Comms Business Magazine speaks to Scott Riley, Director of Cloud and Hosting Solutions of GCI Channel Solutions about the opportunities for traditional PBX resellers in the cloud.
The move towards business adopting cloud-based solutions has gathered a lot of momentum over the last couple of years. It is a market fuelled not only by the hype surrounding all things ‘cloud’ that seems to have gripped the industry but also by tangible and realistic business benefits.
It’s not about costs, although many users have adopted cloud based alternatives to on premise solutions because they are drawn to the OPEX subscription cost model versus the up front cost of buying the products and services.
For many users of cloud services the watchword had been flexibility – being able to add or remove users as the business demands change instead of paying for say 100 licenses when you only have 75 users.
Comms Business Magazine (CBM): Why should voice resellers now be delivering IT services from the Cloud?
Scott Riley (SR): Traditional PBX resellers are seeing their market slowly diminish. They are under attack from alternative deployment models that are being sold by a wider range of resellers they are not used to competing with. They used to be pitching just against other PBX resellers but now they are up against firms that can sell telephony and other cloud based IT solutions, which is putting them at a disadvantage when users wants complete solutions from fewer suppliers. If all the traditional voice reseller has in their bag is a traditional comms solution it can be difficult competing against firms building their own product and services bundles that include say laptops, tablets smartphones, data access and telephony all at a fixed monthly fee. Of course some of these PBX resellers are still doing very well but even so they would still be missing out on revenues from these other sources.
CBM: How do suppliers ‘shake’ the resellers out of their CPE/on-premises based comfort zones?
SR: It can be hard to convince people to move from what they know well when they are still making good returns but the fact of the matter is that CPE solution sales is a diminishing market. Sales are falling year on year and resellers relying on one off revenue hits every five years with little recurring revenues other than lines and minutes in the face of competing fixed monthly fees, SIP trunks and free on net calls are risking running out of customers in the long term.
The traditional comms reseller is getting towards the end of PBX bubble and new firms selling OPEX solutions are putting them under threat. At the same time maintenance revenues are falling and for end users the questions is ‘why would I want to install another replacement PBX and keep paying for expensive ISDN lines’.
GCI Channel Solutions is enabling resellers to sell a portfolio of cloud-based products, including voice. By supplying a wider range of products the customer becomes easier to retain which in turn means a growing stream of recurring services based revenue that is on-going for the reseller.
We reduce the risk for reseller – a lean pricing model that is attractive to the reseller with great retail prices for their customers and this provides an opportunity for them to make greater percentage margins and ARPU.
Traditional CPE solutions need expensive and time consuming accreditation hurdles for resellers to jump over. With our cloud based portfolio accreditation is simple and resellers no longer need in house technical expertise spending months to develop a new offering for their customers – we provide packaged and proven products that are easy to provision and simple to manage. And the reseller gets to own the customer too.
Once you have supplied one cloud based service upselling is easier when you have a range of cloud applications in your kit bag. You may start with hosted back up and move on to hosted telephony and Exchange. But if you can’t offer those products the likelihood is that the customer is already halfway out of the door. Ask yourself – why are you losing customers? It may not because of a poor voice product service but be because user wants one supplier. Employers with 5-25 users do not want to be calling five or six supplier to sort out one problem.
CBM: What are the first steps that resellers should take in their journey to the cloud?
SR: Resellers need to find a supplier partner to get more products in front of their customers - white label solutions you can brand yourself – such as we have at GCI Channel Solutions. Suppliers that will keep away from the user but support the reseller. Find a supplier with a portal to provision services rather than put yourself through accreditation courses. This is the fast track.
For example use our portal will provision hosted Microsoft Lync – after a few clicks the service will be live. Compare this to provisioning a PBX and ISDN. Customer changes and configuration is also via the portal too – there are no truck rolls and expensive PBX engineers.
CBM: Are cloud-based services a key to building business value for the reseller?
SR: As resellers add recurring revenues it is difficult for clients to leave or change suppliers. Don’t just sell one service. The key message for resellers is that cloud provides recurring revenues; you can add further integrated products and service such as Lync and build revenue and value in your business. Selling a PBX is one product - even voicemail is one product. Our message is that it is far easier to upsell than find another customer!