Adaptation is the defining activity of the channel

Federated collaboration, rent-to-rent and a call for greater channel intimacy: Welcome to the first Comms Vision round table debate on the big themes shaping our digital world and why the channel must react proportionately to the scale of these influential trends and market demands. By Stuart Gilroy...

From the smallest resellers to the biggest telcos, all know they must adapt or suffer the consequences of their inaction. They must adjust their strategies to suit the business environment and bring ingenuity into their evolution. No longer can resellers survive as creatures of habit. Traditional structures have been dismantled and context-adaptation is the new curriculum in a digital induced revolution. Modern comms-speak ordains that technology is 'disruptive'. The word is used for good reason, because an age of stability is unlikely to dawn any time soon, making it strategic naivety to ignore the tech-driven upheaval that is reshaping the landscape, evidenced by the uptake of hosted.

"This is the fastest growing part of our business with 5,000 to 7,000 seats a month," said Graham Kedzlie, Head of SIVAR Sales at Gamma. "We are aligned to the Microsoft Lync story, and see local resellers carving out their own markets to provide niche services and bigger partners addressing verticals. We are moving into the IT space now by simplifying product bundles and making them transactional. IT companies are also buying into this."

Today's constant banging of the digital drum exposes sales people who are unable to make the adaptation that is often most important - an ability to talk the customer's language during discussions about removing their capex problem. The push from customers to know more about their options reopens the vexed question of the quality and ability of sales staff. It is folly to assume that ICT purchases still follow a formal procurement process based largely on predefined needs. Unstructured demand, where buyer requirements are far more fluid, is a different can of worms. The battle to address this evolution continues. David Aldritt, Technical Director at HighNet, commented: "At the sharp end, sales people need to have more commercial understanding. They need to be capable of working through financial models and explain business outcomes. The industry needs these skills in sales teams."

Curiosity is an instinctive reaction to an excess of technology and the end user's flight towards pools of knowledge indicates a willingness to dip their toes in. Resellers who swim in this pool stand to gain most. The others are likely to sink. "There is a push from the end user compared to 12 months ago and we are not having to sell the cloud concept," said Steve Ellis, Managing Director at 365iT. "They don't want to own CPE. Resellers who don't provide off-premise solutions will not be able to have this conversation. Resellers need to give users what they want, or someone else will.

"Customers want to be sold to and educated. They are receptive. It may be a step too far to put everything in the cloud, but a hybrid solution starts the journey. Customers are happy to have their back-up in the cloud as a first step, and if you can hold these conversations it's a door opener. Then it's about leveraging the customer relationship and selling services."

Resellers should not be so distracted by their challenges that they fail to prepare for the future - and, more worrisome, stick their heads in the sand. The channel's opportunity is for positive leadership, and business leaders must act now to minimise the risks and maximise opportunities. In a guiding message, Keith Bartlett, EMEA Director for Business Development, Distribution and Inside Sales at ShoreTel, singled out for applause the German method whereby sales people must firstly qualify as an engineer; and in France, two ShoreTel partners transitioned to the cloud by setting up new operations with new sales people and no legacy. Both quickly grew to become bigger than the parent companies.

That the digital revolution embraces new business models with huge potential, deeper conversations with the customer and more productive channel relationships will come as no surprise to the chameleons that already adapt to their environments like ducks to water - they will not be supplanted. But no matter what ambitions a reseller has for their company, they may be constrained by their limitations when trying to give customers what they want. "Microsoft and Google are raising awareness of the cloud," said Matt Tomon, Managing Director at Green Fields Technology. "People aren't knocking our door down, but they do understand the concept. The next step is to talk about the transition."

The digital phenomenon, for users, embodies a belief in immediacy, flexibility, real-time experiences and the opex model. Servicing this strong requirement for contextual communications - any combination of devices providing a common experience - can only be achieved through becoming creatures of context rather than habit.

Alternative Networks is one such chameleon. "We come from an annuity background," explained Neil Rampe, Executive Director. "This is important to us and a big advantage because it takes away the capex problem immediately. With the annuity model, by laying over a service level customers don't come back to you on price. You have to re-market the company to end users and educate them. When they see we can take the capex problem away they take the lead. We need to give customers low inertia and low involvement decisions, it's hard for them to get out of this."

Technology has given us connectivity, mobility, clever devices, the cloud and much more besides, and these glories are irreversible. "We are reaching a tipping point where terminology around the 'cloud' becomes less important," noted Pete Tomlinson, Director, Sales, Marketing and Product at Eclipse. "It's just another delivery mechanism that is showing a level of maturity. In the UK SMB sector 40 per cent of Microsoft's revenue is recurring. An inflection point is predicted within 18 months. It's not just about the financial model, people consume as a service and are no longer mindful of refresh cycles. How we market and position ourselves has changed in recent months. Customers mostly understand the business benefits and what they want to achieve. The big question for them is how to do it. The industry needs to get better at answering this question rather than why it's a great solution."

Businesses and their customers may trade digitally but with every revolution an antithesis follows - in comms it's the end user's in-built resistance to a glut of automation. Self-serve may be the preferred option at low market levels but a reseller's trump card is their potential to consult and build integrated solutions at a practical level. "People buy from people," added David Axam, Director of Hosted Communications at BT Wholesale. "On the hosted journey there must be trust and knowledge in the relationship. The whole premise of cloud is flexibility and pay-per-use. Once delivered, the power of the channel model to provide solutions comes to the fore. As the markets converge towards a utility model we can concentrate on driving more value into services."

Current wisdom is increasingly putting an emphasis on a services-based model. The rise of SaaS, like the sales challenge, usually involves more than first meets the eye, especially for product development. Tomlinson noted: "Eclipse has transferred from a product model to a services one, and we now tread a continual development path and a constant state of refresh. We have to manage the ongoing development and roll outs. As long as the first phase is robust and adds value we can introduce it and develop from there. And because all aspects of a solution are interdependent the conversation with customers must not be narrow. There are different domains within an organisation. It can be hard to get them synced up on the sales journey."

A finger in the product development wind shows us where the market is heading, and a big challenge for vendors in the move towards cloud was pointed out by Bartlett. "The next evolution of cloud will be rent-to-rent, not ownership," he said. "Vendors need to find a way to provide partners and the channel with a rent-to-rent solution for hardware and software. A product release in August will be ShoreTel's last big one. Looking ahead, there will be regular updates. This model aligns with consumerisation and sales and marketing may struggle here. In terms of supply chain management and rent-to-rent, it's all about federated collaboration. It's also about the organisations we can't see today. New companies from the UK, Silicon Valley, New York, developing software that is disruptive and takes off."

The reach of digitalisation is so spectacular it is making unprecedented demands on the nation's resellers, and channel relationships could be condemned to atrophy by a lack of 'intimacy', suggested Axam. "It's difficult for people to work in the channel," he said. "There's not just telephony, there's IT and mobile, and it's incumbent on us to make it as easy as possible with TCO tools. The middle ground is about channel support and intimacy. Our success entirely depends on resellers winning deals. It's all about how you breed intimacy. You should be demanding that support."

Axam's intimacy-fuelled call for partner support is a pursuit also encouraged by Alexandra Tempest, Director of Partners at TalkTalk Business. "We all need to make sure we're supporting our customers at every stage by offering them solutions to the problems they face, not just getting excited about the latest developments in technology," she stated.

"It's vital that account managers have the tools and experience to build relationships with customers. CIOs are looking for partners they can trust to help them make the right decisions for their business. It's about delivering tangible value to the customer, and they need to feel the benefit."

Pro-partnership policies such as those advanced by Axam and Tempest need to be vitalised across the board with some urgency, alongside product simplification. This would ease the burden on resellers who may be prompted to pursue overly ambitious objectives that exceed their capacity to deliver. Axam added: "There's just two elements to a product - the features and how the platform is engineered. Once that's done, it's all about the wrap, ease of use and exposing the richness and functionality. To do this in a simple way is difficult, and it can be surprisingly costly to make the processes shorter and easier. We are on that journey."

The bias in favour of greater TCO will be to the advantage of resellers able to demonstrate it. Customers that were once safeguarded and ring-fenced are now thrown into play as they seek flexibility and pay-per-use solutions. A window on IBM's world, provided by Aidan Piper, Managing Director at Welcomm, proved insightful. Every goal is directed at cost-cutting, and tens of thousands of staff are served by a relatively small number of seats that are flexed when needed. "All of the talk is about driving down costs," he commented. "The question is how we do this with more flexible voice, where the end user has a number of licenses and dips into them when needed."

The overriding reason to evolve and adapt is the bridge between old world communications and the new digital era, suggested Tomon who is serious about empowerment through adaptation. "The market has been product-based for years," he said. "The engagement needs to change because you can't sell a solution over a portal. Channel partners have to use their resources to help with solution design. We changed our business model this year. We've done cloud and support. Now we're doing integration, bringing it all together and building score cards with the customer, getting the information together and making use of the data."

The debate offered scope enough for thought and action. None of this means there will be an immediate conflagration of stick-in-the-mud resellers crashing and burning. It does mean that the future for them is finely balanced and the initiative should be grasped with both hands. At the very least, the imperative at such a time is to ensure that baby steps are taken, however tentative.

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