A Conversation With BroadSoft: Reimagining How the Workplace is Going to Evolve

In this Executive Insights podcast, Jim Burton welcomes Taher Behbehani, Chief Marketing Officer at BroadSoft. Discussion topics include how BroadSoft defines unified communications, how Cloud is changing the business model, where voice fits into today's mix, the white-labeling of BroadSoft products, and BroadSoft's business portfolio. 

Transcript

Jim Burton: Welcome to BCStrategy’s executive insights. This is Jim Burton. I’m joined today by Taher Behbehani, who is the chief digital and marketing officer at Broadsoft. Taher, one of the things that I’d really like to start off with is just a straight general question. Where is this space going? You might want to define our space a little bit, because there’s a lot of confusion in the marketplace about what’s happening and what definitions are and everything else. So, if you could just get us started off kind of clarifying the space you’re in and where our space is going, I’d really appreciate it.

Taher Behbehani: Absolutely. It would be my pleasure. We are focused on an area that we call unified communications. What this really means for the user in the marketplace, the business user, is all the tools that one needs, a business owner needs to run their day-to-day operation. Primarily focused around voice communications, which is a fundamental element of any business. You need to be able to talk to your employees, to your partners and to your customers around messaging, around teamwork, and being able to engage the different elements of let’s say your ecosystem, whether they’re your customers or your teammates, in terms of sharing workspaces and making sure tasks are done.

Our job and what our mission is at Broadsoft is to reimagine how the workplace, whether it’s a small business or midsize or large enterprise, is going to evolve. How does an enterprise of let’s say five years or three to five years from now look like? What will people need and how will they manage all the information inflow and all the information that they get through different channels and different technologies? How do they process the information and how do they manage to respond in an effective way? That’s what we’re trying to do. The essence of what we have is very foolproof, highly scalable cloud technology that let’s all of this happen. We have a pretty good roadmap in terms of meeting the needs of the future enterprise and how it evolves.

Jim Burton: Great - that helps a lot to get us started but this kind of gets me into my next question. At the end of last year I read an article that said that Broadsoft is one of the most important vendors you’ve never heard of. Now, in my business, of course, I’m supposed to be keeping up on everything. But, it made me realize that is the case, because a lot of your product is white labeled and being offered by other people. Could you just give us the reasons you’re now spending time and I see you putting together a pretty good marketing program to cover that so people know who you are. Why are you doing that at this point?

Taher Behbehani: Absolutely. Our business model has been and remains to work through our service provider partners on a global basis. We’re in 80 countries and we’re in a whole number of different service providers on a global basis. We serve and are trusted by 25 of the world’s top 30 service providers by revenue, the largest companies in the world, the best brands that you know on a global basis. We have the largest market share in many, based on different analysts and the data that we have out in the marketplace.

The reason that Broadsoft is now getting its own brand out? There are actually a couple of main key drivers for that. One is that our service provider partners are now asking us to make sure that we in fact include and indicate our name, our brand, in addition to theirs as an ingredient brand. For example, a service provider wants to launch a new application around UC or workspace or messaging. They want to say it’s powered by Broadsoft. Because it does signify that it has the best technology embedded. It does signify that it’s a carrier class foolproof scalable cloud technology and for the service providers it basically it creates a differentiation. It gives a very clear sense that these are not just yet another generic over-the-top or run-of-the-mill applications that keep popping up all over the place. If you’re a business user and you require reliability, scalability and fixed mobile interconnection on a global basis then this is the company you want to go with, this is the technology that you want to go for and the service provider is able to provide that. So, they’re trying to create differentiation and a sense of quality and reliability that I think is really critical.

The second part of it is if you look at how businesses are now buying products they are more and more going to a very well defined but sophisticated buyer’s journey process. Whether they’re a small company or large one, these are now, the buyer journey is very much defined on an online basis. So, when companies search let’s say for unified communication or conferencing or how do I make my work environment more productive? How do I manage communication across different teams? So, if you do a search on these key words or if you want to go and have a content and review it it’s important for us, Broadsoft, to be part of that dialog and to be part of that discussion with the end user so that they understand who we are and what we do. Because we have some really good technology out there but of course we refer them to one of our partners so that they can go and obtain the technology. So, we’re becoming part of the dialog on the one hand and the other side is that our service providers on a global basis are asking us to make sure we embed our brand with them to create differentiation and reaffirm the quality of service that they provide.

Jim Burton: Well my takeaway from that is that your partners being the service providers are acknowledging that you’re a great partner and provide a great solution and they want to make sure your name is out there because it actually helps them sell something. Which is quite the opposite of what people usually do when they white label something, they want to brag about their brand. So congratulations on that.

I’d like to follow up a little bit with the first question I had. What’s some of the recent market activities we’ve had say in the last eighteen months, how is our market shifting and where is it going? What do you view from that from the Broadsoft perspective?

Taher Behbehani: Well there’s a few I would say, dynamics in play. One I think is the whole movement of so-called on-prem services and equipment to cloud is increasing. For example, if you were a business that had a PBX, a box sitting in some closet gathering dust, and that box is either end of life or will not support a whole bunch of different functions. Those functionalities and those features are now moving to the cloud. There are many advantages to that of course to the business. It’s more cost effective in many respects. It’s more scalable. You can connect it to mobility. So, there are a number of different elements of that companies more and more realize. In fact, in a few years most of the PBX sort of the telepathy features that the business uses will be moving to the cloud. That’s really important.

I think the second big trend of course is that moving to the Cloud for a business, whether it’s small or large, reduced the element of risk. What happens if your service goes down? That doesn’t happen with Cloud. The whole element of I would say reliability and security actually in many respects is much better in the Cloud. So, there’s a shift that’s happening from on-prem to the Cloud that’s really working in our advantage. That’s really, frankly, led to the growth of our business, of Broadsoft business, in the marketplace.

Jim Burton: That’s really important. But, one of the questions that always comes to mind is oftentimes when there’s a new product or a new category the vendors are pushing to make this happen. Is it the enterprises that are driving changes and if so, how are they doing that?

Taher Behbehani: It goes into I think in a couple of different dimensions. One is the enterprises are interestingly enough waking up and understanding that this shift in technology generationally essentially and the shift into Cloud. First of all, the fact that they need new services is critical for them. So, they’re basically saying look I don’t want to deal with some legacy technology. I need to work differently. I need to work more effectively and more collaboratively and what we talked about at the beginning of the discussion. So, where do I go to get that? I think that’s the first question they ask. So, when they ask that question logically they come to the types of technology that we provide to our service providers.

The second thing that’s happening is a lot of the old equipment that businesses have are either end-of-life or the companies that provide them are no longer in business or are going out of business or facing challenges. We had the Avaya case, Toshiba is exiting the market, Mitel and others are very much on-prem in many respects and that’s not the solution that’s really relevant to the business users of these days. I think that’s really important to keep in mind.

Then, I think the last one is our service providers. Our partners in the marketplace are doing a very good job in bundling and providing value to the business. You get data plans, mobile plans, and devices, all packaged and provided by one entity which makes the management and the whole I would say payment and sort of the management and TCO of all of this much more attractive for the business. So, when you add all of this together these different practices have accelerated the movement to the Cloud and they are all positive for us, of course.

Jim Burton: One of the things that – and I’m going to age myself here a little bit – but there have been Cloud solutions in the past. We called them Centrex and Centrex just never seemed to be able to get over that ten percent of the market share and I think it’s a question that a lot of people ask. Why will Cloud… will it overtake premise? Meaning everybody will move to the Cloud versus only ten percent would ever move to the Cloud in the old PBX days of what we called Centrex. So, could you just kind of expand on that a little bit about how you think that may happen that Cloud will overtake premise.

Taher Behbehani: Well I think if you look into the marketplace in the past eighteen months we saw something around a sixteen percent drop in new line shipments of on-prem equipment. I think and that’s likely to accelerate. I think sometime by 2020 the numbers of lines shipped on a global basis, in terms of PBX versus Cloud is going to cross. More of the end-of-life products will move over to the Cloud versus a sort of a legacy product. I always tell people, why do you want to buy a new version of the old stuff when you can buy a new version of the new stuff? Because some people are going to get that. I think that’s something that resonates actually. They sort of stop and say yeah, that makes sense. So, if you look at the numbers clearly the shift to the Cloud is actually happening and will continue.

You asked the question, why would this take off? Well, it’s already taking off. Mobile is an extension of Cloud, let’s keep that in mind. When I have a fixed mobile solution, that is really an extension of Cloud. Because our technology or platforms are the only ones actually in the marketplace that connect the mobile core to the fixed core and it’s truly a seamless experience. Whether you’re on a device, on a phone, on your PC or one our clients on a mobile device and using one of our applications. They all are interconnected. They are all seamless experiences. They all adapt to the environment and to the way that you’re running your business at a given time. So, that’s something you cannot do with on-prem. End of the story. That’s it. I think that’s really powerful.

Jim Burton: One of the things that is happening this time of year is that the analysts are putting out their reports for their market shares and market trends of 2016. It’s always interesting to me because a lot of those are good friends of mine, the analysts in the industry. I’m always hearing from others that they may agree or disagree with what the analysts are talking about. I’m just curious about your take on what the analysts have had to say particularly in your market area, about their results from their 2016 findings.

Taher Behbehani: 2016 has been a very good year for us. Our company has had twenty percent growth year-over-year since we went public I’m very happy to say. I think there are different sources that continue to recognize our dominance and market leadership. For example, the Synergy numbers for 2016 indicates that we have forty-nine percent of all new Cloud line shipments. That’s actually a five percent improvement over 2015. That’s a significant number. Keep in mind that we have shipped with this fact that I just gave you, the forty-nine percent that we have shipped in 2016 eleven times what actually RingCentral says that they have done. So, our numbers from a scale point of view or from a size point of view are much more significant.

I think versus the other players in the marketplace, we have shipped something around 3.3 million lines of Cloud. I think if you compare to others I think they’re much less in the terms of the absolute value of the numbers in the marketplace. According to IntelliCom Analytics we’re now number three in North America in terms of unified communications if you put that in the context of all their combined Cloud and premise providers. We are now slightly number two behind Avaya, just behind Avaya, and ahead of Mitel. So, these are sort of the legacy players in the marketplace. So, from a scale point of view we are quite significant and we’re very happy and flattered that the market continues to recognize us.

Jim Burton: You know it’s really interesting. Because there’s different numbers from different people. I’m glad you brought this up to kind of help clarify where you sit in this market space compared to what other reports have said. Because sometimes people are looking at things differently or using different numbers to count them. So, I appreciate that. Those are pretty big numbers. The 3.3 million lines in 2016, that’s a remarkable number. It kind of holds out that maybe people are counting things a little bit differently than what you guys have which I think that helps a lot.

Let me move on a little bit and talk about and maybe you could give us a little bit of insight as to Broadsoft’s business portfolio. Give us a description of that.

Taher Behbehani: Absolutely. So, just on the point that you made earlier let me just address. Yeah, some of our friends in the industry have more literal views of how they calculate numbers. I’m an engineer and numbers are numbers and the facts speak for themselves. If somebody looks at these numbers carefully they will see what is actually happening.

So, going onto Broadsoft business, what we have done really is we’ve created a very clear, concise and intuitive packaging of applications and services that we provide and we call it Broadsoft Business. The value of this Broadsoft Business is that as an end user, as an enterprise IT manager, or a CIO, or a business owner or in a large enterprise or if you’re a chief strategy officer, once you look at the bundle or the package that we call Broadsoft Business you see it’s very clear. I would understand, for example, oh I see what they’re providing for me… There’s the communication part of this, the unified communication part. That’s what I need and that’s what I’ll use.

But in the future if I need to add teamwork and workspaces and messaging I can add that to it as well in a very easy manner and very seamless. An extension really of what I have. If I want to add Contact Center by the same token, I can do that too. I can also see that what Broadsoft offers is an open platform. So, basically we interconnect to different endpoints. We interconnect to different vendors. That’s been the philosophy of the company and it will remain so. They will also see that security and the Cloud platform plays a very important role of the overall packaging. So, Broadsoft Business is the overall package that you as an end user, as a CIO, will get. They will read and say I get it; I can bet on this platform; I can grow with this platform; I can meet the future needs of my organization; I see how everything fits together; I understand what I’m in for in the longer run and who can provide this to me. I think that positioning has been very effective for us. This is something we’ve clarified in the marketplace in the past year and a half.

Jim Burton: It seems like you’ve had great success over the last several years and have grown your business and got Broadsoft into a very, very strong and important position. So, the follow-up question of course, is what do you see for 2017 for both Broadsoft and kind of where unified communications is headed?

Taher Behbehani: Just as I said that the data that I gave you in terms of our growth and the new lines that have shipped and the forty-nine percent and the fact that we are now number one in the unified communication space… I think that’s important to continue our growth. We see a lot of what we call transformation projects. A lot of large service providers on a global basis are now revamping their core older Legacy technology to use us based on many of them are fixed mobile and many of them are going from a TDM to IP. So, we see that happening quite a bit. We see the whole migration from the old PBX to Cloud continuing.

I think what you see from us also is quite a bit of focus on not only helping our service providers adopt the best technology but we are also helping them how to sell this technology and how to position the technology. The dialog between their sales team, their marketing teams and the end users change. Because we’re no longer just talking about telephony we’re talking about actually the whole aspect of communication and collaboration. We do calling. Calling is cool. Because at the end of the day you do need to talk. That is sort of the centerpiece of our thinking. But, I think there’s a lot of technology we have around that in terms of how teams work. How companies address the needs of their customers and talk their own customers and collaborate between different organizations we have all of that.

I think you will see us emphasize quite a bit of what I call the end-to-end processes of how service providers deploy technology. How we manage to help them streamline the innovation cycle. Meaning that through our technology our processes, the front end delivery mechanisms, we enable the service providers to keep up and actually deliver excellent user experience on an ongoing and frequent basis. Something that we’re used to in the consumer space. Focusing on how to sell our products to the service providers in a digital manner and really focusing on this thing I call the buyer’s journey. It’s really critical for us. We’re doing a lot of work in that area in terms of the whole digital transformation of being able to take these new products and draw out some business to market. So, you’ll hear a lot more talk and a lot of discussion on that from us in the marketplace. You will see a lot of case studies and a lot success stories and a lot of testimonials from our partners in how Broadsoft has actually managed to help them on this whole end-to-end process. Not only technology and deploying new technology but also selling the new services and applications.

Jim Burton: One of the areas that I think is going to absolutely become important to people on a buyer’s journey, they’re going to start looking at what’s going on in the area of AI. I think that’s going to be almost as important as the platform. Can the platform delivery my interfaces to various types of AI machine learning? (and go through that list) Where do you fit in there? What have you done and what do you see happening in the future as people start looking more for that on their buyer’s journey.

Taher Behbehani: Almost three years ago we, at our main industry event, and I think ahead of everybody else, we came up with this idea of what we call – the them of the conference was “future work.” We came up with a product we called Hub, and we coined this phrase called contextual communication. The whole idea was that in order for a business to be productive we need to be able to interconnect first with a number of different applications that they use on a daily basis in the work environment. Remember that the experience is now driven pretty much by a mobile interaction.

The second thing is that we need to gather the information from these different applications and somehow in an intelligent manner organize and rationalize this information. The third is be able to through one user experience or one user interface interact with all these different apps and be able to be sure that you don’t have to jump around to twenty different distinct apps at any one time. We actually delivered this product to the marketplace and we call it Hub. It’s an engine, it’s an AI engine that’s embedded in the products that we offer.

Some of the companies and many of the service providers that we talk to in fact want to leap frog. They want to jump all the way to providing these types of products to the customer base which we think is fantastic. Because their belief is they can actually meet the needs of a segment that’s really yearning for these types of products. We’re helping them in terms of messaging and we’re helping in terms of bundling and getting the product to the marketplace. These are hard products to explain even on a phone or even on a presentation. The best way of actually seeing what it does is to see a demo of these things. I think that’s really important for us. So, we have these so-called AI, this intelligence integration of products embedded. It’s ready. It’s working. We are shipping these products as we speak. I think it’s something that will see a lot of traction in the marketplace. There will be the early adopters and there will be this sort of the mass market growth I would say fairly soon.

It goes again back to us as a company continuously trying to envision what is going on in an enterprise and what do they actually need from a business point of view. That’s not leading edge, way out there, but actually something that they can deploy and use right now and they can see the benefits.

Jim Burton: One of the things I know everybody is interested in is collaboration – how people collaborate, set up meetings and share information. So, what’s Broadsoft doing in that area?

Taher Behbehani: Great question. We are actually focused on this quite a bit. We have, through our Broadsoft Business suite of products we have a product called Team One. You can start a meeting through that application whether it’s on desktop or on mobile. You can share documents, manage all the communication and messaging and make sure to keep track of who’s doing what. Assign tasks, invite outside guests to this sort of environment, to the workspace, and really focus on getting the job done between teams and keeping the information that’s relevant to the job. Think of it this way. There are a number of different products in the marketplace that have gotten a lot of traction. Slack is one of them, and Skype for business and a number of different sort of one-off video conferencing products. And of course communication. We have all of this combined in one package. The advantage, of course, of that is you can, as an enterprise, go to your service provider and get one package and pay much less as opposed to having to manage six to seven applications. Then management of this packaged product, our sort of Team One product, through our Broadsoft Business suite is much easier for the IT manager in a larger enterprise and the risks are much lower for them. Because now they’re dealing with a service provider in a secure and reliable fashion. So, thank you for asking that question. This is a big area of focus for us.

Jim Burton: One of the things I hear from a lot of people is they view telephony as just Legacy and it’s obsolete and people can’t make money on it anymore. The PBX is dead. What are your thoughts on that?

Taher Behbehani: Well I think they’re wrong. I think calling is cool. I think if you look at communications there are different elements of communications. If you look at how we use communication tools in the workplace whether it’s messaging, workspaces, calling and video which is very big, they each have their own place and the combination of all of these are very important. The question is what do you use when and in what sort of a timeframe and on what device. We can get all this out. The other aspect of it is is that our service provider partners are extremely innovative in many respects and they have a massive distribution scale on a global basis. Remember they have a brand. They have the outreach. They have the trust of the businesses. I think the best way of taking products to the marketplace is in partnership with them. If you look at the service providers they’re now providing a number of different I would say innovative products for the businesses, unifying communications of course being part of it and this whole collaboration space being a major driver of growth for them in terms of their roadmap. So, I think one has to look at this holistically. Telephony is not dead. Telephony is a fundamental foundational part of all of this that we’re working on.

Jim Burton: Well I really appreciate the update and the information on what’s happening and what has been happening in your area. I’m fortunate that I work with a lot of different vendors. Over the past two weeks I’ve met with several vendors who are planning on making major announcements at your connection event in October. What I’d like to do is to schedule a follow-up interview with you at that time so you’d be able to share that latest information. Because I’ve got to tell you, I think some of these products that will be announced that work with your products are going to be somewhat revolutionary and that I know the people who listen to our podcast are going to be very, very interested in. So, I want to thank you for your time today and I look forward to having that podcast sometime during or near the end of Connections in October.

Taher Behbehani: Thank you for your time. I appreciate it.