4/26/00 PC Dealer 28
2000 WL 9070187
PC Dealer
Copyright (C) 2000 VNU Business Publications Ltd.; Source: World Reporter (TM)
Wednesday, April 26, 2000
How to Sell - Part 5 - A meeting of minds.
Resellers trying to sell converged voice and data networks still face
the mother of all objections from their customers: "I just don't need
them."
Most research companies agree that convergence between voice and data
networks is inevitable, even if this is only because every vendor and
service provider is moving towards converged products so fast that it
will soon be impossible to buy anything else. But this doesn't mean
customers are ready to start placing massive orders yet.
There are some categories of 'converged' voice and data product that
are already selling well, but many businesses remain to be convinced
they really need voice and data traffic to share the same network, from
LAN to WAN. Some of these objections can be overcome now, but most
customers will only be won after the introduction of more mature
products from manufacturers and telecoms service providers.
Keeping down the costs
For a few years, resellers have been profiting from helping their
customers save money by putting internal voice traffic over their
wide-area data networks. From a technology point of view, this is not
rocket science - fast packet routers are essentially next-generation
multiplexors - and the savings associated with sending calls over
privately-owned data networks is a compelling reason for buying the
technology.
Likewise, computer telephony integration (CTI), which was here long
before convergence, is a mainstream technology that integrates voice and
data.
If they decide the relatively high cost of CTI is worth the return, customers have no problem understanding the technology and buying it.
But call-centre software can be made to interact with a company's
voice system without the need for any real 'convergence' between voice
and data networks. CTI requires only that voice and data are able to
talk to each other, not that they operate on the same infrastructure.
Given that voice and data can be put over private WANs today, and CTI
doesn't need convergence either, what reasons can a reseller use to
persuade customers to shell out for new converged networks?
Paul Kibble, marketing director at ONI, a systems integrator that
specialises in voice and data integration, says the biggest problem in
selling converged products is that most customers have already made
sizeable investments in traditional PBXs and are tied into long-term
contracts with service providers. "There's no single compelling reason
for most people to throw out their traditional systems. Most things
people want to do can be achieved working with separate voice and data
networks," he says.
Mark Elliot, senior director of product marketing with contact-centre
software developer Genesys, says: "At the moment we don't see that voice
over IP (VoIP) technology provides anything remarkable that can't be
done with traditional technology."
Elliot says that unlike computer products which can be written off
over five years under UK accounting practices, voice products can be
written off over 20 years. "These people aren't going to want to replace
voice products too soon," he says.
Kibble says the best approach for selling convergence is to combine a
number of smaller advantages that justify the investment when considered
together. These include reduced wide-area bandwidth costs and reduced
management costs. "For some customers, unified messaging and the ability
that IP gives - to use a single number that will contact an individual
wherever they are - is very compelling, particularly for companies that
have employees moving around a lot of different sites."
Keeping up standards
Perhaps the biggest selling point for converged voice and data
networking is that it is standards-based, Kibble says, and CTI products will be vastly cheaper in the future. "If you want to add functionality
to traditional PBXs and get it to work with your customer relationship
management software it is fantastically expensive."
The advent of standards-based technology such as IP, telephony
application program interface (TAPI) and mail application program
interface (MAPI) promises to make it cheaper to introduce applications
that integrate voice and data, he says.
But Elliot believes the standards-based argument may not cut the
mustard with enterprise customers which are more concerned with
minimising risk and protecting investments.
Although traditional PBXs have proprietary interfaces, shared
connectivity protocols that pass traffic between different vendors'
products already exist. "As far as communications between data
applications and traditional PBXs go, companies already provide
platforms that overcome the proprietary nature of voice systems," Elliot
says. However, he does concede that such products come with a price tag
that places them firmly in the high-end market. "But the cost of VoIP
call centres is comparable to traditional systems. I don't think vendors
are selling converged (PBX) products on the basis of cost savings."
Reducing the head count
The main reason large companies want to see the convergence of voice
and data is to reduce the number of suppliers they have to deal with,
Elliot says.
But this sales point can become a disadvantage when you are trying to
sell into companies that still have separate telecoms and data
departments which do not want to lose any of their staff.
Kibble says resellers need to be careful about who they talk to when
explaining how convergence will reduce management overheads. It may not
be a case of individual departments trying to protect jobs, but
resellers trying to sell convergence into the enterprise will encounter
customers with either a data or a voice mindset. Each will be sceptical
about the benefits of getting involved with the other.
However, because converged products will be based around standards
such as IP, the cost savings Kibble was referring to are more relevant to smaller companies that will be able to implement shrink-wrapped
contact-centre software running on, for example, a Windows server.
Elliot agrees the market is potentially huge for products that enable
companies with as few as 20 staff to afford a PBX-cum-router with
unified messaging and contact management software.
Gary Marsden, vice-president of sales at Flexion, a manufacturer of IP
telephony products for small businesses, believes the
infrastructure-focused, cost-saving approach has never been the right
way to sell convergence. "The right approach is to sell the business
benefits of combined voice and data applications that enable more
efficient communication and improved productivity," he says. This method
is unlikely to work with customers that have already invested in call
centres and messaging using traditional (and separate) voice and data
networks, unless they are interested in moving onto IP because they
believe they will benefit in the future.
Playing in the big league
"Convergence offers small firms the chance to buy call-centre
functionality, customer contact management and unified messaging, all
bundled onto a box which is a PBX and a data switch, for a fraction of
the price of traditional solutions," says Marsden.
IP telephony products for small businesses are beginning to emerge,
from start-ups such as Praxon and Flexion, and established players such
as Nortel, Mitel, 3Com and Cisco. But is today's networking
infrastructure able to handle voice and data traffic mixed together in
IP? The major hurdles when trying to sell IP-based PBXs include concerns
about the reliability of the products and the ability of IP networks to
carry voice traffic.
Jaguar Communications, which was taken over by Cable & Wireless this
month, is a systems integrator that has sold converged voice and data
networks to a number of customers. Richard Colebrook, business
development director at Jaguar, says vendors still haven't developed
products that meet every requirement customers want from their voice
systems. "At the moment, IP telephony products are embryonic and satisfy
only small businesses or niche customers," he says.
Currently the only way to successfully implement convergence is to have absolute control of the network from end to end, and be very
careful about how it is designed, says Colebrook. "You have to remove
any bottlenecks and make sure voice traffic has an unimpeded passage. It
relies so much upon the expertise of the network designer that the
solution becomes almost proprietary; if somebody else comes along and
adds something to the network it will stop working."
Colebrook adds that unlike data, which can gradually deteriorate as
new applications and users are added, voice will just stop working.
Kibble believes that as long as a network is reasonably well designed,
it may be able to carry voice traffic quite satisfactorily. "It's not
clear that products with Layer 4 to Layer 7 awareness, full
quality-of-service support and so on are going to be necessary. A design
with Layer 2 switched to the desktop and Layer 3 at the core may perform
well enough," he says.
Eventually, according to vendors, intelligent IP networks that
recognise and prioritise voice traffic will become common. These will be
resilient and will absorb peaks of data traffic without affecting the
performance of voice traffic. But the industry has a long way to go
before it has sorted out all the quality-of-service issues around VoIP.
Elliot says: "We do not see full convergence on IP as even a
medium-term achievable, by which I mean it is not going to happen within
five years."
This doesn't just mean waiting until manufacturers release products
with quality-of-service support, because that is already beginning to
happen.
It means the industry is going to have to wait until service providers
have upgraded their IP networks to handle voice, and until companies
have got round to upgrading their networks with next-generation products
capable of protecting voice traffic.
Until these issues are sorted out, VoIP is not going to be a serious
business tool. Selling convergence is a matter of timing, and it may be
appropriate at the moment to sell voice-ready products, rather than
trying to sell the complete converged solution.
Either way, persuading a customer to buy convergence in the form of an
IP PBX is likely to involve having to sell a major network upgrade too.
So the best chances of success are to be found with customers that are
due to implement a network upgrade anyway, have a green-field site or
are small so that upgrade costs will be minimal.
Competition looms
The process of migrating customers onto voice-ready data networks is
mirrored by the process of moving PBX customers towards IP. Vendors such
as Lucent, Nortel and Alcatel have all come up with migration strategies
to introduce elements of VoIP to their existing PBX products. If
customers approach convergence from this direction, data networking
resellers might be at a disadvantage to voice specialists. Competition
to hold onto accounts, as customers move from having one data supplier
and one telephony supplier to having just one convergence supplier, is
going to be intense.
Many resellers have chosen to go after early adopters and pick up
green-field sites, while trying to position themselves as market leaders
in convergence. Other resellers may be satisfied with having the ability
to sell voice-ready network products and may wait for mainstream
adoption before investing in the skills needed to sell IP telephony.
Call-centre applications are quite a long way from the core skills of
a traditional data networking integrator, and resellers in that field
will need to invest heavily to enter the convergence market.
These strategies may help your customers, sooner or later, to overcome
their objections and convince them that they really do need converged
voice and data networks.
SERVICE PROVIDERS LEND A CONVERGING HAND
The availability of WANs that can carry voice and data traffic is an
important factor in the market adoption of convergence.
All the major telecoms companies sell private circuits that companies
can use to carry voice and data traffic between sites.
Companies such as Uunet will shortly introduce the ability to carry
voice traffic over their virtual private networks (VPNs). This VPN
service uses a private network so Uunet can control quality of services, but because the network is shared by many customers, prices should be
lower than individual private circuits.
When BT introduces ADSL services to the UK it plans to offer voice
over ADSL that will interface with the public switched telephone network
(PSTN) at the local exchange. Gradually BT will push back the boundary
at which it has to convert voice over IP (VoIP) traffic onto the PSTN.
The availability of such services will make convergence available to
the mainstream SME market and drive demand for LAN infrastructures that
can handle VoIP.
ANALYSING THE MARKET FOR CONVERGENCE
Computer Reseller News in the US has begun a major study of the
convergence market. It aims to establish the skills that exist in the
channel and analyse the requirements of customers, assess the patterns
used, evaluate existing vendor channel programmes and predict the top
convergence applications over the next 12 months. The study has made
these early findings:
- There are already 12,000 resellers selling or servicing integrated
voice and data products in north America.
- The main revenue base for convergence specialists lies in the SME
market.
- Nearly half of convergence resellers are selling into Web-based
businesses.
- The core activities of convergence specialists are LAN and WAN
design, Internet connectivity and email integration.
- The technology has a broad application with successful markets in
the education, legal, manufacturing and finance sectors.
CONCLUSIONS
- Steer clear of customers that have recently invested in traditional
PBX systems.
- Networking infrastructure products that ensure quality of service for voice over IP and IP telephony switches are still not mature.
- Sell to the right customers - ones that don't have CTI contact
management applications.
- Every sale must be made with its ability to carry voice traffic in
mind.
- If you haven't got voice skills, start training, or consider
partnering - or acquiring - a voice specialist.
Appearing in this article:
Flexion (01628) 827 260
Genesys (0118) 974 7000
Jaguar Communications (01727) 898 000
ONI (01442) 239 999. |
