UCaaS for SMEs: Best Practice Examples, But Alternatives Should Be Considered

G. Barton

G. Barton

Summary Bullets:

  • Major competitors should be able to offer unified communications-as-a-service (UCaaS)
  • Providers should work with customers/channels to create longer-term contracts that provide revenue stability with keener pricing as a reward for commitment

UCaaS is a much-hyped proposition/delivery model at the moment. The term is usually used to group together hosted IP voice alongside features such as instant messaging, audio/Web/video conferencing, email, fixed/mobile convergence (FMC) services such as single number dialling and collaboration services such as shared applications. The focus on a pay-per-use delivery model is understandable. UC remains a challenging sell, with northern European users in particular remaining sceptical. UC does not always deliver cost savings so much as gains in productivity, which can be hard to prove as return on investment. Thus a ‘no upfront invest, no fixed term’ message is very attractive and has encouraged many users, particularly SMEs, to take the plunge.  

Belgacom has provided a strong best practice model of how to structure a UCaaS proposition. Belgacom has created a number of predefined user profiles that tailor the service around different kinds of workers ‘Start’ (for public areas and meeting rooms), ‘Comfort’ (mostly single location office workers), ‘Favourite’ (tele-workers, people in the field) and ‘Intense’ (C-level, R&D, marketing, project managers). The realisation that not all workers need a comprehensive UC solution is not new, but the marketing/sales strategy is well designed and plays to the strengths of the UCaaS model. Belgacom’s ‘Intense’ bundle includes point-to-point video as an attractive extra feature. This creates enough ‘wow’ factor to, hopefully, convince those making the decisions following a trial phase.

Belgacom also includes training packages either included in the pay-as-you-go price (end-user training) or for a one-off fee (administrator training). This underlines part of the problem with the UCaaS model. Selling UC requires a lot of investment in the sales process. This is particularly true when selling to SMEs via channel partners. Channels are already suffering the loss of equipment sales if they promote a hosted service. The quid pro quo is, in theory, that the ongoing UC subscription fees will replace the lump sum generated by selling CPE. However, a UCaaS model is not conducive to stability: It is designed to let customers pick and choose, and turn services on and off. This makes predicting revenues very challenging, especially for resellers with tight margins.

There is also the question of price for the user. UCaaS makes a lot of sense for SOHOs and small businesses with a low number of users. These companies cannot expect to gain significant discounts for bulk-buying and are most vulnerable to seasonal fluctuations in demand. However, there is usually a premium cost associated with such flexibility, so medium sized and large enterprises are likely to achieve best value from fixed term contracts, which would also guarantee regular income for channels. The problem for providers is how to combine the price/income stability benefits with a flexible service. There is no easy answer, but a close relationship with the customer can allow a greater ability to predict usage, and create contracts that incorporate ebbs and flow in demands and predicted periods. This is what Colt addresses, for example, with its ‘Voice Freedom’ minutes bundles. Longer term contracts (especially those involving combined ‘bundles’) require a longer conversation between the channel and the customer – but both can benefit from this process.

About Gary Barton
As an analyst on the Current Analysis Business Network and IT Services team, Gary covers Business Telecoms Services for the UK and Ireland, with a particular interest in SME and public sector services. Gary’s responsibilities include updating and maintaining Current Analysis’s competitor assessments for the major telecoms companies operating in the UK and on a Pan-European basis.

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