Embracing the Shift to Reoccurring Revenue

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Comms Business talks to Rami Houbby, Managing Director of NFON UK about how his company is gaining a foothold in the UK market and what the key challenges facing resellers.

Comms Business Magazine (CBM): The UK market for Cloud or hosted telephony is very crowded and dominated by Broadsoft platform based suppliers. How can a relatively new entrant such as NFON gain a foothold?

Rami Houbby (RH): NFON has already gained significant traction in the UK and we have ambitious growth plans. There is a huge market appetite for the streamlined delivery of Cloud services. Illume Research indicates that the Cloud telephony segment is increasing by 50% to 100% year on year, and currently 5% of the UK business telecoms market is Cloud-based. NFON is committed to own and grow this segment.

Feedback from resellers is that the key benefit of the NFON Cloud Telephone System is that it’s clearly differentiated from everything else that’s on the market, so they no longer have to compete with a similar product.

Resellers also have the added reassurance that they are selling a quality, tried-and-tested product. We are one of the biggest Cloud telephony providers in Europe, and we are proud of our German heritage, which is renowned for its quality engineering. The platform has been developed and is maintained in-house with precision and skill, by a team of skilled specialists, plus we have a BT IP Exchange in the UK, which means we can boast better call quality and a far higher level of technical support for partners and customers.

CBM: Despite the numerous suppliers of Cloud-based telephony in the UK the changeout from CPE based PBX has been very slow. Why do you think that has been the case and how could it be speeded up?

RH: In the past access to superfast broadband was a roadblock for all types of Cloud-based business services, not just telecoms. This issue has been rectified – nearly 90% of UK businesses can now access superfast 24Mbps broadband and BT Openreach is connecting an additional 60,000 homes and businesses each week.

Having this availability of underlying broadband infrastructure has been a huge catalyst for the global adoption of Cloud-based business services. In fact, according to MarketsandMarkets, the global Cloud computing market now has an estimated worth of more than $120 billion with a compound annual growth rate of 26.2% a year.

An additional factor that will speed up the adoption of Cloud telephony is the new integration with business applications. We are proud to be pioneering this at NFON as we can fully integrate with the likes of Skype for Business, as well as Microsoft Outlook and a host of CRM applications, with IM and presence functions.

Lastly, it’s important to consider how Cloud telephony supports the shift in working styles and practices, which is seeing many more employees work remotely. A recent survey from Vodafone outlined that three quarters of companies worldwide have introduced flexible working policies – Cloud telephony means that they can do this seamlessly and efficiently. CPE systems cannot adapt to this shift in working styles – in fact, the majority of CPE system providers have, or are in the process of, offering a Cloud service, which is a clear indication that the future of telephony is Cloud-based.

CBM: Do you think it is viable for Cloud based telephony suppliers to only offer telephony or should they provide a more complete range of Cloud-based services. For example UCaaS?

RH: Communications resellers should absolutely be providing a range of Cloud-based services, as part of a wider UCaaS product set. There are a host of advanced requirements around unified communications that can be enabled through Cloud telephony, such as FMC, IM, chat and video conferencing.

There is a window of opportunity for communications resellers to take a lead on this market inflection – but they need to act quickly, otherwise the traditional IT resellers will try and take a piece of the pie. Previously the entry barrier into voice was extremely high, as there was a high level of investment required – Cloud-based telephony just requires investment in personnel training.

CBM: What do you believe to be the top three challenges facing resellers of Cloud-based telephony?

RH: It’s much better for communications resellers to view Cloud telephony as an opportunity, rather than a threat, but in terms of fast-tracking customer adoption there are three main areas to focus on:
Understanding the network element: In order to fully execute a successful sales strategy communications resellers need to consider addressing the network knowledge gap. As the network is the primary delivery mechanism for Cloud telephony, having an understanding of how firewalls and data services work is paramount.

Understanding the IT layer: Given that Cloud telephony enables business app integration it’s important for resellers to be aware of the additional features and benefits, as this will expedite the sales process.

Embracing the shift to reoccurring revenue: Resellers need to embrace the move to a subscription based business model and align their business objectives around these reoccurring revenues. There are huge benefits in terms of building customer loyalty and enabling long-term predictable annuity revenues, but it does require a change in the sales process and potentially moving from one-time commission payments to ongoing remuneration for salespeople.