ShoreTel Recruiting For New Cloud UC Channel Program

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Now that ShoreTel has closed its $146 million acquisition of hosted communications specialist M5 Networks, it has begun recruiting solution providers to pilot sales of M5's hosted services through the broader ShoreTel channel.

ShoreTel closed the acquisition earlier this week, and M5 is now known as ShoreTel Cloud Division. Dan Hoffman, former M5 CEO and now president and general manager of the division, confirmed to CRN that ShoreTel is evaluating solution providers for participation in a beta program through which those partners will be sales-enabled for selling the M5 hosted unified communications suite.

ShoreTel is inviting a handful of partners, Hoffman said, and a broad channel program rollout specific to hosted UC is expected by next year. For now, ShoreTel partners interested in the hosted services can participate in M5's existing referral program.

[Related: ShoreTel Partners Gear Up For New Sales Chief, Program Changes]

"We've already closed our first deal with a ShoreTel partner," Hoffman said. "Frankly, there's been so much interest in the program that we're backlogged in terms of getting back to partners. We will be talking with different partners and communicating regularly. No ShoreTel partner has yet closed a deal on their own, but we're formulating that program, and plan to staff it and present it to the partners."

Solution providers told CRN last month that ShoreTel's acquisition of M5 was a strong move -- one that gives ShoreTel a solid hosted communications strategy and its hundreds of partners a good option for standing up a hosted UC practice. Several urged ShoreTel to move quickly on a hosted communications program behind M5 to capitalize on customer interest in the space.

For the beta program, ShoreTel is looking at partners with strong data networking backgrounds and who are both comfortable with recurring revenue models and are of a suitable size for putting a channel program through the paces, Hoffman said.

M5, a survivor of the first wave of hosted VoIP and application service provider companies in the early 200s, has about 2,000 customers and 75,000 end users. Following the acquisition, Hoffman, now reports to Peter Blackmore, ShoreTel's CEO. M5's existing team, with the exception of CFO Gary Deutsch and M5 co-founder and executive vice president Phillip Kim, will remain intact.

M5 wasn't necessarily looking for an acquirer, Hoffman said, but with the spread-out UCaaS (unified communications as-a-service) market belonging to no one dominant service provider, it was time to think about how the company would be best positioned to capitalize on customer interest in cloud-based solutions.

"We were looking for the next step," Hoffman said. "It's become clearer to us and in the industry that the cloud has hit mainstream. Channel partners are all looking to have some solution, so we knew that this was the moment to make a real leadership move."

Hoffman said he explored several options for M5, which did about $48 million in its last fiscal year. He looked at an IPO and fielded a few private equity offers, he said, and also considered more acquisitions in the vein of what M5 bought when it acquired Chicago-based hosted VoIP competitor Geckotech in November 2010.

But after getting to know ShoreTel following an initial entreaty, Hoffman said, M5 had its answer, and with a brand that the bigger customers M5 was targeting were aware of.

"Mainstream buyers want a clear leader," he said. "They're less willing to sort through all 72 little hosted players and pick one themselves. A lot of the bigger channel partners work the same way. So I felt if we did something, we had a chance to become a clear leader. ShoreTel was totally lined up with it -- it's a big bet for them -- and together we looked at this and said the hosted VoIP industry, the cloud, is a jump ball. We have as good a shot as anyone now."

Next: ShoreTel Launches M5 Communicator

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