My last column focused on Google (News - Alert) Wave, and I intend to write more about that in upcoming features. This column addresses a different topic, but provides a good counterbalance to the Google Wave story. Last month, BroadSoft (News - Alert) announced some notable developments around its hosted unified communications offering involving Microsoft and Chinook Hosting.
Before reviewing the details and implications for service providers, the first thing that caught my attention was the fact that Broadsoft is using hosted unified communications, with Chinook being the hosted provider. As a company, BroadSoft has grown to the point where it is an ideal customer for hosted services, both in terms of critical mass and global operations. Stories rarely come up about communications companies using their own solutions, and this one really resonates for my column. Can you think of a better way for a company to validate its technology for their target audience?
Looking at the bigger picture, this news is about how three companies now have an integrated offering that makes hosted IP communications attractive, not just for SMBs, but enterprises as well. I’ve written about hosted services before, and it’s long been heralded as the ideal solution for SMBs. Despite the fact that the technologies around hosted services work pretty well, market adoption has lagged expectations. The issues are more related to classic marketing challenges, such as limited awareness, little understanding of the value proposition, and simple inertia to change from using telephone systems that still work perfectly well.
These obstacles are very real, but I think BroadSoft’s news does a great job of addressing them. There really are two served markets here, and both should benefit. First would be the service providers, as they need the right solutions partners, not just for the hosted offering, but to also have the right focus to serve their customer base. This brings us to the second served market – the service provider’s customers. They are typically SMBs, and need a lot of hand-holding to adopt hosted. This is not the forte of most service providers, but the job of bringing the hosted story to end users becomes easier with a highly integrated offering from partners who understand the needs of SMBs.
Each company in this mix brings something distinct – BroadSoft, Microsoft (News - Alert), Chinook - and together they give service providers a hosted solution that is pretty hard to beat. To further explain, consider briefly what each party gains from this alliance. First is BroadSoft. Having recently consolidated its space with the acquisition of Sylantro, it is now the dominant vendor of IP applications platforms, and has a substantial global customer base serving SMBs. With the company’s technology firmly embedded in so many carrier networks, BroadSoft is in a great position to drive the adoption of hosted services, and get SMBs to go beyond POTS into the richer world of Unified Communications (News - Alert). However, they cannot do this alone.
Enter Microsoft. In most cases, Microsoft leads rather than follows, but voice has never been their strong suit. On the other hand, they have something BroadSoft does not – a nearly ubiquitous installed base of SMBs that relies on them for almost every form of communication except voice. It does not need BroadSoft for SMBs to benefit from their core offering, Exchange. SMBs are quite familiar with everyday applications such as Outlook or messaging, and often use these in isolation from other communications tools.
Office Communications Server is a more complex applications suite, and while it is more akin the unified communications concept, it is less widely used than Outlook. However, advanced features such as Presence, IM and conferencing deliver the kind of value that make UC so compelling, but Microsoft does not really have a complete solution. In this regard, they have been partnering successfully with BroadSoft for some time, but the overall hosted value proposition is still missing some pieces.
This brings us to Chinook. The key to making hosted service attractive to SMBs is ease of use for the end user and seamless integration for the network. Generally, the best reason for using hosted is limited IT expertise in-house, even if just for simple VoIP. Today, VoIP will appeal to some as a standalone offering, but the trend is very much towards an integrated solution, of which unified communications is the best example. BroadSoft has evolved to UC with its BroadWorks platform, and Microsoft embodies many elements of UC with OCS.
Either of these pieces is more complex than basic VoIP, and to get the best UC experience within a business environment using Microsoft, you really need to have BroadWorks and OCS working together. BroadWorks provides a full featured UC platform that goes well beyond the PBX (News - Alert) it was designed to replace, and now includes mobility and video, along with a range of Web 2.0-based collaboration capabilities under the Xtended umbrella.
By integrating all of this with OCS, SMBs get a UC solution that goes well beyond converged voice and data services. UC now becomes a more powerful tool that allows business to leverage their technology investment beyond everyday one-to-one communication. We’re now of course into the magic realm of productivity enhancements that help us work smarter and collaborate more effectively with both our co-workers and the outside world.
This notion is still a big leap for SMBs, but BroadWorks really does make OCS a more powerful solution, and brings a stronger value proposition than either company can deliver individually. Not surprisingly, though, this is easier said than done. I’m not a software engineer, but I’ve long known that OCS can be difficult to integrate with other applications, and is beyond the realm of most SMBs. This is the value Chinook Hosting brings, and they have a long history of helping businesses get the most out of Microsoft’s solutions.
Building on this expertise, Chinook has developed a hosted UC offering that fully integrates BroadWorks with OCS. With this solution, service providers give their customers more reason to use OCS and benefit from advanced features they could not get just with Exchange. By adding BroadWorks, they bring the best of telephony to the Microsoft product set, ultimately creating a stickier solution, and making it harder for customers to switch carriers.
Even better, Chinook can enable service providers to do this with all their customers. For SMBs, a fully hosted solution is the most practical, as they will typically not be able to manage this level of integration between OCS and BroadSoft in-house. Larger businesses, on the other hand, may already be using OCS on-prem, and not see a need to switch to hosted OCS. Chinook can still integrate hosted BroadWorks with premises-base OCS and support a complete UC solution that carriers can re-sell to their business customers.
So, for either type of customer – SMB or enterprise - service providers can now offer a more competitive solution. Once they become comfortable with the hosted services concept, they should then see how this enhances customer retention, offers better ARPU opportunities than POTS, and on the operations side, hosted makes the job of network management easier and less expensive. On the business side, not only can carriers better serve existing customers, but hosted allows them to enter new markets and sell to new types of customers they could not previously cater to.
The pieces have been there for a while with BroadSoft and Microsoft, but they needed the missing link of Chinook to pull everything together in a way that service providers can relate to. Each of these companies brings something distinct to the table for hosted, but they need each other for this to truly work. Of course, this is not the only solution out there for hosted, but in terms of making UC work for such a large market opportunity, it’s a pretty attractive way for service providers to bring two industry-leading solutions under one roof.
Finally, to come full circle, if anyone should be concerned about the potential impact of Google Wave, it’s Microsoft. To protect and extend their installed base, the sooner they can help bring hosted solutions like this to market, the better. I have no doubt that both types of offerings will find a home, but Google Wave is the new game in town, and nobody yet knows how that story will unfold. I’ll keep trying, though, and will revisit Wave soon.
Jon Arnold, Principal at J Arnold & Associates, writes the Service Provider Views column for TMCnet. To read more of Jon’s articles, please visit his columnist page.
Edited by Amy Tierney