It was a busy 2018 for Mitel Networks as it rebranded itself as a leader in the cloud market, and the message to partners since then has been clear: Build business models around cloud, or risk getting left behind. That’s not changing in 2019, according to Mike Conlon, vice-president of channels for Mitel.
“The thing that should worry partners the most, and this is a message we have delivered consistently to our partners, is that if they’re not talking to their customers about cloud, then somebody else is,” Conlon told CDN, adding even some of Mitel’s highest-performing partners have experienced this already. “As long as they continue down the path of a single-selling motion, they may be losing customers on the backend.”
The Ottawa-based company’s $430 million ShoreTel acquisition in 2017 was one of the first major indicators that the legacy vendor was pivoting in a different direction. ShoreTel’s multi-tenant public cloud platform will make it easier, and more affordable, for companies to switch to the cloud. “It brought a whole new dynamic of channel partners,” said Conlon.
Mitel has more than 4,000 partners globally, and a “good chunk” – Conlon couldn’t specify exactly how many – have successfully adopted a unified communications as a service (UCaaS) model, offering customers a complete product line for on-premises, hybrid or cloud solutions. Mitel also boasts a strong service provider community, said Conlon, and more recently, a growing master agent community bolstered by a master agent agreement with TradeWins Brokerage, a deal completed in December 2018 to expand its presence in Australia and New Zealand.
“We’ve seen a huge spike in our ROI by hiring the right level of individuals with relationships and knowledge around the as-a-service business, and these agents are driving our UCaaS business to another level,” he said, adding they want to make similarly aggressive moves in other regions, too.
A subset of Mitel partners, however, are still in a transitional phase when it comes to selling cloud services, while another continues to sell on-premises solutions exclusively. Crossing the chasm is challenging, and not just for partners in the communications space, but for partners across the channel industry. In this case, a UCaaS model means revenue is distributed more evenly over a lengthy period of time as customers sign up for subscriptions, so partners experience a reduction of immediate revenue with the expectation that profits will actually increase over time. While Mitel’s focus moving forward is clearly the cloud, Conlon said it’s impossible to ignore business partners who help the company generate $1 billion with on-site solutions and maintenance contracts. Even Mitel’s executive vice-president of global sales and services, Todd Abbott, admitted that he doesn’t anticipate the on-site business to evaporate any time soon.
“We believe it’s just a matter of when and not if. But in our lifetime there will still be an on-site business…but our message to all of our customers is that you will move to the cloud, you’re already there for the most part. A lot of the applications you run in your business, like Salesforce and other cloud-based apps, are already there,” Abbott said in a video interview with Mitel partner Intelisys last year.
Out of Mitel’s 70 million global seats, more than 3.8 million are in the cloud. It wants to get all 70 million on the cloud eventually, in some way shape or form, but of course, that’s easier said than done. Competitors such as Avaya and Cisco are jostling with Mitel for enterprise market share while making the same shift to cloud-based sales. Pure-cloud vendors like 8×8 and RingCentral are nipping at Mitel’s heels, taking a bite out of the SMB market.
But Conlon is confident customers will see Mitel for what it is today – a modern UC vendor with one of the broadest mixes of public and private cloud offerings.
“I think our longevity is one of our strengths,” he said. “We’ve been around for 45 years…so we can give the best option to a customer of any size no matter what environment they’re in.”