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Cloud Presents Channel Crossroads

March 18, 2011 - Article

By John Macario

Buzzwords change over time. The buzzword de jour is “cloud services." Just a few years ago, it was VoIP.

Back then, we all watched as enterprises adopted IP voice to drive down costs by merging their voice and data infrastructures for more effective management and realized productivity gains through the use of unified communications features.

Not surprisingly, small and medium businesses were slower to adopt the technology for a very simple reason: Most providers and channel partners selling to SMBs never presented them with a compelling economic value proposition. The usual pitch was something like this: “VoIP can give you access to some amazing new productivity enhancing features and will only cost you 20 percent more than you’re spending today." That pitch fell on deaf ears.

SMBs don’t really have voice and data infrastructures to merge and certainly don’t have large IT staffs to support it. Nearly 40 percent of companies with fewer than 100 employees even have an IT person on staff. Even more to the point, SMBs are all about hard cost savings, not productivity gains. Most SMB decision makers look for hard cost savings of 30 percent or greater when switching service providers.

Eventually, some service providers and their channel partners got it right and the market responded. The successful companies bundled together Internet access with IP voice services and offered the bundle at a price point that made sense to the market. According to a recent study of SMB IP communications adoption by research and consulting firm Inzenka, more than 25 percent of SMBs have made the move to VoIP. This represents an increase in adoption of more than 80 percent between 2007 and 2010. The same study suggests that more than half of all SMBs are actively considering a move to VoIP in the next two years.

I spoke at the Channel Partners Conference & Expo in 2007 and was struck by how few of those in attendance were enthusiastic about selling VoIP to SMBs — especially hosted VoIP. The channel seemed reluctant to expand their skill set to take advantage of new opportunities. I remember one conversation in particular with a master agent who said, “Why should we sell VoIP? Our TDM and access business is strong, and we can just sit back and wait for the market to develop." Given the market growth and continued potential, I wonder if that master agent feels he made the right choice.

The ‘New VoIP’

Now we are at a crossroads again — this time with cloud services. The term can mean many different things, but for the SMB market cloud services usually are broken down into three segments:

  • Web hosting
  • hosted infrastructure, such as security and storage service
  • hosted communications, such as PBX, messaging, collaboration, voice mail and e-mail
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