MARKET REPORT Hosted & Cloud Telephony
Differentiation
is Key to Hosted
Telephony Success
Slowly but surely hosted and cloud-based telephony solutions have relentlessly
chipped away at the vast installed base of on-premise PBX – and with a lot more left
for suppliers to target. Comms Business looks at the best ways to do it.
When I last enquired a
few weeks ago analyst
rm MZA indicated
that there were
approximately 17.5 million
PBX extensions in the UK
of which around 50 per cent
are connected to the world by
SIP trunks. Clearly, both the
message regarding the shutdown
of ISDN in 2025 and the fact
that SIP o ers so much more for
business are hitting home.
At the same time Cavell
Group were estimating that
hosted telephony currently
accounts for around 18-20 per
cent of the ‘PBX’ market.
Growing the market has been
a steady plod for hosted and
cloud-based telephony suppliers
but the good news is that this
market share has a rm foothold
and clearly there is a large,
majority, share of the market still
to be addressed.
However, whilst these cloud
solutions have their bene ts in
terms of enabling scalability,
exibility and pay as you go
nancing, the PBX still has its
supporters amongst the channel
and a user base that is frequently
consumed by inertia.
Over the last few weeks we
have talked to key suppliers – and
there are many, to nd out how
they plan to overcome this inertia.
Dave Reynolds of Xelion
With hosted telephony
approaching 20 years of
availability why is the PBX still
dominating the installed base in
the UK?
Steve Day, Group Sales Director
at Invosys, says the reason is PBX,
to many businesses, is a symbol of
reliability.
“Having a physical system in
place provides them with peace of
mind and has done so for many
years. is can make converting a
business to IP solutions di cult.
With no installed phone lines and
only a virtual version of a PBX
hosted in the cloud, they do not
o er the same tangibility as a
traditional on-site PBX does.
is is not an issue speci c to
just telecommunications, as of
2018 only ‘41.9% of companies
have adopted some form of cloud
service’.
e solution for those
sceptical of fully cloud-based
solutions? Hybrid systems that
fuse traditional call handling
technology such as the PBX with
the exibility of the cloud.”
Tim Mercer, CEO of Vapour
Cloud, puts this down to his
belief that businesses haven’t
changed their commission
structure to incentivise
salespeople to sell telephony leases
on this di erent basis.
“Salespeople will
understandably sell according
to how they can earn the most
commission, so commission
has to mirror the company’s
strategy.
On the whole, businesses
still have a somewhat shortsighted
hunger to gain upfront
nancial bene t rather than
a recurring revenue model. It
is admittedly a bold leap to
make the move from a CapEx
to OpEx billing, but the longterm
advantages of this type of
income stream are vast.
If the enthusiasm doesn’t
exist from the reseller, and the
end user perceives the move will
be a big headache, the market
doesn’t change, irrespective of
the added bene ts that hosted
and cloud telephony bring for
organisations.”
Iain Sinnott, Head of Sales
at VanillaIP says principally he
thinks the inertia is down to two
factors’.
“Firstly it suits the PBX
resellers to keep the customer
where they are because in the
PBX world they are the experts,
it delivers an answer and they
have sunk investment in support
tools/sta , spares and supplier
relationships. Stepping out into
the cloud exposes them to the
need for retraining, places them
on the same or a lesser footing
with new tech resellers and invites
deeper questions from clients
around what is best for them.
e second element is customer
ignorance and that is the fault of
the cloud resellers and SPs”
“It’s all down to time,” says
Justin Blaine at NTA.
“I rmly believe the PBX is
dominating the installed base in
the UK only because it takes time
to displace any legacy when new
technology in any sector becomes
available. Whilst we approach 20
years of Hosted it is really only in
the last 5 years that connectivity
has become more reliable and
a ordable to the SMB sector,
which let’s face it, makes up the
bulk of businesses in the UK.
e sweating of assets when
24 | Comms Business Magazine | July 2019 www.commsbusiness.co.uk
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