BT ‘Communications Complete’ – A good move for BT and Cisco

BT has a strong presence in the SMB market and has just expanded its portfolio with a new unified communications UC service aimed at these customers.

Aphrodite Brinsmead, Analyst for Customer Interaction Technologies at Datamonitor says that BT hopes to utilise its ‘Communications Complete’ solution to build long-term partnerships.

“It is well positioned to target this market due to its large SMB customer base and strength as a telephony and broadband provider. UC vendors rely on each other’s complementary technologies to meet demand from users in providing a best of breed solution. BT has therefore chosen to work with Cisco and is using its UC500 platform for this new service. The UC500 system offers functionality for up to 50 users, so is an ideal platform for BT to use to target SMBs. BT is already a technology partner and reseller for Cisco and it is set to further leverage Cisco s strength in UC by this move.

The wisdom of this move is demonstrated by the fact that deployments are already in the pipeline less than a month after the solution was launched. BT appears to have a significant value-add here with its broadband and telephony background coupled with Cisco’s routing and networking capabilities. This is also a good move for Cisco in gaining traction in the SMB space. Cisco has already shown interest in this market by acquiring WebEx in 2007. WebEx offers a range of web conferencing products and on-demand services that are targeted specifically at SMBs and this acquisition enabled Cisco to open new opportunities in this market.

SMBs and unified communications

The UC market gained publicity last year particularly after the release of Microsoft’s Office Communications Server (OCS) in October 2007. The market is becoming more crowded and similar UC solutions are offered by a number of vendors. Avaya, Cisco, IBM, Microsoft and Nortel are vying for market share as the market grows and the technologies mature.

On first glance BT’s ‘Communications Complete’ solution seems to be yet another solution in an already overcrowded UC market. Most vendors have been targeting large enterprises where UC is more attractive to companies and more lucrative for vendors. Packaged UC solutions specifically for SMBs have only recently become available because the market is still relatively immature.

However the competition in this space is increasing: Nortel, Mitel and Siemens are all targeting the SMB market with new solutions. Nortel’s BCM50 platform, Siemens’s HiPath Open Office ME as well as Mitel’s newly acquired Inter-Tel 3000 are all a threat to BT’s proposition with Cisco.

BT is stronger than its competitors in the SMB market and already has a large installed base. Results from a recent Datamonitor survey show that BT is a leading provider for telephony and network services, 70% of the surveyed SMBs in the UK use BT as their telephony provider and 20% use BT for their network services. In addition BT has roughly 20% of the UK market share for broadband, according to Ovum research. BT will use its large installed base as a leverage point for selling this solution.

The Datamonitor SMB survey also shows that what is important to SMBs when selecting a vendor is customer service and an existing working relationship, which is clearly to BT’s benefit here. It has also promised to offer 24/7 help desk support and intends to address SMBs customer service needs.

Like the rest of the communications industry, BT is positioning itself as a services vendor. The success of this approach should be accelerated by the current credit crunch and economic slowdown. Businesses are more likely to reduce costs and shift spending from a CapEx to an OPEX model, choosing to run their software solutions as a managed service. SMBs are key contenders for such a solution because they generally have less IT resources available to implement and run new technology solutions.

BT has addressed SMBs’ concerns about the cost of using a managed service by offering a competitive pricing scheme. It is working with Cisco to offer a package with 0% interest financing for up to three years for ‘Communications Complete’. There is however, a financial risk for BT in using this approach as the return will not be immediate and SMBs may go out of business. Conditions have been specified in the pricing plan to minimize exposure in this regard.

In order for BT to capitalise on its investment in ‘Communications Complete’, it will need to provide a clear message to its target audience about UC and the simplicity of deploying this service. Its choice to partner with Cisco is wise although it could become an issue if SMBs take interest in choosing their back-end platform or want to upgrade to IP telephony at a later stage.

Although there is fierce competition, Datamonitor believes that BT will succeed with this solution because it has such a strong large SMB customer base. Its relationships with these customers mean it has a good understanding of its target audience’s needs. The financial deal BT is offering is also well thought out: it addresses both the current financial crisis as well as SMB s concerns over cost when using a managed service.