.
Finding a Cloud Service You Can Trust
It may not be easy to decide who to partner with. A nice website might be alluring, but you should pay attention to the scale and experience of your cloud partner. Is their cloud carrier-grade? Is it a multi-tenant, geo-redundant solution or a few freeware PBXs in a data center? The good news is that you can try before you resell. Make your own business the first customer. Nothing will give your sales and services teams more confidence than seeing a new solution work for themselves.