Making Money with Lync – Part 1

Making Money with Lync – Part 1

By Kevin Kieller June 28, 2013 16 Comments
Kevin Kieller PNG
Making Money with Lync – Part 1 by Kevin Kieller

I had the pleasure of leading the first session at the UC Summit 2013 along with my UCStrategies colleague Jon Arnold: The Elephant in the Room: Lync. In this session, Jon set the stage by providing a high-level overview of the different “flavors” of Lync and he then highlighted several areas you need to consider when you are thinking about Lync. I then detailed how you as a consultant, value-added reseller, or systems integrator can make money either selling Lync or selling against Lync; we wanted to provide balance.

As it turned out, through a show of hands, at least 80 percent of the audience was interested in considering selling Lync. Only one audience member indicated that he had already decided not to sell Lync. While the session is now two months ago, I still get asked the question, “can you make money selling Lync?” As such, in this article, I am going to expand on the topic of how to make money with Lync.

It is important to first understand that, compared to UC solutions from “traditional” vendors, you may NOT be able to make money selling Lync software licenses. By some accounts there are as many as 28 million Lync voice licenses that were “grandfathered” (awarded to customers) when Microsoft modified its Lync CALs (client access licenses). Of these 28 million Lync voice licenses customers possess, only 3 or 4 million have been deployed. This means your customer may already have licenses for Lync voice (and some may not even know they do!).

Even if one of your large customers does not have Lync licenses, organizations with more than 250 users may have an Enterprise Agreement (EA) with Microsoft, part of the volume licensing program. Fulfillment of licenses for customers with an EA is handled through a Large Account Reseller (LAR), and if you are not a LAR then you do not participate in the license revenue.

Many organizations looking at offering Lync solutions quickly conclude they won’t make money on software licensing and then make the premature business decision to avoid Lync. While you may not make money through Lync licensing, at the UC Summit I outlined how VARs, SIs, resellers and consultants can make money implementing Lync solutions by focusing on one or more of the following six areas:

  1. Hardware sales
  2. Architecture and design consulting
  3. Implementation services (PS)
  4. Managed services
  5. Hosted services
  6. Complementary products and services

Lync Hardware Sales

Many people talk of Lync as a “software based” solution which while true, perhaps distracts some people from the fact that Lync, like all software-based solutions, runs on hardware. This means that customers looking to implement Lync for voice and UC will likely require hardware components that you can sell:

  • Network switchers and routers – often upgrades are required to support QoS (quality of service) or PoE (power over Ethernet, where Lync IP phones will be used). One customer who chose to deploy a Lync solution for thousands of users decided to first embark on a $5+ million network upgrade. The network upgrade wasn’t solely to support Lync, however, the decision to move forward with the network upgrade was finalized concurrent to selecting Lync as the voice and UC solution; this allowed the same vendor to capture the majority of the network upgrade revenue.

  • Wireless access points – increasingly customers choose to provide their end users with wireless access to their networks. Providing any voice solution, including Lync, over a wireless network may require an increased concentration of access points and perhaps upgrades to access points in order to properly prioritize voice and/or video traffic.

  • Servers – Lync runs on servers. In fact Lync has been criticized (often incorrectly) for requiring too many servers. In this context, if additional servers are required, you can make money selling these to the customer.

  • Gateways, SBAs, SBSs – If you use PRIs to connect Lync to the PSTN (public switched telephone network), in order to place and receive calls to “normal” phones you will need a gateway, a survivable branch appliance (SBA) or a survivable branch server (SBS) combined with a gateway at each separate location. These devices typically range from $5,000 to $10,000 depending on the required configuration.

  • SBCs – You can connect a Lync mediation server directly to the PSTN via a SIP trunk (from a provider who is Lync-certified). However, for a variety of reasons, including enhanced security, many organizations using Lync and SIP trunking choose to introduce a session border controller (SBC) at the network “edge.” Lync-compatible SBCs are available from a number of vendors: Acme Packet, AudioCodes, Sonus, etc. SBCs for larger deployments can be priced at $30,000+.

  • Lync desk phones – Lync allows customers to choose to purchase fewer IP desk phones; however, many customers and many situations still require “hard phones.” The good news is that many vendors offer IP sets compatible with Lync: Polycom, Aastra, HP, snom, etc. These sets typically retail for between $100 and $300 per unit, at margins slightly higher than associated with traditional telephony providers. Revenue opportunities for sets designed for meeting rooms are even greater as these devices typically retail for between $300 and $700 each.

  • Headsets – even if customers choose to use the Lync client as a softphone as opposed to deploying desk phones, most customers choose to deploy Lync-certified headsets in order to allow conversations to be more private and in order to improve the quality of the call audio (as opposed to using the microphone and speakers built into a user’s laptop). Basic wired headsets retail for as low as $30 wired with more advanced Bluetooth wireless headsets retailing for $200+. Selling headsets is another revenue opportunity related to Lync solutions.

  • Lync Room System (LRS) – until recently interconnecting room-based video conferencing with Lync’s desktop video was possible, but often complicated. With the release of Lync 2013, several vendors are now providing room-based video conferencing systems designed specifically for use with Lync. At the UC Summit, one such system was demonstrated by SMART and generated strong interest from the summit attendees. SMART single- and dual-screen room systems are priced between $20,000 and $50,000. At present, SMART, and likely other LRS vendors, are looking for qualified resellers to participate in this new and growing market opportunity.

The list of Lync-certified hardware continues to grow almost weekly. The latest list of infrastructure components certified for use with Lync can always be found at www.technet.com/ucoip.

Lync Architecture and Design Consulting

Because Lync was architected to be a full unified communications platform, not just a voice system, it often requires more design work ahead of deployment. And, as noted in the hardware section above, there are multiple architectures and many endpoint options supported by Lync. As such, gathering requirements and then matching the correct Lync architecture and detailed design to these requirements is an important service.

Offering Lync architecture and detailed design services is an area where you can generate revenue with substantial margins. You can also choose to specialize in design related to various integrations between Lync and legacy PBX or video conferencing systems, perhaps leveraging your expertise with another VoIP platform.

As a concrete example, a recent design engagement I oversaw for a large retailer with approximately 9,000 users represented a $120,000 requirements gathering and detailed design consulting project.

Lync Implementation Services

Once an organization has a detailed design for Lync they often need someone to help implement the solution. Offering Lync implementation professional services can provide high margin revenue. Implementation services include basic server stacking, racking and application installation along with other key services such as project management, change management, communications and training. As was highlighted in my “Living with Lync” session from Enterprise Connect, it is often the non-technical PS services that determine the success of a Lync UC implementation.

Even if your current focus is network implementations, you can make money from Lync by partnering with a Lync implementer. Network solution providers would do well to consider Lync solutions because as noted above, Lync, like many VoIP and UC systems, very often drives network upgrades. UC Summit participant HP spoke at length about its model where HP network resellers are paired up with Lync resellers in order to form a complete team of experts.

I feel I need to close with a disclaimer: I am not suggesting that Lync is a perfect UC solution and I am certainly not suggesting it is the best solution for all customers; however, if the UC Summit is any indication, many VARs, SIs and consultants are considering adding Lync to the UC solutions they provide. And while you may miss out on software license revenue, you can make money selling Lync solutions.

Of course, before rushing to add Lync solutions to your current product mix, you do need to consider how promoting Lync would impact your existing reseller relationships and you definitely do need to commit to developing specific expertise in order to deliver Lync solutions effectively.

In the second part of this article, I will explore three additional areas where you can make money selling Lync solutions.

While you are waiting for part two, please let me know if you agree or disagree with my conclusions related to Lync. Continue the discussion in the comments below or via twitter @kkieller. I will respond to each and every comment.

 

16 Responses to "Making Money with Lync – Part 1" - Add Yours

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Art Rosenberg 6/28/2013 9:46:30 AM

Good job, Kevin!

Some of the opportunities you suggest can take advantage of hosted/managed Lync applications in a "cloud" environment, and that is increasingly becoming attractive to any size user organization. Reselling such services is therefore another option, which I guess you might discuss in your Part 2 writeup.
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Roberta J. Fox 6/28/2013 10:07:02 AM

Excellent summary Kevin. Totally agree with your thoughts. My observation is that unfortunately most of the vendors or VARs that I have met working on FOX client projects don't have the depth or cross-section of skills required to ensure a successful implementation. Look forward to part 2 and 3.
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Guy Koster 6/28/2013 10:13:08 AM

Kevin - spot on!

However the corollary to all the money making opportunities you've (correctly) identified is the perception that Lync is 'more' complex than its' segment competitors. More complex to design, more complex to procure, more complex to deploy and more complex to support & maintain - not to mention that some claim that Lync has the highest TCO in the industry.

So the trick that will get you into the game with Lync is to align yourself with a certified and competent channel partner that can provide a single source of supply akin to that represented by an end-to-end UC solution from a single vendor. A partner who can orchestrate all the 'moving parts' into a simplified single point of procurement - for pre-sales, for product, for training and for services. And if they can overlay all of that with business planning advice and marketing support to bolster your go to market proposition & messaging you're holding a winning hand!
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Kevin Kieller 6/28/2013 3:26:59 PM

Art,

Thank you for your feedback.

Yes part 2 will cover hosted opportunities with Lync.
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Kevin Kieller 6/28/2013 4:16:45 PM

Roberta,

I appreciate your feedback. You are absolutely correct, it does take focus and specific skills to successfully deliver Lync voice solutions.

Some Microsoft VARs get into trouble if they try to deploy Lync voice without the appropriate voice, real-time networking and Telco experience. In my opinion application experience (Lync, Exchange, AD), network experience and telecom experience are the minimum requirements for any successful implementation. Also having training, communication and change management expertise greatly increase the chances of project success. See Living with Lync series on No Jitter for more specific lessons learned: http://www.nojitter.com/post/240154737/living-with-lync-lessons-learned.

Even given the high standards I note above, there are many strong Lync partners. Look for Microsoft Gold Competency in Communications and/or several verifiable reference accounts. There are also many organizations such as Deloitte who have developed very strong internal Lync expertise and are leveraging this expertise to deploy Lync voice and UC to hundreds of thousands of users globally (and who perhaps may offer this expertise eventually to their customers?)
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Kevin Kieller 6/28/2013 4:25:52 PM

Guy,

Thank you for your detailed comment.

You are correct that Lync is sometimes perceived (maligned?) as complex. The truth is that voice is hard but far less complex than UC. Because Lync delivers both a complete voice system AND a complete robust UC solution it is complex (although I would suggest no more complex than a complete Cisco UC or Avaya UC solution). I explore the complexity or simplicity of Lync in two No Jitter articles "Is Lync Really that Complicated?": http://www.nojitter.com/post/232301478/is-lync-really-that-complicated and "Is Lync Really that Simple?": http://www.nojitter.com/post/232601718/is-lync-really-that-simple.

I agree with you that you need to find a competent partner to help you implement successful Lync solutions (see more details in my response to Roberta). The right skills and experience are crucial.

As a channel partner if you decide to support Lync solutions you will need to ensure you have the proper people and tools to make you successful. Deciding to add Lync voice and UC solutions to your product portfolio is not a decision to be taken lightly however, as per my article, there are definite revenue opportunities for those who make the appropriate investments.
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Flor Flores 6/29/2013 6:29:03 AM

I have a lync client for iphone I can customize for customers (wync.me).
It is called Wync, in itunes
It does not require Lync mobility service.
Do you know of a way I can make money with Lync?
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Kevin Kieller 6/29/2013 10:36:56 AM

Flor,

I plan to cover application extensions to Lync in part 2 of this article; however, the challenge with your iPhone client for Lync is two-fold:

1. There are other clients that do the same thing and have been around for longer; e.g. iDialog.

2. Microsoft has released an iPhone and Android and iPad Lync client. Yes it requires mobility services but this is easy to setup and provides some significant features.

Kevin
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Helge F Nilsen 6/30/2013 12:48:18 AM

Totally agreement from Norway ! Success = SoW, planning in the front of the customer and well done deployment.
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Matthias Friedrichs 7/3/2013 12:43:32 AM

Thanks a lot! Great summary how VARs and SIs have to set up their businesses. Many partners around europe I spoke with told me exact the same challenges. Totally agree!
I'm curious to part 2!
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Craig McQueen 7/3/2013 5:03:12 AM

Thanks for the article Kevin. Another idea would be training and adoption services. To realize full value of the platform an organization may need to change some communication 'habits'. This is where training and adoption could help.
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Kevin Kieller 7/3/2013 5:03:39 AM

Matthias,

Thank you for the comment and the perspective from Europe.

Glad I've created a little mysterious related to part 2 :-)
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Kevin Kieller 7/3/2013 5:12:42 AM

Good feedback Craig.

I did mention training, communication and change management but you are absolutely correct that driving "Adoption" is key to successful uptake of Lync and is a great service VARs, SIs and resellers could offer.

Driving adoption and usage is something that is near and dear to my heart. I am especially interested in using "gamification" to encourage people to try out some of the many features of Lync - unlocking achievements or competing (in a friendly way) with their colleagues. To this end, I demonstrated www.TriviaEngine.com at the Living with Lync session at EC2013. More adoption and usage = better ROI for Lync and all collaboration tools.
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Marina Geronazzo 7/4/2013 8:44:21 AM

Great overview Kevin and thanks for the spotlight on SMART Room System for Microsoft Lync. Just to clarify the point on costs - it is less than you had noted. Each system includes one or more SMART Board interactive displays, and custom-designed, integrated components comprised of a codec, camera, speakers, a room control console and a microphone. In the United States, the suggested list prices are: US$19,999 for the small version, US$24,999 for the medium version and US$29,999 for the large version.
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Kevin Kieller 7/4/2013 9:28:35 AM

Thanks for the clarification Marina regarding SMART LRS pricing. Having used the product it seems very well priced and definitely expands the opportunity to use Lync effectively in meeting rooms.

This is a great area for VARs and SIs to offer great value to customers and generate good revenue with Lync.
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Kevin Kieller 7/4/2013 9:33:32 AM

Thanks for the clarification Marina regarding SMART LRS pricing. Having used the product it seems very well priced and definitely expands the opportunity to use Lync effectively in meeting rooms.

This is a great area for VARs and SIs to offer great value to customers and generate good revenue with Lync.

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