Peter Radizeski is Founder and President of RAD-INFO INC. He is an accomplished blogalyst, speaker, author and consultant. He has helped many service providers with sales training, marketing, channel development and business strategy. He is a trusted source of knowledge about the telecom sector. His honest and direct approach make him a refreshing speaker.

Look for his innovative ideas and analysis of current technology on his blogs.

Meet him at one of the many conferences he attends and speaks at.

Hire RAD-INFO today!

Why I Sound Annoyed

Many folks think I am a pessimist. Actually I am a realist. My annoyance is with the status quo. The industry is filled with providers that just follow the other guy. Likely due to there not being a leader coupled with no service provider has it all figured out.

In addition, not everyone is building a Business to Last. Some are building to sell; some are just coasting; a few are building for the future.

I think providers should fail more. I mean, try more stuff; see what sticks. The organizations just aren’t built for it. They talk about innovation, but really mean open API or a new feature.

Disruption is coming. At the network layer, revenue from MPLS and fat pipes will be cannibalized by broadband and SD-WAN boxes. Amazon is in the conferencing and cloud contact center space. Facebook has Workplace.

It is very likely another Slack comes along and displaces a bunch of service revenues soon.

While most providers plod along doing the same thing they were doing 5+ years ago.

CPaaS is likely to replace SIP Trunks, if it is done right and deployed smart.

Mobile UC is just one slick mobile app away taking market share. (It should have been Bria by Counterpath but it hasn’t yet.)

If you want some help re-thinking your business, call me. I promise I am not annoyed, so much as disappointed that this industry has so much promise and most ideas are M and A.

Jim Collins, who wrote Good to Great and Built to Last, presented at Ingram’s event in 2015. [The notes are on channele2e]

Do we have the right people on the bus and in the right seats?

Got Empirical Creativity?: Where should we place our really big bets? You don’t need to be the most innovative. Instead, innovate in a different way. It’s about the ability to scale innovations.

What’s your BHAG?

Culture beats Strategy.

What should be on your “stop doing” list?

I’m Going Direct

Some days this industry makes me shake my head. It seems no one thinks long term. It is why the current state of the telecom industry is one big huge cluster. No Long Term Thinking.

Over the years, I have watched most carrier channel programs play the accordion. By that I mean, they start stringent – we will accept only 10-12 masters. Then two years later, everyone is direct with that carrier. And one day, the carrier says, “Oh, time to go back to a dozen.”

The carriers do NOT understand the term PARTNER. If you have an agreement with master agencies, why would you steal their subs? Seriously? Why? How does it help anyone?

I sat right next to a Director for a data center company who told agents they could go direct with him. We were at a master agent show!

How do you do business with people who only value the current deal?

This is and always has been a relationship business.

People play musical chairs all the time. Eventually you will have to deal with someone that screwed you (or that you screwed) once again. Karma is a nasty ex-girlfriend!

It isn’t just the carriers or vendors either!

For the Agents, VARs, MSPs and other channel partners, I don’t understand how you skirt the master agency to go direct on bigger deals. For a couple of points? Really? That says something about your value system.

On bigger deals, you need the extra help that the master can provide. On bigger deals, you can negotiate a one-off percentage. On bigger deals, staying with the master makes you both stronger.

Everyone wants to be a master agent today – direct with the carrier. Everyone wants that extra point. It is so short sighted.

For years, we have heard speakers at shows talk about partners working together. That’s hard to do when one (or both) is short-sighted and/or greedy.

Truthfully, it is hard to work with someone who is short-sighted. You know that at some point they will push you aside – or throw you under the bus – or screw you on a deal.

Integrity is like a balloon. One prick and it is gone.

I have had a discussion like this with customers, peers and vendors: Every action, cheating at a charity golf tournament or being rude to wait staff or how you treat your wife, reflect on your values and who you are as a person. It’s one balloon; not a bunch of balloons. You can say you have character and integrity EXCEPT for that or that. Keep that in mind as you do business, because people WILL show you who they are.

Software is Eating Your Commission

It is the fourth quarter – time for the master agencies to hold their big shows. Microcorp, PlanetOne, and others have all held shows. The Agent Alliance held a learning summit in San Antonio. There has been one recurring theme. (Unfortunately, partners have been hearing this same tune for five long years.) The theme: you have to move up the stack and start selling conferencing, cloud, security and other manager services.

On the OSI Model, partners have sold Layer 2 and Layer 3 forever. They need to go up the stack towards Applications. Software is eating the world. Netscape co-founder Marc Andreessen said that in 2011! It has proven true. However, Nvidia CEO says that while software is eating the world, AI is going to eat software!

This means that a large part of the corporate wallet will be software based. Artificial Intelligence, Robotics, SaaS, PaaS, IaaS and IOT will lead to Analytics, Data Storage, Data Quality and Security. It all ties in.

As the pricing for both voice and data continue a decline, the commission compression makes partners scramble and panic. In that mode, there isn’t the ability to re-think, innovate, strategize in order to transition to the next phase. But partners need to schedule some time to do so. Now!

One scary statistic from ScanSource: “The president of the ScanSource’s Worldwide Communications and Services business has since learned that the transition from transaction-based hardware deals to recurring revenue is often a slow, complicated process for many solution providers.” Wait, there’s more:

“You have to find some expertise there. You have to make the investment,” Baker told CRN . “We’re finding out from Intelisys that it takes a good bit of time. You might break even in 18 months, but you’re probably not going to see a return on your investment for about three years. That took me aback, to be honest with you.”

I have often figured that it was a 12 month plan. Now there is data that it takes 3 years to ROI! That is disheartening.

One thing that most companies do wrong – carriers and partners – is think that the same thinking that got us to here will get us to there. It won’t. Some people will not make the journey with you. You need buy-in from your employees that they are ready and willing to take the journey with you. YOU have to be ready, willing and able to lead that transition.

Cloud is a mindset. It is a different way of doing business. It is a new way of selling. No more pushing product or taking replacement orders; it’s time to put on the grown-up pants and Consultative Sell.

You aren’t late to the party. Despite the drum beat of cloud we hear. And PR like this from master agency, PlanetOne, gaining 22 percent more business than it did in 2016 due to “More partners are taking the initiative to learn about selling cloud services.”

Most of the revenue in the channel is still network, pipe, broadband and voice. But the race is on.

“Telecom agent partners for years have focused on selling connectivity and voice solutions, but the partners that are coming up with new game plans are reaping the rewards, Ted Schuman, PlanetOne’s founder and CEO said.”

You don’t have to know it all. Lean on the vendors. Lean on your master agencies. But you do have to learn how to sell, well, how to ask the Discovery questions that are needed to begin having conversations that aren’t about the pipe or the phone.

Webinar this Friday on that btw!

It’s 4Q, put a day (or at least 4 hours) on your calendar to review your business, your numbers, your customers. Think about what you can add to your portfolio. Take you top clients to coffee, lunch, dinner or breakfast to find out what they are worried about, what technology they are pondering. That is the next step in the transition that you need to start doing now.

Every year in December (12/15/2017), I present a Goal Setting webinar. I am also available to help you put a plan in place or talk it through with you. Call the office today at 813-963-5884 or schedule an appointment to speak with me.

Go For the SPIFF!

While providers (especially public ones) look quarter to quarter, they expect agents to think and act long term. “Stop going with the lowest price or the highest Spiff!” Oh, okay. Since you want to tell me how to run my agent business (particularly when most have never been an agent or partner), then allow me tell you what we are thinking.

“How does a partner choose a vendor for a client?”

Spaceman Spiff (Calvin)

The jaded tend to presume the answer is the SPIFF. “Partners will choose the vendor that pays the most” is what the jaded say (maybe to deflect on why partners are ignoring their company. It is easier to blame it on partners selling on price or commission.) Partners will tell you that they choose the best fit for the customer.

In network services, there is not much difference in pipe or ping. The factors that may come in to play are which carrier has network in the area and how soon does the customer need it to turn up.

In unified communications (and cloud services), the compensation varies greatly, but the differences between providers are negligible. Providers will argue that point, but unless a customer is looking for something specific (like account codes or integration into a specific software) the providers of unified communications have about the same feature sets.

In addition, there isn’t much differentiation in service deployment. The providers are trying to save money; they have not invested in PMO (project management organization) or white glove deployment services.

This leaves the partner with deciding which provider to work with. The factors can include which channel manager is better; which provider has the least friction; and yes even which one pays better. There is another component though. Many partners want to develop a significant book of business with one provider in order to get better service or more attention. This model is help over from Microsoft and Cisco partners who would continue their business model in order to maintain a service and support level (and discount tier) with the vendor.

Another consideration is MDF. If the partner has taken marketing funds from a provider, the partner will want to push some orders to that vendor. A quid pro quo, if you will.

There are quite a few instances where a partner firm would sell a provider despite the compensation being lower. One instance may be that the vendor provides leads or has a co-sale program. If a partner gets leads from a vendor, there is a tacit obligation to sell that vendor’s services.

Another reason may be the Opportunity. The partner may think that one offering has a market advantage. The partner might actually like one product over another. There have been cases attributable to a partner choosing to sell a product line for the exclusivity (or at least that not many other firms would be selling it).

Vendors have said that selling based on compensation is wrong and at least short sided. It isn’t in the customers’ best interest. Well, partners have to eat. Compensation is the revenue. With most things being similar, why not sell the vendor who pays the most?

In many cases, the deciding factors are features and price. If those factors are similar, what are the criteria for choosing? Since no service provider is known for its stellar customer service or its remarkable deployment, doesn’t the choice land on the partner, who, in fact, has to bridge the gap on both deployment and customer service shortfalls of the provider?

Partners get a rap for selling on compensation. And that may cost them customers and referrals down the road if they choose poorly and solely based on revenue. Let’s reiterate that to the marketplace, the features, deployment, customer service and service quality are about the same. So what criterion should the partner choose?

One more point to make: as partners transition to a recurring revenue model, their business may still be running on a hardware sale model. In this case, they need the SPIFF money to cash flow the business until the recurring revenue hits a point to be sustaining – which may take a year or two!

To conclude, vendors that complain about this usually pay less and are not remarkable in service delivery. It is CX (customer experience), price, compensation or feature that go into the determination.

SIDE BAR TO THE CEO:

Note: most CEOs right now are focused on #4: feature, when that is only a component when it is exclusive AND the customer has to have it! CEO’s SHOULD be focused on CX! Instead of adding more services to the catalog, get better at delivering what you have.  Instead of focusing on #4 (and dismissing everything else I wrote, remember that customer retention starts with service delivery!)

I have written numerous times about the lack of branding, differentiation and marketing (good story-telling) in telecommunications. Marketing is Every Touch of the Customer. Marketing is CX.

To be Remarkable means that the customer thinks it should be talked about – Word of Mouth!

UC by the Quarterly Numbers with RC, 8×8

The press release for the quarterly financials must be written by a marketing hobbit to spin everything to sound like roses – as they approach a billion dollars. Why do they have to have 3 or 4 statements about revenue? Why not just one real number?

RingCentral’s total revenue grew 34% year-over-year to $129.8 million for the quarter. So just passed $500M in annual — which is a far cry from a billion!!

RingCentral Office ARR up 37% <- that’s the UCaaS MRR…

RC was recognized by Frost, Gartner and Aragon which gets their name out in a “trusted” report, so it is worth courting the analysts with dinners and trips to your HQ and shows.

RC is making a lot of noise about Connect, their API and integrations:

“Enhanced RingCentral ecosystem including new integrations with Google G Suite, Amazon Alexa, and Slack. RingCentral’s integration with Amazon Alexa-powered devices will enable users to interface with RingCentral through voice commands. RingCentral for Gmail is an add-on that intuitively surfaces key contextual RingCentral capabilities within Gmail. RingCentral for Slack brings meetings and calling capabilities into the Slack messaging platform. In addition, we announced new AI and chatbot enhancements for Glip to better automate processes and enable seamless workflows.”

That RC integrated with Slack and BSFT doesn’t makes me chuckle. For BSFT-Slack help, call Slingr or TenFold or Cloudpipes.

• Mid-market and enterprise is now a $155 million annualized business; Grew 80% year-over-year. [source]
• Sales from our channel partners was up more than 100% YoY.
• Channel partners contributed about 30% of our overall bookings

Meanwhile 8×8 had total revenue increase just 15% YoY to $72.5 million. Annual total revenue in the $292 million to $294 million range, representing an approximately 15% to 16% year-over-year increase.

Mid-Market/Enterprise Service Revenue Increases 28%, Grows to 58% of Total Service Revenue. All the UCaaS players are going up-market. Lots of reasons including more revenue faster, but these bigger deals have a lot less margin.

Named in Gartner 2017 Unified Communications as a Service (UCaaS) Magic Quadrant and a Challenger in the Gartner 2017 Contact Center as a Service (CCaaS) Magic Quadrant.

In other UCaaS news, magicjack (Broadsmart) is being bought by a financial firm. The same firm (B. Riley Financial) also bought United Online [NetZero and Juno].

FYI…
Broadsmart was acquired by MagicJack for $40M in 2015 and generated $13 million in revenues in 2015. Now, Broadsmart Global, Inc. contributed $2.7 million in revenues to magicjack in 1Q2017. That is just $10M!