Comms Dealer

Operator and vendor revenues for the year ending September 2016 reached $148bn across six key cloud services and infrastructure market segments, a 25% annual increase, reckons Synergy Research.

IaaS and PaaS services had the highest growth rate at 53%, followed by hosted private cloud infrastructure services at 35% and enterprise SaaS at 34%.

Synergy Research also said that 2016 was notable as the year in which spend on cloud services overtook spend on cloud infrastructure hardware and software.

In aggregate, cloud service markets are now growing three times more quickly than cloud infrastructure hardware and software.

Companies that featured the most prominently among the 2016 market segment leaders were Amazon/AWS, Microsoft, HPE, Cisco, IBM, Salesforce and Dell EMC.

Over the period, total spend on hardware and software to build cloud infrastructure exceeded $65bn, with spend on private clouds accounting for over half of the total but spend on public cloud growing much more rapidly.

Investments in infrastructure by cloud service providers helped them to generate almost $30bn in revenues from cloud infrastructure services (IaaS, PaaS, hosted private cloud services) and over $40bn from enterprise SaaS, in addition to supporting Internet services such as search, social networking, email and e-commerce.

UCaaS is also growing steadily and driving some radical changes in business communications, observed Synergy Research.

"We tagged 2015 as the year when cloud became mainstream, and I'd say that 2016 is the year that cloud started to dominate many IT market segments," said Synergy Research Group's founder and Chief Analyst Jeremy Duke.

"Major barriers to cloud adoption are now almost a thing of the past, especially on the public cloud side. Cloud technologies are now generating massive revenues for technology vendors and cloud service providers, and yet there are still many years of strong growth ahead."

Across seven key enterprise infrastructure segments vendor revenues for the last four quarters declined by 1% on an annualised basis, claims Synergy Research Group.

Aggregate revenues for the last four quarters reached $88bn, with revenue in each of the last 12 quarters typically in the $20-23bn range.

Data centre servers comprise the largest segment of the market though revenues here declined by almost 5% in 2016.

Switches and routers are the second largest segment and they experienced growth of 1%.

WLAN grew the most while the enterprise voice and telepresence markets continued to be challenged by aggressive price competition and market disruption.

According to Synergy Research Group, Cisco is the market leader in six of the seven segments with the exception being data centre servers, where it is ranked fifth.

In aggregate across the seven segments Cisco's market share over the last four quarters was 33%, in line with its share in the preceding four quarters.

HPE is the leader in data centre servers and is the number two ranked vendor in both switches and routers and WLAN.

Its aggregated market share over the four quarters was 16%. The number two ranked vendors in the other segments are Dell EMC (enterprise data center servers), Avaya (enterprise voice systems), Juniper (network security), Microsoft (UC applications) and Polycom (telepresence).

Vendors who have been achieving steady market share growth in these competitive markets include Palo Alto Networks (network security), Arista Networks (Ethernet switching), Huawei (Ethernet switching), HPE (WLAN) and Dell EMC (servers).

"Cisco continues to control a third of the enterprise infrastructure market and remains in a league of its own despite a variety of challenges," said Synergy Research Group's founder and Chief Analyst Jeremy Duke.

"HPE is the only broad-based competitor to challenge Cisco's dominance though it does not compete in all of the major segments.

"The main disruption to the market is being provided by the growth of cloud and hosted solutions, which are redefining markets and enabling new competitors to emerge."

Cardiff-based thevoicefactory is set to realise its international expansion ambitions following a funding boost that enables the firm to address opportunities in the United States.

Knight CF advised thevoicefactory on a significant debt funding package from Finance Wales that also allows the hosted telephony provider to increase its headcount and strategic focus.

Paul Billingham, Director at Knight CF, said: "thevoicefactory is a fast growing company but was constrained by a lack of funding. We knew that an injection of cash would enable the business to recruit new people, invest, and most importantly free up management resource so key staff could focus their time more strategically."

Paul Harrison, MD, thevoicefactory, added: "Knight ensured that we could secure the required funding with no disruption to the business."

Business owners wanting to sell-up should focus on preparation, planning and executing on a clear strategy to maximise value, according to Adam Zoldan (pictured), Director at Knight Corporate Finance, the comms and IT sector M&A specialist.

To underline his point he cited the firm's role in advising the shareholders of Freedom Communications on its disposal to GCI, saying Freedom displayed a classic growth model that all would-be exiters should aim to replicate.

"Freedom Communications is a forward looking company offering a range of services from traditional PBX, hosted voice and latterly Skype for Business," said Zoldan.

"Ultimately, its strategy and ongoing investment in people, products and expertise paid dividends, with GCI being the successful bidder in a competitive sales process.

"The price paid fully recognised Freedom's strengths in the public sector and expertise in Skype for Business that would help cement GCI's position as a leading Microsoft partner."

Zoldan said the deal offers a neat blueprint and that the mechanics of Freedom's growth engine should become standard across the industry in terms of strategic vision, planning and process.

"Freedom had a strategy and identified a specific type of customers together with a next generation service," he added.

"It invested time and money in building presence and expertise and was able to successfully execute its strategy.

"When it came to exit it was clear this investment had paid off with stiff competition among buyers that wanted to build scale in the public sector and leverage their Skype for Business expertise."

According to Zoldan, there are clear signs that 2017 is set to continue the high level of sustained deal activity witnessed during the past year.

"Well funded buyers are acquiring and financial institutions will continue to investment in the sector," he added. "We have a fascinating range of deals in process and look forward to further announcements in the coming months."

VoIP over VDSL is a long-term risk to business continuity despite many company leaders rating the technology as adequate.

The crux of the issue is a lack of QoS guarantees for VDSL which leaves businesses vulnerable to poor voice quality with no route to resolution, according to comms provider Spitfire.

Spitfire says the situation is set to worsen as more public Internet services such as Amazon Prime, Netflix and digital TV are prioritised.

And users wanting to upgrade to Ethernet connectivity for VoIP can be faced with deployment lead times of up to a year for Ethernet circuits.

The answer, says Spitfire, is a complete end-to-end SIP service run over a wholly owned IP and TDM infrastructure.

Harry Bowlby, Spitfire's joint MD, commented: "Businesses that choose a VoIP solution without appropriate QoS guarantees are gambling with their future. VoIP over VDSL is a significant potential risk to UK business."

Graham Lewis, Spitfire's Director for IP Engineering, has written a white paper on the issues raised in this article.

STL's MD Brendon Cross has been awarded the British Empire Medal in the New Year's Honours list for 'services to disabled people'.

Cross is also Vice President of the charity SpecialEffect and well known for organising the Twin Town Challenge, an event held in 2014 and 2016 that has already raised over £500,000 for the charity.

The Twin Town Challenge, which sees cars costing £500 drive from Witney to Le Touquet for a weekend of fun challenges, has been well supported by many leading players in the comms industry as well as from the games industry and local Oxfordshire businesses. 

SpecialEffect gives people with physical disabilities access to technology to play games and interact with friends and family.

The Twin Town Challenge has raised a life changing amount for the charity over the last 4 years, but Brendon's support behind the scenes for the charity has been equally impactful, involving everything from bucket shaking through to walking on fire in support of the cause.

Dr Mick Donegan, SpecialEffect Founder and CEO, said "There is no better way to start our 10th year than with this fantastic news which is so richly deserved.

"Brendon and his entire family are dear friends of SpecialEffect and their friendship and support has had a life changing impact for the people we help."

Cross commented: "I am truly humbled and honoured to accept this award on behalf of the Twin Town Challenge and all of the SpecialEffect family, many of whom have dedicated their lives to helping severely disabled young people.

"Each year we have smashed the Twin Town Challenge fundraising target and the event planning is well underway to make TTC18 even bigger and better which hopefully will be reflected in raising even more money for this brilliant charity."

Entries for the Twin Town Challenge 2018 will open in May.

Timico Technology Group has hired former Eclipse MD Clodagh Murphy (pictured) as Chief Operating Officer.

Murphy is well known as a business transformer having led Eclipse (which was acquired by KCOM) from a single product consumer broadband supplier to a multi-product business technology service provider.

Her experience also includes business planning roles at Eircom.

"Anyone who knows me, knows that I am passionate about two things - the people I work with and the customers we look after," stated Murphy.

"I will bring this passion and my energy to Timico and I know the next few years are going to be great fun as we deliver our plans to develop the business."

In another senior hire Jeff Palmer has been appointed as Timico's new Sales Director, bringing almost 20 years experience in sales and business development.

He joins from Daisy Group where he was Director for Group Vendor Alliances & Supply Chain Services.

Previous roles also include Head of Sales at Damovo UK and Account Director at Touchbase UK, dealing with enterprise and commercial customers. In his new role at Timico, Jeff will head up Timico's sales, client development and pre-sales teams.

Palmer said: "It's clear Timico has very clear plans for future growth and I'm looking forward to being a part of that journey as we enter this new phase."

Timico CEO Ben Marnham commented: "The arrival of Clodagh and Jeff comes just weeks after our new Chief Commercial Officer, Simon Payne, joined us from Capita.

"2017 will be a pivotal year for the company as we cement our new strategy for the business."

Report by Philip Carse, Analyst at Megabuyte.com
BGF-backed business comms provider GCI has started to spend its new £50m M&A war chest with the acquisition of owner-managed Freedom Communications for an undisclosed sum, boosting revenues by about £18m, or just under a third. On a call, CFO Mark Allen and Marketing Director Phil Hambly highlighted in particular the boost to GCI's Microsoft/Skype for Business (SFB) standing and its public sector presence, with the prospect of more M&A to come in 2017.

GCI is a business comms provider offering a full suite of telephony, connectivity, unified comms, hosting and data centre colocation services, with Microsoft, Vodafone and Cisco as key partners. It targets enterprises and large SMEs direct and via the channel. The business was founded by Wayne Martin, and received a minority investment from the Business Growth Fund in February 2012.

Its M&A activities stepped up a notch in 2016 with the acquisitions of Outsourcery, Packet Media and Fusion Media, and in October the company announced a new £50m bank-funded M&A war chest.

The acquisition of Freedom Comms represents the first acquisition under the new facility, and we estimate it is GCI's most significant to date. Founded in 1989, Watford-based, owner-managed Freedom Communications has expanded from its PBX, lines & minutes heritage to become a unified comms system integrator, providing a range of communication, data infrastructure and voice and data network services. Freedom supports over 6,000 voice, data and connectivity installations to companies and the UK public sector, including Home Retail Group, Hamleys, Shropshire Council and Cardiff University.

In 2011/12 Freedom decided to transition to unified communications off the back of Microsoft products, and particularly Lync/SFB. However, this investment in people, processes, systems and customer education has resulted in a lacklustre financial performance in recent times. Indeed, the newly available accounts to March 2016 show EBITDA halving to £0.3m on revenues down 4% at £18.8m, well down on the £1.4m EBITDA on £19.4m revenues in fiscal 2013. Of Freedom's near £19m revenues, CPE & software and support services each contribute about a third, with the remainder from Networks, Applications and Professional Services.

The acquisition thus boosts GCI's £57m revenue run rate by about a third to £75m, whilst the removal of various lifestyle costs and other cost synergies should lift Freedom EBITDA to about £2m by the end of the year, or a 20% uplift on GCI's £10m run rate. Price has not been revealed, but given GCI's record of paying modest prices, we would guess a valuation of perhaps £10-13m, or a mid-single digit multiple of post-synergy EBITDA.

Aside from the financial impact, GCI management was keen to highlight Freedom's Skype for Business and public sector credentials. Regarding the former, Freedom has 40k SFB seats to add to GCI's 140k (of which 40k came from Outsourcery), making the newly enlarged GCI one of Microsoft's largest SFB partners in the UK. Meanwhile, Freedom is present on nine of the 11 lots of RM1045 Network Services Framework, significantly enhancing GCI's public sector presence. Management also highlighted Freedom's significant pipeline, mirroring the optimistic tone of our conversations with Freedom in the Summer.

Away from Freedom, GCI management noted ongoing improvements to its sales and marketing functions which are starting to generate meaningful new contracts and organic growth, which it hopes to boost through the launch of a new Cloud PBX service in February.

Megabuyte view
Subject of course to the usual caveat over price, this seems a sensible strategic move for GCI, providing a significant boost to its Microsoft standing and adding significant scale. On paper, its target, Freedom, does not have a particularly attractive financial track record, which we attribute partly to being a lifestyle business and partly to the recent investment in SFB. The opportunity for GCI therefore is to both build profitability through taking out lifestyle costs (some of which will fall away immediately, for example a portion of the £1m of directors' remuneration), as well as energise Freedom's sales function. Meanwhile, with this deal representing at most a third of the new £50m M&A fund, we fully anticipate more GCI acquisitions this year.

8x8's cloud-based Virtual Contact Centre and Quality Management solutions will be key to ensuring Bluecrest Health Screening attains a much valued quality management standard, according to Kevin Scott-Cowell, UK MD of 8x8.

"It's important that companies like Bluecrest can rely on their chosen technology to work effectively and improve customer service in a sensitive space," he said.

"We're looking forward to working with Bluecrest to improve service standards and support its bid to achieve ISO 9001 accreditation."

Bluecrest Health Screening needed one unified platform with cloud-based analytics to track the success of marketing campaigns.

Angela Rodbourne, Contact Centre Director at Bluecrest, added: "Bluecrest uses more than 100 non-geographic numbers as part of direct mail campaigns and the ability to record call volumes and responses has been crucial in evaluating their effectiveness.

"It's important as a provider of healthcare that the level of service we provide in screenings is not only first class but also consistent, which is just as important when our customers reach out to speak to us.

"We're hoping to achieve ISO 9001 to demonstrate our ability to provide excellent services to customers."

Aerial Business Communications has staged an Apprentice-style team building challenge in aid of Portsmouth-based charity The Roberts Centre (which supports families struggling with homelessness or suffering the impact of a relationship breakdown).

Teams from each department were tasked with sourcing a number of items on a festive shopping list and they sang carols in pubs to raise extra funds.

At the end of the challenge all of the items were packaged into hampers and taken to The Roberts Centre.

Aerial Business Communications raised over £1,700 for the charity.

Paul Davis, MD of Aerial Business Communications, said: "While the team building aspect is great fun for the staff, knowing that our event helped to make some families' Christmases just a little bit better makes it all the more worthwhile."

Melanie Goddard, Family Services Manager at The Roberts Centre, said: "Christmas can be a great financial strain on many of our families and this amazing team building idea will mean that for some of our families this worry will be greatly reduced. 

"This will mean that families can stop worrying about the cost and simply enjoy being together as a family."

 Pictured above: The winning team