Transcript for UCStrategies Experts (and Guests) Discuss ShoreTel Partner Conference
Blair Pleasant: Hi. This is Blair Pleasant. Today we're doing something a bit different for our weekly podcast. We’ve invited a few non-UCStrategies consultants to join us today. As analysts and consultants we all attend many vender conferences aimed at providing us with information on their products, directions, strategy, and so on. Some venders have separate analyst and consultant events, while some combine them. Analysts and consultants have different business models from each other and we have different expectations for what we hope to get out of these conferences, but we all need to be current on the vender’s offerings and direction.
A couple of weeks ago, ShoreTel had a combined analyst and consultant conference also as part of their Champion Partner Conference. This is something new to ShoreTel – combining the analyst and consultant conference – and this was the first time that they invited consultants. So we thought it would be interesting to talk about how the analysts and consultants viewed the event, what our takeaways were, what our expectations were, and if they were met.
One thing I’d like to talk a little bit about is, is there a difference between the way analysts and consultants go to these events and are our takeaways similar or different, and are we all hoping to get the same thing or different things out of these? We’re going to discuss specifically the ShoreTel event, but next month we’re going to have a separate podcast talking more about analyst and consultant events in general and who hit the nail, who missed the mark, what our expectations are, who met them, and maybe a check list talking about best practices for some of these events.
So, joining me today are Byron Battles of The Battles Group, Melissa Schwartz of Schwartz Consulting, and John Thompson from Thompson-Ross & Associates. They’ve been longtime friends of UCStrategies and regulars at our UC Summit. We’ve also got some of the usual UCStrategies folks who were at the ShoreTel event, including Jon Arnold and Dave Michels.
Just briefly, my key takeaway of the event was a big focus on the cloud and ShoreTel’s ability to do both premise and cloud and hybrid. Although they did say that they were the only ones who could really do this hybrid, which I think they might have overestimated that a little bit, because clearly there are other venders that are doing this. But really the bulk of the discussion was about cloud and how ShoreTel is well positioned in this area – which I think is true. There was a lot of discussion about moving up-market. ShoreTel has been doing a good job in gaining winning sales with larger customers and they’re really not an SMB player anymore the way they used to be, and they’re doing a good job – especially in government. They told us about several different government sales they’ve been getting.
To me, those were the big two takeaways. But we’ve got several people on this call, so I’m going to turn it over to some of the other folks here. Jon Arnold, let’s start with you. What are your thoughts about the event and what were your key takeaways?
Jon Arnold: Yeah, thanks Blair. Well, I’d say, wearing our collective analyst hats, I think we saw and concluded most of the same things. For me, the cloud was certainly a big storyline. As analysts, of course, we are a drop in the bucket compared to the overall audience. I think we need our listeners to really understand kind of how these events unfold. ShoreTel’s event is fairly typical, and we’ll talk more about other events later in another podcast. But, they had over 1,300 people there. That’s a pretty big crowd. These events keep getting bigger and bigger every year. And, of course the audiences, in this case, the partners and the channels, so the messaging that we hear at this event isn’t specifically tailored to us as analysts and consultants. So for us, the takeaways really were – keeping in mind our role at that event – most of the messaging, especially from the executive team, was really targeted at getting that channel community on-side and in-line with their road map. So, those messages were pretty much as expected. But, I think there’s an interesting thing to watch here with ShoreTel as they grow as a company – how they sort of transition their culture and go up-market, as you said earlier, Blair. I think one of the big takeaways was actually one of the very first messages from Peter Blackmore emphasizing this importance of keeping the culture of ShoreTel – don’t lose the passion, as he would say, because they’re growing as a company.
ShoreTel is a bit like the SMB’s themselves – a small company. Now they’re growing. They’re catering to bigger markets, more customers. There is that concern that the channels want to see, that they are friendly, because ultimately this is coming down to a battle between Microsoft and Cisco and Avaya up at the top, and then ShoreTel kind of is a solid tier two player trying to move up-market. So, they – in a lot of ways – are one of the real viable alternatives to the major tier one players. So, for their audience, they have to stay friendly, stay right-sized, and keep that culture, as Peter was talking about.
I think they’re doing a pretty good job of that. And from our point of view as analysts, it’s hard to argue with that. We get the feel over those two days we were there of talking with the channels and everyone, and there seems to be a genuine connection that they have. I think that’s really valuable because they need that help, being a channel-based business. So, we’re there to watch how they kind of get that story out, and I think they do a pretty good job of that.
The other thing, though – coming back to Blair’s comment – yeah, I think the cloud is really… really, I think they’re betting the farm on this in the sense that the M5 acquisition really puts them into that space. And sure, yes, hybrid is a possibility, but, it was very clear to us, I think, from the early presentations, that this go-to-market strategy still really hasn’t taken route with the channels yet. They’re only going to have a handful who are going to trial these new programs for the channel. So it still remains to be seen whether they’re going to have success selling this. If they do, I think they’ve got a great story. But, if they don’t, this could be seen as a costly acquisition that really sets their financials back and confuses the market. There’s always that possibility.
We hear a lot about ShoreTel not being the most top-of-mind company out there. So again, this coming-to-market with ShoreTel Sky is a big move, and if it takes, they’re going to be fine. But, if it doesn't, they’re going to have a lot of kind of “reinventing” to do to make it all fit. Whether their future depends entirely on the cloud business taking off, we don’t know. It is clear that the prem-based business is doing okay, but those numbers are going to slow up. They know they need a strategy to move on from that, and they showed us that. But, I still think there’s a good business there on the prem side.
Anyways, aside from that transition, I think the other point of frustration we all shared was, of course, all of the NDA stuff. All the good stuff that we saw and heard at the conference we can’t really talk about here. I would just certainly say quietly that there were some good things that I think will have a positive impact on the market when they become public. And that’s a good story because as we know, they’ve been behind the curve on video, they’ve been behind the curve on mobility, but I think they’re going in the right direction now to become more competitive. They know they have to be because the channels need this; their customers need it.
So, those would be I think for now, Blair, my main takeaways and I think others may feel the same. But there are lots more we can talk about. But let’s move on now to Dave and get on to the consultants from there.
Dave Michels: Thank you, Jon. Those are interesting points. I agree with many of them. A major point of these conferences is kind of a rah-rah to get you excited about the brand. And I’m generally impervious to these things. I have to say, however, that I came away from this conference feeling much better about ShoreTel and I think that their messaging and their track record is resonating with me. They shared that they grew their new customers 46 percent. They increased sales 22 percent. They had a record quarter – Q4. It’s not just good numbers, but it’s good numbers in tough conditions when we’re not seeing growth across the industry and I think it’s impressive.
I used to kind of dismiss ShoreTel as they were just lucky or it was just a fluke or it just happened this one time, but I’m really beginning to feel that their message is resonating and that their team is kicking in. There were some definite transitions at this event that I took note of – you shared some of them, Jon. One of them, though, is just that they were refreshingly honest. I’ve always had a degree of, or a sense of inflation with a lot of the things that they say. I have to kind of tone them down and deflate them. But, I felt that they were a little more honest this time and more frank about where they are in the marketplace and more frank about their product – acknowledging some of the weaknesses as well as, of course, the strengths. I respected that. It seemed to be a little more mature ShoreTel, in my opinion.
To your point, Jon, they’re definitely in the midst of a big transition. I think they’re going from… we’ve always known them basically as a hardware appliance type of company. And, not only are they going from hardware to software, but they’re going from product to services and they’re banking a lot on their M5 acquisition – now called ShoreTel Sky. Based on the amount of attention ShoreTel Sky got at the event, it seems pretty clear to me that their future is largely based on services. Their strategy is significantly going to be wrapped around that acquisition. But unfortunately, that raises a lot of questions.
But I understand the opportunity. I mean, the hosted spase is consistently growing. There is no branded leader. And ShoreTel is probably the industry’s best at marketing. So they’re probably seeing a fairly significant opportunity here, but exactly what they’re going to do isn’t clear. They talked a lot about a hybrid vision Mitel and Fonality have both attempted that, and haven’t really been successful productizing that, in my opinion. And, I think ShoreTel has got some opportunity there. They’ve been really good with, for example, their database replication between branches. So if one branch was a hosted branch, could that database replicate appropriately and what not? There could be some interesting opportunity there. I’m really anxious to see how they pull off their hybrid vision. I think there’s also some big opportunity around video because I think video is also moving more from product to services. And if ShoreTel can basically offer a video solution that ties into their hosted services, that could be a competitive advantage.
But they have this transition that they’ve described and that I’m seeing has significant amount of risk and heavy lifting ahead. I’ve just gotten kind to the point where I’m no longer going to bet against them. I think that they might be very successful at this.
One of their big challenges is their management team. I mean, Peter Blackmore has been there for less than two years. In that time, he has dramatically changed the leadership team at ShoreTel. I counted up the new senior managers that have started in 2012; considering Blackmore only started basically… it was December 2010 – so basically less than two years. But you've got you know, Dave Petts – SVP at Worldwide Sales, Dan Hoffman – GM of the Cloud Division, Joe Vitalone – VP of Channel Marketing, Mark Arman – VP of International Sales, Tim Gaines – VP of North America. All of those people have a start date of months of this year. And then, Don Joos – SVP of Business Operations – started in 2011. So a radically new team coming together and that’s got some risk, of course, associated with that as they figure out how to work with each other.
I think they’ve also got some pretty big technical challenges. They’ve really got to figure out SIP well. They’re going to be producing their first phone for the M5 environment soon. We’ll see how well they do that. They’ve really got to figure out virtualization, in my opinion. They’ve really got to figure out video. They’ve really got to define, as Jon said, their go-to-market model – their channel model around Sky and Hosted. I think they’ve got some real challenges around international expansion.
So, by no means is it going to be an easy task for them, but they’ve got some momentum. And, I really think their messaging is coming together and their success rate is indisputable. So with that, I’ll turn it back to you, Blair.
Blair Pleasant: Okay, thanks. So now we're going to turn it over to two of the consultants who are friends of UCStrategies who were at the event – Byron Battles and Melissa Schwartz. Byron, would you like to tell us about your key takeaways and what you thought about the event as a consultant?
Byron Battles: Yes. Thank you, and good morning, everybody. My name is Byron Battles. I’m an independent consultant, as is Melissa. We’re both members of the Society of Telecommunications Consultants (STC). When we go to these types of events – at least for me specifically – I’m looking for information on the products and services that the manufacturer is providing. And while we got, I thought, a realistic and an appropriately prioritized roadmap, because of the NDA, there’s not much more I can say about that. But, I did feel like it was realistic and made a lot of sense moving forward.
So, as a result of that, I feel pretty good about what ShoreTel is going to be offering that could be potential solutions for my clients. As we deal with clients, every manufacturer has good technology. And, in many cases, it has become kind of the buy-in stakes for a project, and everybody’s technology is good. What becomes very important to us is the partner: who is going to put it in, and who is going to support it? As a result of the event, I did get to meet some partners. I felt like there was a genuine enthusiasm among the partners that felt like they were buying into the direction that ShoreTel is going. And ShoreTel unveiled some tiered compensation and certification types of programs that I think will appeal to the different partners, depending on how much they want to invest and reap in terms of increased revenues from the different products and services.
The other part that I look for is establishing and building relationships with not only the partners, but with manufacturer personnel. I thought that the ShoreTel executives were very approachable during the entire event. Many times we will be exposed to them for an hour. They’ll come in, do their pitch, take a few questions, and then we’ll never see them again. However, during the entire event, the ShoreTel executives were accessible, approachable, and they were glad to take a few minutes to answer questions.
I felt like that the three main takeaways for me were, 1) there was a realistic roadmap, 2) there’s genuine enthusiasm among the partners, and then that the executives were very approachable and ShoreTel seems to be a horizontally oriented company as opposed to lots of tiers, lots of hierarchy. So, I thought those were very positive events. Then, I guess the fourth takeaway is the fact that ShoreTel has rejuvenated its consultant liaison program so that we’ve got a dedicated point of contact for not only independent consultants, but analysts as well.
Blair Pleasant: Okay, thanks Byron. Melissa, would you like to join in and tell us a little bit about your background and your takeaways from the event?
Melissa Schwartz: Good morning, everybody. I’m Melissa Schwartz with Schwartz Consulting. I am an STC consultant – like Byron mentioned. And I agree with a lot of what Byron said and would echo that. In fact, I did talk to some partners and interestingly they were talking about ShoreTel in contrast to other manufacturers that they’ve worked with and said that ShoreTel was much easier for them to work with. They were tending to propose more ShoreTel because it was much less hassle for them once they actually sold the product. Definitely I saw enthusiasm among the partners.
The other thing that I saw that nobody else has really mentioned – we had some time to do some very quick product demonstrations. And I spent some time at the call center station and I was really impressed with the reporting on the call center. It’s extremely flexible. Everybody can do the routing and stuff like that, but it’s sometimes hard to get reports that are geared to exactly what that individual company needs to see. The flexibility in those reportings was pretty impressive. I hadn’t seen that before, so I was I guess surprised a little bit at the depth of their call center offerings. They’ve got two different ones. They’ve got the premise-based offering that they call ECC and then they’ve got Callfinity for hosted. But I was pleasantly surprised to see their capabilities in that area.
The other thing that kind of surprised me was, I didn’t really expect them to have a lot of international presence. They have partners lined up that give them that distribution capability. I would have, in the past, hesitated to even think about them in terms of an international project. Based on what I saw there, I think that they have the structure in place to actually support that.
The other thing that they did talk about was their marketing plan. They have really gone leaps and bounds beyond what I had seen before. It was comprehensive, it was multi-channel, and really strong branding – which they do need in the marketplace. I know everybody has talked about them not really having a huge presence, but this marketing plan looked to me like a much stronger play in that area.
So I, like Byron, go to the conferences to see what they have in place and what their roadmap is, and try to match that up with what my clients are looking for. Overall, I think they did a pretty good job of that. I would have liked to have seen a little bit more product-specific information, but the time was short and there’s only so much you can cram into it, so I totally understand how they couldn’t spend hours and hours on product presentation on top of everything else.
Blair Pleasant: Thank you. Does anyone else want to join in and give some insight about either what they heard or didn’t hear either on social media or through any of the articles? Art Rosenberg, do you have anything you want to add?
Art Rosenberg: I have a question, since I wasn’t there. All the new technology coming up presents a challenge for everybody involved, to ease the migration from whatever legacy technology that’s been around or exists and so on, to all the new stuff. And I just was curious as to what extent ShoreTel was addressing that – particularly for the partners because they’re the ones that have to take charge in making that migration happen. Nobody can do it by themselves anymore.
Melissa Schwartz: I don't know that they really talked about that very much at the conference. Did anybody else hear it? I certainly didn’t.
Byron Battles: No, they didn’t really address it . They didn’t address it specifically. However, I had a couple of offline conversations with some partners, and actually they acknowledged that one of the toughest items or areas that they have is integrating everything or multiple components of any solution in terms of integrations, in terms of making sure that their partners are as up-to-speed as they are. Now, one of the things that I’ve seen is that – for example – with the ECC offering (contact center offering), we just did a small one with the client and ShoreTel was able to provide everything – including the reporting, including the agent management, and including – most importantly to this particular client – the drag and drop IVR capability. It wasn’t as robust as their dedicated IVR, but it was certainly more than enough for this particular client.
So, in this particular case, ShoreTel was able to provide a single-vender solution, but they acknowledged that it’s harder and harder to address all of the areas and they really have to be picky about what partners they propose solutions with as well.
Art Rosenberg: I would think that they’re in a very strong position in terms of exploiting the cloud for doing the migration and the testing and the integration, rather than have things being done on-premise because that to me is the shortcut to the future. So, I would have thought they would have emphasized that.
Melissa Schwartz: This is Melissa. They put a lot of emphasis on the cloud and they specifically talked about the ability that they have for the cloud and the premise offering in the future to essentially work together. So, there was a lot of emphasis on that.
Art Rosenberg: Okay, good.
Byron Battles: One of the takeaways was whatever the client is going to need, ShoreTel is in a position to offer that, whether it’s cloud or premise or some combination of the two.
Jon Arnold: I want to add just a quick counter balance to some of that. Someone said earlier they liked the honesty that they heard out of the ShoreTel people. One of the things I thought really resonated well but may raise some doubts with the channel is the whole kind of aftermath of hurricane Sandy. Dan Hoffman, the M5 exec, who is now the ShoreTel Sky exec, noted that when Sandy hit, their data center is in the lower part of Manhattan and was underwater – they lost, he said, I think at one point they had up to a third of their customers without service. And, I thought there was a very frank, kind of candid acknowledgement that yes, cloud is the future. Art, to your comment – but it’s still, the infrastructure – as all of the east coast found out with Sandy – is still young and developing.
In fact, M5 – before they were acquired by ShoreTel – had made an acquisition of their own, a Chicago-based company called Geckotech, primarily to have a second data center operation so they would have a fully redundant infrastructure. But unfortunately, I know Dan told me some of this directly, that they have not yet been able to get the full backup in place yet. So, a couple of weeks from now they’ll probably have it, but unfortunately the timing worked against them.
Dave Michels: Yeah Jon, I think that Sandy impact was much bigger than what you described. In fact, one of the things that I heard Dan say is they had customers down for an average of over 21 hours. And he was quite pleased with that because a lot of Manhattan companies were down for much longer. But the point is that a lot of those customers aren’t in Manhattan. A lot of those customers are in places like California, and they’re wondering what happened to their dial tone. I think building up a fully redundant data center is not something you do in weeks. I think it’s one of the major challenges the company has ahead of itself.
Jon Arnold: Yes, exactly. I’m just trying to raise the point. If I’m a channel partner sitting in that audience hearing that, saying geez, you're telling me my customers are going to be out of service? Well, relative to everybody else, everyone was affected by it. So, it wasn’t just M5 and ShoreTel of course. But, I think it just speaks to the fact that yes, (while) cloud is in theory ready for this marketplace to take over, the infrastructure still has a ways to go. And, it’s not just ShoreTel who has that challenge.
And there are issues of scaling. It was mentioned earlier, how are they going to grow internationally? Well, we haven’t figured that out yet for the cloud. That’s still to be determined. So, yes, the future is there. But, I just want to throw that kind of counterpoint into the conversation – to Art’s comment. Yes, it’s there, the future, but it you know what? It still needs a bit of work – probably a lot of work actually.
Blair Pleasant: Well, I think it was the fact that they didn’t have the geo-redundancy. They had two data centers, but they were both in New York. And, apparently one was used for some of the early responders who kind of took over that data center, from what I understand. So, they were pretty much out of luck and it was just bad timing that their two data centers happen to be in the one area where Sandy hit the most.
But, they are working on that. I spoke with Dan also, and that’s definitely top of the list of what they’re doing. And, they have been working on it. But, I think the point is cloud really can be the right solution, but you have to have a geo-redundant cloud. So, that’s what they’re working on now.
Jon Arnold: I just want to emphasize I liked their candor – how they acknowledged it to the audience – because you can’t hide stuff like that. I thought they handled it well in terms of updating the audience and making them understand what this is all about and how it affects them. But, it affects everybody in this business, not just ShoreTel.
Blair Pleasant: So let me play devil’s advocate a minute. A lot of you were talking about the candor. How did you feel about the candor regarding the virtualization story?
Jon Arnold: Less so...
Melissa Schwartz: Yeah, I thought that they were not very specific about that – either on the roadmap or in discussion. And interestingly, they break down virtualization into two categories: one is the centralized processor type of virtualization – this is joint server – and then virtualization of the appliances at the edge…. But they were not very specific.
Byron Battles: I would agree with Melissa. They were talking a lot about virtualization but they broke it down and they were a little vague – to put it mildly – about what was actually available or what would be available and when it would be available. So, virtualization they were talking about, but not specifically.
Blair Pleasant: One thing I thought was interesting is, in the past ShoreTel was always talking about competing with Mitel, and they would bring up Mitel constantly. This time, we didn’t hear anything about Mitel and it was all about Avaya and Cisco and how those are their main competitors now and that’s who they’re attacking with the cute little Pacman icons. What do people think about that?
Dave Michels: I don’t think that’s new from ShoreTel’s messaging point of view. I mean, both Mitel and NEC are significantly larger than ShoreTel and always have been. But ShoreTel has never acknowledged them as competitors. That’s their desire to do so. The market obviously has different takes on that. But I don’t think that’s new. I think they’ve always positioned themselves that way.
Blair Pleasant: Really? I always heard them talking about Mitel a lot. And the fact that I didn’t hear Mitel at all this time, I thought was pretty surprising.
Jon Arnold: I agree. But, I think some of the consultants may know the channel guys better than certainly I do, but my guess is that most of their channel community sells Avaya and possibly Cisco and others, but maybe not so much Mitel. I’m just trying to, again, position to the audience that they’re catering to here. They’ve got a choice: Do I sell Avaya? Do I sell ShoreTel? Do I sell Cisco? Do I sell ShoreTel? I’m not so sure that those channel guys are making the same decisions, whether they’re going to sell Mitel verses ShoreTel.
I might be wrong about that, but that’s my guess and having seen a few of the business cards from the channel guys, that’s what I see, the logos on those cards seems like that’s the milieu that they’re really in.
Byron Battles: I would concur with that. There are very few, at least where I practice, very few Mitel/ShoreTel dealers. It’s one or the other. Now, in most cases a ShoreTel dealer or a Mitel dealer will carry another brand, but it’s usually not a combination of Mitel/ShoreTel. And I think that also indicates that ShoreTel is kind of determining its own terms in defining Avaya and Cisco as its main competitors as opposed to Mitel, which has always been considered kind of a tier two. Great technology, but somewhat inconsistent terms of service and support, depending on your geographic area. So, that may be another facet of that is that ShoreTel is just saying hey, we’re focusing on Cisco and Avaya.
Blair Pleasant: Okay, good points. Does anyone have anything that they want to add?
John Thompson: This is John Thompson from Thompson-Ross & Associates. I thought that the ShoreTel Consultant conference was excellent. A couple of things that I really liked about it: one was the fact that I always enjoy when the consultants and the analysts get together, because we don’t get to interact all that often, and when we do, I think we both gain a little bit from it. We always work in the tactical level; they work on the strategic level. And it’s an important distinction. I always think that it’s always great to see the fellow consultants because we only get to connect most of the time through the conference programs, the CLP programs, and they’re excellent.
The third thing is I really enjoyed interacting with the VARs, because a lot of times if VARs don’t know us, they’re concerned about consultants. When they get to see we’re real people, and don’t have an agenda, it makes them more comfortable and you get to reconnect with VARs that you haven’t connected with for some time.
The other thing that was very good for me was I’ve had some concerns about the financials for ShoreTel, and I thought they were addressed very well. So that, at least in my mind, put a lot of concerns to rest. Still looking for additional information relative to the contact center and recording package, which I don’t know enough about and I would like to learn more about, but I thought overall it was an excellent conference, good content, good detail, and great venue overall. Thanks.
Art Rosenberg: I have another quick question. Was there any mention of them looking at the wireless carrier service providers for mobility as a potential channel partner?
Melissa Schwartz: I don’t remember hearing anything about that.
Art Rosenberg: Okay. It’s maybe too soon.
Jon Arnold: Are you saying that Art, because Mitel has a wireless service provider business of their own?
Art Rosenberg: It’s just not Mitel, but I’m seeing that the wireless service providers are starting to offer the hosted services. So, there’s going to be some either competition or partnership coming up in the future because everybody is playing in the same sand pile.
Jon Arnold: Yeah, we’ll that’s a good point though because I think that week too, didn’t Verizon make a big announcement – or was it AT&T – about the hosted offerings?
Art Rosenberg: Yeah, both of them are starting to do that. I’m sure you know it’s not limited to that, because it is a shift from hardware to software and now from software to services. Everybody is going to be in that pile.
Jon Arnold: Exactly, sure.
Blair Pleasant: Well, that’s something we’ll have to ask about next time. I’d like to thank everybody for participating in this and hopefully Byron and Melissa and John, you can join us when we have our year-end call about analyst and consultant conferences and some of our expectations and thoughts about the events. And thank you all to the UCStrategies folks, and thank everyone for listening to us.