In launching Connect Cloud to the UK market ShoreTel has also shown us that it is already moving ahead of the cloud revolution and entering the post-digital ‘age of experience', according to CEO Don Joos (pictured) and EMEA Managing Director Adrian Hipkiss.
The leading role of UK partners in advancing ShoreTel's global expansion campaign was underscored last month when the vendor rolled out ShoreTel Connect Cloud and ShoreTel Connect Contact Centre for Cloud during two launch roadshows held in Manchester and London. The move signifies a big step forward in ShoreTel's transition from a maker of products to a globally focused software and services business, and follows the introduction of cloud-based solutions as a partner managed service to the UK in 2015.
ShoreTel Connect Cloud has been available to US customers for 16 months and according to Joos the time is right to take it into more theatres. "The launch is another step in the expansion of our hosted capabilities," stated Joos. "We have North America and the Australian market covered, but the launch of Connect Cloud in the UK is another starting point. From here we will expand these services into other countries."
Cloud focused resellers are well served by ShoreTel's data centre partner Rackspace and its private cloud, along with the end-to-end control exerted by ShoreTel which includes the connectivity infrastructure, thereby meeting customer demand for a framework of trust in technology and supplier partners. "Rackspace already has a global footprint and as it builds out more capability in SDWAN we get to leverage those investments," added Joos. "We also control the relationship with the carriers that come into the data centres. The QoS has absolutely improved and there are big technological advancements on the way. Furthermore, security issues are less prohibitive, that's why the mid-market is adopting up to the mass."
Joos also introduced to the UK an expanded channel approach that has been tried and tested in the US, a retail commission model based on the same service as the reseller model. According to Hipkiss, a section of ShoreTel's partners displayed a sharp appetite to sell the vendor's contract and its price to the client, so ShoreTel gave them what they wanted. "Developing this model is a strong indication of our commitment to the channel," he added.
The Connect Cloud launch was both pragmatic in terms of its timing and market focus and popular among partners with an eye to augment their portfolio and make the most of this new tool in the vendor's kit bag. It will help them to fulfil an upsurge in demand from customers (especially in the mid-market) who want to revise and modernise their communications strategy, a task made easier by the joined up nature of ShoreTel's primary comms solution Connect. "Connect has a single code base," explained Hipkiss. "It enables us to offer three alternative deployment methodologies - on-site, hybrid and cloud. Partners in the UK have strongly adopted the Connect on-site solution, they have invested in skills, training and marketing. Their investment is immediately transferable because of the single code base and the single set of features and functionality."
The appetite for Connect Cloud among ShoreTel partners was swiftly exposed by the roadshows. "Our partner community is showing great interest in Cloud Connect and already we have strong engagement following high attendances at the launch events," commented Hipkiss. "Some partners wanted to sign up pre-launch and on the spot, one partner even sold a Connect Cloud solution before the official UK roll out. This is a reflection of the reality in the market and the confidence partners have in our ability to deliver. We also have strong relationships with US-based cloud services distributors and they see an opportunity in the UK. It will be natural for us to extend those relationships."
A combination of ShoreTel's Cloud Connect launch and the firm's long-time presence in the mid-market has made the forecast a positive one for resellers and SIs. "The sweet spot for us is companies with less than 5,000 employees," stated Joos. "This is not a technical limitation, but a focus area from a go-to-market perspective. That's where the majority of companies sit, and that's where ShoreTel operates. As the mid-market advances into hosted, it moves towards ShoreTel."
The vendor's single code base displays coherency not just in technology but also strategy and leadership, a combination that breathes life into Joos's brand of business transformation which has advanced ShoreTel's revenues to a much wider recurring profile, notably in hosted. "In our September Q2 we passed an important inflection point where hosted revenue became greater than product revenue on a quarterly basis," he stated. "Hosted was 42 per cent of total revenue, but adding-in the support agreements, which are also recurring, takes us to 61 per cent. The transformation of our business is all about moving to the recurring revenue model and I expect that to continue accelerating. There is no looking back."
ShoreTel's dramatic forward advance needs a closer look to gain an understanding of what is driving growth and its trajectory towards becoming a cloud-based software business. "In terms of growth, I expect to see a step function every six months, whether that's more partners coming on board, new logos from a hosted perspective, or some of our existing installed base converting to hosted," explained Joos. "I see growth in two areas. One is the adoption that's occurring from a UK perspective, and there is an opportunity to attract more partners now that we have both delivery models, including those ‘born in the cloud'. Our SaaS solution has open APIs, so I see SIs coming to us who, from a hosted standpoint, want to integrate services into a solution for their customers. We have already witnessed this in the American and Australian markets."
The rise of cloud services and their likely impact on the comms landscape is no longer debated. Talk of the cloud has passed from the realm of ‘what if and when' to that of everyday discourse among not just the industry but also end user decision makers. The world is going that way, and so is ShoreTel. "The change in buying behaviour has been building and rapid acceleration is happening now," noted Joos. "For decision makers, the time frame required for a return on their investment has changed. It used to be three to five years, now it's 18 to 24 months. They know technology is changing beyond recognition, and they want the continual flexibility of a hosted offering to ensure they keep pace with change. That's a big shift."
As the cloud revolution marches on, a process of adjustment is required by business leaders to rethink and realign their strategy. "Many organisations are evaluating their operations and identifying functions that can be outsourced," added Joos. "Security and QoS have dramatically improved, so companies are more receptive to outsourcing as a way to focus on core competencies. Their challenge is how to embed UC, flexible working and team working etc to improve the customer experience while becoming operationally efficient. Another driver is the high level of M&A activity. As companies merge the cost savings and synergies they look for include cost-effectively unifying disparate systems."
Migration to the cloud is a widely accepted feature of the digital revolution, hastening the decline of on-premise hardware in fixed places of work. And as the edifice of conventional communications collapses all around us, traditional vendors unable to leave their past behind them are becoming disempowered. Not ShoreTel. In its journey from being a product company towards a software and services one, ShoreTel is on the back stage.
"When I stepped into the CEO role in August 2013 we broke this transformation down into three phases - foundation, migration and acceleration," explained Joos. "The first two are done, and our acceleration phase is driven by five factors - ongoing product releases, the geographic expansion of our hosted solution, scaling the channel, mid-market adoption and our installed base migration. We have four million seats and endpoints in our installed base to be converted, and because Connect is one product the migration is easy for us."
ShoreTel's transformation is another proof point that cloud technology is in the ascendency and upending the comms market. But it doesn't stop there. The ensuing drift into the realm of ‘experience' underlines that this technology is an enabler, not the headline act. Digitalisation has passed the peak, we are now heading for post-digital, an age where experience transcends the medium, which is reflected in how ShoreTel's stance is moving beyond communications towards innovation in interactions.
"We talk less about communications and more about interactions," explained Joos. "The term ‘communications' has connotations of people-to-people, but people-to-machine and machine-to-machine is emerging. It's not about making communications simple, it's about how we, in our world, make these interactions simple. One example we have prototyped is a ‘smart conference room'. I walk into the room, my primary device knows who I am, it knows the time of the meeting, autodials, and using beacon technology activates the projector because it knows I'm presenting. That's machine-to-machine. When I talk about innovation of the experience, we're focused on the most common use cases. Hosted is half of our direction, the other half is how we improve the overall customer experience because they are buying a service, not a product. The experience is the sexy part, and we innovate to make it simple."
The digital revolution is riding roughshod over traditional technologies and business models and requires organisations to embed a smarter way of working which is echoed in the steps taken by ShoreTel to help partners deliver modern day solutions. "When making the transition from a product company to a services business it's not enough to simply introduce new releases into the marketplace," added Hipkiss. "ShoreTel's European organisation has been realigned to make us accountable for the end-to-end experience of our partners and customers. This extends to how partners are found by potential clients, so we have planned marketing forums to help them raise their profile, focusing on digital marketing and ways to nurture relationships with customers who want to benefit from UCaaS, voice, video, mobile, conferencing, messaging and contact centre communication services."
It would be folly for channel companies to turn their back on the digital transformation that is forcing organisations in nearly all industries and sectors to reassess their place in the evolving technology and business landscape. "Standing still isn't an option, and having the ability to continually rethink and reinvent is the new standard," added Joos.