UCaaS and the Channel: Part II - The Channel Partners

11 Nov 2013

Why hasn't the UCaaS channel caught fire?

During my recent years in Lync Partner engineering and later as the SaaS Channel manager at Microsoft, I had a chance to meet and work with many dozens of talented and interesting partner executives. These are (mostly) men who were approaching UC as a Service (UCaaS) from one of three perspectives:

They ran some kind of VoIP or IP-PBX business and they wanted to extend their offerings to include UCaaS
They provided SIP trunking services and they wanted expand their offerings to include UCaaS
They ran some kind of SaaS offering, usually Exchange, and they wanted to expand their offerings to include UCaaS

In some cases they had experience with Cisco's HUCS or Microsoft's OCS offerings but usually not; some of the larger partners were deploying Broadsoft VoIP solutions but really nothing from Broadsoft in the UCaaS space. In extremely rare circumstances you might run across an IaaS or PaaS provider trying to move into UCaaS but not often enough to pay attention to. Fair to say everyone coming to UCaaS in 2009 was new to a new market.

Most of the channel partners I've met, regardless of what or which product they sold, competently engineered their offerings. There were some that were excellent and others merely capable but largely they were able to get the products up and running in their clouds. In other words, their UCaaS offerings work. That it works is no big surprise because when UCaaS was created most of the product vendors focused on engineering airlifts to get partners up and running on the product.

Unfortunately, engineering alone is not what sells UCaaS. While everyone "gets" voice, UC is more of an unknown. Because UCaaS was even more of an unknown and, as I pointed out in my previous blog, the vendors aren't helping with demand creation, the channel partners didn't have much to go on when going to market so they fell back to selling, and supporting UCaaS like they did with their existing VoIP, SIP Trunks, or email offerings. This didn't work so well.

Consider the VoIP or IP-PBX vendor moving into UCaaS. Voice is something of a commodity business and, although there are some vendor differences around high-end environments like call centers, the competition is on price once you get past the feature checklist and desktop phones. Most of these channel partners are looking to commoditize UCaaS and make it price-competitive with voice. They are not upselling the value of identity, presence, conferencing, application sharing, or context-driven communication (text to voice to video and back again in a single session). Their sales teams usually are compensated on the voice component with the rest of the "UC" features offered as almost a throw-in. The technical sale of UC is more complex than the technical sale for voice and usually customers want to spend more time evaluating the offering. Consequently, the cost of sales and lead times for UCaaS rises while revenue is no better than what they are getting from voice - so the business thuds. When you add in the increased complexities and costs for support and provisioning, a lot of the UCaaS vendors coming from the voice side have been discouraged by the results to date.

SIP Trunking providers are used to selling at wholesale or at the enterprise level and it feels like they are getting into UCaaS as a way to sell more trunks. The long and involved UCaaS sales cycles do not readily fit the SIP Trunking sales models and many of their UCaaS offers have never really gotten off the ground. Several SIP Trunking providers looked at going the wholesale route (whitelabeling UCaaS) but that requires a big investment in their own channel organization and, ultimately, dedicated private hosting of enterprise UC has proven so far to be monetarily more appealing than UCaaS.

The SaaS providers historically have been marvelous at attracting their customers through search engine optimization (SEO) marketing efforts and through various types of media campaigns. However, UCaaS is a more hands-on sale than they are used to and it requires considerably more customer engagement than they are prepared to do. It also requires knowledge of telephony that is expensive to acquire and difficult to master for a company that makes its living off of email.

The bottom line is that while UCaaS may be the future it is not the "now" because the product vendors haven't invested in helping their channel partners develop the market and the partners themselves lack the expertise or the capital to develop it themselves.

There are some interesting exceptions. West IP Communications has advanced their thinking to focus on hybrid UCaaS in such a way that it leverages their network and conferencing offerings (but largely now at the larger enterprise segment). Intermedia, one of the world's largest Exchange hosters, has acquired a VoIP provider to build out their own UCaaS offering. And Chinook Communications is building a niche as a UCaaS companion player in Microsoft's Office 365 universe. But even where there is innovative thinking the results are still modest compared to the potential.

How to solve the problem? The market needs less energy around engineering and more around storytelling. Tell the customer why communications should be unified. Show the customer how communications can be unified. And work with the customer on unlocking the value of unified communications as a service. The rush toward BYOD and mobile offices is maturing and this is where UCaaS shines! Pressure your product vendor to invest in the UCaaS channel instead of over-weighting their investments in the traditional enterprise or telco partners like Avanade, Verizon, or Telefonica.

New vendors are entering the UCaaS arena - this is a great opportunity for GENBAND, Unify/Siemens, and others to really differentiate themselves by placing bigger bets on the UCaaS channel.