This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.
Mitel CEO Sets Sights on the Mid-Market
Mitel is focused on the mid-market. That was one of the take-aways from the recent Mitel Summit I attended. It’s an old idea that was surprisingly refreshing. While the vast majority of the industry concentrates on the cloud, Mitel focuses on the customer.
It’s not a mutually exclusive distinction. Mitel has competitive UCaaS and CCaaS offers, but many of Mitel’s customers (about half) prefer to own their communications technologies. The company sees that mid-sized customers are frequently caught between simple small business solutions and overly complicated solutions that require specialized skills to implement and manage.
A mid-market approach requires Mitel to maintain an extensive portfolio that includes multiple call control platforms and applications for collaboration, conferencing, and contact center. Mitel also produces its own appliance and endpoint hardware. Design considerations require its portfolio to be channel-friendly, global, and suitable for on-site or cloud-delivered implementations — as well as anything in between.
Mary McDowell is the CEO of Mitel. You may also recall that she was the CEO of Polycom in 2016, just after Mitel attempted to acquire it. That was the acquisitive Mitel, different from the company she now leads. At Polycom, McDowell implemented several changes, including a blasphemous truce with Zoom. A partnership that may have been a motivation for Plantronics to acquire Polycom in 2018.
It’s easy to miss the significant changes that have occurred at Mitel over the past year. Many involved internal processes. The annual Mitel Summit featured familiar faces providing updates to familiar products. However, the impacts of new leadership and a pandemic were apparent in priorities, guiding pillars, and a strategic outlook.
I had the opportunity to ask Mary McDowell about the past year, and this is an edited version of our conversation:
Typically, when a new CEO comes in, there’s a lot of travel to meet customers, partners, and employees. Were you able to complete that before the lockdown in March?
When I came to Mitel a year ago, things started off just as you describe – lots of travel to our sites in North America and many introductory conversations with key partners and customers. I also asked all employees to share via email what they thought I should start, stop, or keep doing. I only got a few responses at first, but once word got around that I was responding and trying to learn about the organization, things picked up. A few people took the time to send multi-page, single-spaced documents, and presentations with their detailed thoughts and plans for the company. It was a signal that many deeply invested employees wanted to have a voice in the company’s future. Ironically, the travel part got cut short when I broke my shoulder (at an airport!) a few weeks into the job – great timing, right? I started traveling again at the start of the year and was on the road almost full time until returning from Amsterdam the first week of March, where we’d held our International Sales and Partner 2020 kickoff.
You implemented “One Mitel.” What was the goal, and how are things different?
One Mitel was about two things: streamlining some of the operational inefficiencies and cultural subgroups that come naturally with a lot of M&A activity; and second, moving away from the divisional structure that was in place when I arrived. In 2019, Mitel had gone to an operational model with separate UCaaS and UC divisions [intending to optimize] the motions for UCaaS and prem/private cloud customers. But in my early days here, it quickly became clear that the divisional model had introduced a number of challenges. It was one of those rare situations in which the feedback from employees, partners, and customers, was unanimous and loud; it wasn’t working.
In early 2020 we moved back to a functional organization, which we dubbed “One Mitel.” It enabled internal teams to work more efficiently, helped us better align resources, and allowed us to respond more rapidly to customer needs when COVID hit. I think the biggest difference, though, has been in the experience our partners have with Mitel – having one hand to shake regardless of the product allows them to focus on meeting the customer’s needs instead of navigating Mitel.
It’s fairly typical to see senior executive changes after a new CEO arrives. Can you share the backstory about some of the changes made to the leadership team at Mitel?
Our leadership team is a strong mix of Mitel veterans with tribal knowledge and some fresh blood. When I arrived, Mitel was without a head of HR. Building a strong people-culture has always been an important part of my leadership approach, so bringing in Billie Hartless as CHRO was an early action I took. Another early decision was to elevate our customer experience function to the executive level with the internal appointment of John Buszka; it’s such a critical factor in a subscription-based world. In terms of other changes, the shift to a functional organization led a few executives to choose to move on to different opportunities outside of the UC&C space, [allowing me] to bring in Tarun Loomba as our Chief Product Officer and promote key Mitel leaders like Dave Silke and Scott Peterson to their current roles of CMO and CRO.
At the recent Mitel Summit, we heard about the four pillars driving the strategy at Mitel. Can you share a quick intro here for the No Jitter readers?
Sure, but first, I’ll set the scene a little. We came to these particular drivers through a pretty intense strategic planning process this year where we did a deep market analysis and self-inspection to hone-in on not only the opportunities available in the market but specifically where Mitel can lead. Everyone talks about cloud and things moving to the cloud, but if you break it down by geography or seat count, you see different opportunities. In the U.S., for example, cloud communications [have] penetrated the low-end and enterprise segments pretty dramatically while the mid-market remains largely on-prem. The mid-market is kind of like Goldilocks: the simple UCaaS solutions for the low end don’t address the more complex requirements, and the enterprise solutions are overkill, especially for the many customers without huge IT teams. It turns out that a huge portion of our customer base is in the mid-market, positioning us well to deliver “just right” solutions.
The first pillar of the strategy is “best modern communications services,” which reflects where Mitel is going as the market moves increasingly toward cloud. It also addresses the fact that we have a huge on-premises business that’s not going away and frankly is an area where we’re still winning new logos every week. We chose the words carefully to encompass our full range of customers while committing to delivering services that are relevant to the challenges today’s workforce is facing. [The] second is “focused applications,” which speaks to Mitel’s aim of providing fantastic common communications and collaboration experiences for all of our customers, whether they’re on-prem, hybrid, or in the cloud.
The third pillar is “expanded routes to market.” Mitel has a partner network that is second to none. Expanding our routes to market is about continuing to maximize the value our partners bring to Mitel and our customers by adding new capabilities that will allow them to become more engaged in the delivery of our cloud solutions. And the final pillar is “customer base retention & growth,” where we’re looking at how we can best support our customers throughout their communications lifecycle and are building programmatic paths to help them modernize their capabilities along the way.
One theme heard across all the keynotes was data-driven decisions. It’s one of those easier said than done objectives. How are you doing it, and can you give an example?
This [theme] is rooted in two things – a shift in culture and the operations that enable it. I’m working hard to drive decision-making based on the strength of logic and fact, not power of position. Once you open up the door to hearing ideas from throughout the organization (arguably a good thing since great ideas can come from anywhere), you need a rubric to separate the wheat from the chaff. So, yeah, you’re hearing the team talk about data a lot because it’s a key touchstone for us in validating concepts for how we drive the company forward.
For example, we had a good handle on the partners that had been growing our cloud business. But, given the market declines in the prem sector, we hadn’t really considered that there would be partners growing their prem business, but there are! Now, we have more concrete plans on how to support their success and leverage those plays into other regions.
“Mitel the Consolidator” hasn’t acquired since ShoreTel in 2017. Has that era ended?
Mergers and acquisitions played a central role in Mitel’s strategy for years and brought the company to where it is today in terms of market share, portfolio breadth, and global reach. However, we see a clear opportunity right now around the mid-market transition to cloud that lines up perfectly with Mitel’s strengths – a portfolio that is unique in its ability to meet the needs of any customer, a strong and diverse partner community, and a huge global customer base. Like any business of our size, we get calls from investment bankers and will always listen to an interesting idea. But our strategy is centered on operationalizing and scaling the assets we have to take advantage of the opportunity we see for organic growth.
How do you think Mitel is changing in 2020?
An unexpected benefit of everyone quarantined at home is it gives you the chance to reset in many ways and look at what’s important. From a business perspective, we’ve repurposed that time typically spent on planes or in off-site meetings to set our strategy for the future and make some foundational improvements to our platforms, services, and internal tech stack.
2020 has been incredibly difficult for so many reasons – a long overdue racial reckoning, a polarizing political landscape in the U.S., and even natural disasters that seem practically apocalyptic. It’s really stressful to deal with all of that on top of the prolonged uncertainty of a pandemic and a lack of normal human interactions. A year where nothing is “normal” can make it hard to compare the true culture of a business but we’ve been actively focusing on things like employee communications, expanding our diversity, equity and inclusion programs, and launching new employee-driven values in an effort to keep our teams feeling connected and supported.
There’s a sweeping assumption across the industry that all that matters is cloud, but Mitel continues to invest in premises-based solutions. Why?
I’m a big believer that great portfolios are not assembled and forgotten but actively managed for maximum leverage and coverage. There’s no question that UC&C is moving to the cloud, and Mitel is well-positioned to benefit from that shift. Our multi-tenant UCaaS solution, MiCloud Connect, delivered double-digit growth in the past 12 months, and we’re investing in it heavily. Likewise, MiCloud Flex continues to be a great answer for customers who require the control of a multi-instance solution. But we’d be crazy to ignore the ongoing demand for premises-based solutions; it’s good business for us and still central to the business of many Mitel partners.
We also continue to invest in helping our prem customers consider cloud in different ways. Our CloudLink technology is a cloud-native microservices platform that allows us to deliver consistent application experiences across our portfolio for both cloud and prem customers. It allows us to have a different conversation with the prem customers who aren’t interested in migrating right now, one where they can leverage their prem investments and step toward cloud by augmenting with cloud-based applications.
Mitel launched its new MiTeam Collaboration solution just in time for the pandemic. Was it ready?
Yes! Plus, I think the adoption we saw by both current and new customers when organizations faced transitioning to remote work almost overnight earlier this year confirmed that. In Q1 alone, we saw over [a] 500% increase in adoption.
It’s become a highly competitive market, but MiTeam Meetings always intended to be part of an integrated, secure collaboration experience for the enterprise – end-to-end communications rather than a point solution. Since January, we’ve continued to steadily enhance the feature set, and now that the whole company uses it all day, every day, we have all gotten very interested in new feature releases. That dev team gets a lot of internal suggestions.
Your tenure at Polycom presumably helped, but have you learned about enterprise communications that you didn’t know a year ago?
I used to think about how technology could be used to deliver great meeting experiences. Meetings in the context of a “normal” office environment where video calls with people in other parts of the world were just one part of the workday.
Now we’re in an environment where the video meeting is the workday. Some of us are going back to the office, but not everyone. And not everyone all at once for a very long time, if ever. In a world where remote work is persistent, getting a delightful intersection of all of the communications modalities that reflects the need for productivity, privacy, and even personal proclivities across a typical 8- to 10-hour workday is a much bigger challenge that requires answers beyond the purely technical. You layer on sociological imperatives around inclusion and representation, and well, it becomes an interesting challenge. But it’s a challenge that the Mitel team and I are very much up to meeting.
During the recent Mitel Summit, you and your team communicated vision and strategy, but there were no major announcements. When should we expect announcements?
That is a fair observation as it was a deliberate choice. We are aligning announcements more closely with commercial availability. We are also doing more small-scale testing of new concepts before taking them globally; the subscription service for the 400 in Germany is a good example of that. But not to worry, you’ll see some great stuff coming from Mitel in 2021, and I’m sure we’ll be talking again quite soon!
Dave Michels is a contributing editor and analyst at TalkingPointz.