4/6/12 - Votacall Hosted VoIP - Boston, Massachusetts - It is truly scary the direction that the large carriers are trying to take business-class Hosted VoIP in. This technology is a true game changer and obviously becoming a disruptive technology, but fear uncertainty and doubt play a huge part in the wide adoption of Hosted VoIP. Business-Class VoIP is a technology that will alter how we do business, but only if appropriately implemented and supported. Bottom line, it must be handled with care. VoIP should be a managed service, the key word is service, not a managed number or commodity. I can see the large carriers, as they lose marketshare, using Business-Class Hosted VoIP as a kick save and not as a primary solution which has true buy in from the top through engineering down to sales and support. A VoIP provider's buy in to the technology and corporate culture will be the difference between an enhanced customer experience and a detrimental one. Remember, we are not talking about a POTS line, we are talking about a managed and ever changing corporate communications tool. The reputation and the growth potential of Hosted VoIP can and will be harmed if treated simply as a price on a contract. Warren Buffett has been quoted as saying, "Price is what you pay, value is what you get." This should be the tag line for Hosted VoIP the Technology. Below is a great article written by Dave Michaels on the subject.

Pork Bellies and Hosted Voice

It is happening and no one seems interested in stopping it – that hosted voice services are rapidly becoming a commodity service. Personally, I am opposed to such ruthless and irresponsible commerce, but I am just one. The most powerful vendors and service providers are conspiring to eliminate visible product differences.
Technically, a commodity is a good not a service – the issue I am raising is if it is a good service. A commodity is a generic term for any marketable item for which there no qualitative differentiation. For the past five years or so, we have seen hosted voice rise in popularity. It was initially brought to us by the ISPs that got themselves an Asterisk box – many failed, but many flourished. Flourished so well that it attracted more providers. New vendors emerged that targeted the service provider markets. Enterprise vendors repositioned as well. Traditional telecom dealers found they could also host, then came carrier-class offerings, and major national carriers.
It has been slow, but the traditional enterprise vendors also repositioned to capture some of the burgeoning demand. Siemens Enterprise, Interactive Intelligence, and Mitel were early – more recently we saw ShoreTel, NEC, Aastra, and Avaya jump in as well. Cisco took a different approach, and targeted its UC-focused Hosted Collaboration Solution (HCS) to major carriers including Sprint, AT&T, and Verizon. Then there’s the old guard – a bevy of providers running Broadsoft’s portfolio, Fonality, 8x8, and Thinking Phone Networks. You can’t throw a dead cat without hitting at least four service providers.
That’s ok though – we need more service providers because demand continues to grow. We need an ecosystem of providers so that we have choice – the ability to match specific needs with the unique characteristics of each provider.
There is only one problem. The unique characteristics of each provider are not easy to understand. I’ve been talking to a lot of them, and although I am fairly certain huge differences exist among them, I can’t prove it. The providers are forcing price as the key differentiator, typically the worst strategy in a competitive market.
I saw this before – I remember asking the Dodge salesman the difference between the Dodge and identical Plymouth. He said, "there isn’t any." Plymouth is gone now.
Differences are important. We engineers like to be sure we have the right partner. Let’s start with features, those should be easy to segregate – voice vs. UC, etc. A growing percentage of providers are expanding from voice services to UC – particularly the carrier-class solutions. But even those big differences can be confusing. They all claim to support things like “mobility” and “collaboration,” and all offer an iPhone client. But they don’t mean the same thing. It is up to the prospective buyer to play 20 Questions to figure-out the feature differences: what this client does, and what that vendor means by collaboration.
Beyond features, perhaps the issue is the phone. Two problems, most hate phones and will do everything they can to talk you out of them. The second issue is if you have to have one, they mostly offer the same phones. Since most hosted providers don’t make phones, or profit from them – they sell whatever they can at the lowest possible price. The phone itself offers no meaningful part of their value proposition, raises the cost of admission, and complicates deployment.
So that moves us to the softphone client - but that can also be hard to evaluate without really using it. That’s assuming the vendor even offers a soft client – many use generic third party soft endpoints.
Instead, let’s look at the corporate profile of the provider – let’s make sure the proposed provider has the financial wherewithal worthy of such an important, mission critical operation. Darn. The vast majority are either private, or part of a much larger public organization. No way to tell if this hosted thing is profitable business or an experiment.
Maybe the trick is to ask for reference accounts. Of course all companies have a handful of selected cherry picked references. The problem here is most customers are confidential. There is really no way to determine customer churn, satisfaction, or horror stories. Almost all hosted voice providers insist they service enterprise customers, but few will back it up with names and references.
When in doubt, being a critical service, it is reasonable to insist on a Service Level Agreement guarantee (SLA). Basically a document that says the provider pays an agreed fee/penalty if services are not provided. Darn. Once again, few providers will back their service claims with anything more than discount on services. It’s particularly scary since most report rapid growth and scaling a data center can be expensive.
It’s a problem for SMBs and enterprises. Lots of providers are using the exact same software from Broadsoft. Lots of carriers are using the exact same software from Cisco. Most of the providers downplay differences between other providers with the same infrastructure. Sure they might package things differently, but the overall features are pretty darn close. So how do we select the right provider?
I know for a fact that some service providers are going to great lengths to create differentiated services; they are building out their data centers and customizing their software solutions. But they won’t let me write it. It’s a secret. For some reason, we seem destined to a commodity market.
There seems to be a conspiracy afoot to turn hosted telephony into a commodity – to insist that price be the only real differentiator. It is a shame. The market is taking off, and customers should be able to select characteristics (features, SLA, demographics, etc.) that matter.