April 18, 2013, 2:37 PM — You might not know BroadSoft if you're not in the telecommunications space. But if you use a hosted unified communications service from a provider like Verizon, Swisscom, or any of about 500 other telcos around the world, you may be a BroadSoft customer without realizing it.
That's because BroadSoft made a strategic bet not to sell directly to enterprises. Rather, it assembles the pieces necessary for telcos to host and sell unified communications (UC) services -- think voice, messaging, video conferencing, and so on.
Michael Tessler cofounded BroadSoft in 1998 after coming from Alcatel, and has since grown it into a publicly traded company with annual revenue of more than $160 million. In a recent interview with IDG Enterprise Chief Content Officer John Gallant, Tessler explained how Broadsoft sees the hosted communications landscape and the role of mobile devices.
Here are some of the highlights:
Abstracting complexity is the key to success: "One of the most important things that we focus on is really making sure that the end users can actually effectively use all those capabilities .... The very massive amount of interoperability to all the devices that make up the solution, so handsets and gateways and all the things that need to be done, but the end user really doesn't want to know how complicated that is. We've done a tremendous amount of work in making sure all that is really simple, integrated, easy to use, so that the operators can deliver much more effectively."
Why the rise of mobile gives operators an edge in selling UC: "As mobile operators launch hosted unified communications solutions and all that unified communications capability now exists in their mobile core, now they'll be able to go to enterprises and basically present a fully integrated solution. What does that mean? Every employee gets a single subscription and then you, as an enterprise, can choose -- does that employee need a hard phone? Do they need a mobile? Do they need a soft line? Do they need two hard phones? Do they need a hard phone at their house and their remote office? All of that now changes to really treating this thing as one, one single subscription .... This is where our integration and strategic alignment with mobile operators is critical for delivering on the next-generation mobile enterprise solution. We really feel great about the strategic choice we've made. I think selling directly to enterprises would be a distraction."
Watch out for "open" solutions that aren't really open: "I think competitively you have lots of vendor lock-in, which ultimately goes against the whole concept of moving unified communications into the cloud. As an enterprise you want to be able to use the max devices. You want to be able to pick phones. You want to be able to pick clients. You want to be able to integrate with your technologies. You maybe will want to substitute out a particular element of the UC stack for something you think is better or fits better in your environment. You want to be able to have that flexibility in these solutions. Unfortunately, the unified communications field talks a lot about openness and interoperability, but everybody seems to be selling closed solutions with very little openness."
The full interview follows:
John Gallant: What is the BroadSoft mission and how do you deliver on that mission?
Michael Tessler: At BroadSoft, we are delivering unified communications solutions to service providers around the world and enabling them to deliver unified communications as a service, really a new category of capability. Instead of enterprises looking to purchase software and servers and do all that integration on their own, we're enabling the service providers to come to market with a full unified communications solution that enterprises can consume on a per month, per seat basis -- very much like the transformation that took place with CRM and companies like salesforce.com. We allow the service providers to brand, using their own branding. We become a kind of BroadSoft Inside, inside the carrier's networks, and allow them to build their own brand with these unified communications solutions. That's one of the reasons why enterprise customers may not know us as a brand name, but would see us as powering services that they might purchase from their operators, whether those are fixed operators, mobile operators around the world.
Today we power a little over 500 operators around the world, and of those operators we power about 20 of the top 25 by revenue size. We're certainly well penetrated in the service provider marketplace globally.
Q: There isn't always a consistent definition of what unified communications is. In your view, what are the key components of that? What do you have to deliver to make a great UC solution?
A: The functional elements would be things like the old, what we call PBX functions, unified messaging, audio conferencing capability, desktop sharing collaboration, instant messaging and call centers or group capabilities, the front-office capabilities, the ability to interact on lots of devices -- mobile and fixed devices. Those are the functional elements that make up what we would consider the unified communications suite.
One of the most important things that we focus on is really making sure that the end users can actually effectively use all those capabilities, so a huge focus on user experience, with that user experience crossing over from handsets to desktops, whether it's Windows or Mac, to tablets to mobile phones, all the various operating systems, and really being able to make sure that all those experiences allow the end user to take advantage of this unified communications capability. What does that mean? It allows me to be more productive internally, allows me to be more effective in getting a group of employees together to collaborate. We can start dialoguing on instant messaging at present, and promote through conference and video. We can share documents. The way I love to think about unified communications is really using all these tools to be making sure that the employees will end up being more productive, both internally and also externally, with partners, customers. That's really the drive for this.
Q: So how quickly is this hosted UC market taking shape?
A: The big shift has been building for quite some time. I think the big shift that has taken place recently is that a lot of the operators have been delivering what I would call hosted PBX functions, very much voice-centric capabilities...
Q: The managed Centrex kind of thing?
A: Exactly. Centrex was not a loved term, but definitely in the hosted voice world, a much richer experience, passing lots of the control over to the end users, but very much centered around replacing the PBX into the cloud. I think what's shifted in the last 18 months is really taking that core and adding on the rest of the productivity capabilities that I mentioned before and transforming what I would call hosted voice or hosted PBX to now it's hosted unified communications capabilities. It's not a U.S.-only phenomenon or a particular market. We're seeing this happen in every market that we participate in around the world. One of the things driving that is that unified communications is a very complex service to build. Lots of services, lots of functional elements, lots of complexity. The operator can reduce that complexity for the enterprise, so they can get this rich unified communications suite without all the complexity and with interoperability and upgrades. They can really take advantage of the productivity gains without all that major investment in both capex and ongoing operating expense.
Q: One of the things that service providers are criticized for is that they haven't moved very quickly into the cloud services market. At least in the customers' minds, they don't have a great track record. What is it about the product set that you deliver that would make the enterprise user comfortable with this hosted UC?
A: Many times the challenge the operators have is that they're delivered a set of components of technology and they're required to integrate and create the end service. We've brought everything together for the operator from user experiences, and what I mean by that is clients that run on all the various devices that are delivered out of the network, upgrade out of the network, to the core functions, to the bridging functions, audio conferencing functions. The very massive amount of interoperability to all the devices that make up the solution, so handsets and gateways and all the things that need to be done, but the end user really doesn't want to know how complicated that is. We've done a tremendous amount of work in making sure all that is really simple, integrated, easy to use, so that the operators can deliver much more effectively. We've also focused for the operators on how to deliver the value proposition. We've done lots of work in terms of helping them do a better job of understanding the customers' requirements, and how to match that to the capabilities in the suite.
Another area that we've spent quite a bit of time on is how to really help those operators with things around delivery. You're going to deliver a unified communications solution in the cloud. How do you make sure that service runs effectively? You can troubleshoot it, you can monitor 7/24. You can really provide superior performance on the service. We have all that in our suite. We deliver that to the operator, so the enterprise customer gets a much stronger capability through the operators than, I think, where traditionally the operators are forced to bring lots of components from multiple vendors together. We really helped them with the messaging, the packaging, the sales promotion, the way to go to market, really to help them figure out a segment into the various enterprise markets. Also, on the back side we really helped them with the delivery side of it, which can get complex as it's a big shift of moving from traditional premise delivery to cloud where the operators have scale and will shine in terms of running very highly scalable, reliable, redundant infrastructures.
Q: Companies like Cisco and Avaya are trying to outfit service providers or channel partners to offer hosted collaboration services as well. Talk about the competitive landscape. Who are the big competitors and how does your approach differ strategically from what they do?
A: Most of the competition is the operator-branded service competing with an enterprise solution from one of the enterprise PBX providers. That's most of the competition that we see today. Many years ago we chose strategically to align and build our business around making a big bet on operators as the channel. We don't sell direct to enterprise. Our technology is built for operators, designed around operator infrastructure, designed around operator deployment models. Enabling the operators to create their own branded services is a huge differentiator. In addition to that, allowing them to make a much more healthy return on their investment in our technology, versus others that see the operators more as channels or resellers and are really looking to push their brand through those operators. Those are the strategic set of differentiators.
Then there's a technology differentiator where we've been built from the ground up to being multi-tenanted in the operator network, able to interwork with both existing mobile infrastructures, 3G, 2G infrastructures and also next-generation IMS infrastructure. These are all the things that operators understand and care about. All of the what I would call enterprise communications companies don't really understand that operator environment, don't come from that environment, and haven't made a strategic bet that the operators are going to win a significant portion of this unified communications marketplace.
Q: Would you ever sell directly to enterprise? We have more and more of the readers that are trying to build private cloud kind of environments at scale. I know they can never replicate the scale or the capability that a service provider has, but they certainly are in the market to try to do things in a much more efficient and unified way. Is that a market you'd ever target?
A: Not really. Strategically we've decided to focus on service providers. We don't have an enterprise brand. We have a very well known operator brand and service provider brand. It's not really a strategic direction we'd like to follow. One of the things that we're very excited about is that we think this enterprise communications world is moving not only from enterprise to cloud, but from cloud to mobile cloud. This is where our integration and strategic alignment with mobile operators is critical for delivering on the next-generation mobile enterprise solution. We really feel great about the strategic choice we've made. I think selling directly to enterprises would be a distraction.
Q: You've mentioned mobile a number of times, and that's obviously a huge issue for our readers. I think they're getting through the first stage of dealing with mobile in the sense of coming up with the right policies or approaches to BYOD. But in your world, how do you see enterprises really capitalizing on it? What does this hosted UC allow them to do to really take better advantage of mobility?
A: What's really interesting is that most enterprises have considered the enterprise side of it, what we call the PBX functions inside the premise as one complex, and then all of the users running around using mobile phones as a separate challenge. With some feature-interworking through clients, or some bells and whistles they kind of make these things work together sometimes.
What really is the opportunity that is presenting itself is that as mobile operators launch hosted unified communications solutions and all that unified communications capability now exists in their mobile core, now they'll be able to go to enterprises and basically present a fully integrated solution. What does that mean? Every employee gets a single subscription and then you, as an enterprise, can choose -- does that employee need a hard phone? Do they need a mobile? Do they need a soft line? Do they need two hard phones? Do they need a hard phone at their house and their remote office? All of that now changes to really treating this thing as one, one single subscription.
And the really interesting thing here is with that transformation the enterprise customer gets something really important, which is cost savings. They're not buying a PBX extension or a unified communications suite and a mobile phone for their users. They're buying a single subscription and then outfitting that user with devices given their job function. They get this tremendous cost-saving of bringing down the number of subscriptions from two or three to one, and they get the power of equipping every single employee with a unified communications suite, from voice mail to audio conferencing to video conferencing, to instant messaging across the organization, to desktop sharing, a really rich set of capabilities that are now available to you anywhere on any mobile device. The real change is that moving that enterprise logic from the premise to the cloud. The next step that I think is just starting to emerge is moving that into what I call the mobile cloud or mobile core and making mobile the front and center of these solutions. I think there's going to be a dramatic change in the way that enterprises equip their employees to be productive.
Q: What are you doing to integrate these hosted UC capabilities into other cloud-based services and applications that people are using?
A: Because we're in an operator's network, a thing that is quite important to them and obviously important to the end users has got to be openness of the platform. We for many years have had a set of open APIs and a pretty rich recruitment of developers that build bridges from these hosted unified communications solutions to various vertical applications to various CRM systems. We really allow the unified communications capability to drive the business process, so linkages to CRM and to Salesforce.com or a number of other CRM products out there, linkages to vertical software for hospitality, education and professional services firms, legal. We try to find ways now to take that very rich UC suite and enable that across those business processes that the enterprise might be using. I'm using Salesforce and I'm using hosted unified communications and these two things work well together and the plugs that are available and the integrations that are available are really simple and scalable in the cloud network. It's a very important part of our strategy to make sure that this unified communications capability that we're delivering through the operators is really treated as a platform that enterprises can build on and integrate with their other capabilities.
Q: As a CIO or senior IT person, what are the key things you should be looking for in UC as a service?
A: I think the enterprise customer should really be looking at operators that have the ability to deliver a complete unified communications suite, not just one component of it. I think over time you're going to be looking for service providers that can deliver this mobile integration. I think it will become more and more critical to strategy. I think what's really important is to validate that the service providers can deliver the technology with scale, with high quality, with a high level of support. That's another element here. You're clearly trusting someone else to run your enterprise network. Make sure that trust is warranted, and that you feel comfortable that the operator can in fact deliver a high quality service.
Q: The flip side of that is what are the things they should watch out for when they're dealing with a service provider on hosted UC?
A: I think that you want to make sure you really have a solution that's open, expandable, that you can really mix and match components. I think competitively you have lots of vendor lock-in, which ultimately goes against the whole concept of moving unified communications into the cloud. As an enterprise you want to be able to use the max devices. You want to be able to pick phones. You want to be able to pick clients. You want to be able to integrate with your technologies. You maybe will want to substitute out a particular element of the UC stack for something you think is better or fits better in your environment. You want to be able to have that flexibility in these solutions. Unfortunately, the unified communications field talks a lot about openness and interoperability, but everybody seems to be selling closed solutions with very little openness.
Q: What should we expect to see from BroadSoft over the next year?
A: We're very focused on expanding the unified communications stack. We have quite a bit of work going on to continue to refine the user experience. We do lots of research. We have a fairly rich set of user experience clients out there. We continue to work with both our operators and their end users on fine tuning that experience, making sure that all these capabilities are easy to use. We're clearly building out more capabilities around integrating with mobile networks and we're going to see more and more of our customers go to market with these integrated mobile-led solutions. I mean that's going to be a huge differentiator in the market. We're going to see unified communications solutions that are really first and foremost led by mobile access, mobile devices, and then followed in with fixed devices and with soft clients. We have a number of operators, customers of ours, who launched services like that in Europe. The customer receptivity is really high, and they really never understood they could buy a single subscription. They really thought they'd have to buy PBXs and mobile subscriptions forever, and the concept of being able to buy just one has been extremely powerful in a number of market launches we've seen in the European marketplace. We've seen a really, really strong drive and I think you'll see a lot more of that over the next 12 months.
Q: Is there an enterprise customer that's working with one of your big service providers that we can show as an example of this?
A: I don't really have the ability to talk about the end users. But what I'll do is I'll use BroadSoft as a wonderful end user. We're about 700 employees in about 21 markets. We operate seamlessly across time zones and geography. I work effectively anywhere I am, I have hard phones and soft clients. I'm able to work at home, on the road. I can do video conferencing from hotel rooms on my iPad. The ability for us to just work so effectively across the global landscape is powerful. I think about what it would take to implement what we use internally with premise-based technologies, the cost, the complexity, the infrastructure, the installation - unbelievably complex. Eighteen months ago we moved into our latest office here. Basically, I just unplugged my phone from my last office, plugged my phone in and I was up and running in five minutes with all my unified communications capabilities. To be able to transport yourself anywhere and be connected with the cloud, and have access to all your unified communications capabilities, that's very powerful, very cost effective, very productive for employees.
Q: You have one sentence here in the elevator with a CIO, and you say 'you should care about BroadSoft because...'
A: We're powering the unified communications and the solutions service that's coming to you from your service provider.