Sangoma: "Full-Fledged UC Provider"

31 Jul 2019

In this Executive Insights podcast, BCStrategies' Jim Burton welcomes Jim Machi, Vice President of Marketing of business communications supplier Sangoma. Discussion topics include company history from where they've been to where the company is positioned now, AstriCon, customer profiles, case studies, financials and products.

Transcript

Jim Burton:

Welcome to BCStrategies Executive Insights. This is Jim Burton and I’m joined today by Jim Machi, Vice President of Marketing for Sangoma. We’ve been working with Sangoma at UCStrategies and BCStrategies for some time, and we’ve known Jim for a very long time. But one of the things that’s very clear, we know that people don’t necessarily understand everything they should know about Sangoma. There’s a lot of background there. Jim, why don’t we start off with that. Could you just give us some background about Sangoma?

Jim Machi:                 

First of all, thanks for having me on. It’s a pleasure to be here.

Let me talk about Sangoma. There’s been a lot of change with Sangoma. We’ve been around for 35 years. We’re a business communications supplier right now. That means we supply PBXs and unified communications solutions. But we also supply the surrounding products that go with it, like phones, SBCs, Gateways, boards, SIP trunking, stuff like that. We provide the full solution.

Over the course of the past few years, Sangoma has changed into that company. For instance, in September last year, we purchased Digium. So now in Sangoma we have the two largest open source communication projects that we sponsor: Asterisk, obviously, and then FreePBX, which is built on Asterisk, but is more of a complete PBX. That’s where we are in the space.

Beyond the open-source projects, we offer our own commercial solutions for PBX and UC solutions. We’ve changed quite a bit from just being a board company that supported Asterisk to being a full-fledged UC provider.

Jim Burton:                

Well, that’s interesting. I know that AstriCon has always been a very popular event for people involved in your space. There’s been rumblings that it might be changing. Can you just give us a little background on what’s happening there.

Jim Machi:

Yes. We’re definitely supporting AstriCon in this year. It’s going to be at the very end of October in Atlanta. We’re going to have an open source track where we’ll talk about Asterisk and FreePBX like we always have.

And the one thing that’s changed where maybe you get that input from is that we’re going to be adding a business tract. We want our resellers and large enterprise customers to come. We’re going to talk about the business aspects of how you do business as a reseller and things like that.

We’re hoping to make it bigger, actually, and have a broader audience for that event. So, if people are interested to register, go to our website, Sangoma.com, or Digium.com still is out there, too, and you can get information. (https://www.asterisk.org/community/astricon-user-conference).

Jim Burton:

Well, I applaud you on adding help for the channel. I think that’s one of the biggest challenges our industry has today – that the products are changing. The financial models are changing. And the channel, you know they’re doing their best to keep up, but any guidance that they can be given by the vendors I think is helpful. So, good move there.

One other thing – and this is kind of interesting because it has to be a multi-part question: who are your customers and what products do you provide?

Jim Machi:

Right. We have some typical kinds of customer classes or examples of customers. Let me first start with the open source guy. We have these guys that are on FreePBX or Asterisk, and maybe they have a technical guy who did it all for them. And maybe that guy leaves or maybe the company gets bigger. They don’t want to dedicate somebody to just running the business communication solution; they want to upgrade to a supported product, and they go to PBXact or they go to SwitchVox. So, they kind of upgrade from the open source area. That’s one kind of classic customers we have.

The second class would be small businesses. You know, Jim, we’ve been in the space a long time and there are a lot of businesses out there that have these old key systems or these old PBX products from the early 2000s. And they fall over. There’s no more support, and so they’re constantly looking for new products. Some of these guys come to us because we offer basic services that they have. But also, some of these guys go, “Oh wow. I can get my phone number to ring on my smartphone.”

Now that’s something taken for granted for a long time. But, you know, we’re deep in the space and a lot of people don’t really realize that.

We get these small businesses that are either moving or they got bigger and they just need a different PBX. That’s another classic customer we get. And our resellers service all those guys.

And then we have a vertical focus. We tend to do well in education and automotive dealerships and healthcare. Some of that has to do with just where we focused years and years ago. And some of it, like education, some of these guys still want on-prem. They don’t want a cloud. And we offer both cloud and on-prem solutions. And we still talk about that. Both of those businesses are growing. Some of these customers still want on-prem, and so that’s another sort of customer class for us.

And we still sell to some bigger enterprises like name companies that wanted a cost-effective solution in their offices. That’s kind of a floor kind of profile—typical Sangoma customer profiles that we tend to win.

Jim Burton:

That begs the question, because you were talking about all the different areas you cover, and how long you’ve been around, and all of that. How many real customers do you have? How many real seats are out there installed and working?

Jim Machi:

So, for paid UC seats, this isn’t the Asterisk or the FreePBX, for the paid seats, we have 1.5 million seats out there, and that’s spread along on-prem and cloud.

Jim Burton:

Wow. I would never—I almost was literally about to not ask you the question because it might be embarrassing because it was only 100,000 or something…

Jim Machi:

Uh-huh.

Jim Burton:

Wow, 1.5 million?

Jim Machi:

When I first came to Sangoma, which is a year and a half ago, we started to look at how many seats we had. And then when we bought Digium we did the same thing, and that’s where you get to the 1.5 million paid-for seats. And so we have maintenance on that as well, you know, for the on-prem.

We have a good customer base; our products are solid. We tend to win, like I said, from a value-based approach. People are looking for basic services, that also can do more, and at a fair price. And so we tend to win. So that’s why we’re growing.

And again, like I said, we still talk about on-prem. So, we’re also growing there too.           

Jim Burton:

You know, it’s interesting. There are a number of companies, including the very biggest companies that provide these solutions, that their on-prem or their single instant cloud solutions are growing where people are thinking you have to have multi-tenant cloud solutions. That’s where the growth’s at. I think there’s a little confusion in the marketplace about that, but, you know, when I talk to Cisco and I talked Avaya, they’re growing in that space as well. So, I think it’s interesting for people to understand that. It’s not all cloud today.

Jim Machi:                 

Yeah.

Jim Burton:                

So, Jim, you’ve got a lot of customers. You’ve been around for a while. One of the questions that always comes up when someone’s looking at a company is, “How viable are they? Are they profitable? Are they publicly traded?” Can you give us a little bit of the financial background on Sangoma?

Jim Machi:                 

Yeah. First, Sangoma is a public company. We’re headquartered in Canada—in Toronto. We’re actually on the Toronto Stock Exchange. So, if somebody wants to see our quarterly press releases, financial press releases, they’re available on our website.

We’ve been profitable the past couple of years. We have positive EBITDA. We’re doing well. We’re hitting our numbers. So, I understand where those questions come from and I think it’s a good question that you ask me because people tend to ask that when they’re making a decision to buy a UC or a business communication product, they want to make sure that the company’s going to be around in five years and be there to support them. So, that’s a great question, Jim.

Jim Burton:                

You obviously, just based on your history, the number of accounts you have, you have a lot of different types of customers. You talked about that a little bit. But maybe you could talk about the diversity of customers and the typical type of customer you have and maybe follow that with appropriate case studies that you could share with us. Customer success stories.

Jim Machi:                 

Let me get back to one of the ones where somebody had an old PBX from years ago, like the early 2000s. There was a customer called St. Louis Foods and they were moving. The vendor had gone away, so when they moved, they went to the reseller who had been supporting them, trying to support them, and they had two requests: I want mobile support and I also want my old phone number, even though they were moving to a different county, their phone number – the first three digits of their phone number – would change, but they wanted the same phone number. And obviously, we’re allowed. We were able to keep the same phone number, and give them mobile support and also, they were interested in video in the future. So, they’re looking forward. And they want it all on the cloud. They didn’t want wiring in the building and all that stuff again. That’s a good example of a company that modernized and took advantage of moving to get to our solution.

There was another company called Lamp Linguistic Services. They provide linguistic services where if you go into a law office or a doctor’s office and you need to translate into English, they would dial out. The people would know to contact them. And then they would put you in touch with a Spanish translator or a French translator, or whatever translator you needed. They had a key system. They have to put you on hold, and then dial down, and then find somebody who’s available. And it would take time.

But in a modern phone system, they were able to put in the different call flows, how they could go, put people on hold in a modern way. And then they were able to increase their business by four times just because they went to a phone system that had basic call routing. And obviously, they are interested in video, too, because there might be people who need that kind of video translation services.

Those are good success stories because they’re looking at moving, growing their business or saving money—or (for the first one) save money because they also went the SIP trunks. But also, they’re looking at future services like video. They wanted to go to a system that was video capable. Those are two good examples of success stories.

Jim Burton:

Well, that sounds great. One of the things that you’ve had—like any other vendor that’s been in the space for a while—a variety of types of products that cover a broad range of functions and capabilities. But clearly, everything is moving to the cloud even though I commented that it’s—that you--there’s still a lot of people that aren’t. But what have you done in your participation to move to a cloud-based UC solution?

Jim Machi:                 

Yeah. So, first of all, our on-prem product and our cloud product are actually the same product. They’re not different code bases. So, somebody that’s familiar with on-prem that wants to move to cloud, it would behave exactly the same. And a lot of the bigger companies, their cloud solution is a little different because they bought some other company and it doesn’t behave the same or look the same. So, that’s one thing we did.

We also offer our own cloud service. We have our own cloud, so we’re actually classified as a service provider because we provide the services. And another thing is if somebody wants to run their own private cloud—and we do have people that do that—then our products are software based, virtualized, and they can put it in there in their own clouds.

But the products are exactly the same. Our mobile client, which is our UC client, is the same on both on-prem and cloud. so I think that’s a big selling point with why people come to us. They know the same code base that’s been out there on-prem is going to work in the cloud.

Jim Burton:                

As you’ve been talking, something that’s come to mind is that you’re in a different situation than a number of vendors out there. You have a very broad product portfolio and you provide most everything. A lot of people buy a solution and they’ve got to buy someone else’s phones and someone else’s ABC gateways, and you’ve got it all. I think it’s amazing. And my guess is that people probably don’t understand that. It’s got to be a really great deal for your channel partners because they can come in and go to a customer, listen to what the customer wants, and give them what the customer wants as opposed to trying to sell them what they have to offer…

Jim Machi:

Yeah. That’s a really good point. I think a lot of our customers—we use the term “trusted advisor” —because we can go to them, talk to them, find out what they really want to do. And then, if they want to do on-prem, we have the solution. If they want to do cloud, we have the solution. We just want to win the deal. And we don’t have to drive them to either cloud or on-prem, because that’s what we have.

So, I think that trusted advisor concept that you kind of brought out is very important in how we win some of these customers because we can listen and really say, “this is, for what you want, this is the best solution.”

By the way, with our phone, Jim since you brought that up. Our phones auto provision. So, if you’re on a cloud for instance, like I am right now, I’m on a cloud. I’m in my house right now. I’m on a Sangoma cloud PBX right now. And when I—I just plugged it in and within 10 seconds I was connected to our PBX. So, it auto provisions and that’s really good if you have remote employees, like I’m a remote employee today.

Jim Burton:                

Wow, that’s great. And the audio quality is perfect, so that’s great.

Well, Jim thank you very much for your time today. I really appreciate it. It was very insightful learning more about Sangoma, where you’re going, and the things you’re working on. Best of luck to you, and I look forward to having an interview with you sometime in the near future.

Jim Machi:                 

Thank you, Jim. It’s always been a pleasure talking to you, so thank you.

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