Mike Dolloff Chief Revenue Officer and Travis Dillard President of Inflow sat down for a recent discussion on “The Rise Of Unified Communications As A Service”. Unified Communications As A Service has been a hot topic for the past decade, with a lot of predictions on when the adoption of cloud technologies would outpace traditional premise-based solutions.
The adoption rate over the past 18 months has brought this topic top of mind as the majority of how businesses operate is in the cloud. From Customer Relationship Management to our everyday applications like email the cloud is nothing new. When it comes to the Unified Communications space there has been an acceleration of adoption and no one knows the landscape better than our own Travis Dillard who has been at the forefront for two decades in the Unified Communications industry.
The Acceleration Of Unified Communications Moving To The Cloud
Mike: When did you see UCaaS accelerating and what do you attribute that acceleration to?
Travis: It has been on all of our minds for the last half a decade if not more. We started seeing the fastest acceleration over the last twelve to eighteen months. We have seen more customers looking at more cloud communications solutions, especially larger customers. Looking at our revenue sources at Inflow the revenue from new customers purchasing on-premise communication systems and software solutions has all but disappeared. Those sales were less than 1/10th of what we have seen in previous years. On the existing site, our hardware sales were still strong but on the new customer side is where we have seen the largest shift, and that is the best indication of trends within the industry.
Companies are realizing that they are coming to a junction, a fork in the road. When making a decision on a technology stack as it pertains to your Unified Communication and Enterprise Contact Center solutions they realize that if you invest in the premise-based system, in essence, you are obsolete from day one. All of the research, development, and innovation is happening in the cloud. The APIs, integrations, and collaborations have happened rapidly in the cloud. If you wanted to get the type of innovation on-premise, you would need to invest in servers, technicians, and hardware.
Mike: The only other thing I would add would be that for companies that invest in platforms there is not a clear path for them moving forward. What has also surprised us is the rapidness of that shift, people have been talking about this for a long time, and talking about Cloud Unified Communications is coming. It has been a slow adoption over the past 5-to 7 years on the UC side.
When looking at CRM, ERP systems, email & office productivity systems, and other technologies that went to the cloud some time ago it was a matter of when not if the Unified Communications industry would get there. Over the past 18 months, there has been almost a hockey stick type of adoption rate in customers moving to the cloud in the UC space.
The Changing Competitive Landscape In Cloud Communications
Travis: On that note have you seen the competitive landscape change because of this?
Mike: You have traditional players who have the premise-based experience and they have seen the writing on the wall, They have tried to figure out how to make that transition into a recurring revenue company. On the other hand, you have companies that were born in the cloud. There are pros and cons to both of those, and you have these native cloud companies competing against these legacy companies. There is a battle for who is going to win and there are a lot of players in the mix while also having this convergence of non-traditional companies competing as well.
Take a company like Zoom Communications which has been a player in the video that now has Zoom Voice with its basic cloud PBX offering. They are coming at UCaaS at a different angle than say a Mitel who has a rich telephony PBX background. Then you throw in other players from a different angle altogether. Travis, you used the example of Zendesk who has added voice in with their ticketing system. There is this blending of different technologies that can do similar things coming from different areas, where 2 years ago things were friendly those companies are now competitors.
Everyone is now competing for the same space, which creates a great opportunity for the customers who need the technology and also creates uncertainty about how this will all shake out over the coming years.
Travis: If you put yourself in the CRM or Zendesk shoes, they have a large loyal subscriber base that they have built up trust with. They can now turn on voice and double or triple recurring revenue. If I was to predict I would say the true winners in the UCaaS space are the ones that focus on being very good at what they do and have a very strong API set on how they integrate with others. It will be interesting to see what happens.
Mike: As you are talking with customers how are companies evaluating the move to the cloud and the reasons why they are moving to UCaaS?
Travis: I mentioned it earlier as far as day one, you are obsolete within your Contact Center with a premise-based system when you are talking to the CIO’s of the companies we work with. The role of the CIO and IT Director has changed with the evolution of technology. Their resources need to be freed up so that their focus is on being strategic for their company looking at API, software, and other cloud applications that can drive revenue and customer experience.
As opposed to decades ago their time was spent managing servers, patch cords, and software. When you look at it that way it makes a lot of sense. They like the OPEX economic models, which initially people thought going to the cloud would save them money, but if you look at a simple 3-7 year cost of ownership that is not the case with UCaaS.
Elevating Customer And Employee Experience Through Unified Communications
Mike: Some of the trends within companies would be that they are shifting how they do business, they are trying to innovate and they need something more flexible. Post-recession there are a lot of companies growing and considering what is their limiting factors to growth. Growth usually comes down to bringing on the right talent, and with the market being what it is today one way to fill that need is with remote employees instead of desk space. They have realized that it is easier to connect with remote employees, and we have more tools to help them engage with employees when not in the same physical space.
We have heard conversations come up several times, they are in a hard market to find talent within their geographical area, and you have companies competing for talent at a global level. It has been surprising to learn that offering the most cutting-edge tools is a necessity when they are recruiting people. They want them to see those tools and it has become a differentiator in attracting new talent. They need to be able to work more efficiently and more nimble than ever, so they are losing the systems that don’t create a great employee experience. Not adopting new tools is the opposite of UC as it is 20 applications and no one knows who uses what.
Travis: When you think about a millennial who has grown up with facetime and they show up for an interview and they see a Nortel phone from 25 years ago, that is embarrassing. Not to mention the training needed on how to use it.
We often speak about being obsolete if you are not investing in the tools with your customer experience, equally important should be considered you will also become obsolete if you are not investing in the tools to provide an exceptional employee experience.
The Biggest Factors Limiting Success WIth Contact Center Cloud Solutions
Travis: Mike with you, the sales team, and the customer success team migrating customers to the cloud, what type of stumbling blocks are customers experiencing with UCAAS post-implementation?
Mike: One thing that I see is the pricing model, they have an expectation of it being immediate cost savings. We have found that less than 25% of the time is there a dollar-for-dollar cost saving for the cloud.
Beyond that, cloud UCAAS is a crowded market right now, there are a lot of options, every telco that used to sell T-1’s has a cloud UC offering, which is usually a Broadsoft or some other UCAAS player. Value-Added Resellers, Managed Service Providers, Agents, and so many others are selling some type of UC solution. Then when we add the Manufacturers this all means there is a lot of noise in the space right now.
Managing how you sift through that, who the top players are, who is leading who is lagging, and having someone navigate that path with you has become increasingly critical for companies. This is what Inflow does for a living and it is an enormous amount of work to stay on top of that. If you are doing a project evaluating UCAAS and UC, it is tough. We help cut through that noise as companies can quickly become bogged down when evaluating 8 players. Not to mention knowing if those are 8 fringe players or experts in the industry? How do you know if you are navigating that today? That is why our Contact Center Consulting services are so important when faced with these questions.
The biggest “gotcha” that we experience time and time again is the migration process. When it comes to migrating from premise to UCAAS or from one cloud-based communication solution to another, that is a disruptive project. You want that process to go smooth while minimizing disruption, and no matter who the provider you will experience some form of disruption. How do you make it a good experience for your end-users, and how do you get the benefit of what the sales and marketing team told you?
For the majority of the Cloud-Based Communications solutions, the process of migration is an afterthought, they are trying to compete against each other on the newest feature or function. The thing that has come last is the professional service aspect of the implementation. Having the right partner in place is critical to defining expectations and ensuring that the process is as smooth as possible.
One of the things I see that make Unified Communications projects an opportunity for success or failure is that these projects aren’t every year so there isn’t familiar with the process. If you don’t have someone setting those expectations it can be the wild west. If this isn’t given the proper priority you can get the opposite of what you expected because now you get angry end-users and disruption.
Travis: First impressions especially when it comes to technology migrations are critical. Post-implementation services are important, we see customers who are on great platforms that are looking to make a change because they have been through a lot of pain as the implementation was an afterthought.
People underestimate communications in the cloud and think it is Fisher-Price easy, it works and you go about your day. There is a complexity and there have always been nuances with voice, whether it is an app on the server or cloud. We see it with strategic customers who have been through a failed cloud contact center implementation or we see it with customers who get it and know it isn’t easy.
We have UCAAS implementation and strategic customers that are willing to pay for the managed services ongoing and also make sure the implementation is done right.
Now that service is what the providers are toting. Mike, you talked about how that plays into consolidation in the marketplace you may have a player that does a really good job with their software and feature set and does an ok job at implementation. They get rewarded by getting purchased then the customers get punished by making the right decision, now the purchaser is not investing in that stack, there is confusion and clunkiness in trying to integrate the companies, we have seen that in the carrier space for years
Mike: Just to wrap this up where do you see this acceleration happening and going from here?
Travis: First I think people aren’t going to have a choice, all of the evaluations on wall street value recurring revenue-based companies, as a matter of fact being a legacy player that has a robust cloud platform, gets devalued just by having a premise hardware-software play. All of the research and development is currently going into the cloud, and I think you are going to see some of these legacy players looking to divest some of their premise-based assets.
I don’t think customers will have a choice, they will need to move their communications to the cloud because there isn’t another option. A good example of that is Salesforce.com at some point it is going to be a no-brainer, of course, your communications are in the cloud, and that is how you integrate with other applications. SFDC as far as I know no one would want to deploy an on-premise CRM system. The ones who win will be really good at what they do like SFDC and have those very robust applications, API, and the ability to interface with other players. Maybe I am biased but if you stand for everything you stand for nothing, and you need to pick what you are going to do well and partner with others.
Navigating the world of Unified Communications as a Service can be a very daunting process as there is a lot to consider. At Inflow, we work with companies to make that process easier. From selecting the right solution to post-implementation and everywhere in between we can help, contact us today to find out how we can help make Communications truly Unified!
