Channel Leaders Discuss Unified Communications' Future, Challenges
“We’re definitely on the cusp of trying to find that balance between the right talent and the right talent that can work remotely."
December 7, 2022
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“The market in the greater Salt Lake area in the tech space is probably one of a negative unemployment rate. It’s really difficult for us to find engineers,” said Jim Christensen, COO at Callware Technologies. “Setting up a remote aspect is challenging. You just don’t know if they’ve got two jobs or what. So, managing that is difficult.”
In general, UCaaS organizations are facing challenges with the current economic slowdown, a stark contrast to the frantic hiring that took place two to three years ago.
“The work from anywhere culture, accelerated by the pandemic, kind of increased the pace of hiring, especially in the tech space,” said Irfan Fazlulla, senior director of marketing partnerships and strategy at Vonage.
Joel O’Brien, vice president of engineering at Ooma, agreed, adding that two years ago no one was thinking about inflation.
“I think there was a lot of revenue growth at the expense of margin. I think reality has hit and it’s been let’s get back to our core essentials. Let’s get back to gross margins.”
Al Kelley, vice president of channel sales, Americas at NEC Corporation of America, said as a traditional Japanese organization, NEC tended not to hire at the pace of maybe some other organizations did a few years ago. Now, they are looking at markets such as the Midwest to either relocate or hire people at a lower cost.
“Whether it’s a Salesforce administrator, or a Power BI administrator, or sales, or channel manager types, we’re not really struggling with [hiring]. We’re finding good people,” Kelley said.
Penny Thurnau, vice president of strategic alliance at Powernet, said that as a small company, they struggled finding engineers.
“We had some of our larger, publicly traded suppliers that would have good engineers and can triple their salary,” she said. “So how do you make sure you keep your existing engineers happy?”
Michael Day, vice president of global partner sales at GoTo, found a silver lining to the economic downturn.
“It has to lead to innovation from the technology vendors,” Day said. “Additionally, some of the greatest agents have entered the indirect channel due to being laid off at larger organizations. It’s an absolute great opportunity for these very highly skilled, very intelligent workers to become agents and then be able to be prosperous with all of our technologies.”
Price compression, the idea of buying today with the expectation that future earnings will justify current prices, is something UCaaS companies grapple with, especially in a complicated economy.
“We’re holistically at RingCentral looking at our pricing model, said Wendy Harmon, assistant vice president of channel marketing at RingCentral. “So, it’s not just looking at one specific aspect, but we step back and look at all the value add throughout the entire portfolio and price according to that.The point is ultimately people pay for value. You should be able to align your pricing model to fit where those high value points are. I think it helps to be able to reduce in some areas and increase in other areas. It’s a balance.”
Day said GoTo has stayed in tune with the consumers and the partners to understand the products that the company is creating, building, implementing, and integrating to answer the market of “what people want now” in the UCaaS space.
“There are always the bells and whistles of who has what, but not every consumer needs every piece of it,” Day said. “So how are we able to now tailor the platforms and create bundles of products that consumers want to use so that they can say this is exactly what I’m looking for. And the whole price conversation isn’t there because you’ve built the value of a platform from what the consumer wants.”
For the companies in the UCaaS space that offer hybrid work technologies, many of them are also dealing with the same challenges their customers and partners face when it comes to remote work.
“We’re definitely on the cusp of trying to find that balance between the right talent and the right talent that can work remotely,” Fazlulla said. “We have had a very distributed workforce across multiple cities and countries and because of the acquisitions, we organically had additional offices and different team cultures that we had to integrate. I have to work very closely with people who are in multiple cities.”
Harmon said RingCentral hires in their hub offices and that three-plus days a week is spent in the office. Although younger employees want the flexibility of working remotely, Harmon said she thinks there’s value in going into work.
“What I think is still really important is people starting out in their career learning so much about dynamics and being in an office situation,” she said.
In many respects, Microsoft is not viewed as a competitor to UCaaS firms, according to the roundtable participants.
“People are buying ecosystems these days, Google or Microsoft, and they basically tend to stay in those ecosystems,” Fazlulla said. “And they think Teams is the panacea to all communications problems. And in some ways, it is. But it’s not a fully redundant UC solution. And they discovered that very quickly. We can come in and add that UC backbone to a customer’s Teams solution. It’s a perfect marriage.”
Day took a more enthusiastic approach to a Microsoft partnership.
“We love Microsoft,” he said. “They own 98% of the desktops globally. Every computer we have, someone’s running an application right now built on Microsoft. Every company has to make a decision to compete with Microsoft and their offering.”
However, a partnership with Microsoft is stronger than the competition side is going to bear out, Day said.
“Microsoft has a unique position where they can dictate our destiny. They also have the financial abilities that they could own any one of us if they really wanted to. And in reality, Microsoft’s been in the voice space for over 20 years, going back to products like Skype. However, when they partner with one of us in this room, all of a sudden, the voice product gets better.”
It’s no mystery that partners are embracing a more consultative role in the channel.
“I think partners are more engaged than what they used to be,” said Thurnau. “They want the knowledge to be better. They want to be that advisor, so they’re hungry for the knowledge.”
However, for vendors to pass along that information, they must also understand a partner’s background to avoid a relationship that’s purely transactional.
“It’s more important now than ever before to know your partner,” Day said. “And not just know them from what’s their name, where are they located, and what do they sell, but truly understand who the people are inside of their organization. Due to mergers and acquisitions, the partner landscape is drastically changing. So how well do we truly know the partners that we can be a part of their offering, creating their value proposition?”
It seems organizations are doing everything to avoid channel conflict so much so that they are embracing symbiotic relationships with direct sales team.
“We actually have in-house direct sales and we’re obviously selling the channel,” O’Brien said. “But we’ve also brought on resources who have expertise in selling direct and marrying them with those channel managers that bring those opportunities. So, we’re working on larger deals than ever. It can be a little complex with the type of solution that we have, which has many value-adds to it by the way. We’re really focused on what we’ve brought together with these expert sales resources from both angles. It’s a hybrid approach.”
Day agreed.
“[GoTo] is one unified selling organization. Some of our markets are 100% revenue driven through partners. Overall, globally, GoTo is probably 80% partner driven business, 20% direct business. It’s the collaboration model that’s bigger than ever before. We love the direct sales organization. In fact, we’ve created the model where there’s consistency in the direct seller that a partner works with so there’s not round robin. “
However, other companies in the UCaaS space have gone to a more channel focused model.
“We’re essentially a channel centric organization today,” Kelley said of NEC. “We at one time had a very, very aggressive direct sales organization at NEC. Over time, it evolved away from that. And a lot of that had to do with profitability or the lack thereof on the direct side of our business. The majority of our UCaaS business is through the channel, almost 100% at this point.”
Thurnau relished the opportunity to merge direct and indirect sales teams.
“About four months ago, one of our direct sales leaders left,” she said. “Now I oversee all of channel and direct and it’s been great bringing the two together because it was conflict within the organization. We still have our separate meetings. But in bringing them together, they’re able to understand there’s things you learn from direct that channel partners wouldn’t have known. And then the same thing for our direct sales folks who are vertically assigned or product specific. Now they can become experts with multiple things that their customers need and for channels, vice versa. I think it’s been it’s important to marry those relationships.”
Finally, the participants reflected on the future of the UCaaS business model.
“It’s going to be ultimately about how fast you innovate and have you opened up new channels of delivering that technology, both to your partners and customers,” Fazlulla said.
For others, the future is about investing more in UCaaS/CCaaS than on the on-premises side of business.
“We’re experiencing probably 30% quarter-over-quarter growth,” Kelley said. “Now, we’re not seeing that on the premise business, right? Clearly. We see very positive results, but we see our business over the course of the next couple of years shifting right to that point where we’ll get that crossover, where we’ll be generating more revenue from UCaaS/CCaaS.”
Day added that he was thankful for what every on-premise organization has built over the last 20-plus years.
“However, the evolution is that you’re no longer selling a phone system,” he said. “You know, we are selling a complete communication collaboration type system that allows you to communicate with your customers and the way they want to communicate with you. That’s why I’m so excited about what is the next phase. The future of the UCaaS market is extremely strong. Because the buyers of today are communicating in a different way. If you’re just selling a phone system, you’re in trouble. But if you’re selling a true communication collaboration platform, well now we got a chance to do something really special and become the size of what the on-premise world was.”
Finally, the participants reflected on the future of the UCaaS business model.
“It’s going to be ultimately about how fast you innovate and have you opened up new channels of delivering that technology, both to your partners and customers,” Fazlulla said.
For others, the future is about investing more in UCaaS/CCaaS than on the on-premises side of business.
“We’re experiencing probably 30% quarter-over-quarter growth,” Kelley said. “Now, we’re not seeing that on the premise business, right? Clearly. We see very positive results, but we see our business over the course of the next couple of years shifting right to that point where we’ll get that crossover, where we’ll be generating more revenue from UCaaS/CCaaS.”
Day added that he was thankful for what every on-premise organization has built over the last 20-plus years.
“However, the evolution is that you’re no longer selling a phone system,” he said. “You know, we are selling a complete communication collaboration type system that allows you to communicate with your customers and the way they want to communicate with you. That’s why I’m so excited about what is the next phase. The future of the UCaaS market is extremely strong. Because the buyers of today are communicating in a different way. If you’re just selling a phone system, you’re in trouble. But if you’re selling a true communication collaboration platform, well now we got a chance to do something really special and become the size of what the on-premise world was.”
The world of unified communications is ever evolving and becoming more profitable. The global UCaaS market stood at $28.96 billion in 2021 and is expected to grow to $69.93 billion in 2028. Other estimates have those figures even higher.
Of course, UCaaS doesn’t live in a vacuum and is affected by market forces just like other industries. This year layoffs have rocked the tech community, including the UCaaS. Such factors have made employment decisions a challenge for this sector. Additionally, as the economy fluctuates, price compression has become an important issue to watch in this space.
In September, Channel Futures held a series of roundtables in Orlando, Florida, at the MSP Summit, Channel Partners Leadership Summit and Women’s Leadership Summit. The roundtable involved leaders in UCaaS and the channel and covered a range of topics. These included how partnerships with Microsoft have evolved and the extent to which UCaaS firms handle hybrid work not only for their customers but for themselves.
Callware Technologies’ Jim Christensen
GoTo’s Michael Day
Vonage’s Irfan Fazlulla
RingCentral’s Wendy Harmon
NEC’s Al Kelley
Powernet’s Penny Thurnau
Participants in the roundtable were:
Jim Christensen, COO at Callware Technologies
Michael Day, vice president of global partner sales at GoTo
Irfan Fazlulla, senior director of marketing partnerships and strategy at Vonage
Wendy Harmon, assistant vice president of channel marketing at RingCentral
Al Kelley, vice president of channel sales, Americas at NEC Corporation of America
Joel O’Brien, vice president of engineering at Ooma
Penny Thurnau, vice president of strategic alliance at Powernet
Economic Challenges: Tech Layoffs and Recruitment
In recent months the tech industry, particularly in California, has experienced massive layoffs, making workers available to new opportunities outside of the state.
Utah is seeing an influx of talent leaving California. However, even though workers are coming to the state, Jim Christensen, COO at Callware Technologies, said it’s still not enough.
For more comments and insights from the roundtable participants, scroll through the gallery above.
Want to contact the author directly about this story? Have ideas for a follow-up article? Email Claudia Adrien or connect with her on LinkedIn. |
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