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Daddis George Daddis George Presentation Transcript

  • A Winning VoIP Solution For SMB
    • The SMB Market
    • SMB Purchasing Patterns
    • The VoIP Opportunity
    • A Winning SMB VoIP Offering
  • Overview
    • VoIP & SMB: An opportunity to advance !
      • Magnified market presence
      • Increased customer responsiveness
      • “ Location Transparency”
      • Potential monthly savings on telecom
    • VoIP & the VAR: Growth opportunity!
      • Develop recurring revenue stream
      • Become vital to your customer’s operation
      • Differentiate your business
    • The Opportunity:
      • Provide a Total Solution
      • Bundled IT/Voice Service & Maintenance
  • ABOUT THE SMB MARKET
  • SMB Market Potential Source: US Census NAICS Data SMBs There are ~4.5M SMB with 2 to 100 employees* SMBs make up 97.6% of the business population! (but only 20% of the employee base!) * After eliminating 0 and 1 employee businesses
  • SMB – Local & LD Expense % of Total Telecom Expenditure 68.9% 74.0% 65.2% 62.5% 65.4% 74.7% 42.0% 54.7% 38.3% 37.7% 62.0% 58.6% 56.3% 67.0% 46.4% --- --- --- --- --- --- 57.9% # of SMB's (5-99 EE's) Market Value $ 153,781 $2,294,258,739 172,478 $1,204,213,800 84,005 $486,560,320 155,242 $842,181,640 115,262 $578,278,675 290,277 $1,100,625,884 60,456 $213,433,862 31,299 $102,820,971 201,388 $632,390,542 51,038 $158,258,630 208,596 $618,378,670 234,560 $661,374,758 455,446 $1,178,931,080 284,813 $726,444,038 3,250 $3,558,750 34,485 --- 22,336 --- 6,789 --- 5,275 --- 5,096 --- 1,402 --- 2,577,274 $10,801,710,360 KEY Market Segments
  • Target SMB Market
    • Define 3 Market Segments within 2-100 Employees:
      • “ Basic Communicators” 33% of SMB
        • Minimal and simplistic data & voice communication requirements
        • Drycleaners, gas stations, independent small retail, 0 & 1 employee businesses…
      • “ Power Communicators ” ~5% of SMB
        • Advanced data & voice requirements – high volume, fully converged, complex traffic patterns, highly reliable
        • Call centers, some financial services, some medical
      • “ Professional Communicators” 62% of SMB
        • Communications in voice & data are integrated and essential to business operation
        • Business-to-Business Services, Retail, Manufacturing, Local/Municipal Government, Health Care
  • SMB Market Segmentation
    • Approximately 2.7M “Professional Communicator” SMBs
      • 16% - 20% turn-over or 700K systems sold annually in this segment
    • VoIP Penetration: Estimates vary widely but opportunity is large!
      • Only 15% of all prof small businesses use VoIP services in any fashion within the entire SMB market
      • Only 6% of all new telephone systems sold today to SMB are pure VoIP Solutions
    • Cost burden of telecommunications services
    • is high to SMB :
      • 0 to 4 employees/firm - $82.81/emp/mo
      • 5 to 9 employees/firm - $50.18/emp/mo
      • 10 to 499 employees/firm - $20.99/emp/mo
    Source: - "The State Of SMB Network And Telecom Adoption: Business Technographics North America“ – June 2006 - 2005 Telecom Report: Hot Issues Facing the Industry – Harris Interactive VoIP Study – October 2005 - A Survey of Small Businesses Telecommunications Use & Spending – TeleNomic Research – March 2004
  • SMB VoIP Concerns
    • Perceptions of Drawbacks from traditional service
      • 911 Calling (32% selected it as a huge drawback)
      • Network Reliability (23%)
      • Voice Quality (23%)
      • Hassle factor of switching (14%)
    • Don’t see the advantages
      • Only 19% see Ease of Use as an advantage of VoIP
      • Quality of the Voice Connections (18%)
    • High Price!!
    Sources: 2005 Telecom Report: Hot Issues Facing the Industry – Harris Interactive VoIP Study – October 2005 2007 Frost & Sullivan “North American Enterprise Telephony Sys”
  • SMB & VoIP Adoption
    • In 2005, SMBs spent roughly $2.1 billion on telephone service, according to a Wall Street Journal Report
    • Familiarity with VoIP
      • On average 50% of businesses (all sizes) are “somewhat familiar with VoIP”
      • 26% are “very or extremely familiar”
      • 24% are “not very familiar or not at all familiar” with VoIP
    • High Satisfaction with VoIP
      • A Savatar survey reports 69% of SMBs with VoIP would “highly recommend” VoIP, while 22% would just “recommend” it
    • SMB IT spending is growing faster than enterprise spending
      • 48% of total US IT is for SMB ($320 billion) – Forrester
    • In the “Technology Adoption Curve”, SMB is ready to enter mainstream adoption!
    Sources: - 2005 Telecom Report: Hot Issues Facing the Industry – Harris Interactive VoIP Study – October 2005 - SMB VoIP Research Study – Savatar – September 2006 - 2007 Forrester Research
  • SMB BUYING TRENDS AND MOTIVATIONS
  • SMB Purchasing Triggers
    • What motivates an SMB to invest in a new telecommunications system?
      • The “Impending Event”
        • Business Establishment
        • Business Expansion
        • Business Move
      • Technology Obsolescence
        • It broke!
        • It costs to much to grow to the next step
      • Reduction of Monthly Recurring Costs (MRC)
        • > 25% seems to be the trigger!
      • Solving a key business application
        • Remote users, Improved Customer Response (Follow-me, Notification/Escalation…), data/voice integration etc.
  • SMB Selection Criteria
    • SMBs selection solutions based on:
      • Risk
        • “ Threshold Criteria”
        • Is the solution reliable? Will it consume large amounts of resources/time to maintain? Will deployment not disrupt my business?
      • Feature Set
        • “ Threshold Criteria”
        • Does the solution support my daily business operation (legacy features)?
        • Will the solution improve my ability to work with customers & employees (advanced features)?
      • Cost
        • “ Comparative Criteria”
        • Initial investment, TCO, MRC
        • Impact on cash flow
    • SMBs look for a complete solution that is supported !
      • One-stop shop – a single contact to manage the infrastructure – LAN, Network Appliances, Telephone, WAN voice & data
      • SMBs require a strong relationship with a trusted local resource!
  • SMB Purchasing Concerns
    • Risk: Reliability, Quality of Service, Resource commitment
    • Lack of knowledge of what VoIP solution is best for them
      • 70% of the SMBs which haven’t yet migrated to VoIP have almost no idea which service to use
      • Overall complexity of VoIP systems
    • Security Issues
    • Customer Service / On-site Repair
      • Due to lack of IT resources
      • Is there a dedicated responsive support resource?
    • Conclusion: A strong need & opportunity for the local reseller!
      • Equipment Sales & Ongoing Maintenance of the LAN/WAN environment
    Source: SMB VoIP Research Study – Savatar – September 2006
  • SMBs Differ from Big Enterprise
    • SMBs are more sensitive to cost, especially installation costs
    • Risk and redundancy requirements are different
      • Reliability of TDM Key-systems
      • Don’t expect to pay premium
    • Usually lack IT knowledge and/or resources
    • They typically have shorter sell cycles (1 week to 6 months) than their enterprise counterparts
    • SMBs telephone system feature sets are different!
      • One-touch access / Key system features
      • “ Technologically Conservative”
      • True “value-add” improvements integrate existing technologies:
        • PC/ MS Office & Outlook, Cell Phone, Telephone System
  • Common Pitfalls in Addressing SMBs
    • Price points out of line with SMB expectations
      • Installed VoIP costs range from $600 - $1,500 / employee
      • Out of line with today’s TDM $300 - $500 / employee
    • Inappropriate feature set
      • Most VoIP IP-PBXs provide only PBX behavior with their VoIP feature set
      • Legacy key-system behavior is dropped!
    • Requirement to move abruptly to VoIP service – poor transition plan!
      • Requires change in carrier/service & LNP hassles
      • Expensive or impossible to mix TDM & VoIP services
    • A “High Technology” message to a conservative market
      • Buzzwords
      • Technology integration & features well beyond current state
    • These issues keep most VoIP SMB solutions in the “early adopter” market segment
  • OPPORTUNITIES IN VOIP FOR THE SMB MARKET
  • Opportunity for The Reseller
    • A source of new sales opportunities
      • VoIP provides a strong incentive to turn-over an installed base of aging key systems
      • VoIP MRC savings, flexibility, and features drive adoption
    • A differentiated offering in competitive bids
      • Most SMB proposals are TDM Key systems today!
      • VoIP strongly advantaged in application-based sales over TDM
    • VoIP can expand your business into new areas
      • Telecom VARs grow into networking/data domains
      • Networking VARs grow into voice domains
    • An opportunity for more profitable installs and ongoing service revenue
      • Growth of complexity in the SMB LAN is outpacing the ability of the SMB to manage it
  • Opportunity for the SMB
    • Core Value Proposition:
    • A managed VoIP offering will provide…
    • * the key system features they use today
    • * the best of SMB VoIP features
    • * slow/risk-free transition to VoIP w/ PSTN backup
    • * a worry-free support package
    • * opportunity to use VoIP trunks to reduce cost
    • … all without paying a premium relative to TDM Key Systems
  • Opportunity for the SMB
    • Key VoIP Features and Benefits:
      • Monthly telecom & data service cost reduction
      • Multi-site integration
      • Location Transparency ( Remote Users / “Road Warrior” )
      • Presence Management / Advanced call routing
      • Advanced messaging / notification
      • Cell Phone Integration
      • Computer Integration
    • Summary: Beyond VoIP cost savings, VoIP truly has an opportunity to improve an SMB’s operation!
      • “ Application Sale” vs. “Price War”
  • Example: Multi-site/Remote User
  • Example: Call Routing/Notification
    • A SMB supplies “kitchen equipment” to local restaurants and provides an SLA-based contract for their maintenance
    • Business problems:
      • How to quickly move customer calls to technicians deployed in “the field”
      • How to escalate problems seamlessly if primary technicians are unavailable
      • How to document response time for SLA
    • VoIP Solution:
      • VoIP Features: Cell phone integration, Call routing, Presence Management, Call Detail Reporting, and Advanced Messaging / Notification
      • Calls routed seamlessly to technicians with “available” status at their cell & office phones. If no answer, re-routed automatically to “secondary responders”. Off-hours svc requests go to voicemail which notifies via pager/email/SMS-Text the first and second level responders. Call reporting documents response times.
    • Provide SMBs with a multi-year agreement to:
      • Maintain the business LAN & WAN network environments
      • Extended equipment warranties
      • Data and equipment backup
      • Administration and MAC support
    • Bundle with network services & equipment lease
    • Simplify SMB IT infrastructure management
      • Single point of contact for telephony & networking
    • Lower overall cost to the SMB
      • Bundled voice/data services, single vendor, VoIP savings…
    Example: Managed Services
  • Growing a Reseller into an MSP:
    • A managed service provider (MSP) is a company that manages IT services (LAN/WAN/voice/data) for other companies remote and/or onsite.
      • VoIP Technology provides new features & benefits to drive upgrades within the SMB Market
      • The rapid growth of remote technology allows for MSPs to control network operations completely off-site.
      • The Managed Service model provides a total, single source solution lowering risk & providing security and simplicity to SMBs
    Source: Wikipedia Managed Services
  • The Major Elements
    • The Reseller
      • Data & Telecomm Savvy
      • Sales & Service Oriented
    • IP-PBX/Key System & NW Server
      • $400 - $600 / seat installed
      • Key system + VoIP functionality
      • VoIP / Network Server “Appliance”
      • PSTN & VoIP WAN interfaces
    • Managed Service Offering
      • The Total Solution
  • To offer a true managed services product, a reseller should:
    • Offer network and voice hardware (VoIP)
      • Allows you to offer full service to client/customer
      • One point of contact
    • Support remote monitoring & diagnostic capabilities
      • Delay/Network latency & jitter
      • Mean Opinion Score (MOS)
      • Bandwidth usage / Packet loss
      • Security
    • Establish agent relationships with:
        • Phone/Network hardware vendor
        • ITSP
        • Regional ILEC/CLEC
        • Leasing Agency
    • Build 24/7 Customer/Technical Support
    The Major Elements
  • The SMB Customer Offering
    • A Complete Data & Voice Package
      • Service delivered via T1 & backing POTs
        • ISP / data bandwidth
        • VoIP & backing TDM trunks
        • Direct Inward Dialing, Redundancy, LNP…
      • Complete Allworx System & Telephones
        • Industry best SMB feature set & price point!
        • 5 Year Extended Warranty
      • Managed Network Services
        • 24x7x365 voice trunk SLA with monitoring & utilization reporting
        • Allworx remote configuration management (MACs) & monitoring
        • Data backup
        • Disaster recovery: Immediate off-site system backup
        • LAN event monitoring & troubleshooting
      • Complete Installation & Training Package
        • Network assessment
        • Service provider coordination
        • End user training, etc
  • Example VoIP Solution
    • The Fastest Growing SMB VoIP Solution!
      • $400 - $600 / seat installed
      • Complete TDM PBX/Key-system feature set + Best of SMB VoIP
      • PSTN & VoIP Trunk support for easy transition to VoIP
  • A Real World Example
    • “ Acme Services”: 55 emp. New England Business
    • 3 Sites + remote small offices/users
    • Customer Priorities:
      • Key-system features
      • Integrated, free calling between sites
      • Highly reliable: backup, redundant service, simplified
      • Advanced communication features:
        • Conference Bridge, Call Queuing, Integrated Voice/Email, virtual employees, cell phone integration, call follow-me/notification, multiple AA…
      • Unified incoming call mgt across sites
      • MRC Reduction
    • Single point IT resource
  • Initial Needs Analysis
    • Analysis of “Acme’s” current monthly telecom expense showed opportunity for dramatic reduction
      • Inefficient use of POTs trunks
      • Expensive calling between sites
      • Separate data trunk and expense
      • Data via DSL with reliability & bandwidth issues
    • Current feature set poor with minimal integration
      • Simple key systems at each site
      • Sites not integrated
      • Inability to route phone calls
      • Inability to support remote users
      • Inflexible configuration/environment
  • Acme’s Current Cost Structure Current Scenario Monthly Yearly 3 Years Data - DSL for Business Class (4 DSL Lines) $400 $4,800 $14,400 Local & Long Distance Charges with usage (16 CO Lines) $1,500 $18,000 $54,000 Service Contract: Data   $100 $1,200 $3,600 Service Contract: Telephony   $100 $1,200 $3,600 TOTAL $2,100 $25,200 $75,600
  • Acme’s Proposal
    • Customers signs a 3 year service contract with reseller for $1,410/month
    • Lease payment on equipment:
      • $475/mo
      • 5 yr lease, 7.5% annual rate with 20% residual value
    • Customer Receives:
      • Flat Rate fee for voice and data network services
      • Reduction of $690 per month in telecom expense
      • New VoIP phone system and all the key features
      • Higher speed access to Internet (Move from DSL to T1)
      • Significantly improved reliability & redundancy
      • Single point of contact for all IT administration
      • Very flexible, reliable and customer/employee friendly communications
  • Acme’s Proposed Cost Structure Managed Services Scenario Monthly Yearly 3 Years Monthly Managed Services Fee       Telephony & Data Services Flat Rate Fee $1,110 $13,320 $39,960 Includes:       1. ITSP Services / 12 SIP trunks / Flat rate LD + 55 DID numbers ($25-$30mo each)     2. 2xHigh speed Internet Access (up to T1 @ $350/mo each) + DSL ($60/mo)       3. CO Lines - basic coverage for fall over ($50/mo w/o usage)               Service Agreement - Data & Voice $300 $3,600 $10,800         TOTAL $1,410 $16,920 $50,760 Savings - % 33% 33% 33% Savings - $'s $690 $8,280 $24,840         One Time Charges:     1st Year 3 VoIP Ready New Phone Systems (e.g. Allworx)     $5,400 55 12-button PBX/Key VoIP Phones     $12,595 Software/Hardware Options     $3,000 Other Hardware & Installation and Set-up     $6,230 Total One Time Charge for Equipment     $27,225
  • Conclusion
    • Managed VoIP Solutions can benefit all businesses
      • Savings, Streamlined Communications, Location Transparency…
    • However, SMBs have unique needs and limited resources compared to big business
    • The Keys to the SMB- VoIP Market are:
      • Understand the SMB business process
      • Create a tailored application solution fitting the SMB
      • Solve the whole problem: Equipment, Network, Maintenance
      • Utilize VoIP for its advanced features & lower costs