Transcript for NEC’s Path to the Cloud
Jim Burton: Welcome to UCStrategies Executive Insights. I’m Jim Burton, and I’m joined today by Jay Krauser, who runs the business unit for UNIVERGE BLUE.
Jay, you launched UNIVERGE BLUE at the BC Summit this year. We are happy with that, but I want to take everybody back about three years. You had talked about the NEC initiative of getting into the Cloud market at that time. In fact, I have told a number of people that your presentation from three years ago, I think, really set the mark for what the partners needed to do to come up with a good solution.
At that time, it seemed to me that you really nailed the business model to help your channel partners and the positioning, but it has taken you a while to get around to launching this whole new program under the UNIVERGE BLUE name. Which by the way, for those of you listening, univergeblue.com is the best way for you to find the website that hosts all this information.
Jay, please give us some insight as to what happened in that period of time.
Jay Krauser: Thanks Jim, I appreciate it. It was three UC Summits ago, which was very educational for us as a company. As you know, NEC is a 100+ year-old company, with 50+ years in the United States. We are an engineering-based, conservative organization. We are known for delivering on-premise PBXs, communication platforms from the low-end of SMB to the high-end.
Our goal and objective over the first two years was to incubate; grow our channel, because it is a very channel-centric, and that was one of the things that we presented at the UC Summit a few years back. We wanted to make sure we were channel-friendly. We wanted to make sure that we had the back-end and the front-end of the office completed.
We brought a high-end, enterprise-class feature set; unified communications with strong mobility and contact center, collaboration, conferencing to the market.
We wanted to make sure that it could be delivered utilizing NEC intellectual property all the way through. We wanted to make sure that we delivered those capabilities from the very low end, so we could deploy the 5 to 20 station users, all the way up to a couple of universities at 6,000 end users.
We took a very conservative approach. We rolled it out. We made sure the technology was sound. We made sure the tool set, the self-serving tool sets, the portals, were all built and integrated.
This year, we came out with UNIVERGE BLUE, launched it now with a portal, with its self-serving capability, with external websites, all of the marketing, and having our strong dealer presence that was ready and trained to drive this solution to market.
Jim Burton: One of the things that I know, when I talk to customers about NEC, there is this comfort level they have of working with NEC. You described the fact that you have a business-class product, which is absolutely critical for anybody that wants to scale this up above some smaller number of phones. But it is also, I think, beyond that because one of the other comfort factors with NEC is how you would compare to a number of other vendors in the industry, vendors who are either not in the best financial shape, vendors who are being acquired, vendors who are shrinking in size. Maybe you can talk about that a little bit?
I think this comfort level of working with NEC is an important factor and I think it gives you a strong position in the market.
Jay Krauser: Yes, it’s a very good point, Jim. Communications is an important part in the lifeblood of an organization. Picking the right manufacturer and partner to deliver that communications has always been important, whether you go back into the late ‘90s, early ‘90s, early Y2K days, when you did that transition from traditional TDM, to Voice-over-IP, to now Cloud. You’ve had different players come in and out of the market.
When you purchased that on-premise PBX and if that company, for some reason, was unable to provide you that service or that next-generation, traditionally, that PBX continued to work on-premise, you could find somebody to give you some support as you worked towards migrating to another manufacturer’s on-premise system. You still had business continuity.
But in the Cloud scenario, where you have a lot of start-ups or companies that may or may not be acquired because they are based on venture capital funds, you can find yourself in a sticky situation where that company, whether it’s FCC-driven, or decisions that are outside of their capability, they have to cease the ability to provide you service.
At that point, you can find yourself in an interesting situation where your organization is totally out of communications and it could take you days, weeks, or months to find the right solution and get it implemented, depending on the size of your organization.
Making sure you pick that right manufacturer and that right partner has always been critical, but I think with the Cloud, it is even more so. As I touched on earlier, NEC is over a hundred-year old company, worldwide. Over 50 years in the United States, very stable. As a matter of fact, if you look at all of the industry data that you can find on NEC, one of the things that every analyst will point out is our ability to be an engineering-based company that is financially stable. It is a good decision to go with NEC from that perspective; we are going to be here today, tomorrow, and in the future.
When it comes to Cloud, as I pointed out, I think it is even more important that you do your due diligence on the financial stability of an organization that you are going to partner with, to get that level of communication, which, as I said before, is the lifeblood of your company. I think that is very important.
Jim Burton: Another area that is important, too, is the channel. You sell products through a distribution channel and I think it is important for people to understand that. I think it is important for your channel to understand what a new Cloud solution means from NEC and it is very important for end-users to understand how they get access to products and technologies from NEC. Can you talk about your channel program a bit?
Jay Krauser: Sure. One of the things about NEC, again, in North America, has always been a channel-centric organization. Unlike some of the traditional players, as I mentioned early on, or some of the newcomers, they are in the distribution/out of the distribution, they have never been in/distribution.
NEC for the last 30+ years has been focused on their channel and when our channel is healthy, we are healthy. It gives us the phrase; “local touch, but national reach.” We provide the national reach for your organization and our channel provides that local touch.
When you have a problem, you know exactly who you are calling; you are calling the people in your local environment that are going to come and take care of you, versus calling some 800 number that you are not quite sure where that toll-free number is terminated, or if those people even know that you are having an ice storm in your geographical location.
It is important for us and we have built models, as we talked about earlier, we have made sure that we have kept our dealer channel close, and they are still the single point of contact for our customers. Again, that local touch, but national reach and strength of NEC.
Jim Burton: That brings up another important product area. You started on this, but I would like to talk about it a bit more; about your depth of product. One of the things many of us, particularly those in the industry, have observed is as we are moving into these new technology areas it seems like you have to buy products from a lot of different vendors. That it’s not one vendor (who) can provide everything.
If you could spend a few minutes talking about that broad product portfolio that NEC has to offer? The one that jumps out at me is the SDN capabilities you have because under all of these new communication solutions is a network. If you could go into the breadth of the NEC products and platform, I would appreciate it.
Jay Krauser: That is another great question. I like to coin the phrase, “all clouds are not created equal.” When we started this, and we talked about it earlier, we wanted to make sure we used as much NEC intellectual property, and then partner where we didn’t tightly integrate. We are not just at the application layer; if people are familiar with NEC, because it is such a large organization, we have a supercomputer division, we have server divisions, we have storage divisions, and we have SDN, software-defined network divisions. We utilize all of that NEC intellectual property.
When you go into the data centers, data centers are important; they are tiered one through four; we are in a tier three, which is the highest multi-tenanted data center that you can get. We are geographically dispersed, east of the Mississippi/west of the Mississippi. We are not on the coasts; we do not have hurricanes or earthquakes. We have geographically dispersed an active-active matrix throughout our network. Because of our hardware, our SDN, our servers, fault-tolerant, Blade; we are able to provide, from the ground-up, NEC Intellectual Property.
Whether I lose a virtual server, a physical server, or a complete data center, I have made sure that we are meshed across the country with aggregators, that no customer anywhere in the country will feel that outage. It’s more than just the application layer; it starts with the fundamental NEC-driven technology. We layer our applications on top of that from unified communications, contact center, collaboration; all of the different features and functionalities that an enterprise has always enjoyed. But, now we can drive those high-end applications, all the way down at a very cost-effective manner, to the S of the SMB.
Jim Burton: One of the things I would like to get your thoughts on is market adoption. This whole area of Cloud communications is a whole new area. We all saw Centrex in the past; it only accounted for 10% of the market. Where do you see market adoption? What experience has NEC had? Where do you see it headed?
Jay Krauser: This industry, we have always sectioned it off. There was the S of SMB, mid-market, enterprise space, and then you had verticals. You had your high-red, or hospitality, and government, those types of verticals that are out there. What we have seen is it is not necessarily the physical size of the organization, it is more the geographically dispersed an organization is or their employees, the more they come preconceived to having a Cloud deployment. It lends itself to geographically dispersing organizations or their employees.
But, we are seeing it again at the low-end of S from a pure end-to-end, unified communications. The mid-market is doing very much the same. The enterprise is starting to, but that is more of an exception than a rule.
Where you see the adoption in the enterprise space is really in a hybrid manner and hybrid has so many different types of definitions. You can have your communications on-premise and different applications in the Cloud. Or, you can have some of your applications, mission-critical applications on-premise, and then your communications and some applications in the Cloud. When you start to look at enterprises and hybrid, they are starting to adopt more in that hybrid-type environment.
Then, we switch to the verticals. Verticals in a lot of ways were slow to adopt Voice-over-IP in the early Y2K days because they had guestrooms, patient rooms, dorm rooms… the inexpensive TDM phone was fine, and the administrative area would move over to a Voice-over-IP deployment.
Now what we are seeing in those same verticals, we are seeing a rapid adoption, and they are almost leap-frogging. In some cases, they still have a hybrid or a TDM PBX on-premise, even in 2015/2016, and now they are jumping straight into a Cloud-type deployment. Hospitality is a perfect place for that.
You are now utilizing Cloud-based communications in a hospital or in a hospitality environment because now they can upgrade. They have all that technology going into a patient room, whether it’s Wi-Fi or wired networks, dorm rooms, guest rooms; all of that is moving into technology, which lends itself to moving into the Cloud.
There is many different ways that we are seeing adoptions, but the biggest piece for me, is I think it is now a business discussion, versus a technology discussion. You now are dealing with the taxation, CAPEX versus OPEX, budgeting; it’s more and more of a business decision that makes it very nice for certain organizations to be able to budget.
Talk about a start-up; traditionally a start-up has to spend, even at the low-end, six or seven thousand dollars for an on-prem PBX. Now, for a couple of hundred dollars a month, they can have rich feature sets, and it can be deployed from the Cloud. As their organizations grow, the Cloud grows because it is elastic.
Or you can see seasonal; we see a lot of that. They have a contact center with 25 agents, but at Christmas time, they need 75 agents. Before, they would have to buy those seats; in the Cloud, it’s elastic. They can grow for two months, then shrink back down to 25. We are seeing lots of different adoptions from different sizes of the market. Retailers, again, very huge because of that elasticity especially around the holidays.
Jim Burton: Jay, I look forward to the BC Summit next year, to follow-up and see how things have gone for you in the past year. I know you have had some great success getting the product started and launched; it is going to be interesting to see the success you have had in the market when we have our event next November. Thank you so much for your time today. I appreciate it. It’s always good to talk with NEC, one of our market leaders.
Jay Krauser: Thank you, Jim. It’s always a pleasure and definitely look forward to seeing you again at the BC Summit.