The number of hosted PBX providers is growing exponentially, creating a threat to solution providers that sell and service traditional premise based IP PBX products. The biggest battleground will prove to be the growing small business market, where operational expenses are favored over capital expenses. Simply put, most small business operators would rather moderately increase their monthly operating expenses to access critical technology instead of incurring a large initial expense to deploy new technology. It all comes down to cost out of pocket challenging the return on investment (ROI) offered by a new technology, and business phone/PBX expenses are no exception.
That has created a conundrum for channel partners looking to grow their SMB IP PBX sales and services businesses — how can you get a customer to outlay several thousand dollars to purchase something that could be reduced to a much smaller monthly expense, especially with the current economic environment? While there may be no simple solution to that dilemma – solution providers do have other options at their disposal – the first being an ideology of “if you can’t beat them, join them.” That means partnering with the “enemy” and reselling hosted PBX services.
Of course, a radical ideological change in a solution provider’s business process should be vetted before committing to change. Solution providers will need to consider the implications and ask themselves if they are willing to switch over to a recurring revenue stream model as opposed to profiting on initial margins generated by installation and hardware sales. Solution providers will also want to consider some of the advantages offered by selling a hosted solution — the ability to establish a long-term relationship with a customer and sell complementary services.
For solution providers, it is also important to note that hosted services do not exist in a vacuum, that a whole ecosystem of products and services is required for a hosted PBX to function, ranging from infrastructure to IP phones to connectivity and, of course, security products. All of those items and services can lead to profitability beyond the margins realized with a premise-based solution.
