I'm a big proponent of hosted voice services, have been for some time, and like many am encouraged by the progress these offerings are making in the B2B market. Application and core telephony providers alike are now standard alternatives for small business decision makers. Yet in the mid and enterprise markets--notwithstanding that scalability is no longer the issue it once was--penetration by services from the cloud have been slower to gain traction.We often rationalize that hosted's marginal advances into the upper markets stem simply from larger companies being later adopters. While this may be true, spending a few days at VoiceCon Orlando last month reminded me there are other forces at work--namely the product marketing and sales efforts of the customer premise equipment (CPE) vendors. And, that it's perhaps time to give them some credit for it.
You see, even if hosted services have not yet dented the revenue numbers of the bigger CPE providers, the threat of things to come has mobilized marketing departments across the land. CPE providers now appear as well equipped as they ever have been to handle objections tossed their way by companies considering hosted alternatives. Consider the following:
1. CapEx versus OpEx: Central to any sales discussion that involves hosted, this differentiator has made a winner out of hosted in the SMB market and forced some innovation by the enterprise CPE crowd. Apart from leaning more on leasing solutions than before, CPE vendors have also become more software centric/hardware agnostic to allow the buyer greater flexibility. And at VoiceCon, the notion of subscription-based software pricing was introduced for the first time--further blurrying the difference between buying (CPE) and renting (hosted).
2. Network Management: Those selling hosted services like nothing more than to find a prospect either short of internal IT resources, or one looking to reduce them. Hosted offerings disrupt the traditional requirements for onsite skill sets to manage the voice and data side of telecom networks (and applications). In response, CPE has fought back with "Managed Services". Although when first introduced, these seem like nothing more a distraction, sales of these services are evidence that Managed Services are more than just a counter.
3. Extensibility: When the "cloud" first emerged, hosted providers were quick to point how much easier it would be for customers to integrate business process applications into telephony environments. Many an enterprise had previously suffered through laborious third party integrations. But today--even if these are still perceived as easier done in the cloud--premise-based solutions have made huge strides in both the "openness" of their platforms and the depth of their relationships with complementary software vendors.
I could go on and of course--in true marketing spirit--Team Hosted has answers for all of the above. But the net result here is a set of blurry lines, and in field-level selling battles, blurry lines often favor the incumbent. While the enterprise once embraced hosted 1.0 (aka: Centrex), the majority today still consider a move to hosted as a leap. And people rarely get fired for sticking with the devil they know.
But product marketing won't be the only force at play as the market for Hosted Voice/UC services evolves in the enterprise. Next, we'll address the critical role the channel will own.
