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2008 Unified Communications Highlights

I’ll join in on the year-end roundup – it was a great year for the unified communications market and we’ve made a lot of headway. Here are some of the year’s highlights, and my expectations for next year in the unified communications world – in no particular order.

1.    The economy - Of course the economy is the biggest news of the year. Enterprise customers are unsure what the fallout of the recession will be and are still not sure how UC fits into their environments. Some UC purchases have been put on hold, and many companies are now taking a wait and see attitude.

2.    Software as a Service – The only bright side about the lousy economy is that it might encourage companies to consider these alternative ways of reaping the benefits of UC without the capital expenditures. We’ve started seeing more companies – both large and small, evaluating Software as a Service offerings for UC in 2008. Cisco is well positioned for SaaS, of course, based on its WebEx acquisition, but other companies (like CommuniGate) will benefit as well in 2009 and beyond.

3.    Partnerships and alliances – vendors are starting to work together and we’re even making headway toward UC interoperability and federation. IBM and Microsoft are working together and making progress in terms of interoperability testing, and I expect to see more interoperability announcements between all of the major players in the coming months.

4.    Increasing number of UC implementations and case studies – while the market is still relatively small, 2008 was the year for real UC implementations, for both UC-User (for user productivity) and UC-Business Process projects.

5.    Social networking/social software has become huge, both in the consumer world and within the enterprise. New enterprise-grade social networking projects are being developed and announced, and are beginning to integrate with UC. Expect to see forms of “click to call” from some of the leading social networking sites, and especially from corporate social networking applications. Virtual worlds are also becoming more “mainstream” for the enterprise, as evidenced by Nortel’s Web.Alive.

6.    Mergers and acquisitions - Cisco/PostPath/Jabber; Nortel/Pingtel/Diamondware; Gores Group/Siemens; Convergys/Intervoice; and Syntellect/Envox are just some of the relevant acquisitions of 2008. I expect Cisco and possibly other UC vendors to acquire a social software company in the coming months so that it will have a commercial product offering in this area (see above). Unfortunately, I also expect some UC companies to downsize and either close up shop or get acquired by former competitors.

7.    End user focus – from a purely UC perspective, we saw several companies focusing their UC efforts on the business user or end user, rather than the IT manager. Avaya, Cisco, NEC, Alcatel-Lucent, Siemens, and others have introduced programs aimed at understanding end user needs and matching UC offerings to these needs. Line of business managers will be the key to UC success.

8.    Channel involvement - As evidenced from the UCStrategies UC Summit last June, resellers and system integrators are gearing up to sell and implement UC solutions. This requires knowledgeable and experienced partners who can work with not only the IT staff, but line of business people as well. New channel programs from Avaya and others demonstrate the commitment to help bring the channel up to speed in going beyond selling boxes to selling solutions to the end users and line of business managers.

We hope that in 2009 the UC market will continue to build on the momentum that started a couple years ago. Let’s hope that it’s a happy new year for all.

Quick Update on Some Industry Changes

Many of you may have heard by now that Mitel announced a restructuring and an undisclosed number of layoffs. Mitel lost two of its top marketing people, which will be a serious loss for the company.  According to Mitel, there will be a shift to more regionalize marketing, providing local channel and sales support. The restructuring and layoffs appear to be a preemptive strike in light of the economic realities across the globe. According to Don Smith: the uncertain fiscal climate has led to “declining consumer and business confidence.”

And Mitel isn’t alone - rumors have been circulating that Nortel will lay off around 5,000 workers shortly. Motorola announced major layoffs recently, and according to the Wall Street Journal, the company “put on hold its breakup plans and outlined a second strategy to fix its troubled cellphone division. The radical restructuring, which includes 3,000 more job cuts and will halt the launch of many upcoming phones, raises fresh questions about the company’s future in a cellphone industry it pioneered.” Nokia has announced that it is cutting over 600 positions, mainly in marketing and sales departments. Cisco announced it will lay off 129 of roughly 1,200 Dallas-area employees over the next two months when it shuts down the Broadband Telephony Services operating unit. And according to GigaOM, BroadSoft has cut about a dozen positions in its sales, product management and engineering divisions, in both the Americas and the EMEA region, due to sales starting to slow, not just for BroadSoft but for other vendors as well. Sigh.

Fortunately not everyone is experiencing layoffs. Avaya did some restructuring lately and people were let go, but there were also lots of new hires, “Avaya’s New Focus (http://www.nojitter.com/blog/archives/2008/10/avayas_new_focu.html).

Overall, work still goes on, and most companies will still have to keep on doing what they keep doing - producing, selling, marketing, servicing, etc. Genesys just announced that Merijn te Booij will replace Paul Lang as Vice President of Product Management (Paul Lang recently joined LiveOps). According to Genesys President & CEO Paul Segre, Merijn will “collaborate extensively with customers and partners, as well as Business Development, Product Marketing and Genesys Sales Teams to determine product strategy, new business opportunities and product requirements.”  

While the economy is taking its toll, and we’ll be hearing about lots more layoffs in the coming months, hopefully there will be a silver lining.

It’s About Time – Cisco Meets the Judge

What a surprise! A judge found some of the provisions in Cisco’s ICPA (indirect channel partner agreement) to be “clearly one-sided” and “unconscionable”, and found no evidence that Cisco has ever negotiated a partner contract. Now I could say I was shocked and appalled, but the truth is that I don’t recall ever seeing an indirect channel partner contract - from any major manufacturer - that wasn’t one-sided and non-negotiable. At times, the one-sided nature of partner agreements has even led me to question the use of the word “partner” to describe the relationship between some manufacturers and their reseller channel.

In this particular situation, the provisions in question revolved around termination (of the partner) and damage limitations (the vendor’s, of course). I understand the need of a business to protect its’ interests. However, what I don’t understand is protecting those interests at the expense of the “partner”. Whatever happened to the idea that a partnership is undertaken to be a win-win business relationship? The point is to create an environment where partners create and share in success - and sometimes in failure. Not to pick on Cisco - because they have some excellent elements in their partner program - but this is a great example of how one-sided the vendor-reseller relationship can be.

The data industry is a wonderful place to be. The pace is fast (make that frantic), and the changes in technology are exciting. But I believe that the industry has hurt itself with the dysfunctional relationship between manufacturers and their reseller channel. Rather than seeking ways to strengthen their resellers and help them be more successful (increasing the sales of the manufacturer’s products), many manufacturers have actually fostered the very elements that lead to the failure of many of their own channel “partners”. For example, we see partnership agreements that require a great deal of the reseller and give little in return, including “sales” training which encourages “box selling” leading to low margins, flooding geographic areas with many resellers with the same product competing against each other, onerous certification requirements for infrastructure products, and on and on. On my website, www.sierrasummitgroup.com, I discuss what is essential for resellers to be successful, and mention the importance of vendor selection in the reseller’s success. When all else is stripped away from the relationship, the degree to which vendors actually contribute to resellers’ success directly impacts the volume of products sold - i.e. the vendors’ success.

My words of advice…. vendors beware! Those one-sided channel “partnerships” may now come under some heavy scrutiny from the “other side” of the partnership.

Is Anyone Really Listening?

I really do like this industry! It is dynamic, exciting, and full of great minds. But it is also too busy talking to itself. How many definitions are there for UC right now? And is VoIP really a part of UC?

Thinking like a customer, I have to tell you that the definitions REALLY don’t matter to me very much. And I don’t care if VoIP is part of UC or not! In fact, I (the customer) am getting so confused by all of the articles, podcasts, etc. that I probably won’t be able to make a decision whether to buy anything or not!!!!!!!

I sure would like to see unified communications (however it is defined) have the impact on business that it promises. And I believe that it will do that - if the industry can get out of the way! Wouldn’t it be more productive to focus on how various verticals will benefit from UC solutions? As an end-user, I really don’t care HOW you make my work day more productive - I just want you to DO IT! And I don’t care if my new communication system is IP telephony and isn’t part of unified communications - I just want to work from anywhere and have my tools be easy to use!

Many of us depend on reseller partners to get our products into the hands of customers. But we’ve even managed to keep them confused! And if they’re confused, how can they possibly take the UC story to their customers? In a recent white paper on my own web site, I discussed the chasm between the UC vendor and their channel. But now I’m wondering about the chasm between manufacturers and the end-user!

A number of the resellers who attended UCStrategies UC Channel Summit in May, indicated that the conference answered many questions for them - but the vendor presentations brought up an equal number of new questions. We need to “unconfuse” our channel partners! We need to bring clarity to the end-user. We need to stop talking to ourselves!

Recruiting from the “Right Channel”

Over the years, manufacturers have often asked me which channel – voice or data – I thought would be most successful with “convergence” (and now unified communications) products and solutions. My answer has always been the same and now I am seeing an ever-increasing number of “integrators” who support my answer….

It is possible to draw a general conclusion that data VARs will have an easier time understanding and implementing unified communications technology because it is based on hardware platforms and integrating various applications. But data VARs will find it more difficult to sell UC solutions because the sales process has generally been product focused, involving primarily one department within the customer organization – the IT department.

On the other hand, telecom dealers should be better equipped to handle the sales process of UC because they are familiar with more complex decision-making processes involving numerous departments and multiple influencers and decision-makers. But telecom dealers will find it more challenging to deal with the complex integrations involved in UC.

So what’s my answer to “which channel will be more successful”? I don’t believe that it’s in any vendor’s best interest to rely solely on one channel or the other. The successful convergence integrators that I’m seeing are successful, not because they are telecom dealers or data VARs, but because they have a focus and a strong vision. They are making significant investments in hiring and training the right sales personnel and training their technical staff for the more complex environment of UC. It’s all about the vision and mindset of the owner – not where the company came from last year!