A "100% channel focused organization...since day one," ESI entered the cloud space 18 months ago with SIP Trunking solutions that connected easily to their customer premise-based phone systems, and today offer a full cloud PBX.
Transcript for ESI: “We Make it Easy to Communicate”
Jim: Welcome to UCStrategies Executive Insights. This is Jim Burton, and I’m joined today by George Platt, CEO and President of ESI. A little background—I actually worked with ESI quite a number of years ago in the CTI days. It’s interesting to catch up with him as we’ve kind of gone through the UC era, and the IP PBX era, and now moving towards cloud. It’s interesting to see how ESI has continued to grow and evolve and win some good customers along the way. I wanted to just start off just to make sure everyone else knows – I know who ESI is, but to ask George, can you give us a background about ESI?
George: Yes, that’s great, Jim, thank you very much. ESI is a 28-year-old provider of innovative telecommunications infrastructure. The thing that we’ve focused on through the years has been delivering products that are easy and intuitive to use. We not only take it from a use perspective, but as an end user, easy intuitive. But also from our reseller channel perspective, they’re easy to demo, easy to install, and easy to maintain. Taking high tech and making it easy to use is not always as easy as it seems. But that’s really core to what we do.
Jim: One of the things, as I recall, just looking back at your history, is that ESI was the company who actually put the voicemail inside the skins and was the first company to do that, and as I understand, has patents for it. What is your offering today? What do your solutions look like? What’s the portfolio?
George: It’s good that you start from the very early days. We did start as an OEM provider of voice messaging. Again, if you think about that from an easy-to-use standpoint, we looked at what other people were doing in the voice messaging space. Sometimes you had up to 16 keystrokes just to record your new personal greeting. We wanted to take innovative steps to make it very easy to use. What happened was the voicemail product morphed into a customer premise-based phone system. So, you actually took a core voicemail engine and morphed it into a phone system. We provided digital phone systems that had unique sets of features, not just from a messaging perspective, but things like presence and access control and virtual answer. We took that from a digital phone system that went from 4-5 stations up to hundreds of stations, and various models in between.
After that, we did launch a fully IP product, a CPE product that was really built on the same foundations. A lot of the great features and functions, those innovative products that we had in the early systems we brought forward into the new systems. And then of course, we brought all the strengths of IP along with that. Now, we’re really taking that experience, that 27-28 years worth of experience and bringing that to the cloud PBX offering.
We entered this cloud space about a year and a half, almost two years ago now. We started with adding SIP trunking solutions that connected easily to our customer premise-based phone systems, especially the IP systems, and now we’ve taken that a step further in offering a full cloud PBX that really encompasses all the great things we’ve done and learned for those 28 years into a cloud-based platform. We really run the gamut from a small CPE, which believe it or not, I think the people in the cloud would tell you nobody buys those anymore. And believe it or not, people still do. We have many customers that buy a small digital phone system because it’s all they need and all they really want. We go from that all the way up to large, multi-site premise deployments, to large multi-site cloud PBX deployments.
Jim: That kind of begs the question of your go-to-market strategy. What is it? What’s your approach?
George: Ever since really the inception of the company, we’ve been a channel company. So, we work with resellers throughout the United States primarily. It’s mainly a North America play, for sure. We have 600-700 partners right now; some of them sell the full portfolio of ESI products. Certainly those that are IP-capable can sell premise IP products, and those that are more VoIP-capable can sell both the SIP trunking and the cloud PBX products. Then we have some partners that really just sell the premise-based products.
We’re a 100% channel organization—have been since day one. We make it so we build products. We put together support services to make sure those channels are successful.
Jim: There is certainly no shortage of cloud providers out there. It seems like every major PBX vender has got a cloud offering today. Certainly there are a lot of companies like 8x8 and Ring Central that are in this space. How is ESI differentiating your products from all of those competitors?
George: That’s a great question, Jim. It actually took us a long time to develop that strategy, really through our initial decision to get into the space. So, initially we had seen the writing on the wall about 3-3 ½ years ago that we knew we wanted to be a cloud services provider. And so, at that point you kind of do this “build” verses “buy” analysis. I had been through building a cloud operation from scratch before, and said, “you know, it’s great if someone has already set up all the data center contracts and network provider contracts and over the top service provider contracts.” So, we decided we would go through an acquisition process. Whenever you go through an acquisition process you actually do a lot of discovery on a lot of different companies. To say that there’s a lot of competition out there is really an understatement. I mean, there are so many different providers out there, it will make your head spin.
But along the way, we started to learn those that were being successful, how they were being successful, those who weren’t being successful, why they weren’t being successful. We began to develop our strategy there. From our perspective, we looked at a lot of these players as just service providers; they're not technology providers. They were very much at the whim of…they bought a soft switch from a vender, and they bought phones from a different vender. And because they didn't have any engineering or development expertise, they struggled to actually make a product that was differentiated, defined, that was actually something usable at the end user perspective.
What we wanted to do was really take our expertise in that engineering design and integration standpoint and bring that into the products. So, what we’ve brought to market—it has taken us about a year to get there, year and a half to get there—is a uniquely integrated platform that takes the great things that a premise-based PBX had, and brings that to the cloud and offers that along with the great things that the cloud brings you. What differentiates us is that ability to be technical product experts as well as being a service provider.
Jim, let me give you an example of what I’m talking about by an integrated product and taking the best of the premise-based systems forward. I actually had a next door neighbor who has had a dentist office for 15 years…actually longer than that. I think it’s closer to 25. He actually inherited it from his father. He had an old key system in his office for 12 years or so. And as happens finally in technology is that product began to die and support for that product went away. This was prior to us actually getting into the cloud PBX space, but he thought instead of buying another system, why don’t I just venture to the Cloud? I kind of consulted him and said that was a great idea. I said if you need any advice, feel free to ask me. He just kind of went on his own business and he installed the cloud PBX.
He got it installed and the system was up and running with really not many problems. Then all of a sudden he realized that on the phones there were no DSS keys—direct station select keys. So, his receptionist, his secretary at the front, couldn’t tell when he was actually on the phone. It was really baffling to him to say you know, here’s this product I had for 12 years and it seems something so simple that every phone system has, and I went to a Cloud solution provider, they didn't give me a product that had buttons, they couldn’t see who was on the phone, and quite frankly, he said, he couldn’t run his business that way.
We see examples like that all over the place where people take for granted features that were in their premise-based system, that when they go to a cloud provider, again, thousands of different providers out there, but very few of them really had been on that CPE side and they knew what features were important to those customers. So, we’ve taken things like DSS keys that I would tell you the majority of cloud service providers don’t even think about today, and we’ve incorporated the best of those things into our cloud PBX offering.
Jim: Well, that’s a very good example—one that takes me back to days when people were debating whether they wanted Centrex or a key system. It was a real tough problem. You think about the example and how it has evolved. Centrex didn't deliver a lot of those features that people wanted and they would install Centrex because it sounded like it was the future. In that day, that was the cloud future. Then they go back to a key system. So, it sounds like history is repeating itself there.
George: Yeah, it is in a way. It’s really surprising. We really were surprised when we saw that gap. But we understood how it happened. It happened because these service providers aren’t really in control of the technology. We believe that’s a real key value add that we have is to not only be that service provider but also be that technology provider.
Jim: Well, that also begs the question you've got product and you've differentiated that as being a channel-centric supplier. You've got to have some programs to keep your resellers happy—and obviously you have over the years, being around as long as you have been. I know you've got some loyal channel partners. But, what are you doing to help them, to keep them, to give them the support that they need to be successful?
George: I think support for resellers is extremely important from an ESI perspective. Again, if we can’t make our resellers successful then we won’t ultimately be successful because we don’t have a direct channel to fall back on. We didn't start selling direct and then try to sign up different partners. We’re invested in the success of our channel.
So, it starts with a certification program. These channel partners, many of them have been in business for 20 years selling communications products. They’ve got a large customer base either with phone systems or telecommunications or with other products. We wanted to make sure that they were certified and trained to offer these new solutions for those customers. So, it's not quite as simple as a closed-end CPE system anymore. They’ve got to understand VoIP. They’ve got to understand routers and WANs and things they didn't have to deal with 10 years ago when they sold some of these customers their phone systems. So, we start with that certification. It starts with a very basic level—VoIP, SIP, WAN/LAN training—and then goes into actually implementing the cloud PBX. We put the reseller in control. We allow them to do the implementation just like they’ve done today. They’re in control. Once they turn in the order to us and the numbers are in the process of porting, they actually go in and design the system from the auto attendant to the button appearances to the feature keys and everything else. So, we put that partner in control.
And then foundationally, how do you work with channels is, you have to support them very well. So, one of the things that ESI has been known for, for years and years is our superior tech support. We want to make sure that we offer the best tech support in the industry. As you transition and as you move, you know you have different challenges that go with the transition and the move. But our goal is to have a key differentiator in tech support. So, we want to have the best tech support to be able to support those partners.
Jim: Well, that’s important. I know it is for the reseller community, and of course any customers that they may have, that there’s that backup support. One of the things that I find fascinating is that while in many respects you're delivering the same kind of services and features that your customers and your channel has grown to expect, you're delivering it in a whole new way. So you've got a whole new offering even though it’s delivering voice services. Has there been anything that’s kind of surprised you about this new space that you're entering?
George: I don't know that there’s been too many dramatic surprises. I think a couple of fun surprises along the way that can bite you if you're not careful. But, we actually have very loyal ESI customers through our partners. We had people that had been using ESI systems for 10-15 years and they decided that they wanted to transition to the cloud. I think one of the things that kind of caught us off guard is some of these folks really expected the cloud system to work exactly like the CPE system, and it doesn't. We’ve had to train some people to understand the differences between cloud and customer premise. Some of the little features that they use kind of surprise us. They like that the clock counter counts backwards when listening to a voicemail on the CPE system and it didn't do that on the cloud system—little surprises like that.
I think broader from an industry perspective, it’s really around what we call “day two regret.” So, I go to put in a cloud-based phone system and all of a sudden I’m missing all these features that I had in my old system and now I’m stuck. So, I think that’s been a little surprising in that even with the shortcomings—you mentioned it earlier via the Centrex and things—some people are willing to live with it and some people aren't. But it’s been surprising as to how many features and functions really went away when some of these cloud services providers entered the market. Like I said, that’s a great opportunity for us to capitalize on that and to provide the features and functions that people use in their day-to-day business.
Jim: What are the challenges that you think this market faces as we’re evolving from CPE based solutions to cloud solutions?
George: We think it’s really three-fold. A lot of the phone systems that have been sold, a lot of the business communication that’s been consumed here in the United States has been through channels. We believe that those channels are still an integral part of the success of our industry. Some of the larger competitors out there believe that they can just ship boxes of phones in and have customers unbox them and plug them in themselves and everything will work. We don’t really believe that’s a recipe for success, especially when you get into the small to medium businesses where they may not have dedicated IT staff. That’s going to confuse them and really lessen the opportunity for success. So, we believe that the channel is an integral part. The fact of the matter is the channel hasn’t really been ready to support these cloud products. So, part of our goal is to…working with our current channel partners in educating new channel partners as to what they need to do to be prepared to be really an integral part of this service delivery going forward.
It’s not just enough to ship in boxes. How do you install them, get them up and going, show people how to use them, be there for them when there’s a problem and a challenge? It’s technology, so there’s always going to be problems and challenges. Number one, we have to equip the channel with the skills and the know-how to be successful.
The second piece is really hidden around that intelligent integration that we talked about earlier. So, the fact that all the sudden I don't have DSS keys, or the fact that if I use my dashboard control in my cloud PBX system and forward my calls…like let’s say I wanted to forward my calls to my home phone or to a different phone number. I could do that in the dashboard yet there’s nothing on my phone display that talks about that—that shows me that my phone is actually forwarded. What we’ve really worked on is whenever I enact a feature or I do something in my…whether it be in my control dashboard that I have for any PBX offering or whether it’s a button on the phone or whether it’s a button on your mobile client to your desktop phone, that they all work together. So, if I did put my phone into “do not disturb,” that’s reflected across all my devices.
A quick story on that one: we had customers who at times, they would put their phone in “do not disturb.” Let’s say they did that on their mobile device. They came in and they put their phone down and their office phone didn't show that their account was in “do not disturb,” and they sat there working at their desk for two hours and wondered why they didn't get any calls. Well, the reality is that they had set up “do not disturb,” but didn't see that on their phone. So, having that linkage of features and functions across the different devices we think is important. We call that “intelligent integration,” and really driving that integration between the devices.
And really, the third thing goes back to our core, which is simple and intuitive to use. The answer to this integration challenge that a lot of cloud PBX providers have done, is they’ve put more and more user control, more and more feature functions in their web-based portal or dashboard. What you have then is this very confusing home screen that provides you access to every single feature that’s available within the system; however, you’d have to have a huge manual to figure out how to navigate through it. So really taking those complex tasks and making them easy and intuitive to use. We believe that really combining that intelligent integration with a simple, clean, and intuitive technology interface, whether that’s on your phone, your computer screen, or your mobile client, really is going to be one of the keys to success in this industry. But they’re just far too complex today.
Jim: I’d have to agree with you on all three steps that you just mentioned because to me the channel is something that, I think, a number of venders have just ignored. Quite frankly, I think some of them are figuring it out because of the challenges they face. But, if you don’t have a channel that can go out and help deliver these things, it is really, really challenging for someone who is not in the technology business or even if they are in the technology business, they're not in the voice communications business, to go and implement one of these things. I think that we’ve got some big venders who are working on direct sales channel solutions that are just going to make it very difficult. So, I think you’ve probably got a really big leg-up there.
Your second point about intelligent integration, I think that’s another very important thing. I think that kind of goes along with your third step of making it simple and intuitive to use. I think those are things that a lot of people have ignored. There are so many things out there that we’ve taken for granted in our industry for years—the joke about how we’ve got 450 different features. The fact is that there’s always something that somebody has had as a feature out there to use but as you move to the cloud and you don’t have the specific buttons to use, as you just mentioned—like your “do not disturb” example—I think you're absolutely right. Those are challenges our industry faces. I think it’s going to be interesting to see how the market adopts those types of things because we all know we have been willing to compromise voice quality to have mobility. It will be interesting to see how people will step up and deal with some of these other compromises they’re asked to take. It sounds to me like what ESI is doing is saying well, let’s not compromise here. Let’s make sure we’ve got intelligent integration and we make it simple and intuitive to use. I applaud what you are doing and I respect the fact that you've figured these issues out and seem to be addressing them.
George: I think it’s a great example. You mention the system having 450 different features. How others are trying to come to grips with that is trying to put all 400 features on one screen that you have to try to get access to. It’s hard, just as a technology provider, to understand all of them, let alone some doctor sitting down and trying to use it in his office for an hour in a day after visiting patients all day. So, we tend to lose sight of that ease of use and intuitive use. If you look forward, right? If we look at what’s driving our market, really that intuitive use of a mobile device is key. As a technology company, as a PBX provider, we’ve got to take some hints from user interface design that the mobile phone manufacturers—the Apples and the Samsungs and the HTCs have done—and make sure that our systems are as easy and intuitive as it is to use those devices.
Jim: Yes, absolutely. Well, I think it’s going to be interesting to follow your path over the next year or so and see how this evolves for you. It just sounds like you're doing so many of the right things. Of course we're going to let the market figure that out because they’re the ones that will make those decisions of if you’ve figured it all out or not. But, certainly with my background and history, it seems to me you're on the right path. I wish you the best of luck and thank you so much for your time today.
George: Thank you very much Jim. I appreciate it.