It’s been clear for a while now that UCaaS (Unified Communications as a Service) will play a huge role in the future of enterprise communications. Moving the communications and collaboration layer to the cloud in one (integrated) fell swoop is appealing to many, many businesses and helps explain the rapid expected growth in the hosted UC space. Check out this infographic for details, but multiple market research firms expect an average of 22% compound annual growth rate (CAGR) through at least 2019 and a UCaaS market that exceeds $20 Billion annually by 2020.
With market penetration like this, it won’t take long until traditional on-site telephony or VoIP deployments are in the rearview mirror for most companies. The question becomes, what will this transition mean to the MSPs (managed service providers) and VARs (value added resellers) that have been providing services to these businesses?
Traditional Voice Service Models for MSPs and VARs Under Threat
For decades Value Added Resellers and Managed Service Providers have installed and managed network, voice and software solutions for businesses of all sizes. These may have included services like network management, wiring, break-fix, helpdesk support, perhaps NOC services, as well as telephone and VoIP system management. As their customers quickly pivot to the cloud, this business model has been under threat. We discussed this recently in a post about how service providers are adapting their network services using a network function virtualization (NFV) model:
Under the old model, each time a service provider offers a new service, it means putting in new hardware in its own POP and, often, at the customer site. “They have to provision and maintain that hardware as well as the software on top of it,” Konrad says. “It’s a relatively slow process and every time you want to do something new, you have to go through it again.”
With NFV, service providers can far more quickly spin up new applications by running them on a hypervisor on top of any server; no purpose-built hardware is required.
That makes sense and is all well and good when the service is network based, but what about threats to MSPs related to companies moving their collaboration layer to the cloud? According to Mike Cromwell, the Chief Sales & Marketing Officer at ANPI, the biggest risk may be coming from areas they weren’t expecting. “We had a meeting with an MSP recently and they had just lost their entire book of business with a top 5 customer because the customer wanted to deploy UCaaS and they didn’t offer a solution, so the customer went with a national UCaaS provider. This opened the door to new service providers and the fox was in the henhouse. It doesn’t take long to realize that the best customer is one you already have, and being able to deliver a UC&C offering is critical.”
When it comes to offering hosted UC, MSPs only have a few options: They can try to build and manage their own solution, which is very expensive, complex and time consuming; they can resell a UCaaS solution from a company like 8×8 or Masergy, or; they can private label a UCaaS solution that they can brand as their own.
Benefits of a Private Label UCaaS solution for Managed Service Providers
According to Cromwell, whose company offers a private label UC solution for MSPs, there are a number of benefits to private labeling. “For service providers, it starts with the ability to leverage their existing relationships and deliver a powerful branded solution that enables them to provide a great customer experience by having full control throughout the process from quote to lifecycle management. Most of these MSPs and VARs are already trusted business partners and offering full featured solutions with white glove service leads to not only happier customers but also increased and ongoing software and service revenues.”
Some additional benefits of a Private Label UCaaS solution include:
Speed to Market– Without the need to build a platform from scratch, MSPs can offer a robust, private labeled, hosted UC platform within weeks. They especially like the ability to do this with no Capital expenditures and minimal upfront costs. Note: Stay tuned for a future post on what questions MSPs should ask providers when considering a private label solution.
Unified Sales, Management and Customer Portal – Not only do private label UCaaS solutions offer web portals for customers so they can manage their own experience (pretty much all UCaaS providers do), but in the case of a solution like ANPI’s, they are custom built to help MSPs/VARs manage all their customers in one portal and support the entire sales, customer management and ordering process in a single location.
Primary Point of Contact – According to Cromwell, “If an MSP is reselling a national UCaaS solution, they are often cut out of the customer relationship once the sale is complete. Most customer service, upgrades, etc., are handled by the UCaaS provider. For MSPs looking to maintain that high-value relationship, private label solutions make sense as they remain the primary point of contact and can control the experience for their customer.”
Deliver Complementary Services – As we’ve covered in the past, having a rock solid internal network is one of the most important aspects of a successful UCaaS deployment. A private label solution positions an MSP (who likely already manages the network) to deliver any necessary network upgrades as well as additional complementary services – like wiring, infrastructure management or monitoring and maintenance – that may be required.
Recurring Monthly Revenue and Higher Margins – It always comes down to the Benjamins at some point. “MSPs love the recurring monthly revenue (RMR) associated with hosted UC and in the case of private label solutions, they not only maintain the customer relationship and associated service revenues, but they also can expect a higher margin than they would get just by reselling a national brand,” says Cromwell.
Branding, Marketing and Training – Private label providers can also offer full-service offerings to support the sales and marketing efforts with things like branded marketing content, lead generation plans and custom pricing and packaging offerings. Additionally, be sure your private label provider is offering a structured training plan both for staff and customer employees with on-line, portal-based and face-to-face offerings.
Are you an MSP or a VAR looking for a UCaaS solution? What are the criteria you are considering? Let us know in the comments section below. And stick with The UC Buyer for more on this topic.