The market for Communication Service Providers (CSP) offering hosted business services has changed radically over the past 2+ years. The market has become considerably more competitive, with well-funded cloud-based providers moving aggressively into the CSP’s linchpin – the small to mid-sized business segment. On the supplier side, the traditional vendors that have provided the technology for CSPs to capitalize on services like Hosted PBX and Unified Communication are in many cases leaving the market.
Given these changes, what options do CSPs have? The following five options begin to emerge:
With that in mind, let’s look at each of these options.
For those CSPs with feature servers in their data center, maintaining their current UC offer (or adding a new soft phone client) is certainly an option. After all, CSPs have made large investments in these feature servers and softswitches and, understandably, want to maximize the return on these investments.
However, this approach carries several significant risks. The largest risk is staying with a vendor that is no longer investing in the underlying platform and is only providing minimal service and support. The UCaaS market is highly competitive and providers like Intermedia and other born-in-the-cloud providers are consistently adding new, well-supported products and features (particularly around AI, analytics, and collaboration). By continuing with the status quo or slightly modifying it with a new soft client, the CSP is essentially freezing its UC product at its current state, while competitors will continue to innovate.
For some CSPs, moving to another feature server platform may offer incremental technological improvements while keeping the fundamental operational model intact. This approach can be seen as a lower-risk option compared to a complete shift to the cloud, particularly for CSPs that are cautious about major changes.
However, over the past 5-10 years, there has been a paradigm shift in how services like UC get deployed. Cloud-based offers have supplanted the locally deployed service model. Continuing with a “DIY” approach may keep the CSP from achieving economies of scale that a more centralized approach would create. In addition, the traditional perpetual licensing structure used in this product creates inefficiencies in purchase timing and capital allocation.
Transitioning to a cloud provider from a legacy feature server in the CSP network is a logical progression in the evolution of UC. While there may be a perceived loss of control as the CSP no longer has direct management of the platform in their network, it has many benefits, including freeing up technical resources, reducing op-ex expenses (e.g., colocation space, power, hypervisor licensing), and eliminating cap-ex costs (e.g., capacity, UC license inventory, hardware refreshes).
In the case of Intermedia, almost everything you need to run your UCaaS/CCaaS business is included in the monthly price, including:
There are up and downsides to selling a branded UCaaS offer (e.g., Teams, Webex, …) as the CSP’s core strategy. On the positive side, you are selling a brand-name product that your potential customers most likely know by name. On the downside, financial returns will be less than what you’re accustomed to, and certainly lower than pursuing a white label solution. You also may run into more channel conflict as compared to selling your own branded solution.
Within the business communications market, only 30-50% have adopted cloud-based telephony, and many of these lack a comprehensive UCaaS solution. Based on estimated growth/migration rates, millions and millions of businesses are expected to accelerate their move off older, premises-based solutions to UCaaS in the next several years. It may be too soon to give up on this market opportunity.
In the telecom industry, change is a constant. While change can certainly present its challenges, change also provides an opportunity to step back and evaluate options. As hosted PBX has morphed into a full-fledged unified communications platform and over-the-top providers assume market leadership, the competitive landscape has become highly challenging. In this evolving environment, you need a technology partner who is relentlessly innovating and deeply committed to partner success, offering the tools, automated processes, branding flexibility, and unwavering support essential for your success.
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