Hosted and cloud-based telephony is reaching new heights of success. Comms Business examines the latest technology developments and customer requirements.
The world of work is changing, with hosted and cloud-based communication the driving force behind many new ways of working. These technologies can help organisations transform their operations – from weathering the pandemic storm to the emergence of hybrid working.
Bertrand Pourcelot, managing director, Enreach for Service Providers, said that the growth of hosted telephony is part of a much wider acceleration of three components: cloud, collaboration and digital transformation. He explained, “The pandemic has been a catalyst for hosted cloud voice because it was the best way for organisations to organise ways for the employees to work from home rapidly. Cloud-based hosted telephony is a lot easier to manage than on-premise solutions, including activating new licences, controlling systems remotely and supporting softphone clients, both on the desktop and mobile devices.”
Pourcelot is also seeing businesses investing more in equipment to make working-from-home more comfortable. New additions might include higher quality headsets, speakers and helping employees to achieve better connectivity. He said that there will be more than one person working or studying from home in a single household, so the connectivity solution that was previously adequate may no longer be suitable.
He added, “Mobile is increasingly being seen as a convenient extension to a hosted phone system, whether just for voice, as part of UC, or as a fall-back when the quality of connectivity wherever someone is working is poor. For instance, a 4G router is a good backup for users who only have DSL.”
Peter Jury, commercial director, Elite Group, said customers want to do more with the solutions, hardware and software they already had in place before the pandemic, as well introducing new features and services, enabling them to drive productivity in a remote world.
“We’ve also seen a huge adoption in services such as Microsoft Teams by businesses as they need to be flexible in the way they interact both with their employees as well as their customers. This has meant a more focused, consultative approach with our customers on how we can help and improve the way they use these services to maximise benefit.”
For Jon Dailey, channel director, NFON UK, technologies that enable and streamline remote working were crucial during the pandemic, so market demand was high. “As we look ahead and adjust to a new working new model, we believe businesses will continue to invest in technologies that will enable them to implement smarter working practices and have a more agile workforce. Cloud technology, especially telephony from the cloud, is becoming more and more established.”
True remote working
Claire Richards, head of voice portfolio at DWS believes lockdown restrictions have made remote working solutions essential. She said, “It’s more than simply being able to make a phone call at home, we can already do this with mobile technology. The real need was for true remote working, the requirement to be able to collaborate and work together as efficiently as we did from the office, whilst at home.
“Businesses already using hosted telephony adapted very well from a calls perspective. They quickly and effectively moved their telephony to remote locations by switching from desk phones to softphones. However, the pandemic changed a few nice to have hosted features into must have hosted features.”
She continued, “Collaboration now being a key tool to have in the kit bag means that the hosted telephony providers who didn’t do it well, had to quickly adapt their services to bolt in to the likes of Microsoft Teams or Zoom. There has been an emergence of cloud telephony providers introducing Teams plug-ins, or new licences which have Teams integration included.”
Paul Gibbs, sales director, MyPhones, noted, “The obvious change was the fast deployment of soft clients, mobile clients and the use of UC applications. Whereas before the deployment of desk phones was common place, people are now thinking about what they want to use from home and whether that can be blended between home and office.”
His views were echoed by Dave Reynolds, managing director, Xelion UK. “The pandemic has accelerated the working from home trend, which was already underway. But people working from home do not usually have space for a work deskphone, so there has been a significant increase in demand for softphone clients and a corresponding drop in demand for handsets. This has implications for the channel, because the sale of handsets was a leading element in hosted voice subscription bundles.”
He added that another major area of concern is network security. “For office based staff there can be strict security controls, for example prohibiting the use of USB drives and visiting non-work related websites. At home and using personal devices to access corporate networks introduces security weaknesses. The recent spate of ransomware scandals has alerted businesses to the security weaknesses of working from home. Resellers need to alert customers to the vectors for hacking and offer both hardware and software network security solutions coupled with advice on best-practice protocols.”
Russell Parker, managing director, AVC One, pointed out how Teams is big and here to stay. He said, “The question is how does the telephony industry stay relevant and offer value to the channel and end users? Teams voice for the SMB is very simple to purchase and implement. This will create a new license revenue stream for the smaller IT reseller market who have not embraced telephony.
“It has also created a new battleground for the IT reseller without voice capability and the telephony reseller without IT capability. Teams voice plans would appear to be set at the 9 to10 user SMB market that just require simple PSTN style access.
“However, the market opportunity for the channel is at the 10 to 250 or 500 user base. Larger enterprise customers with a large or outsourced support function have turned to direct routing, using self-managed SBCs or SIP trunks. This is extremely cost effective for enterprise and MSPs and affords for far greater management, administration and supplementary services above the Microsoft offering.”
Andy Smethurst, channel sales director, Gamma, agreed that Teams has had a huge impact in the market. He said, “Although UCaaS adoption was already growing before the pandemic, this global event has led to a near complete adoption in any desk-based role requiring human interaction with colleagues or customers, and Teams has been the big winner.
“The opportunity here is vast and varied. If a customer’s telephony requirements are quite light-touch, there is the opportunity to completely adopt Teams using Direct Routing. Alternatively, there is a huge market for using Teams for its UCaaS capabilities, whilst integrating into more complex phone systems for customers with more demanding call routing requirements.“For resellers, having UCaaS capabilities within the portfolio is no longer a ‘nice to have’, but a must have. In the past year, there has been no greater example of how quickly our industry can move and change than this.”
On the horizon
In terms of innovations that might follow in the months and years ahead, Jury at Elite Group feels the market shows no sign of slowing thanks to the rise in remote working. “Thanks to this growth we are seeing many innovations come from our suppliers relating to hosted and cloud telephony whether that be new ways to communicate through services such as WebRTC, micro-level detail on the way a business communicates or artificial intelligence.
“We are also seeing a greater adoption of the ‘cloud-first’ approach as well as allowing telephony solutions to be cloud-agnostic. This ensures that both the channel and our customers can decide where and how to host these services –whether public, private or hybrid – allowing for a truly global reach.”
He also highlighted how an exciting mindset shift is also taking effect, with the more traditional providers of telephony services acknowledging that their service is no longer a stand-alone product.
Dailey at NFON UK noted how with the increasing shift to hybrid working, there’s going to be a host of innovation in enabling people to make it look and feel like they are working from the office, when they are actually communicating on the move or from their own home. “We are seeing the germination of this with Microsoft Teams and Zoom backgrounds, but in the future, we could potentially see amazing breakthroughs via the likes of augmented reality.”
End users are now much more open to embrace new technology and what it can do for their business, according to Richards at DWS. “If the pandemic has taught us anything it is that most customer or business transactions can be done online. Consumers have changed their behaviour; they no longer want to go into a store or call a contact centre for advice. Let’s take a look at our transactions with our GP surgery, you can now have e-consultation or even text consultation, removing the need to call, book and visit in person.”
For Reynolds the uptake of 5G and the withdrawal of ISDN by 2025 will lead to rapid changes in the telephony landscape. “The distinction between fixed line and mobile connectivity will effectively come to an end. The use of numbers for dialling will also decline – you will ask the network to find a person and it will call them, similar to Skype, WhatsApp or Amazon’s Echo devices.
“The development of folding screen devices will also blur the line between mobile phone and tablet devices, so that working patterns become more mobile and flexible. With 5G the Internet of Things will become a reality, with most household devices having a SIM embedded and able to communicate.”
Issues and challenges
Dailey believes the biggest consideration when strengthening a cloud-based telephony portfolio, to gain a stronger market position is ensuring the quality of the products. He said, “Reliable products with strong uptime, which can scale, are the key that will keep customers buying more and recommending you. That’s why reliability has always been a strategic priority for NFON. We offer a standard 99.99 per cent uptime on our core telephony SLAs, which in practice runs significantly higher.
“Vendors need to offer an array of models that best suit the partner needs – from wholesale to commission based options where the vendor bills the customer direct. However, the key factor that partners want and need is to have control over their customer. This is something we passionately believe in delivering. We believe our partners deserve to have both the choice and autonomy over how they want to work.”
Gibbs at MyPhones said there are a lot of people competing for the same piece of business so the challenge really comes in making sure your wallet share with the customer is maximised. “So not just selling the hosted telephony, it’s important that you build a reseller that can deploy a wealth of services which in turn means that the door is not left open to the competition. So to summarise, creating sticky customers is the challenge.”
Sell the sizzle
For Reynolds the most disruptive change in the ICT market is the shift from customer premises hardware to cloud solutions. “Data storage, applications and services are all moving to the cloud, as fast, reliable gigabit fibre connectivity becomes widely available at cost-effective prices for SMEs.
“Customers will also present new challenges to channel companies, with demand for more open contract terms becoming common. This complicates options that bundle hardware or minutes which are financed by the reseller or their provider. Flexibility will be the key to winning deals going forward.”
He stressed, “The important thing is to make customers focus on the deliverables and benefits of hosted and not on the “how”. In sales jargon, “sell the sizzle, not the frying pan”.
Parker at AVC One thinks the on-premise, hosted or cloud argument has been officially laid to rest. He said, “Customers are now looking not so much at either an ROI or TCO modelling but at the OPEX costs of telephony services. Stats from Cavell 2021, suggest that over 70 per cent of UK businesses will purchase their telecommunication including hosted or cloud voice from a national carrier, whereas only approximately 23 per cent will purchase from a local IT specialist, local voice specialist or cloud comms provider.
“That means that partners and end users are looking for suppliers based on service, commercially agile and transparent charging. No contractual lock in and innovation. This can be enhanced support models to suit business activities, coverage time and contractual flexibility to continuous product evolution and innovations to locally based support and account management.”
Resellers and MSPs can beat the competition through focusing on what they do best: getting under the skin of their customer’s organisation and delivering the right solution that will get to the root of the issue. Smethurst at Gamma explained, “I think the biggest challenge is in understanding that it’s not the same as it ever was. It would be tempting to say that things are more complicated, but in fact I think there is a huge opportunity for channel partners to tailor solutions that meet customer requirements by first understanding what it is the customer is trying to achieve.
“One size does not fit all, but there are solutions that can cater for all ends of the market, and customers are prepared to pay more for their telephony or comms if there are clear benefits to their business.
“By having these new and appropriately positioned, but ultimately better services, resellers have the opportunity to cross-sell and up-sell into every existing customer – notwithstanding new business, that becomes easier to win when embracing this technology.”