October 11, 2018
I attended the Mitel Next conference in Phoenix last week. Though no big announcements came out of the conference, there were some key takeways.
Mitel executives conveyed the message to customers and partners that they’re not abandoning on-premises Unified Communications (UC) or contact center customers. Unlike some competitors, Mitel will continue to support—and more importantly, innovate—on-premises solutions.
But the company also recognizes the growing appeal of cloud services and is straddling the line with support for both camps—with a heavier weighting on the cloud. In fact, Mitel will invest most of its R&D dollars (60% to 70%) to its Cloudlink middleware layer. Executives spoke firmly to partners who resist a strategic shift toward selling cloud services. The message? You may not survive.
Though Mitel is supporting its on-premises stalwarts, it’s also taking the position that “every customer will move to some type of cloud,” says Bob Agnes, EVP of Mitel’s products and solutions. His point is that companies may keep core telephony on premises. (In fact, CEO Richard McBee, himself, acknowledged one-third of Mitel's customers likely will stay on-premises, regardless of how appealing cloud services are or may become.) But when they want new features, the only way to get some will be from the cloud.
As a result, they’ll need to create a private cloud that integrates the on-premises telephony platform with the cloud services. The cloud services will include artificial intelligence, machine learning, chat, SMS, social integration, workflow automation, and analytics. Essentially, there will be a public cloud and a private cloud.
Strategy Reflects Acquisition History
It’s important to note that Mitel’s strategy reflects its history. A $1.3 billion provider with 70 million global users, Mitel is a company built on acquisitions—21 of them from 2003-2017. Mitel must reassure a wide mix of customers and partners that they’re not abandoning the products and services they initially bought. As a result, Mitel builds into its M&A strategy a healthy amount of funding to regularly update, support, and integrate its bevy of products and services. That’s by design. The acquisition strategy means Mitel spends less than typical on customer acquisition and more on technology integration.
Mitel’s product strategy pairs each UC platform or UCaaS service it operates with a contact center solution—a point of debate in the industry. Do organizations buy contact center solutions that are paired with a UC solution? Or do they buy stand-alone platforms and services? In Nemertes 2017-18 contact center research study, 36.8% of companies were using the same vendor for UC and contact center.
Of course, by supplying contact center solutions that are paired with UC solutions, Mitel isn’t positioned to lose prospective customers on either side. But it is positioned to attract those who want the technologies to be integrated.
That position can be both a blessing and a curse. From a marketing standpoint, it must have a message and competitive strategy for a variety of players. Basically, Mitel competes against pure cloud providers, such as Amazon, RingCentral, 8x8, Nextiva, Five9, and Vonage, as well as hybrid providers, such as Avaya, Cisco, Genesys, and Microsoft. One example of Mitel missing the boat is with making it easy to buy. The pure cloud providers make it incredibly easy to visit their website, review product offerings and associated prices, and buy online. Done! Mitel can’t compete with that simplicity yet. With a website in transition, prospective customers aren't even able to do research on its products or services, much less press a "buy now" button.
Another issue the company faces is lack of clarity in its branding. This came through loudly in a few sessions I attended. Because of the merger-driven product integration, there are still too many products and confusion around names and target markets. Take contact center alone. MiCloud Connect Contact Center is the cloud version of MiVoice Connect Contact Center (both based on the former ShoreTel products). Then there is MiCloud Flex Contact Center, which is the same software as the MiCloud Contact Center Business platform. Then there is a managed service for on-premises solutions. There are three code bases, along with Engage, which is an OEM solution. Confused yet? It should be much simpler.
That said, customers seem to like its contact center offerings. In Nemertes Digital Customer Experience research study of nearly 700 global organizations, Mitel was the highest-rated contact center provider.
Moving forward, perhaps most exciting for the future is Mitel’s partnership with Google. By first quarter, customers will see basic AI bots integrated in with contact center solutions. Other plans are in the works for additional advanced services in 2019.