Software Vendors Killing Service Providers? UC as a Service Offering a Breath of Fresh Air

The surge of Software-as-a-Service (SaaS) has left some providers worried. After all, with the rise of SaaS, clients may be able to buy solutions directly from software vendors, skipping these providers altogether. But does this mean that in less than 5 years, service providers will lose most of their territory to vendors selling directly to the SMBs?

Consequently, a number of ITSPs and managed service providers are eying various services they can combine in a logical offer, so that their customers get hooked on the service, rather than on the individual products. A recent study showed that 68% of communications providers intend to offer SaaS within the next two years. One of the most promising services to incorporate is Unified Communications.

smbs cloud insights for 2016


Research by MarketstoMarkets indicates the Unified Communications-as-a-Service (UCaaS) market will grow to $23.34 billion by 2019 from the $13.10 billion it’s supposed to bring in this year. The reason is straightforward: many service providers are adding it to their portfolios, to complement their existing proposition made to the SMB customer.

Here’s a look at what drives the specific adoption of UCaaS solutions in the service providers’ portfolios:

  • It’s what customers want. Unified Communications are no longer the domain of enterprises. SMBs are waking up to UC benefits and want to enjoy the cost savings that come with increased efficiency; and they want to create collaborative environments. Unified Communications tools make this happen. Only on telephony costs alone, businesses might save up to 30 to 40% by moving to UCaaS. Also, many businesses are choosing to deploy UCaaS solutions because they want to give their employees increased access to the tools that help them do their jobs, no matter where they are located. All in all, SMBs will be accountable for a large part of UCaaS deployments in the coming years.
  • It keeps you in business. When providers secure a UC platform from a trusted vendor, the risk of that vendor selling directly to businesses is alleviated. What’s even more important, selling UCaaS can be complicated, as such solutions require managed services and often boots on the ground in order to ensure they are operating at optimal levels. Oftentimes, vendors don’t want to shift their business models to managed service, but keep their focus on development instead. That’s why partnering with a UC vendor for a UCaaS offering makes a lot of sense. In doing so, providers can focus on delivering stellar customer service, while the vendor ensures the software they offer remains the best option for their end-users.

Service providers thinking about overhauling their portfolio so as to offer modern communications solutions don’t need to work hard to find the right solution, they just need to make sure that the end-user is happy with their service (and this implies marketing efforts as well). We will approach marketing from the perspective of a service provider in a different article though.

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  • Software Vendors need to decide whether they want to sell via a service provider or direct. Vendor cannot be establishing a channel and provide sales without boundaries whilst expecting a service provider to market a vendors product with his own funds, without vendor financial support, and be in a position for vendor to take over client from service provider because client feels (and gets) that he can score a better deal directly with vendor.

    Vendor discounts are also marginal, grabbing most of the revenue whilst expecting service provider to promote vendors software with peanuts.

    The landscape in the industry is definitely changing. Software vendors open to sales directly to the public should have no channel. Can’t butter their bread on both side….and still eat it!!

    Mohammad Patel 9 years ago Reply

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