It’s the market report roundup time for the PBX and Communications Platform market. We provide the latest trends in the market as seen by our own editorial team as well as those of leading vendors.
The PBX market peaked during 2008 and then, in the wake of the 2008 financial melt down significantly fell away. Today, cash remains tight and investment in new systems difficult to justify. Add to these difficulties a growing market for the less CAPEX intensive hosted or cloud based models is it ever likely we will see a return to the halcyon days of PBX systems sales?
Are users really buying in to the unified communications and collaboration (UCC) dream promoted by the vendors or are resellers faced with an uphill struggle?
Mike Smythe, Marketing Director of distributor Capstan Communications, says sales of PBX systems will not recover to pre-2008 levels as leasing firms are no longer prepared to fund complete change out of systems on the basis of just adding a few new features.
“In 2008 the market was awash with finance for new PBX systems. Salesmen looking to introduce new applications such as homeworking for example would not bother upgrading existing user systems when they could get the cash for a complete change out. Today those funds have dried up so if the existing system can be upgraded then that is the best deal on offer.
Users are also not buying in to the unified communications ‘dream’ in anywhere near the numbers that the vendors had hoped for. Resellers are finding that justifying the return on investment is more difficult than many realised so the investment is not being made.”
Smythe advises reseller to not take their eye off the ball by ignoring what they are good at at the expense of applications they are unfamiliar with.
“Today, a lot of really good applications are available via the cloud and can be deployed via SIP trunks. Businesses with cash in the bank have become reluctant to invest in new communications systems as they can probably get a better return on investing elsewhere in their business. We are therefore finding that successful resellers are those selling system enhancements where the returns are provable such as call recording and IMS. Currently our biggest growth area is wireless access solutions from LANCOM and providing hotspots with our Yo Wireless solutions.”
John Bird, Head of Systems and Support Services at Micro-P acknowledges that overall, we all know the PBX market is in decline with the latest reported figures suggest an 8% decline for sub 100 extension solutions.
“Will the channel ever recover to pre-2008 levels? I do not think it will but equally so there are positives to be had from this: Technology and market trends have changed significantly in the last four years – for example SIP based technology is far more prevalent. Additionally the evolution of the smart phone and the dependence of the end user on this device is now widespread whilst the cost and availability of bandwidth has become key to how the market is evolving. The channel has evolved and it’s important we all understand this evolution and adapt business models to suit.”
Bird adds that resellers need to understand the demand for hosted solutions is at an all-time high.
“Resellers need to adapt from a ‘tin only’ sales model and recognise that the ‘reoccurring revenue’ model needs to be a serious consideration. We believe that resellers need to have both hosted and CPE PBX solutions in their portfolio and it is the early adopters of this ethos that continue to grow in the current climate. One solution does not fit all.”
Comms Business Magazine believes it is highly likely that Micro-P will be making a hosted telephony supply announcement to their channel within the next four or five weeks.
Meanwhile we have also reported recently that the distributor increased its Samsung PBX revenue by more than 30% in 2012 and during the same period grew its NEC trading accounts base by 33%. How did they achieve this?
John Bird, “There are key reasons why we have grown significantly during this time: our product expertise is second to none, so there has been some migration of accounts from other distributors to ourselves but the real reasons are that not only do MP help our resellers to generate more system sales through our support services but we also help them maximise revenues from each sale. As an illustration of how we achieve this our attachment rates of applications far exceed figures we receive from our vendors as channel averages.
Micro-P is best placed to help resellers upsell with applications, utilise applications and mobility solutions to open doors with end users and provide them with a total solution, importantly within budget, to close the deal.
No longer can a reseller try to win a deal by looking to replace a ‘telephone system’ – a different tack is needed, such as integrating the customers CRM and database system with the PBX, thus increasing productivity and incorporating PCI call recording compliance. This is how we see our Samsung resellers grow year on year – utilising Samsung Xchange to integrate with applications such as Sage or SIMS to give a true benefit to an end user to invest in new technologies. The same can be said for mobile applications, where the ability to include a mobile as an end point in a PBX solution can justify the investment to replace the system.”
Bird concludes, “ Only a distributor who understands the market, the technologies required – from a voice, data and mobile perspective, and have the services wrap in place to support the reseller can truly help a reseller grow their business in a declining market place. Micro-P is that distributor.”
UC – Something for Everyone?
Contact Centre applications are big business for resellers and a vendor ShoreTel has just released their latest version of their Enterprise Contact Center application on the platform saying that Version 8 enhancements to the email and chat channels within the extends the set of features enterprises use to communicate with customers and deliver quality service by removing barriers and offering more avenues for communication. Agents can now more effectively handle emails, chats and calls, both inbound and outbound. Customers can also schedule callbacks so they can be contacted at a time that is convenient.
Clinton Fitch, Practice Manager, Advanced Applications, ShoreTel EMEA, says that they have maintained focus on agent experience by significantly improving by new call queuing features for email and web chat with single clicks required to answer and improved reporting systems.
With this release our resellers can further compete against other main players and vendors in this market. We generally win those deal anyway and this new release succinctly shows how we simplify the experience for the agents.”
Looking at the unified communications and collaboration (UCC) market Fitch believes there is something available for everyone whatever size, shape or sector they operate in.
“In the ShoreTel world everything we do is modular; from dial tone to IM, and presence, layering applications such as conferencing and contact centre on top. This can be as simple or as sophisticated as it needs to be to meet the user need our solutions and can grow with them.
Today ShoreTel is seeing more and more applications and services being driven on to mobile platforms. From our perspective mobility is an extension of the overall enterprise. In my own case you can just call my extension and get me anywhere on any device I happen to be using. This reduces user cost by, say, voice over Wi-Fi. You can be everywhere et still connected to everyone.”
“ShoreTel is being selected by more large enterprises than ever before, for which the multi-channel contact center is a key part of their evaluation for their overall communications strategy,” said Pejman Roshan, vice president product management, ShoreTel. “We’re realising the significant investments we’ve made in channel programs and certifications, and integrated innovation partner solutions to bring a sophisticated yet brilliantly simple contact center solution to market. We will continue to focus on this strategic communication segment driven by the adoption of mobile users demanding multiple ways to communicate, and in parallel evolve our solutions to incorporate more unique hybrid cloud solutions over time.”
Reseller Comment: David Hughes, Managing Director at Incom Business Systems
“More than a decade ago, Incom Business Systems chose to adopt an ‘applications led’ sales route, focusing on bringing together a customer’s business applications with their communications platform. This could involve our writing bespoke scripts to enable seamless integration between PABX and CRM systems, or automating a customer’s existing business processes to improve productivity. The strategy has proved successful and to a certain extent we have been unaffected by the downturn in the PABX market.
Over the last 12 months, we have enjoyed increasing success using this approach, particularly with the ShoreTel portfolio. Being purpose built for IP, the product suffers no legacy TDM issues, has a compelling redundancy story and boasts an exceptionally strong suite of applications; notably contact centre and mobility. With ROI paramount for most customers, particularly in today’s economic climate, ShoreTel also delivers lowest total cost of ownership.
With the advent of hosted/Cloud telephony, I feel it is unlikely that PABX sales will return to pre 2008 levels. However, there is certainly a place in the market for businesses that don’t just ‘sell boxes’ but offer professional services and strive to understand a customer’s requirements, improve productivity and reduce costs. Our recent substantial contract wins include deals from verticals such as travel, accountancy, housing associations and utility providers – proving that, with the right approach, there is still plenty of business to be won.”
It’s Been Tough!
Simon Skellon, UK Sales Director and Vice President UK Sales at Mitel, says that it’s been a tough few years for the industry, but we are beginning to see signs in the market that are making us optimistic.
“It’s hard to make an accurate assessment about when sales volume will recover to pre-recession volumes, but I believe the industry is expecting to see growth. In 2012, Mitel secured the number one market position in IP extension shipments in the UK, demonstrating a positive development for UCC solutions.
Skellon says that overall, Mitel is feeling optimistic about this market moving forward and believes there are increasing opportunities for partners, particularly around cloud-based and virtualised solutions.
“Certain verticals experience greater growth at different times and professional services can be a strong vertical, particularly legal and accounting. These are typically application-rich deployments that take the broad portfolio of solutions that Mitel offers, including IP telephony, contact centre, Teleworking, mobility applications and unified collaboration tools.
Local authority and government can also be very innovative when choosing UC applications and Microsoft Lync is becoming particularly prevalent at the desktop. This is something Mitel has been expecting and planning for and we’re working collaboratively with Microsoft from an integration perspective to ensure our solutions deliver more advanced functionality into Lync.
“The PBX market is going soft,” says SpliceCom’s Director of Marketing and Product Management, Robin Hayman. “After Voice and Data Convergence at the network level, and IT/web based application interaction through Unified Communications the consolidation of hardware platforms that these applications run on is the logical next step.
For larger organisations this will invariably means running the PBX as just another software application on their existing servers, either natively, or in a virtualised VMware environment. Smaller businesses benefit from significant reductions in cost, management overhead, space and power requirements as PBX, Business Management, Mobility Gateway applications, etc. can all be run on a single PC or Server. We’ve taken this approach with maximiser Soft PBX, Vision and iPCS which can all run on the same Linux platform,” states Hayman.
The other trend Hayman identifies for 2013 is an increase in choice for customers – in terms of both products and payment. “Whilst we’ll see an increase in the sales of Soft PBXs over the next 12 months, there will still be a demand for hardware based systems. The same goes for IP Phone applications for smart phones and tablets versus traditional desktop devices – vendors need to continue to cover both bases. In terms of payment options, we’ll continue to see a blurring of the boundaries between CPE, hosted and hybrid sales. For example, in conjunction with SpliceCom Financial Services we’ve introduced a Flexible Licencing Programme, which allows our software based products to be paid for on a monthly subscription basis, with the ability to increase/decrease the number of users, trunks, etc. up or down as seasonal needs dictate. So in essence, our customer’s get a CPE solution, using a hosted payment model,” concludes Hayman.
Will the market ever recover to the 2008 pre-recession sales volumes? Richard Bennett, EMEA Director & CTO Lead at Avaya says that across all vertical markets he sees increasing appetite among communication and IT decision-makers for smart investments.
“Thus growth is not solely linked to sales volumes. With the evolution of technologies such as tablets and mobile devices, and an ever-advancing world of social media – held almost exclusively in the cloud – the challenge is no longer about lowest cost or cheapest solutions. The growth is actually in end-to-end solutions. It’s about relevance. Technology adoption, specifically around collaboration and communication, is no longer focused on upgrades and refresh, nor is it limited to a single tool such as a PC. General trends in the way people communicate day-to-day have changed far too significantly for people not to expect this in the workplace as well.
Companies have begun to maximise what are largely considered to be steady IT budgets. Therefore investment in solutions must deliver upon the promises of support for this changing world. This inherently means that businesses’ investments in the desktop are decreasing, as user demand shifts to their own devices. While there is a business challenge around user adoption, BYOD represents a considerable opportunity for vendors and their partners. It creates opportunity to enhance working patterns by giving employees choice. This is where an Avaya core gives context, based on the fact that the communication and collaboration tools used by one person will not necessarily deliver the same efficiency benefits to another.”
When it comes to UCC Bennett says that businesses are still cautious in terms of IT spend but remaining competitive is also top of the agenda so they are investing in tools that make their employees more productive.
“We’re seeing continuous interest in UC collaboration solutions as a symptom of this. But much of the investment we’re seeing is also driven by a need to invest to negotiate potential challenges that come hand in hand with trends such as BYOD and BYOA. Businesses are waking up to the fact that they need to address their network capacity and security as well as to open them up to more devices.
Managers and IT departments have recognised how productive staff are when they are using devices that are easy-to-use and familiar, and enable mobile working and flexibility. This means we’re experiencing a neat evolution to the adoption of truly unified and integrated communication solutions. But this also requires them to have a flexible architecture to enable companies to manage all those devices in a secure way. Our Aura architecture for example is designed to enable an open-standards approach, essentially allowing different devices and applications from different vendors and operators to federate with one another. With this infrastructure in place, businesses can manage these new collaboration environments simply, widely and securely and can benefit from network virtualisation technologies such as Application Driven Network Infrastructure (ADNI), which frees up space on the network.
In the end the key to success is taking traditional investments and arguments for business adoption, which should be supported by a robust ROI and risk mitigation, then using the investment in the communications core and collaboration applications to generate increased revenue from end-customers. Relevant
across all vertical markets, Avaya as a collaboration core, enables this rotation towards business transformation by taking traditionally disparate front-office (contact centre) and back-office (UC&C) solutions and interlinking them, embedding real-time communications incumbently within business processes and workflows.
Gateway to the World!
Colin Mann, Head of Marketing Aastra UK and Ireland, says that th
e market is changing – the IP PBX market is the major growth sector for UK businesses.
“The IP PBX market is now being driven by a broader unified communications proposition, plus the advancement of cloud based environments in the UK mean that IP/SIP is a key technology. In effect the PBX is becoming a gateway to a new world of applications, messaging, video and collaboration technologies – this is one of the reasons why the IP PBX market is stronger and is the backbone to recovery in this market.
At Aastra we see both SMEs and larger businesses buying UC and collaboration technologies but in different ways. In the SME space the evidence is that they are buying technologies, such as more advanced voicemail and messaging systems to improve their availability and customer service. This is also being driven by efforts to reduce costs in areas such as travel and efficiencies in company productivity. It remains the case that SMEs can be price-sensitive sales, but smaller businesses are increasingly moving up the value chain in terms of the features they want to access.
In the Enterprise space our customers are buying fully integrated unified communications and collaboration technologies encompassing video, contact centres, mobility applications, messaging, switchboards and virtualisation solutions. In this space we find that customers are interested in how our technologies can provide solutions and add value to their business processes.”
Cause for Optimism
Times remain tough for traditional PBX sales but there’s still plenty of cause to be optimistic, according to Paul Burn, Head of System Sales at Nimans.
“The market will recover to previous levels, just not in its previous format,” he explained. “In 2008 for example the channel was a different place to what it is now in terms of the type of technologies available. Hosted was not that common then but the momentum continues to grow. Will pure PBX sales ever recover to previous record levels? Time will tell because the channel has evolved, and that’s not necessarily a bad thing.
“The market itself will recover just in a slightly different dynamic. I think if general system sales recover to 2010 levels then that’s a positive start; as for the halcyon days of 2008 then that’s a different story. The key for a reseller to evolve in line with customer expectations and the development of new technologies. Times change and we all have to move on.
“In general the market is still fragile. I think the decline is over but there’s not been a significant recovery either. For us as a company 2012 was a better year than 2011 for system sales so there’s cause to be optimistic although obviously everything is linked to the wider general economy and we all know how things continue to stutter along. Businesses will always refresh their comms technology but it’s just a question of at what speed.”
He continued: “It’s no secret that systems sales have been hit by the global recession, but the inbuilt features in today’s platforms present a great opportunity for resellers to persuade their customers to upgrade their comms operations. We are working exceptionally hard to support resellers and help them clinch more sales.”
Burnsays the adoption of UC and collaboration is a crucial factor in the development of the industry. “It’s giving companies a tangible reason to re-invest because generally people are hanging onto their technology for longer unless there’s a financial reason to change. That’s where UC comes in, although we are still in a stage of transition. There’s a lot of talk about the benefits and sales are increasing, but it’s steady rather than spectacular. UC is a great way to open up a conversation with a customer, but the tipping point is some way off. Cost savings and business driving applications are where the focus should be. Call recording is a prime example. Presence is another way to boost efficiency. In today’s tough market a dealer needs to demonstrate a cause and effect in a financial way. It’s not about the bells and whistles it’s about showing how a company can improve their bottom line, equating to how a particular type of technology can make them money.”
Simon Broadbent, Corporate Sales Manager at Netcall, says that as Customer Engagement software solutions vendors they position themselves very differently to the traditional voice vendors and have a different but very valid take on the current landscape.
“Will the market ever recover to the 2008 pre-recession sales volumes? No. The market has changed considerably in the last five years. The global economic downturn can be partially attributed to falling sales volumes, however, the biggest contributing factor is the exponential rise of mobile devices being used and as a consequence the ‘consumerisation’ of enterprise telephony. All the major telephony vendors offer mobility solutions via smart phone apps which allow the user to take advantage of an ever increasing business telephony, UC and collaboration feature set from the comfort of their mobile device. BYOD (Bring Your Own Device) policies further support this shift in the way enterprise communication is facilitated. Traditional voice vendors that have relied heavily on high value ‘tin and plastic’ orders are now seeing the customers embrace a world where ‘tin’ is virtualised and devices become a software entry support to a vendor agnostic array of endpoints.”
Broadbent believes UC and Collaboration is in a state of flux as customers struggle to culturally embrace the flexibility and operational efficiencies these technologies can bring to an organisation, whist at the same time witness the mixed messages emerging from their voice partners around the value of these tools.
“For a number of years we saw the likes of Cisco driving the adoption of UC and Collaboration though acquisition (WebEx, Tandberg and Jabber) and UC driven licensing workspace models, whilst overlooking Microsoft’s potential to dominate the market with its ‘under the radar’ ubiquitous roll out of Lync. All of a sudden the traditional vendors have seen themselves playing catch-up and their response to this has been to now either significantly reduce the cost of entry into the market, or as we have seen in Cisco’s case, give the tools away free. So who is buying? Not many organisations will spend considerable money on UC and Collaboration technologies as they expect it to be an integral part of whatever business tools they choose to use.
Niall Anderson, Sales & Marketing Director at G3 Comms: “From G3’s perspective, caution and risk aversion underpinned by an overwhelming desire to control costs are the key factors driving SME market activity in a number of specific areas. Firstly, there is a trend towards business relocation as companies either downsize or look to reduce the overhead of expensive offices and improve their operational efficiency. These greenfield sites are creating opportunities for us to deliver new telecoms systems that allow our clients to capitalise on the latest technology and increase their productivity. At the same time, office refurbishments are also providing the chance for businesses to assess their communication requirements and with many systems deployed between 2002 and 2005 reaching end-of-life, we’re also seeing demand for new installations across brownfield sites.
In contrast to the new system requirements resulting from moves and changes, a large proportion of our recent work has been from clients choosing to optimise their existing systems to deliver greater business value. To meet the challenges of headcount reductions and budgetary constraints, IT managers are turning to asset-sweating as a way of cutting costs at the same time as improving performance. By seamlessly integrating new business-empowering technology with existing systems, our clients are achieving exponential returns on relatively small investments.
Simply replacing ISDN with SIP, for example, has helped many companies realise immediate cost savings and has enabled the efficient delivery of a new range of advanced business applications and services. Likewise, advances in unified communications technology like Avaya IP and the Avaya one-X Mobile solution are allowing SMEs to benefit from new fixed to mobile convergence solutions that dramatically improve productivity – without needing to replace an entire comms system. Our own specially developed iPhone apps also provide clients with smart but simple ways to remotely access office calls from Avaya platforms or manage their contact centre systems.
With a rapid increase in the proliferation of smartphones, tablets and other sophisticated mobile devices and the move towards BYOD, technology vendors like ShoreTel and Radvision have been quick to embrace the need to provide greater interoperability across devices, platforms and applications. This, combined with an increasing reliance on the skills and expertise of service providers such as G3, has helped to ensure the tighter integration of new technology with older systems across multiple interfaces, allowing SME clients to benefit from the latest UC and collaboration innovations at affordable prices.
With many SMEs opting to upgrade rather than replace their ageing systems, we’ve also seen a rise in the demand for telecoms management and maintenance services. Pressure on headcount and the necessity to minimise outages and downtime have prompted IT managers to rely on their service providers to deliver a comprehensive range of support. G3’s award-winning technical Help Desk and services such as G3://4D, our suite of proactive network monitoring tools, are helping many SMEs to maximise the performance of their existing infrastructures by identifying and resolving system issues before they become a business risk.
Does is matter if sales volumes for PBX systems never return to the pre-2008 levels? We don’t think so. The fact of the matter is that there are more choices today for the reseller willing to embrace some form of change and the prime objective for any business is to be profitable no matter what basket of products, applications and services they sell.
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