Khali Henderson Blog 

Hosted VoIP has the ability to polarize a discussion almost as quick as politics and religion. A recent discussion at Channel Partners Network, the LinkedIn group hosted by PHONE+ and the Channel Partners Conference & Expo, bears this out.

The genesis of the discussion was a blog posted at Internet Telephony about the VoIP Surge Theory, which basically asserts that the recession has speed up VoIP adoption. Coincidentally, I just finished reporting on a similar topic for PHONE+. My article, “Hosted VoIP Sales Up In a Down Economy,” cites statistics that indeed first quarter sales of hosted VoIP have gone up. And, anecdotally, hosted VoIP service providers told me that they were experiencing unprecedented growth, which they attributed directly to the economy.

The discussion at LinkedIn, however, quickly reverted to the hosted versus premises VoIP debate irrespective of the state of the economy.

The opponents cited the classic argument of lack of control. Specifically, they said that hosted VoIP does not allow for customization or changes on the customer’s timetable, which could limit productivity. Costwise, they argued that the breakeven point on hosted versus premises-based solutions is around year four.

As in my article, proponents of hosted VoIP cited the advantages of outsourcing – constant updates, included maintenance, built-in disaster recovery, pay-as-you-go pricing, no need for IT staff, etc. Transforming a business from centralized to virtual operationally for both hard cost savings and productivity gains was another argument in favor of hosted.

I will add that in recent interviews with PBX manufacturers, many have mentioned they are exploring their own hosted offers. Samsung BCS and Avaya are two. Additionally, NEC just announced this month a hosted collaboration offer.

These decisions – probably hard-fought internally – would not be coming without significant pressure to do so from the channel or user community. Or it may be that they just see the writing on the wall.

As Jeff Ponts, EVP and founder of DataTel Solutions, wrote in his comments on Channel Partners Network: “I believe when SaaS and cloud computing gets to critical mass and widely accepted at the midmarket and SMB levels, physical PBX vendors of any size will be in trouble, and the majority of voice will be hosted VoIP.”

There is a lot of muscle – Google and Microsoft to name a few – behind this move to a cloud-based model. Once there, as Jeff says, voice will be just one application in the cloud.

Many of my recent blogs have been talking about the changing role of the telecom agent – from order taker to trusted adviser. I’ve covered:

• the misperception of the agent model
• agents’ need for a new image
• what defines a solutions provider
• the changing role of the tech salesperson

All of these blogs have roots in the move to consultative selling approach. So, I was particularly intrigued by a recent blog by Geoffrey James at BNET that addresses what might be a significant hurdle to creative a consultative selling environment. That is, wait for it ... the efficacy of sales quotas.

Whoa! Isn’t the quota the cornerstone upon which every sales organization is built?

One could argue that and be on firm ground. But, James (quoting a sales trainer) writes: It’s only possible to sell consultatively if you focus on PROCESS rather than on GOALS.” James then questions whether that means sales quotas are anathema to the consultative selling approach and encourage a different behavior from sales reps than is desired.

I am not a salesperson, so I can’t speak with authority, but I find this idea of no sales quotas interesting since it eliminates the stick, but not the carrot. Here’s what I mean: The salesperson still has incentive to sell because he/she still gets paid, but there is no penalty against them for the longer sales cycle consultative selling presumably requires.

Imagining this in a consumer setting, it’s easy for me to see the difference. If I’m shopping at an electronics store where the salespeople are commissioned and goaled, I am attacked immediately and “talked into” buying the 52-inch HDTV for my cozy bedroom. If I go to a store where the salespeople are salaried, I am lucky to find them in their department, let alone able to help me find the Blu-ray player with best OTT content subscriptions. (OTT? Say what?) Somewhere in between would be nice.

It seems to me the carrot works pretty well, but is it enough to make the numbers? Might it eventually be enough as a “culture” of consultative selling emerges where the norm becomes larger initial orders and more follow-on sales? Is it even logical to assume these compensating outcomes will occur as a result of moving to a consultative sales approach? Is it logical to assume that consultative selling cannot coexist with quotas in the first place?

I know a few agents who would probably argue this point with their carriers over high commit levels. I knew one agent who was an “elephant hunter” and basically met his dollar quota for the year with one sale, but was missing his quota since he is required to sell a certain amount every month no matter what. Granted, that’s not every agent’s situation, but it’s a graphic illustration of how quotas can go wrong. And BTW, that carrier is losing agents and agent customers right and left. On the other end of the spectrum, I know a master agency that will let agents sell as little or as much as they want – it’s revenue it wouldn’t have otherwise – and the company is growing even during this downturn.

I don’t want to confuse the issue too much, since there are many ways quota systems can be set up. However, as it concerns moving to a consultative sales model, how have quotas helped or hampered your company?

Comment below or take the PHONE+ POLL: Are Sales Quotas Counter to Consultative Sales?

Another agent equity program debuted last week. That got me thinking about whether or not agents are interested in equity plays. The hullabaloo over equity in the late ‘90s really fizzled out. That’s no surprise since the Telecom Bust soon followed, leaving CLECs’ and resellers’ hopes of being bought for ridiculous multiples dashed. Agents’ hopes of cashing in went right along with them.

Indeed, few programs seemed to payoff:

• In summer 2001, Lightyear paid an equity disbursement excess of $6 million to each of its "founding agents" after a merger with VarTec Telecom Inc.
• In spring 2003, switchless reseller Telcorp Ltd. issued agent equity payments after its acquisition by NUI Telecom. Payouts ranged from $25,000 to $700,000, or 12.5 percent to 65 percent of an agents contribution to the company's revenue.
• More recently, the acquisition of Mpower Communications Corp. by TelePacific Communications in summer 2006 triggered more than $500,000 in payouts to Mpower agents.
• I’m told PAETEC also paid out a limited number of warrants issued to agents when it went public through its merger with US LEC in March 2007.

I might be missing some others – feel free to set me straight. But you can see how this list underwhelms and leaves some agents wondering: Where’s the big payday?

In a last week’s PHONE+ poll, agents revealed their skepticism about agent equity plans:

More than half (52 percent) said they don’t make sense. Critics overwhelmingly said equity plans are merely recruiting tactics by companies that rarely, if ever, sell. Other reasons they dissed them were that equity percentages are too low for an agent to get a significant payout and the thresholds for vesting require agents to risk too much revenue with one company.

That said, nearly as many voters (48 percent) think equity plans are just fine, thank you very much. Fans said equity is the only chance for agents to get a big pay and to “own” the customer. A few were less idealistic, saying you might as well sell for a company that’s willing to give you something if it does sell.

What do you think? The poll remains open through Monday, June 22. Vote today! Or click on the comment link below.

I can’t take credit for this idea: the death of a the salesman. It’s not playwright Arthur Miller’s either, but tech blogger Michael Vizard’s. In his May 21 Channel Insider blog, Michael suggests that the “type A” tech salesperson risks becoming the modern equivalent of a traveling salesman.

He writes that in this economy, “Instead of relying on high-priced salespeople with expensive tastes to sell products, many solution providers are relying more on low-key field sales engineers that are more effective at building relationships with customers over the long term." He concedes the Type As will be needed for new account sales, but these will be a specialized minority of the sales force.

I was intrigued by this hypothesis about the future sales model and circulated it at Channel Partners Network, the PHONE+ LinkedIn community.

One CPN member said: “Although IT technical engineers can and do create great relationships with customers, and become their trusted advisors, few have the necessary skills to open doors. Without the ability to open new doors, a company dies.”

Another said in addition to opening doors, traditional salespeople are trained to transform customer pain into opportunity, which could be overlooked by a specialized technical person focused on implementing specific solutions.

It’s possible these voices are the Type As arguing for their own existence, but are they right? Or is Michael’s premise that salespeople are being displaced – painful as it may be to salespeople – the reality?

Plus, I have to wonder if the answer varies by technology. So, in the more hands-off world of carrier services, is the salesperson’s role on more solid ground than it is in the premises-based IT environment? I would argue yes, BUT ... the more tech savvy the account executive can be, the better they will be able to fulfill a consultative function for the customer.

If this is true, then would it not stand to reason that a similar approach would emerge in IT as it moves to the utility-based model like managed services and cloud computing?

I disagree with Michael’s argument that the salesperson is a dying breed given that there are ample and evolving reasons to the contrary, as noted. However, his blog does shed a harsh light on the shifting and emerging roles within the tech sales force. A layered and complementary approach combining various skill sets is increasingly required to win, maintain and grow technology accounts.

In response to my earlier blog about agents as “paper pushers,” XO’s Tom Gorey offered an insightful (I think) comment about the difference between bundles and solutions. He wrote: "Many in the telecom community consider something to be a ‘solution’ when more than one telecommunications service is provided. I would call that a ‘bundle.’”  In contrast, he described a solution as including “extensive professional services” or integration work.

I like Tom’s idea because it so neatly distinguishes between tiers of offerings and, more specifically, skill sets of indirect sales partners, which was the subject of my blog.

But, I fear, that terminology will not satisfy everyone. Here’s why:

• Isn’t a “solution” merely the act or process of solving a problem or even the answer to a problem itself? That’s what the dictionary says.

• Isn’t evaluating a customer’s situation and recommending an appropriate product or service widely referred to as “solution selling?” That’s what the sales gurus say.

• Isn’t “bundling” services to meet a customer’s need providing a “solution?” That’s what logic says.

But, I fear, that equation will not satisfy everyone, logical as it is. There seems to be a continuum of functions that a “solutions provider” could take on. I would suggest they range from business-oriented on one end to technology-oriented on the other. So, for purposes of illustration, imagine a continuous line with possible tasks listed on it. Evaluating a customer’s telecom spend would be on the left (at the business end) and integrating a customer’s IP PBX and CRM system would be on the right (at the techy end).

It’s fair to say that most agents’ capabilities would fall more toward the left of center – in the business end. And, the VARs' and systems integrators' capabilities might fall more toward the right or techy end.

Which is more valuable? Whatever you offer, of course! 

Seriously, I suspect it comes down to what the customer needs, but I’d be interested to hear what you think -- as sales partners or vendors/carriers alike.

My son Arien just came home from his first year at U of A this week. I am happy to have him home.

It was in interesting year in that the difference between my generation and his was highlighted -- in particular their communications mode of choice. Anytime there was a concern or question, we (my husband and I) would ask, “Did you talk to your professor?” He would always say, “I e-mailed him/her.”

When we suggested a phone call or visit, it was met with obvious discomfort or the excuse: “I have a class during his/her office hours.” OK, how about scheduling an appointment. “I e-mailed him/her to schedule an appointment.”

We suggested that some of the professors might be from a different era (e.g., old, like us) and might prefer a less technical interaction. Our son was unmoved by this argument.

Apparently my son is not the only one. I recently read a May 7 article in the Seattle Times quoting a professor at the University of Washington, who said his office phone rings “once every two weeks.”

So, naturally, the university took his phone away! Literally, just took the phone off his desk. And, not only his, but all the professors’ phones. The outgoing message on the disconnected lines directs the caller to, you guessed it: e-mail the professor.

Eliminating the desktop phones was part of a cost-cutting measure, which I should appreciate considering that it might lessen tuition hikes. However, I find it somewhat sad. The desk phone, it seems, is a dying breed.

You may be thinking: “Of course, you saw this coming. You cover telecom, for goodness sake.”

I suppose I did, but the harsh reality of the phones being ripped from our hands unceremoniously troubles me. I always pictured it as a gradual weaning from the desk phone to the mobile phone. Of course, that wasn’t going to happen until FMC was perfected, enabling in-building/campus calls to be on no-cost Wi-Fi and remote calls to be on the cell network. Running parallel systems it seems is cheaper than going cold turkey, it seems.

The residential market, as far as I can tell, has been years ahead of businesses on this front, converting to wireless-only in droves. But they had a great incentive – each family member usually didn’t have their own personal landline phone number. With mobile, they do. It makes more sense for each family member to have his own number.

But in the office, we already have that phone ownership thing going. Our own phone, our own voice mail, etc. There’s no need to give that up – unless you are trying to maintain two. Two phones, two voice mail boxes. That’s a pain ... for the user. For the business, it’s cheaper, so that’s what we’ve been doing – two-timing the phones. Thankfully, that seems to be coming to an end. Soon we’ll all be one-device, men and women.

For the dealers out there, this is bittersweet. They may see more customers forgoing the traditional phone system setup, making orders and revenues decline. At the same time, more customers will be interested in upgrading to FMC solutions. Some of these work with existing smartphones, so the revenue opportunity might not be as great as one device per person. But the applications upsell and the help desk options should be significant revenue generators, and let’s not forget the mobile device management. Corporate-liable phone plans will be the de facto standard and companies will want to make sure that those phones are procured, inventoried, secured and disconnected efficiently.

Meanwhile the displaced desksets will wind up in the secondary markets, or worse, the landfill, where old technologies go to die.

In my last blog, I suggested that the agent community might be in the need of a PR makeover since they seem to have a bad rep or at least a very outdated image in the larger telecom/datacom marketplace and the channel. It might be a bad rap, but its looking like the agent image could use a spit shine and polish.

I think there are two separate issues here. One is definitional. The other is practical.

An agent, by definition, is an establishment doing business representing another. In most cases an agent represents a provider of goods/services, suggests appropriate goods/services and takes the order for goods/services. The provider then delivers the purchased goods/services.

The agent provides value by helping the provider to reach a wider audience of potential customers. And, the agent provides a local touch point for the buyer. It also may provide that touch point for multiple competitive providers, thus making the buying processes easier. Furthermore, the agent provides a thorough understanding of the goods/services such that he can suggest goods/services to match their needs.

In the telecom industry, this basic definition applies and should not be discounted or denigrated in any way.

Practically speaking, however (and this goes to the second point), it doesn’t describe every company that calls itself a telecom agent. The model has evolved beyond this definition to include more technological and solutions expertise.

You can argue – as some of the respondents to my blog did – that in fact, agents have not evolved and that more technologically savvy VARs and interconnects necessarily have filled their shoes. I suppose there is a percentage of the agent population that have their roots in an IT/hardware world, but I also think that there are plenty of agents from the carrier world that have had to acquire expertise (through training or hiring) in order to deliver the solutions required by today’s telecom/datacom users.

So does that mean agents need a new name? If we take cues from other segments of the channel, the answer might be yes. I am not from the IT world, but I suspect the “value-added” in VAR came as a result of some resellers who provided a solution (with software or integration, etc.) and wanted to distinguish themselves from the resellers who merely sold vendor gear at a markup. Many companies in the IT industry have taken to calling themselves IT solutions providers. That term gets them even further away from the commodity reseller label, IMO.

In the carrier world, the prevailing terminology for agent seems to be “business partner.” I am not sure that’s any more descriptive than agent as far as the consumer is concerned. It doesn’t do anything to shed light on the value or functions performed by the agent.

While it would be helpful if there were industry agreement on the accepted “label,” I think it’s much more important that there be a larger effort to help end users to understand the value of a channel partner – by any name.

PHONE+ asked the question in a recent poll: Does the Agent Community Need a PR Makeover?. Seventy percent of voters (as of May 10) said yes.

Of those, most said agents need a “seal of approval” or certification program. That usually is the province of an association. With the newly minted TCA, perhaps there will be something of the sort forthcoming, but it won’t be very soon.

Among the makeover supporters in our poll, a good portion backed the more immediately doable plan: vendors educating end users on the value of the channel.

This was an idea that I heard from Motorola’s new channel chief Janet Schijns. A consultant in her previous life, Schijns tends to be an out-of-the-box thinker. She said in a recent interview, “I think while many vendors have said, 'We sell through the channel,' there’s always room to show how channel partners for firms like Motorola are an extension of our solutions to the customers and make sure the end-user audience understands the value the channel brings to their businesses.”

She literally hopes to launch a PR/ad campaign around why people should buy from the channel. A similar effort by carriers might help the telecom agent community tremendously. I can see some of the carriers that use the channel exclusively embracing this idea, but I don’t hold out much hope for the onboarding of the big brands – mostly because they don’t seem to appreciate the value of the channel themselves. So, agents, maybe the PR campaign needs to start with the carriers first.