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Service Provider Leverage in Emerging Collaboration Markets

The Collaboration Market

The rapidly growing cloud market and the significant shifts in the voice and data services marketplace have created unprecedented challenges and opportunities for service providers. While the challenges presented to service providers are numerous and of strategic significance, in the interest of brevity, I will focus on opportunities specific to cloud collaboration.

Business OTT services like UC, UCC, and social collaboration are experiencing a surge in demand (Gartner predicts the collaboration market with grow to $21 B by 2018), and offer much greater margins than consumer OTT services, which are harder to monetize. As PWC observed in its recent report, service providers are especially well positioned to serve the business market given their preexisting relationship in business IT departments, and ownership of networks and infrastructure which allows them to offer best-in-market SLAs.

Three key drivers determine the success of cloud solutions and in particular cloud collaboration solutions  – 1) rapid adoption, 2) ease of use and 3) value, determined by a ratio of feature and functionality to price.

Point collaboration solutions (single application solutions) may offer ease of use and rapid adoption for a specific application, but they certainly lack value as compared to unified applications that offer multiple applications and capabilities. In addition point collaboration solutions challenge the notion of ease of use and adoption in the context of using technology in support of specific business processes. Improving any workflow through collaboration and communication requires the use of multiple applications – email, calendaring, document management, project management, social collaboration, im and presence, click to call and conferencing applications. Ease of use and rapid adoption are negatively impacted when users have to deal with multiple applications with different user interfaces, different login requirements and information silos while collaborating and communicating.

Collaboration and communication systems with tightly integrated applications, a unified user interface and consistent behavior across all applications, channels and devices without compromising ease of use and rapid adoption deliver the best value for businesses.  A typical business customer can deploy a single unified collaboration and communication system (UCC) and support a wide range of business processes critical to their operations and team members.  Users of these systems will need to learn only one user interface and adopt one system as they seamlessly navigate across applications, information sources and devices. There is no need to deal with a new user interface and a new information silo every time the user needs to work with a different application.
Service providers benefit from offering unified collaboration and communication systems that deliver a tightly integrated and unified user interface across applications, channels and devices because:

1.      A well Unified Collaboration and Communication system satisfies the 3 key drivers to the success of any cloud collaboration solution – 1) rapid adoption, 2) ease of use, and 3) value
2.      Service providers can consolidate a number of point collaboration and communication solutions into one
3.      UCC systems with the right architecture can serve as a platform for offering additional services

So how can service providers participate in the booming cloud collaboration and communication market?

The initial reaction has been to forge partnerships with prominent OTT services like Google and Microsoft and benefit from the demand built by them. This approach is shortsighted. It is tantamount to seeding the market for a potential competitor and accepting a greatly reduced role in the future. It gives service providers little more than short-term profits in the form of minimal “reseller” margins.  A more strategically sound approach is for service providers to launch their own OTT services, to take control of their customers’ data and to offer them branded OTT services aligned with their strategic and financial goals. By leveraging their own brand and their sales and marketing strength, service providers will get a much larger share of the revenue pie while protecting their customer base.

While service providers have network expertise, operational experience and sales and marketing prowess, they are understandably anxious about developing their own OTT applications. The risks of building a cloud based, scalable, simple to use and successful software product, under budget and in time to take advantage of a rapidly moving market are significant. To mitigate these risks, service providers should partner with innovative technology companies focused on specific OTT applications, with proven products and without any competitive threat. A number of service providers around the world have successfully adopted this strategy and are working with companies like HyperOffice. A provider of cloud based UCC, Social Collaboration, Federated Collaboration and Mobility, HyperOffice enables service providers to roll out high margin, private labeled cloud services deployed in the service provider infrastructure, HyperOffice infrastructure or any third party.

HyperOffice Makes Deeper Inroads into Global Collaboration Software Markets

vncNext week we will announce a new partnership with VNC – a European distributor with resellers in Europe, Middle-East and Africa. This partnership represents another important step in gradually building a carefully selected and qualified distribution channel. There has never been any doubt about the importance of a channel to the long term success of HyperOffice. The challenge has been timing and finding the right partners.

Timing

For a partnership to be successful there has to be a viable and sustainable business relationship. In other words our partners have to be successful in generating revenues and profits in order for our partnership to grow and thrive. One way partnerships don’t last long and don’t make economic sense. A few years back when we were exploring different channel models and partnerships we quickly realized that the market was not yet ready for a broad scale push to cloud based collaboration and messaging.

As a result we felt our partners would likely run into undue friction in their sales and marketing efforts. Today, the market has changed dramatically. Cloud based collaboration has moved from a niche technology to mainstream. Businesses of any size and representing any industry are comfortable with this new technology and in most cases interested to learn more. Businesses are looking to their trusted advisors (resellers, consultants, vars…etc) to guide them through their options and to help them benefit from the cloud. Resellers and partners are now in a position where they can choose to embrace this new shift in how technology is sold, delivered and consumed and profit from it.

Right partner

In the traditional software/hardware sales cycle, a reseller’s economic incentive is aligned with the vendor and not the customer’s ROI. In other words the majority of the effort on the reseller’s part is focused on making the initial sale. Once the sale is made the end customer will have to spend time, more money or both to get the technology they just purchased, deployed. Even more troubling is the fact that they are fully invested in that technology and stuck with it.

This model does not work well for most organizations and in particular for smb’s who lack the resources and the time for needs analysis, contract negotiation, large capital expenditure, long term IT planning and deployment. In the cloud model on the other hand the economic incentives for resellers, customers and vendors are all aligned with maximizing customer’s roi and with maintaining it through the life of the relationship. In this new model the customer’s investment in technology is spread over the life of their contract and is not concentrated all upfront. As a result the customer is in control and can cancel a service with minimum downside if they are not happy.  Therefore, the successful reseller will have to adjust their business processes from sales and marketing to support to accommodate customers in this new world. The right partner for us therefore is an organization with:-

1.      An understanding and appreciation for cloud based collaboration

2.      The infrastructure, processes and mindset that can help customers drive value from HyperOffice long after the initial sale has been made

3.   The required credibility to serve as a trusted adviser to their customers and partners

An established distributor in the SaaS and cloud marketplace, VNC offers a deep understanding of the cloud based collaboration market, along with a mature sales and support infrastructure. The executives at VNC have managed to build and operate a thriving distribution business while keeping ahead of the market and identifying the next important trend.

VNC is an ideal partner to take the next step with as we work to continue to build global marketing channels for the new generation of HyperOffice services and technologies.