Transcript for UC in the Mid-market

Blair Pleasant: Hi, this is Blair Pleasant. I am here with the UCStrategies Experts and today we’re discussing the mid-market. We will talk a little bit about how do we define the mid-market, what are their needs, how they differ from their smaller and larger counterparts, and what should they be looking for in terms of unified communications, collaborations, and video solutions.

Nancy Jamison: This is Nancy, Blair, I think I will step in really briefly because mid-market is right in the middle—I mean it’s kind of funny, it catches both ends. There are challenges for all ranges of mid-market that hit the small end, the SMBs, and the larger end, too. So I think with unified communications and video collaboration and all that sort of stuff, we have a lot of opportunity to help with different challenges because they can look like both. They can either be on the high end, which means they may have big branches and may have thousands of people, but they are still in the mid, but they may be in the small end. And there are UC solutions that will help both. For example, they can use it to cut costs. They can use it on the small end to collaborate better and do all sorts of things that we talked about when we first initiated UC, acting like players in the mobility space, and they can use it on the large end, as well. So I don’t know really how...it's kind of a broad term, maybe somebody can step in and give some definitions of mid-market that they’ve heard and some of the challenges that go along with that.

Jim Burton: This is Jim and I’ll comment on that because I had this challenge with my clients being a variety of vendors in this space and it's all in the eye of them, of who they think and what they think is the midmarket. So if you take a company that addresses a small market size because their product only scales up to – and for sake of argument, let’s say a thousand – to them, midmarket could be as low as a 150. If you deal with most of the vendors, that mid-market size will start typically at 250 to 500. But then if you deal with somebody like IBM whose customers are very, very large, I quite frankly don’t know what they would define as mid-market, but it wouldn’t surprise me if that number is 5,000 to 10,000 as the low end of mid-market for them. So midmarket is a very tough one to define. You almost have to be saying what products are you looking at and if you are being specific, which vendor are you talking about?

So for the sake of this discussion, I would have to say that the mid-market is probably starting at 500 and going up and then again the top limit is the same problem of where do products scale to? Marty, I know you have similar issues with some of your clients and maybe you could give us some definitions that you have worked with.

Marty Parker: Yes I will, Jim and thanks. I agree with Jim in that it has a lot to do with what is being offered and let’s think about it from the customer’s perspective in terms of what are they trying to buy. I think there is an interesting definition of mid-market that characterizes many of our clients, which is that mid-market is kind of like what they are not. They don’t want to have a large onboard staff organization that our largest clients will have. The largest clients tend to want to be self-sufficient. They don’t want to pay the kinds of fees that they have to pay for maintenance and so forth to the vendors. And you take a maintenance per seat price and multiply it by 50,000 employees and you are going to spend money to avoid those costs. People in the mid-market aren’t focused on that. They typically are either growing mid-market companies working on spending all their energy on the growth and the future, or they are – I will call them stable mid-market companies who are working on managing costs. In many cases that means they will self-maintain as I suggested some of the larger will do. But that’s the mature mid-market companies.

Mid-market companies also typically need a more complex solution than you can get by going to Staples and buying something off the shelf. It's not a package solution. They have something about their business that has allowed them to get bigger than a small business, allowed them to become a mid-market business. Something about that is unique and they want to preserve that uniqueness.

They also are probably large enough to have a call center, so you will get that into the picture. And from a unified communication perspective, probably there’s a good chance that they are – well there’s a very good chance that they are multi-locational and in some cases they’ve gone international. They will have either employees or active business partners in other geographies and definitely they will have customers in other geographies, so they will have traveling executives. Don and I at UniComm Consulting – Don, I am thinking of that one client who – in fact many of our clients have this – they have traveling executives. People who travel internationally to see their clients and their business partners and that becomes a real unified communications problem, as they try to manage the costs of communication during those travel experiences.

So I think mid-market can be defined as it has to have more capability and more flexibility than the small business key system packaged-in-a-box type of approach, and wants the features of large enterprises, but does not want to get into self-maintenance and that kind of extraordinary staff expense.

Blair Pleasant: We hear SMBs need to find products that are low cost, and all-in-one and simple. Where does pricing come in for the mid-market? Is it something that is important, but not as important and they would rather find the features, functions, and capabilities that they need?

Marty Parker: Well, I think that goes to which of the two business models that I mentioned, Blair, and then others would probably have comments on that too. If they are a fast growth mid-market company—one that is coming from a small and is headed toward large, then they probably have a profitability that will fund large enterprise features and they will pay for that. If on the other hand, they are a mature mid-market company, that is to say they have found their niche and found that they are going to keep going that way for years into the future, they probably don’t want to pay the larger, high end price. They are going to be shopping for the bargains. And I think those are some of the companies we have seen for example, buying Asterisk. They are saying, I know what I need and I can get it done with that open source. So I think we are seeing the bimodal experience here in the midmarket, some on their way up who will pay the large enterprise prices because they are investing in the future, and the others who are stable and are just looking to really manage the cost.

By the way the other thing that you would see is that a mid-market company that is in the growth mode  will often adopt the front edge of the market. They will be more willing to try having their employees be mobile so they won’t have to have as big an office space lease build. Or, I think they are more likely to depend on laptops and tablets and mobility features, expecting their people to know those things. A growth mid-market company is probably 50% of employees who have been hired in the last three years and probably has a demographic skewed toward sub-forty-year-old thirty somethings and maybe even twenty somethings based on their hiring model. So you will often find that the growth type of mid-market company is much more technology adaptive than others.

Blair Pleasant: What about from the business side, do you think that there are specific things to the mid-market in terms of some of those business challenges and what they are trying to accomplish and how does this translate as to what they should be looking for as far as a UC solution?

Don Van Doren: Blair, this is Don. I think as Marty said earlier, I think what we have is real different kinds of experiences throughout the market. If it's a market that is stable and there is a company that is serving those niches well, they are much more likely to want to just have a very stable environment and not looking for extensive new features. On the other hand, you are seeing some that are classified as SMB companies that are extremely forward-looking in terms of their UC technology and how they are in fact leveraging technology in ways to really grow their businesses. That is obviously a very different kind of requirement that you will get.

The other thing that I will just comment about here is you mentioned this as to whether the people want to have their own gear that they have on-site that they are managing or whether they are moving to some sort of a hosted model, because again quite often companies that are well established in terms of what their requirements are, sometimes are moving to a hosted kind solution, and in effect outsourcing all of their technology requirements.

Blair Pleasant: I think that is a really good point. We hear of the cloud solutions for the really small companies, because they don’t have the resources and staff and the the financial resources. And then we hear about clouds for the really large enterprises that have so many different sites to manage and it's easier just to use the cloud. But what about the mid-market, do you think that they are a good candidate for the cloud or are premise solutions more effective for them?

Don Van Doren: Well again, this is Don, it's so dependent on where they are in their own strategy. One of the things that I didn’t mention before is one of the reasons that companies sometimes will come go to cloud kind of solutions is if they want to make a dramatic change in what they are doing. So for example, a company that is a mid-market company that has never really had a very extensive call center operation, suddenly decides that they really have to do this as a competitive advantage. They won’t make a significant investment in the infrastructure necessarily, they will go to a hosted solution, which will enable them to get up-to-speed quickly into this kind of environment.

Marty Parker: Yeah, I think we see that – you’d have to say looking at some of the case studies out there in the application sector, I think the mid-market companies are a huge part of the Salesforce.com base. They are a huge part of the Microsoft dynamics base, as examples of hosted. And once they see that possibility of taking applications in the cloud, it's just a natural to start bringing the unified communication out of the cloud, as well. I think the motions we see from IBM with LotusLive, to Microsoft with Office 365, from Google with their Google Apps, Google Docs, Google Talk – those types of offers I think are going to get well embraced in the mid-market. I think though that they will still expect some hybrid capabilities and goes to the points we’ve seen recently, for example, with the Polycom announcement with assured interoperability via the cloud. I think these mid-market companies will probably have initially invested in something on premise at their headquarters or some regional offices, but as they grow if they can grow by a hybrid model where the growth vectors come out of the cloud, they might embrace that pretty readily. It has yet to be seen, but and that would typify a growth version of a mid-market company. Whether the stable mid-market companies would go to the cloud for cost reduction reasons is yet to be seen.

Marty Parker: Blair, more to your point about UC features – here’s a couple of things that you can notice from all the UC case studies we see about these companies. What they spend their money on I would observe as in the following categories: one is Leverage. They can’t hire fast enough, they don’t want to over-hire, they don’t want to get ahead of their headlights so to speak, so they really look for Leverage. Celina Insurance is an example of an IBM case study of using WebSphere in the mid-market insurance brokerage insurance firms dealing with their brokers through comm-enabled web pages. That was a high leverage thing for them.

Another word I would use for the mid-market companies is Reach. They are smaller than a small business, they are not just serving a local city or community, and once they start serving a national or multi-national or intercontinental geography, they have to compete with the big companies. So they really want to reach into those other geographies as efficiently as possible. And that is part of their differentiation in many cases. So you will see those mid-market companies are looking for presence, search—skills-based presence search so that they can find the skills and leverage them around the companies. Consulting firms by the way, some of the major consulting firms are mid-market consulting firms. There’s a lot of them are 2,000-employee law firms, consulting firms, professional services firms – they really want this. They want to leverage talent across their multiple locations and be able to reach those other locations with the full energy of their firm, without hiring every specialty in every location. So you will see that, and then you will see because of the reach within the firm, they also want to reach outside of the firm, which will bring them to video and it will bring them to web meetings. So most of the mid-sized companies that we see, as I am just flashing through them in my mind, we are seeing those. We are seeing case studies and clients where they are using video with their clients. They are using web meetings – voice and web sharing with their clients on an active basis. Sometimes that’s done through collaboration workspaces, where the clients walk in and work with them. In other cases it's done through published meeting events like you get with IBM SameTime, Microsoft Lync, and then from Cisco WebEx, and similar products to that. But they are really trying to go for the reach – the leverage and the reach are the two biggest words that I find when thinking about those types of companies.

Blair Pleasant: Okay, well thank you all. We appreciate this great input and we will see you all next week.