Selling Convergence: Focus on Cost Savings or Features and Functionality?

Results from our SMB Convergence Survey show that key motivators for adopting IP telephony are cost, scalability and manageability.

SMBs are a busy lot. When it comes to changing their communications systems, they don’t particularly care about or the underlying technology. To grab their attention, vendors must focus their pitch on the tangible business impact of their technology can make on the SMBs’ business. This paradox presents itself when SMBs evaluate the pros and cons of migrating from their TDM-based phone system to a converged (IP) telephony platform. The recent Yankee Group 2003 SMB Convergence Survey reveals end user insights on the issue.

Survey Findings
Results from the SMB Convergence Survey show that SMB’s key motivators for adopting IP telephony are (in order of importance):

• Cost: This refers to the ability of the converged phone system to save money on calling, management and installation costs.
• Scalability: To be cost effective, SMBs need to have a telephony infrastructure that adapts to the changing needs of the organization—both expansion and contraction. When hiring new employees or opening a new location, SMBs do not want to pay for an expensive upgrade to add extensions. The SMB also is looking for a flexible platform that adjusts for staff or location consolidation.
• Manageability or ease of use: SMBs are short-staffed, and if the solution is hard to use and takes a long time to learn, they will not be very interested. They also look to reduce dependency on consultants for minor moves, additions and changes.

However, the story changes dramatically after SMBs implement voice and data converged solutions. Price, scalability and ease of management do not make the list of top reasons for adoption for these types of businesses.

SMBs that had adopted a converged solution report that the key driver for adoption is the need for unified messaging applications (see Exhibit 1). This presents an interesting situation to vendors and channel partners. There are critical benefits to the solution that do not resonate clearly or find relevance until after the sale is made. It is certain that the SMBs that have adopted a converged solution initially did so to address cost and manageability concerns—only to discover later the productivity benefits of a converged solution. The challenge is how to make the SMB experience the value of unified communications during the evaluative purchase process. In the end, this is a positive, since SMBs will see value in some of the critical benefits of a converged solution. One key issue is timing, and another is that a critical benefit of a converged solution is not seen during the sales process.

Recommendations for Vendors

• Focus on the key benefit of cost savings. To drive a sale, it is still paramount to focus on the cost saving, scalability and management aspects of the solution. There is no point in trying to fight reality; the costs savings are substantial, and it is clear that this is the key deciding factor.
• Make the features and functionality tangible by providing experiential product demonstrations. Vendors often talk about technology in a vacuum. Allow SMBs to experience new applications enabled by IP. Key applications are call forwarding (to cell phones and home phones), auto attendant and PC-call management.
• Articulate proven and successful implementations using real-world situational examples. It is imperative that vendors apply the benefits of the technology to real-world business solutions. How did a unified messaging solution help a customer deliver better service to a client and increase revenue? Don’t focus only on what the technology can do—focus on why it is important. SMBs will look to see examples of businesses similar to theirs effectively leveraging converged services.

Recommendations for SMBs

• Determine whether a rigid TDM-based environment can support your business communications needs for another 7 to 10 years. Your organization is becoming more dependent on multiple modes of communications that include the phone, Internet, e-mail and instant messaging to conduct your business communications. Can your business afford to not have an integrated platform to manage both your telephony and IP-based communications?
• The bottom line is not the only line. For SMBs, every penny matters, but ample evaluation should be given to the productivity-enhancing features of converged solutions. What is the financial benefit of a quicker, more professional response to a customer? What if you can increase the productivity of an employee?
• Think about long-term costs as well as upfront costs. While migrating to a converged solution may result in significant upfront costs, it is important to evaluate the long-term benefits of going to a converged solution. Can you reduce the number of phone lines? Benefit from least cost routing? Reduce conference-calling expenses?

Survey Methodology
In August of 2003, the Yankee Group completed a survey on the market opportunity for converged services. In total, 350 small and medium businesses were sampled that currently have a PBX, key telephone system or use a Centrex service from their service provider. The sample targeted companies with 20 to 500 employees in total across all locations.

The Yankee Group originally published this article on 19 November 2003.