Making Money with Lync – Part 1
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:
Architecture and design consulting
Implementation services (PS)
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.
– 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 PRI
s 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.
– 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.