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Are You Ready for Hosted IP Telephony?

- Blog

Scott StewartBy Scott Stewart, Director of Sales, ADTRAN Inc.

The emergence of cloud-based technologies, not to mention the hype around them, are acting as a catalyst to adoption of hosted IP telephony, giving it the push it lacked in previous years. According to the research firm Frost & Sullivan, this will boost the North American user base of hosted IP telephony by a compound annual growth rate of 32.7 percent by 2017; and will raise the market share of this segment in overall business telephony to 20 percent by 2020, from the current 13 percent.

Hosted IP telephony enjoys significant advantages over on-premises installation. This is particularly true for small and medium businesses, which find it difficult to manage these installations. To SMBs, a hosted IP telephony solution means lower costs, better quality of service, 24/7 support, a large “office feel" and the opportunity to tap into varied productivity-enhancing value-added services increasingly offered by hosting service providers. Less-known advantages include flexibility to choose numbers, storing of central directories and an automatic disaster-recovery solution.

It is no surprise then that traditionally, SMBs have been the early adopters of hosted IP telephony services. But larger businesses are joining the bandwagon, said Frost & Sullivan. The larger firms are “increasingly deploying hosted services at branches and remote locations, with some intending to eventually migrate the entire organization," the research group said in a recent report.

This is great news for carriers. It vastly expands their potential client base as well as the size of the potential deals, besides offering the opportunity to broaden their portfolio. From the perspective of a hosting provider, as the proportion of hosted IP telephony solutions rises to a forecast 20 percent by 2020, they have the opportunity to increase “stickiness" and cut a neat path toward increased value-added services, resulting in higher average revenue per user (ARPU). Overall, the hosted solution, as opposed to in-premises IP telephony, contributes to greater customer loyalty.

What does the hosted IP telephony solution mean to the sales process?

Obviously, it means larger commissions for the agents. But there are obvious differences, and perhaps complexities, that need to carefully assessed to ensure quality of service. Let’s consider the following.

  • Technical complexities. Site survey becomes more complex as well as critical to ensure proper internal wiring to manage the LAN. It is important to get this and the entire installation process right. Otherwise, service quality could suffer and also lead to higher cost of maintenance services.
  • To manage the LAN or not. Carriers also need to consider whether or not to take ownership of the client’s LAN and manage the network. In many cases, it is a good thing to do so because whenever troubleshooting occurs, you will have to get your hands dirty with the LAN. So, you might as well get used to it.
  • Finding the right partner. Carriers need to carefully choose good technical partners in order to develop a profitable turnkey solution that can be quickly and easily duplicated across enterprises.
  • Optimizing Day-Two experience. In order to build strong customer relationships and loyalty, it is important to deliver an optimal post-sales service and standards, the traditional Day Two experience.
  • Plan your growth. Scaling services can pose challenges, especially when it comes to quickly adding clients or when adding larger client firms. Carriers would do well to evaluate growth opportunities and lay out a roadmap they can follow.

As we see above, offering a hosted IP telephony comes with both challenges and opportunities for agents. Market dynamics will ensure that the good agents will be separated from the bad. Good agents will be the ones who will differentiate themselves by the quality of their partners and the quality of user experience they will consistently deliver. After all, their eventual success will still depend greatly on the carrier’s ability to deliver a robust solution utilizing appropriate technology and satisfying the end user.

Scott Stewart is director of sales – competitive service providers for ADTRAN Inc., where he focuses on solutions that enable carriers to deliver Ethernet, internetworking and converged voice solutions into the SMB marketplace. Stewart has 15 years of telecom sales experience working with a diverse set of customers including Tier 2 and Tier 3 IOCs, wireless service providers, CLECs and MSOs. Scott is a graduate of the Pennsylvania State University. He also is a member of the Channel Partners Advisory Board for 2011-12.


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