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VAR SaaS and Hosted UC Services: Business Models Make a World of Difference

Yesterday I participated in a briefing with a vendor who indicated that some of its independent VARs are embarking on developing and offering their own hosted UC services.  These VARS serve medium and small businesses, and historically derive a significant amount of their revenue from designing and installing equipment like routers, IP PBXs, IADs/gateways, and LANs.  Another major source of their revenue consists of fees for upgrading this equipment, and to perform break/fix functions.  Most of these firms can show little if any expertise in the ongoing day-day operations, administration, management and performance assurance of both the assets and applications that are a service provider’s bread and butter.  For instance, many lack the breadth of operational support systems service providers use to monitor end-end IP performance on a continual basis.  This type of proactive, continuous monitoring and support is essential for many real time IP applications.  In addition most of the equipment VARs offer to customers is based on a purchase or leasing arrangement, but this is not the type of acquisition model many smaller businesses can afford at present.  Thus it surprises and concerns me that some medium and smaller VARs want to take on this challenge directly-because it’s an expensive undertaking (for equipment, applications development and management, operational support and billing systems and staffing expertise) with a very long payback to do right.  Considering that few VARs are flush with cash, I think the majority of those offering their own hosted UC services will re-consider, and so prospective customers are duly cautioned.

However, there is another business model for VARs that are interested in the opportunity that hosted and SaaS-based UC provides, one that I think makes more sense.  In contrast to the above, some vendors are creating packages/bundles that make it easier for VARs to sell and support a wide spectrum of hosted and managed UC applications.  This week’s Broadsoft/Adtran/Polycom announcement is a case in point-it focuses on offering VARs hosted solutions that are easy to install (see http://www.ucstrategies.com/unified-communications-newsroom/adtran-works-with-broadsoft-and-polycom-on-hosted-services-delivery.aspx and http://www.adtran.com/web/page/portal/Adtran/wp_newsroom_newsreleases).  If deployed in combination with the availability of the new Broadcloud application delivery platform, this should help a variety of providers, including VARs, to offer uniform (pre-specified)  SaaS-based UC services (UCaaS), precisely the kind of offers many medium and small customers want to deploy (see http://www.ucstrategies.com/unified-communications-newsroom/broadsoft-introduces-new-cloud-based-infrastructure-for-unified-communications.aspx and http://www.broadsoft.com/news/2010/broadsoft-introduces-broadcloud).  Over time, these types of offers should help reduce UC installation intervals.  For instance, today, most providers’ current SIP Trunk installation intervals are 60-90 days.  Additionally, the Broadcloud solution includes PacketSmart diagnostic tools that identify problems that can impact real-time applications, which is another important element on the road to becoming a service provider.  However, these tools are reactive in nature.  While this puts can place VARs on a level playing field with customers who would otherwise attempt to perform these functions in-house, it doesn’t provide a superior service experience.  Thus VARs who want to provide a higher level of performance assurance to customers should evaluate additional services, like VoIPCare, which monitors call quality on an ongoing basis.   This can help reduce the length of downtime or service disruptions.  While this does not constitute UC performance nirvana, it is several steps better than what many VARs and their customers have in place now, or would have in place with the go-to-market approach I described in the first paragraph.  Thus, I expect packaged product and lifecycle UC offers to be very useful to both VARs (and a number of other UC providers) and to their prospective hosted UC and UCaaS businesses customers.  In a world full of vendor solutions searching for customer problems, packaged product and lifecycle UC offers are indeed a solution that fits a very pressing business need.

Why Interactive Intelligence’s Caas Offering Can Be A UC Winner

By now you must have read some of the very positive analyst comments on Interactive Intelligence’s (ININ) Partner and Analyst conference in San Antonio, TX on October 11-13th.  What was most impressive to attendees is how well-structured ININ’s contact center software applications were to cover both traditional call center and future UC business application needs. What caught my attention, however, was the successful push that ININ was making in the hosted services market, they refer to as CaaS or Communications as a Service.

The idea is now new, but ININ has taken the lead in making CaaS offerings more flexible in order to overcome the concerns of organizations that don’t know enough (yet) about whether they want to end up with a hosted service or take full responsibility for support with their internal IT staff. Given that customer interactions applications are moving into the new UC domain of “multimodal communications,” there is little experience available to make such a decision yet. So, the obvious approach is to “try before buy” with minimum cost and maximum flexibility. What ININ has cleverly come up with is the option to start with a hosted service but switch to other support alternatives based on actual experience with the specific UC applications involved.

Not surprisingly, ININ reports tremendous interest in their CaaS offering for contact center applications, particularly since they have gone out of their way to allow business organizations to retain local control over their telephony communications activities (CaaS with Local Control).

In terms of other contact center UC application functions, those are still evolving slowly but steadily, but will benefit from ININ’s “”all in one” platform philosophy for cost efficient integrations. Their approach is being enthusiastically supported by their business partners who are focused on helping customize different organizational needs for both inbound and outbound multimodal customer UC interactions.  I am waiting to see them support the needs of consumers who will be using mobile smartphones!