The IT industry is currently going through a radical change driven mainly through cloud computing and its impact on how customers purchase their future infrastructure and systems, but IT’s pain will also have significant repercussions for the telecoms industry, says Outsourcery channel business unit director Simon Howitt
The demarcation between computers and telephony is increasingly blurred and will only get worse as unified communications becomes mainstream, leaving complete IT/telephony integration the inevitable outcome.
As the adoption grows, the issue for IT resellers will be how do they cope with integrated telephony; with the reverse true for telecoms resellers i.e. how do they cope with IT?
Historically neither have been very good at doing the other and each reseller has focused on what they were comfortable with, but unified communications and cloud computing are driving change and as margins are eroded, resellers must take active steps to skill up and satisfy customers’ requirements or risk a bleak future.
Over the past few years all businesses have been used to a CAPEX and depreciation model. However the recession has turned businesses off from buying ‘kit’ and lack of funding, lack of financing and increased restrictions when trying to obtain them are forcing customers to look for other ways to fulfill their technology needs, leading them to adopt an OPEX model – now freely available through hosted, cloud-based services.
However, telecoms resellers recognise that capital equipment purchases are on the decline as CAPEX budgets are cut (both in the public and private sectors).
Resellers also realise that cloud-based software and telecoms services are expanding quickly and want to move to a more future proof business model.
From the telecoms side many resellers who install and maintain PABXs (telephone systems) rely on the upfront profit generated from companies purchasing their equipment, whereas cloud based services are all operating expenditure (OPEX)-based monthly service fees.
These upfront margins generated from equipment sales help pay their staff and sales commission and without them it is hard to incentivise their sales people with very
low month-on-month service fees.
I believe this will lead to a re-education of how sales people work and their remuneration packages, as resellers need to create a different structure for service revenue.
One suggestion is to part cash flow for some of it, or another could be they move to a flat monthly rate and as the customer pays so they obtain their commission.
This is unfortunate for the salespeople who typically like the upfront payment, but it would suit the business better as such lump sums payments do place more of a burden on the company’s cash flow.
But there are drawbacks. In a service revenue model, churn could be a huge factor and it will be critical for the reseller to provide the highest quality of customer service and skills to keep their customers loyal.
However, while appearing risky at first glance, the fact is both sides want continuity and security so those geared up to provide this will prosper.
Hybrid cloud communication services can offer a potential answer because these types of solutions work with, and complement the existing telecoms equipment supply model but also provide a way to move the reseller business over to a service revenue model in incremental steps rather than a big leap.
It’s also great news for the end customers who will see their initial PBX capital investments future-proofed and capabilities extended allowing them to expand their phone systems without requiring further capital investment.
An example of a hybrid cloud communication service is Outsourcery’s IP PBX Overlay product which works by delivering new unified communication capabilities from the cloud – such as Click to Call, SIP Trunking, Presence, Instant Messaging, Desktop Sharing, Call Recording and Video Conferencing all in one package.
Cloud is here to stay and it is a matter of when rather than if. If resellers don’t adapt and develop cross-sector skills, their profits will dwindle and they will be a casualty of the inevitable shake out that will envelop the channel.
For the reseller, the incremental service revenues generated from selling these new unified communication services will soon start to build up and eventually overtake the cash generated from the CAPEX sales allowing a far smoother transition to the cloud.
If as a reseller you are not in a position to re-train or provide first class customer service, companies like Outsourcery can help resellers make a painless transition and are already providing sales training, field support, first line support and even second line support for its partners.
With its history of experience in both IT and telecoms Outsourcery is ideally placed for IT/telecoms integration, and ready to face a brave new world. Are you?