What Convergence Means to the Channel
Today Mitel announced its call processing software can be virtualized in a VMware environment. This isn't just another feature – it is a game changer. Today for Mitel, and potentially for the industry, and specifically for the channel.
Convergence has been promised for nearly a decade, but it arrived it drips and drabs. First it was VoIP packets on Ethernet, followed by various features of convergence including unified messaging, WiFi Phones, click to dial, presence, etc. But Mitel's news isn't just a new feature. It represents the final step in convergence; server consolidation. Now IT can manage, plan, and implement voice and data with one plan for operations, capacity, and disaster recovery.
The voice channel has been moving away from hardware over the past several years, and the inevitable elimination of hardware was predictable. Soft phones, SIP phones (from Internet houses), and SIP trunks wreaked havoc on the hardware business model. But the elimination of server hardware is far more significant because the skill set required to sell and support virtualization is likely already in place at the customer. Even more, it represents a mental shift. Prior forms of convergence were technical, not human. There are still differences between voice and data people. Virtualized servers move the voice system clearly into the realm of the IT administrator.
This means changes for the channel; sales, support, skills, and methods. Many voice and data VARs already made the leap and offer converged services including managed services, servers, phone systems, applications, messaging, and phones. But more VARs remain steadfast in either voice or data. It is not just a matter of adjusting the line card, the two business models work very differently. Margins, trip charges, and warranties are part of the differences. On a new system, if a feature doesn't work properly and a bug fix is subsequently offered from the manufacturer; should the dealer install it for free (warranty) or is that installation billable? The answer is often determined with this question; voice or data? Voice systems carry a higher implied warranty and installations are typically fixed bid. If voice and data can't be separated in the data center, either can the charges and that will create some confusion.
Technology convergence was the easy part, the human factors involve heavy lifting. IBM uses the term "remissioning," and remissioning an employee can be a painful process for all involved. There is a slew of differences between voice and data staff. Voice technicians expect a company truck and usually provide their own tools and get paid a wage. IT technicians generally provide their own transportation, expect a company laptop, and get paid a salary. So during an after-hours cut-over, one is getting overtime and one isn't. See how long that lasts.
Remissioning also means learning new pitfalls. In the case of the Mitel dealer, Mitel offers preconfigured hardware ready for Mitel installation disks. Tomorrow's Mitel dealer can create a customized resillient solution on a thrid party server with multiple instances of servers resilliently configured in a virtual environment. The dealer will need to deal with troubleshooting issues between Mitel, the hardware maker, and VMware as well as design, configure, and acquire the server to meet customer requirements. These are not necessarily difficult tasks, but ones the dealer likely didn't do last week. From a voice perspective, it means new types of implementation pitfalls - the DVD reader is the wrong size for the server, server configuration decisions, integration into an existing IT production environment. Data VARs too will experience new kinds of issues as they embark on ACD queues, complex IVRs, and troubleshooting one way audio.
Virtualization of voice represents another problem (or opportunity depending on perspective), and that's voice centralization. Historically, voice systems were always on-site and serviced by a local dealer. Virtualization, SIP, and broadband networking is driving a trend for organizations to centralize voice systems into fewer or one location. That means one dealer can replace many. If phone systems don't need to be local, does the dealer? And if not, what will be the key characteristics customers seek in selecting their primary dealer? Dealers specializing in virtual implementations won't be restricted to local customers, nor should it be assumed that virtual implementations will take place on-premise. The Mitel VMware deal creates a private cloud opportunity, but there are an increasingly number of public cloud providers offering VMware based infrastructures too. There is also the opportunity for dealers to transition into the service provider role and use the benefits of virtualization to build a hosting service. Every side of the traditional channel equation is under pressure.
Mitel created a technical edge and an interesting new partnership with VMware. To fully realize its potential, Mitel needs to both push its existing channel into virtualization and attract existing VMware dealers to resell Mitel. It also undoubtedly wants to see expansion into larger businesses. Is it a coincidence that Mitel is also launching new channel programs and tools this same week? About two years ago, Mitel made a parternship with Sun involving new products optimized for Sun Servers and desktops – and now Sun Computer is among Mitel's top resellers. It is not known if Sun earned net new business or grabbed it from existing dealers, probably a little of both – but it is safe to conclude Sun isn't focusing on the SMB. Nor will the majority of new VMware dealers that resell Mitel.
The emerging voice dealer clearly needs to be embracing the total solution, and that solution isn't confined to traditional voice. Today is just one announcement. Changes were already imminent, and today's news didn't change that. But this round of convergence is different, and it is time to start discussing what the future dealer looks like.