Recently we interviewed John McCarthy, ShoreGroup's CEO, to discuss the Cloud's impact on contact center and collaboration.
Q: What are you hearing from your collaboration customers these days?
A: They have made an extensive investment in infrastructure over the years, so there's still a very large installed base of on-premise gear from Cisco, Avaya, and others that are perfectly capable of meeting a lot of the functionality requirements that customers have now. The trend is that customers are now consuming that functionality in different ways.
We are seeing that customers really want to focus on their business. They want to be a finance company or a healthcare company or a media and entertainment company. They don’t want the distractions of having to be a technology company too. The problem is that a lot of today's on-premise-based solutions force them to have an extensive roster of team members focused on just keeping the lights on.
Q: What trends are you seeing in collaboration technologies?
A: What we've seen over the last six to eight months is that a lot of our current Cisco Collaboration, UC, and Avaya customers with multiple sites are now looking at cloud solutions—especially for smaller sites or sites overseas. So instead of “rip and replace” everything, they are moving to the Cloud.
What's interesting about that is—it’s primarily for voice data. Whether it's Five9 or RingCentral or some other vendor that can scale up to 500 or more agents or phones, it's mostly voice. So, our customers are asking us about management. They want to know how we are ensuring the reliability of the communication between these different solutions. If I've got my cloud solution over here, and an on-prem solution over there, we need to work with them to consider what the potential issues are that can be in the communication path.
I remember working with a small company years ago, and there are some similarities between what's going on in today's market and then. At that time, there was a move from TDM-based digital switches to Voice over IP. You had an enterprise that had different technologies, sometimes from different vendors. And there was a desire to be able to figure out how to manage it from a single pane of glass.
So, this is a very similar time, except now we’re moving from IP to cloud. And once again, we have multiple vendors and technologies that all need to be run in such a way that it's seamless to the end user.
We’re in a transition period again. We are working with partners to help enable that and it’s a good story to tell. We have built a business around multi-vendor, multi-technology and we know how to normalize it and optimize it from a management and performance perspective.
Q: It's almost like the challenges facing your customers are becoming compounded. Everything is even more complex now that we’re turning to the Cloud. It’s supposed to make things more efficient, and it absolutely does for some given applications such as backup. But for managing say, performance, it's added another layer of complexity. So, it feels like the challenge for you is to help your customers keep pace with that.
A: Exactly right. The promise of cloud is simplicity—it’s pay-as-you-go. But for those who are responsible for service delivery, it adds—potentially, at least in the short term— another level of complexity to achieving the desired state with their existing equipment.
For example, you come up across complex issues such as consumption. In the case of Cisco, for instance, they're driving a consumption model based on enterprise agreements. In the case of any technology investment, the customer’s IT department—presuming of course that they are the ones that initiated that investment—needs to be able to demonstrate the desired effect—that the improved functionality creates better business outcomes that are tied to that investment.
If we, the vendor community, can't get the correct department within the customer’s IT organization to drive business utilizing the technology then, when it comes time to renew that enterprise agreement, they'll say "I only need half of it," or “I don’t need it at all.”
The Cloud is great and supposed to be simple, but how do you ensure the level of functionality that's underlying the technology is being fully consumed? Our job is to ensure the efficiencies of productivity that are associated with all this new technology ultimately gets consumed, absorbed, and used, and that the desired outcome is realized. That they get the expected ROI.
Q: To what degree are you seeing your customers embracing the Cloud? Are they using it just for certain applications dependent on their vertical? Are some organizations all-in?
A: The non-collaboration areas of compute and applications such as CRM, storage, disaster recovery, and back office are all being consumed at a pretty high rate in the Cloud. IT organizations are challenged with keeping their arms around that.
What often happens is the business unit goes out and initiates a relationship with, for example, Salesforce. They’ll take their existing CRM and say, "I don't want to be on it anymore," and off they go to the Cloud. So, how do you how do you gain greater control over that business unit when it goes rogue and starts buying cloud services?
And sometimes I see their CIO telling them, "I want a cloud-first IT strategy." So, they’re forced to consider adding a cloud option to their on-premise solution and they’re faced with a high cost of upgrading.
As a result, I see a great deal of spending on customer services and business process outsourcing. I see high-level spending for AWS and Azure with many of our customers in media and entertainment, healthcare, and financial services. And those customers have a pretty established investment in their collaboration infrastructure as well. Fortunately, for us, it's predominantly Cisco.
A: Yes, that’s certainly indicative of the Enterprise Connect conference over the last five years. You suddenly see all of these cloud collaboration vendors that are now moving into those top sponsorships and they are playing in the legacy spaces. There are now more vendors participating in the Enterprise Connect showcase that I don’t know versus ones that I do know. And I've been in this business a long time.
For example, cybersecurity is now a big space, especially if you're talking about contact center, but also for collaboration. With an Amazon or an Azure cloud hosting offer, people feel like those solutions are more secure now, so that’s making the decision to move to the Cloud easier.
Q: What do these shifts mean for ShoreGroup?
We are targeting those enterprise customers who have a pretty high investment in their infrastructure, so they question the scale of some of these cloud providers. But they still want to get the benefits of the Cloud, so they are basically saying, "Take this gear and get off my premises."
I tell them to put this new technology in a data center on-prem somewhere and gain the benefits of that and some of the licensing models. Particularly in Cisco's case—you can sign an enterprise agreement, change all your licensing to what they call “Spark Flex” and start paying for it “by the drink.” That way you get the benefits of the existing infrastructure and you get it in a data center. You can lease the gear back, or maybe you decide to own it in the end. And then you just pay for the licenses if someday you choose to.
So that gives you the financial benefits, it gives you the logistical benefits, and you can control how much it affects you if you move from a CAPEX to OPEX model. But it doesn't leave you the responsibility to have full visibility to what's going on within that data center. We’ll do that for you.
And there are those who say, "Look, I don't quite yet trust that the Cloud has the fault tolerance for me.” AWS went out for four hours twice last month.” So, we’ll put it in a bunker somewhere with battery backup and High Availability—the whole thing. An HA structure plus our ShorePatrol platform has equivalent, if not more value, to a large enterprise.
Q: Beyond the Cloud, what other challenges do you see for your customers? The customers that need to prove that they are driving revenues from their infrastructure—what challenges are you seeing for them?
A: Businesses of scale, who rely on the contact center to drive revenue, will be—for the time being—reluctant to give up control of that infrastructure.
For example, I can't see one of our major carrier customers giving that control up. I could see them giving a peripheral—like an IVR—and putting it in AWS. But not the core infrastructure.
So, they still need that high level of fault tolerance, of root cause analysis, of outsourced technical managed services expertise to ensure that they get the five nines that they're striving for. That's still there. That will always be there.
Now there are some, such as one of our major financial services customers, or a few others, who have gone the Cloud route. (AWS even has its own contact center offer, AWS Connect.) But as evidenced by their recent uptime statistics, they’re lucky to get three nines. My guess is they probably have an overflow-outsourced group. When the primary call center, tied to AWS, goes down, the calls overflow and get answered somewhere else.
And, as I say that, my guess is AWS was probably saying that too (the financial services customer) when it went that route. My guess is they probably went that route for a subset of their overall call center operation, rather than the primary site.
And the reason being is they need that high level of fault tolerance. They need that level of expertise that they can count on. And they need that level of reporting, so they can proactively manage that infrastructure on a day-to-day, month-to-month, quarter-to-quarter basis.
Q: And how do you see that evolving?
It’s funny. I had a conversation with a customer from a major American university. I asked, "Are you comfortable with the level of training that you received on the appliance? Do you get the reports that you're looking for? Do you feel that you're getting the maximum ROI that you expected from the platform?”
He said, "I don't care. I just want you to fix it when it breaks. I count on you for the SLA."
He and one other guy manage the voice infrastructure that supports 14,000 phones—two people! And they manage call centers, IVRs, auto-attendants, voice mail, and carriers etcetera, etcetera. He’s the perfect candidate for that perspective. "Just take care of it so I don’t have to."
Of course, we will deliver a demonstrated higher level of service to him. Just based on the fact that we have a tool that is purpose-built for his Cisco infrastructure. We’ll provide him with carrier management, root cause analysis, proactive monitoring, so on and so forth. So that type of customer who does not want the burden of having to manage the infrastructure would view ShorePatrol as their best bet.