Channels in a Cloud Comm World.

In the business communications market, there’s not a provider that doesn’t give consideration to leveraging ‘the channel’ as a way to scale. With this in mind, as well as a Buzz post from industry friend Peter Radizeski suggesting the Hosted PBX community pay closer attention to the growth of Hosted IVR companies, I recently posted these thoughts to Voyces….

…Hosted IVR, in its original incarnation, is not really new. Companies have been at it for years, providing applications from the cloud way before we called it that. These were more typically focused on larger call centers (inbound call triage or very large outbound applications), so Peter’s reference was more likely to the newer crop of hosted voice application providers.

This next generation, by contrast, has significantly simplified what it takes to develop rich business applications that combine voice calls, DTMF, speech rec along with some form of web-based database at the back-end. The result has been more widespread adoption by smaller companies and a much broadened set of vertical use cases. Companies in this space include the likes of Ifbyphone, CallFire, Voxeo, Twilio and others.

Peter’s Hosted PBX/Hosted IVR tie-up got me thinking. In terms of go-to-market, these two communities have much in common including that so far, only a select number of them have selected or succeeded with a classic resale model. For the most part, many leading providers of these solutions generate their revenues through direct sales forces. This is the case for various reasons:

• Until recently (at least in Small Business segments), selling the Hosted PBX or IVR applications was exclusively a ‘push’ proposition. Indirect channels are typically more effective for scale once a market transitions to ‘pull’ status;
• Selling cloud-based communications services is still considered complex, versus the age-old sales process built around their prem-based brethren. The more complex the sale, the closer to home operators want their sales people;
• In the both cases, many customers can actually be converted using a combination of web and telephone sales – eliminating the value of classic resale processes.

These two groups also share similar target markets, with several providers in both spaces serving businesses between 20 and 100 employees.

So, if both have struggled so far to scale through channel and both spend to acquire the same customers, should they not look at one another? Should Hosted PBX providers not resell pre-packaged IVR applications to their customers? After all, as they both live in the cloud, a simple pipe between them would make it transparent to the customer.

As much as the answer screams out ‘yes’ on paper, in the field for the foreseeable future it will more likely be a ‘no’. Here’s why:

1. Focus: We’re still early in terms of market penetration for Hosted PBX. Even if CEBP-type IVR applications would give salespeople an edge against prem-based competition, without the benefit of extra ‘special teams’, all the sales energy will be poured into selling core product.

2. Buyer: While the general target market (20-100 employees) may be the same, the actual buyer on the inside may be different, particularly as you go up market. For the Hosted PBX, the buyer ranges from the CEO down through to an IT person; for the IVR app, it could very well be the line of business or department owner that the app is designed for.

3. Packaging: Both sets of providers, at some level, have network usage or minutes built into their packaging. The customer won’t tolerate being double-billed for network costs. And even though the IVR application provider could – and probably should – change to software driven pricing models, it’s not a change that will come easily.

4. Vertical Marketing: Application providers stand to win most by identifying, developing for and capturing outright vertical segments of the market. Hosted PBX providers, like the prem gang, are more typically horizontal sellers. Not to mention the solution selling skills required to sell vertically oriented apps.

Peter is right. Hosted PBX providers should pay attention to the success Hosted IVR is gaining. Sooner or later their paths need to cross, just maybe not in the conventional ways one might assume.

Tagged as: Hosted IVR, Hosted PBX