Business Value, Not 'Cool,' Will Sell IP Telephony Apps

Carl Weinschenk

Carl Weinschenk spoke with Terry White, vice president and senior program manager for Info-Tech, which is part of Telecom Intelligence Group.


Weinschenk: What did your recent study find?
White: We're looking at IP telephony systems that phone companies use. [These derive from] PBXes for enterprise or key systems for small businesses, both of which have transformed to the IP version. In the case of the SMB market, these are businesses with up to 500 employees, all primarily U.S.-focused, though we had some analysis outside the U.S. that had similar results. The headline is that over the next five years for the SMB market, revenue will grow 47 percent per year. If you look at revenue growth for the underlying systems on which they run, that growth has been leveling off at 16 percent per year. Companies have been migrating from traditional phone systems to IP telephony for at least five years now. So the huge growth in that area has already occurred. If I look back for five years, growth on the systems side is 80 percent per year. We're sort of past the peak growth period. We are just entering the peak growth period for the applications.


Weinschenk: What kind of applications are fueling the growth?
White: The term that is sort of becoming the broad term for these applications is unified communications. It covers several areas of applications. Four we highlight are messaging, a category we refer to as collaboration, personal productivity and mobility. I think the real critical question here is why business would invest in these applications. The key is if the vendors can show how their customers can derive business value from those applications. It's not simply enough to say, "Wouldn't it be great when you're getting ready to contact an associate to look at your PC and determine if they are available and, if so, what's the best way to reach them: phone, IM or e-mail? Or if I'm on the road, can I reach them through cell phones?" That's nice, but what does it do for my business?

The question is which employees could use those capabilities to change the way we do business. Let's take salespeople, for example. Can I increase the productivity of sales - which means higher revenue. It also means potentially higher customer satisfaction. When a customer calls, can I use those applications to more quickly find a person who could answer the question in one call instead of saying, "Let me have someone call you back." These are all ways of changing and improving the way you do business, improving the customer experience. That's where the applications are going to be sold.


Weinschenk: Do the SMBs see the actual value, or is looking at the underlying value an exercise mostly done by enterprises?
White: We're going to be publishing the equivalent report in the over 500-employee market in November. I think the key difference is the channels that serve the vendors and therefore deliver this business value message. I think the larger channels are further along the learning curve on how to sell business value than the smaller sales channels that might be selling to SMBs. The research we've done shows if you look from an overall average standpoint, it's up in the 60 percent range in both cases. You really have a strong belief that applications really can deliver business value. So the perception is there in both the SMB and enterprise.

The question is on acting on that perception, knowing where to go and how to do it, what business processes are and how to "get me there." Some of the larger enterprises in certain industries sort of have that vision, but a lot don't. Certainly SMBs are looking for vendors that can help show them the applications and how to use them to drive business value. They clearly believe that it can be done but they need help to know specifically what the apps are and where it will work in their industry.

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