10 Questions For Cisco's VoIP Gurus

Two of Cisco Systems' VoIP experts, Barry O'Sullivan, senior vice president of voice technology, and Richard McLeod, director of unified communications solutions for worldwide channels, recently spoke with CMP Channel Assistant News Editor Jennifer Hagendorf Follet about the changing VoIP market, the challenge of working with Microsoft as it pushes into the unified communications space and what it all means for channel partners. Edited excerpts of the conversation follow.

CMP Channel: As Cisco looks at this market, does it seem like it's becoming more competitive? Are your rivals getting more aggressive in their push toward VoIP and unified communications?

O'Sullivan: There's certainly a lot of competition in the market. We're No. 1 and we only have 25 percent share, so it's still pretty fragmented. There's huge change going on in the industry as well. There are different types of change. One is consolidation. You see some of the competitors going out of public ownership. Other traditional competitors rumored to be for sale, new entrants coming into the market, so a lot of change. But at Cisco we look at change as opportunity. A lot of customers are looking for some certainty and a future-proof path here, so we see a lot of opportunity with the changes in the industry.

I think the industry is going to look very different in three years than what it looks like now. I think there will be less players and different players going after this unified communications market ... I think you'll see all types of players: software vendors, mobile phone vendors, service providers, networking vendors, all of them in that space. And the space is getting bigger too, because the traditional telephony market is $10 billion, and we think the unified communications market is about $25 billion, so we're not all converging on the same field here. The field is getting bigger as well.

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CMP Channel: What would you say so far has been the impact of Microsoft's move into this market? Microsoft held its partner conference recently and was talking about it a lot with their partners, many of whom are also your partners. What are you hearing from your partners?

O'Sullivan: First of all, we launched our unified communications strategy about two-and-a-half years ago now, and Microsoft entering we think validated that to a [large] degree. What we hear from our customers and our partners is that they want to make sure there's interoperability. They know there's going to be a lot of overlap between Microsoft and Cisco, but at a lot of companies, both of those vendors are strategic partners. They want Cisco and Microsoft to work together on interoperability, so we've done a lot of that in terms of launching Cisco voice sessions from a Microsoft instant messaging client. Obviously our unified messaging products are deeply integrated with Exchange and Outlook and so on, so that's the No. 1 thing we hear, and the No. 1 impact. So we've got to, with Microsoft, do a lot of work on interoperability. That's been going on now in earnest for about 18 months.

And then people want to know, "well, which horse should I pick?" What we say to them is, "Look, you've got to build a platform and then leave yourself the flexibility and the openness so you can make choices in the future about which way you want to go, so go standards-based." Our view is that the network is the platform because it gives you the flexibility in the future not to be locked into a particular device, or a particular operating system.

McLeod: I might add to that that clearly having another major player in the mix increases the conversation in the press and with customers. Whenever there's more conversation that's more acceleration away from traditional TDM into unified communications. For many of our partners who have a practice in Microsoft and a practice in Cisco unified communications, this could be an opportunity for them to accelerate their end users from both angles, if you will.

NEXT: Getting along with Microsoft

CMP Channel: The cooperation you've had so far from Microsoft as you work toward interoperability, do you expect that to be as forthcoming as they move deeper into the market?

O'Sullivan: So far we've delivered good basic interoperability, and we've got plans to deliver more. No one said they're all very easy and simple conversations that we have with them but we do talk regularly with our counterparts up there and we have a joint roadmap that we're managing. The one area that's been tough is to get Microsoft to expose their presence information from [Office Communications Server]. They haven't said no to that, but they haven't said yes either.

CMP Channel: Conversely, is there anything that Microsoft is asking Cisco to do that you're not so keen on doing?

O'Sullivan: No. The sorts of things that we're doing together are being able to launch a MeetingPlace audioconferencing session from the Microsoft Office Communicator client. We announced recently that we were supporting the standard for dual-forking, which basically allows you to have one telephone number between your Microsoft Office Communicator softphone and your Cisco IP phone. So in terms of [the roadmap], it's pretty complete. I think we'll get there. I'm not sure there's any philosophical difference between us on wanting to do this. The discussions are usually about how quickly and what do we do first, that sort of thing.

McLeod: I think that's probably the most important point of all, that we both represent for those customers their No. 1 and No. 2 or certainly in the top three of their key vendors, and customers need for Cisco and Microsoft to work well together. The same thing we hear from our partners is that they need for these solutions to be optimized for their customers as well. So I think that there's certainly sufficient pressure on both companies to make sure we are creating the kind of offers that meet the needs of our customers and our partners.

NEXT: The changing face of the Cisco channel

CMP Channel: As you look ahead to the next six to12 months, what do you think is going to be the most difficult shift or changing trend that your channel partners are going to be dealing with?

McLeod: I think the biggest challenge is that we're going through another evolution. When we started talking four or five years ago, it was about partners coming from the voice background, partners coming from the data background and, to some degree, partners coming from the applications background and all three of those partners having to move to a new space. It wasn't about the advantage the voice guys would have over the data guys or the data guys would have over the voice guys: Everybody had to move to a new space ... I think the same thing is happening again. We're now moving to a very applications-centric, a very presence-centric, a very business transformation-centric power of unified communications. Partners are once again going to need to move to a new space. Partners that are highly skilled in Microsoft Exchange will have some advantages; Partners highly skilled in IP telephony will have some advantages. All partners will need to have some real clear understanding of contact center, unified messaging and the key business attributes that drive those decisions in that operational planning. So everybody is going to have to move to a new space again.

Cisco is investing heavily in helping our partners understand what it takes to be a successful practice in that new space. We're providing the tools and the plug-ins to support our partners in terms of linking in with [IBM] Lotus Notes, linking in with Microsoft, linking in with Salesforce.com, and we're providing them with the white papers and the design guides and the tools and the training to help them move there. We continue to help them from a recruiting perspective ... and we continue to provide them the incentives ... to reward them and make that practice development profitable.

CMP Channel: As they make that shift, what's going to be most difficult? Is it finding the right talent? Adjusting to a change in their business model?

McLeod: I think No. 1 is it's a different way of selling, moving from a speeds-and-feeds and hardware conversation to, "How does this impact your business? How does this improve your speed to market? How does this improve your customer satisfaction? How does this improve your overall profitability as a business?" Having those business conversations with business decision makers ... what carries with that is having the resources, both the sales folks and the engineers that are able to sell and propose in that fashion. And then there's the technical challenge of do I have the in-house staff or do I have the ecosystem partnerships to do those integrations that really provide the business applications to be enabled with presence, availability and those kinds of applications.

CMP Channel: What's going to be the impact in terms of what a Cisco partner looks like? Will they have more partnerships with software vendors? Are they going to have more partnerships with other Cisco solution providers?

McLeod: I'm not sure there's one pat answer to that. Like most anything there are several different routes. Part of it depends on what your particular current complexion is as a business. Another depends on your comfort level and experience with ecosystem partnering. I think partners will follow different routes. But it will also, I think inspire creativity within companies. Last week I was talking to a partner that is a multi-faceted business. Within their business they have a CRM division, they have an ERP division, they have a business consulting division and they have an IP telephony/IP communications division. That partner now sees the opportunity for pulling together those aspects of their business into a whole new offer for the marketplace to differentiate themselves in the market and drive higher value-add for their customers ... So I see different paths to the same end. We'll see some partners that can make the transition, some partners that will stumble and struggle, and perhaps some partners that will not make the transition.

NEXT: Cisco's small business push

CMP Channel: Can you give me an update on the Smart Business Communications System, the new small business product you SMB space is the [Unified Communications Manager] Business Edition, which is also shipping now. That goes up to the 500 user line size and includes, likewise, all-in-one packaging, so again easier for our partners to install and better value price points. We think we have some major editions to the small and the mid-size portfolio.

CMP Channel: I'm making the assumption that that's the biggest shift so far this year in Cisco's VoIP strategy, but are there other things you would point to?

O'Sullivan: Well, I think really our strategy is about continuing our momentum. The biggest migration going on in this industry is still the migration from TDM to VoIP, and then from VoIP to unified communications, so very much continuing with that strategy. We're vicious here and we want to aggressively take share away from our competition, and we have been. Synergy [Research Group] has us at 25 percent market share now and we want to continue that aggressively. And then there's also moving into adjacent markets, like we talked about moving into the small business space, deeper down there, and then moving into Web collaboration as a service with the WebEx acquisition. So it's a combination of continuing the momentum that we have in the enterprise IP telephony, expanding into unified communications, driving down into the SMB and then across into conferencing and collaboration as a service.

CMP Channel: Can you talk about that push into collaboration and what's on the forefront that partners should be on the lookout for from Cisco?

O'Sullivan: What [enterprise customers are] looking for is to future-proof their solution. They want to make their communications available to their users, independent of what device they have, whether it's a desk phone, a mobile phone, a smart phone; independent of what operating system their on, whether they're on Mac or Windows or Linux ... So openness and interoperability are a very important part of our strategy here with unified communications ... They need the flexibility and the power so that they can use this technology to be better at what they do: in other words, to transform their business processes. More and more, you're not just talking to the voice guy or the IT guy or the applications guy. You're talking to the business guy.

McLeod: Let me add to that from the channels perspective. One of the things we think is very important is for our channel partners to be able to deliver against that vision, whether the customer has business productivity applications from Microsoft, from IBM, whether they have ERP packages from Oracle or [Oracle] J.D. Edwards, whether their CRM packages are Salesforce.com or Microsoft Dynamics. We want to be sure that we have an open solution and provide the framework for our partners to provide UC enablement to those business applications, really drive that business process transformation that Barry spoke of. By opening up the breadth and depth of applications that our solutions are compatible with, it really gives our partners a very broad spectrum to build their practices, and increases the size of the pie that they're able to play for.