Mike and Scott’s Crystal Ball
By Michael Tessler and Scott Hoffpauir, Managing Partners
The world of unified communications has changed dramatically in the last few years. The industry shifted from unified communications to collaboration meaning everything is in the cloud and accessible from anywhere. Look at the market today. The leading suppliers have integrated calling, meetings, and messaging into a single unified user experience. As a result, they provide a go-to app for all real-time communications needs all in one place. And, they’re leveraging user’s data and artificial intelligence to continually provide an enhanced user experience. We have also seen the emergence of Microsoft and Google — with a renewed focus on this business. These are some examples of the many changes we have seen.
With this shift in the last year, we reflected on what we think you need to do to be successful. Of course, what you do depends on who you are, your existing customers, what other assets you have, and your overall business approach. Here are some things to consider as you contemplate your strategy.
Digital Everything
As the collaboration market matures, it is becoming critical that you scale your business to build long term value. The reason is simple, with scale comes efficiencies in two of the most important parts of the business model — the cost of acquisition and the cost of supporting customers.
One way to impact both is to work on making everything digital. For example, at BroadSoft we embarked on a journey to create a digital experience for all of our marketing content. The goal was to simplify the delivery and execution of marketing campaigns by our partners. What we discovered in our recent work is how little of the customer experience is online. To be successful you need to think about how to remove as much friction as possible for your customers. From quotation to ordering (quote to cash cycle) to customer success and engagement (making sure the customer is getting the most value from your solutions) and support (helping when things go wrong). Your strategy needs to have the right balance of self-service and human interaction, that leads to the best customer experience. We are surprised by how little progress has been made in this domain.
Open Platform
A trend that has been accelerating is the move to a single collaboration platform that includes all collaboration functions: calling, messaging, meetings, and customer engagement. More and more customers want to standardize on one platform. That is why at BroadSoft we first focused on adding messaging and video via our UC One product. And then we broadened our contact center offerings with a multi-modal cloud contact center product. We saw the early shift towards a single platform as critical to our success, and this trend has accelerated.
To be successful today, you need a couple of strategies. One is a platform that works together with a unified user experience and administration. The second is a platform that “works with” other solutions. For example, we see many providers offering a voice add on to Microsoft Teams via direct routing. This allows them to capture the hosted PBX business for customers that have chosen to use Microsoft Teams for messaging and meetings. It is also important that your platform allows several different entry points. Some customers might want to start with meetings only and then add other capabilities. While others might come from needing to transform their contact centers and then move into the collaboration suite for the rest of the organization.
The Evolving Workplace
Many end customers, especially small to medium-size businesses, are struggling with not only collaboration challenges but also with a massive shift to work anywhere. This has created access challenges (getting employees enough bandwidth at home), quality of service issues (clear and crisp audio and video is critical), and security concerns (making sure business assets can be reached securely from remote locations). All of these are crushing IT teams, who themselves are working from home and rapidly trying to move their systems to the cloud.
Most providers have either ignored these issues or treated them as completely separate from collaboration. We see more and more providers tightly integrating access with collaboration, focusing on the end-to-end solution ensuring high quality and reliability. It’s critical to think about your customers and how you can solve the problems of a remote and distributed workforce.
Frontline Workers
Most collaboration solutions are designed with generalized capabilities to serve the needs of as many businesses as possible. Most focus on knowledge workers, who are workers with an unstructured environment — ever-changing, dynamic, and autonomous. Knowledge workers represent at most 25% of the worker population.
There are also frontline workers, who primarily spend their time performing client-facing activities and operational activities. The needs of these workers are largely underserved. For example, push-to-talk capabilities and point-to-point video calling are key for operational activities and business to consumer messaging is key for client-facing activities. In the future, we expect the leading suppliers to shift focus to these types of workers. Microsoft Teams has already started down this path.
Get Vertical
All collaboration platforms now have application ecosystems and developer programs. These allow providers and third parties to integrate collaboration capabilities with enterprise applications. This enables providers to better serve vertical markets with an integrated solution that better meets the workflow of the business. One example is Weave, which provides an integrated solution for dental offices. By integrating collaboration with the applications used by these offices, they provide a solution that enhances daily operations. The integrated functionality provides appointment scheduling, curbside check-in, wellness forms, and payment services.
By focusing on the needs of a specific vertical and tightly integrating the key applications, a provider can specialize the generic capabilities of their platform and provide more value to these types of customers.
Mobile
As businesses have become more and more comfortable with employees working from home, they have to rethink their device needs. Do you really need a desk phone, when working from home? Probably not. Most employees have a smartphone, and all collaboration solutions provide mobile apps for their capabilities. In almost all cases, the capabilities provided on mobile apps are as good or better than what’s provided on a desktop or laptop. In addition, leading smartphone operating systems now support multiple SIMs. This means that you can have a separate identity (e.g. phone number) for your business use vs. personal use. For example, a business can provide an eSIM for business use on an employee’s personal device.
Moving forward, we expect to see more and more providers leveraging this capability and reselling mobile subscriptions for business use (business SIMs supporting voice, messaging, and data). Ultimately, collaboration solutions will shift to mobile-first and maybe even mobile-only.
The collaboration market will continue to grow aggressively in the next couple of years and this is the time that the winners and losers will be determined. We recommend that you adopt one of three strategies:
Go big or go home — As in any technology segment the top 3 players usually capture 80% of the market. Strive to be in the top 3. Or figure out a defendable niche protected from the market power of the top 3.
Get focused on a set of customers — This could be a vertical or geography. Be the best supplier for your targeted customers.
Build a deeper solution for your customers — This means narrowing your target market but solving a bigger set of problems for your customers. For example, access and security solutions.
Those that don’t reassess their strategy will suffer severe competition, shrinking margins, and higher costs of customer acquisition. The time to act is now to stay ahead and win in the market. Have you noticed any of the above trends? If so, share with us in the comments!
