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NWN Carousel CEO Jim Sullivan On The ‘Huge Advantage’ Of Scaling Up In Cloud Communications

With the acquisition of Carousel Industries by NWN, the combined company will have offices around the U.S. with more than 6,000 customers and a $1 billion run rate.

NWN’s acquisition of Carousel Industries will create “national scale” that will offer “the most value and advantages for our customers,” as the combined company seeks to accelerate its growth in the red-hot cloud communications market, NWN Carousel CEO Jim Sullivan said in an interview with CRN.

With the disruption of the traditional office from the COVID-19 pandemic, customers are expecting to provide employees spread around the country with the same user experience as if they were in the office, Sullivan said. Meanwhile, many enterprises are likely to continue operating offices around North America as the hybrid workforce, split between office and home, becomes the norm, he said.

[Related: NWN Targets UC And Collaboration For The ‘New Normal’ With Officeanywhere]

The combination of NWN and Carousel “gives us that scale to help customers meet their business objectives better,” Sullivan said.

In the current environment, having scale is “a huge advantage,” he said.

Backing NWN’s acquisition of Carousel is private equity firm New State Capital Partners, which has owned a majority stake in NWN since 2015. The acquisition of Carousel is now closed, and financial terms were not announced.

Both Carousel and NWN already ranked among the largest solution providers in North America. Exeter, R.I.-based Carousel held the No. 59 spot on CRN’s Solution Provider 500 for 2020, while Waltham, Mass.-based NWN ranked at No. 80 on the list.

NWN Carousel will have a $1 billion run rate for 2021, with more than 6,000 combined customers and more than 1,400 employees.

“We’ll have major operations all over the country—from New England and the Northeast, to North Carolina, Texas, California, Florida. So we’ll be a national player,” Sulivan said.

What follows is an edited portion of CRN’s interview with Sullivan.

How did this acquisition come about and what is the vision behind it?

We started on this transformation journey a couple of years ago. We focused on these five core offerings—around unified communications, contact center, security, device-as-a-service. And then the infrastructure to support that. And then the Experience Management Platform—EMP—wrapping all around that. It’s worked really well. We grew 20 percent per year, every year, added a lot of customers, expanded customers. And then the marketplace is a $70 billion marketplace in North America, and everybody during COVID has been moving to work from anywhere—and all of this has led to cloud communications being adopted faster and becoming really a must-have.

And then Carousel has roughly 5,000 customers, mostly enterprise-type of accounts—a real who’s who of enterprise accounts. They specialize in unified communications, security, contact center. We didn’t have overlap in the accounts—the combined company will have over 6,000 accounts, and there’s only 37 accounts that overlap. And the new company will be a $1 billion dollar run rate, and really profitable—great partnerships, great customers. And the model and the vision is really aligned with everything that we’ve been doing. So they’ll begin picking up the EMP platform for their customers. They’ll pick up device-as-a-service. And then they’ve got some really solid other offerings that we’ll pick up. And there’s just a great chemistry with the founders—Jeff Gardner, Jim Marsh—great guys.

How does this help in your efforts to evolve away from being a traditional VAR, and into more of a tech-enabled services company?

For Carousel, a really high percent of the businesses is services, and the management layer. We also have a lot of investment into the Experience Management Platform, and that’s evolved a lot with really strong technology that fits in the cloud—whether that’s billing, fault correlation, asset management tracking. So we’ve really had the technology, and we’ve been deploying it really fast in our accounts. Now this gives us an opportunity to accelerate solutions [with the EMP]. Carousel has had really fast growth with cloud adoption. And now, bringing in our differentiated IP into 6,000 accounts in North America will really give a faster path to market for the technology.

As we come out of COVID, we’ll be entering back into a work world that will most likely be hybrid. You’re going to have work environments where people want to work anywhere—it could be in the office, it could be at home, it could be on the road with clients. And you need to be able to have that secure access into the right types of networks and the right infrastructure to support that. And then, as everyone’s moving from on-prem into the cloud, there’s a whole new set of capabilities that used to be on-prem software, that now need to be cloud capabilities—analytics, predictive analytics, fault correlation, billing, asset management tracking, tracking your SLAs, your ELAs, your subscriptions. EMP will be able to manage all these different domains, but also provide that type of capability in the cloud that used to be existing on-prem.

How does this acquisition help while competing in the cloud communications market?

It just gives us the national scale. We’ll have major operations all over the country—from New England and the Northeast, to North Carolina, Texas, California, Florida. So we’ll be a national player.

Why is scale such an advantage in this environment?

It’s a huge advantage. Employees used to be predominantly at one headquarter, and they were all pretty centralized, and the tools and the resources could have been centralized. Now we’re going to see that employees could be anywhere, but they have to have that same experience and security as if they were in that corporate headquarters. That’s No. 1. No. 2 is when you talk about the enterprise accounts, they still will have locations that will be everywhere in the country. And so we’ll be able to handle their locations with technology and people anywhere they exist in the country. And that gives us that scale to help customers meet their business objectives better.

So scale is almost a necessity to be really competitive in this environment?

I think scale offers the most value and advantages for our customers. You can have a nice little boutique company and you can cover some local companies, but it’s a little bit more challenging as you either move upstream to a [larger] size of account, or a customer has capabilities and they need to be national and they need to support employees that are [across the country] and all tied back to the mothership.

What are some vendor partnerships that Carousel is bringing to the table that NWN hasn’t focused on as much before?

The founders—Jeff Gardner, Jim Marsh—are really just outstanding entrepreneurs who have built a great company at scale. And they’ve built great services, solutions, technology, and they’ve done it across multiple vendors in unified communications and contact center. They have really strong relationships with Avaya, really strong relationships with Microsoft. They also have really strong relationships with Cisco. And then they’ve got some newer relationships, like with Genesys and RingCentral. And then a lot of different smaller, unique technology pieces that fit in to support some of the contact center areas. Some of it we have really great synergy with our same existing partners. And then there’ll be some partners that’ll be new to us, but have really strong partnerships with Carousel—with Avaya with RingCentral with Genesys. It’s going to be beneficial for everybody.

So in cases such as Microsoft Teams, for instance, you see the full NWN Carousel organization offering that going forward?

Absolutely. We’re going to combine all of our strengths. And it’s going to be all about the customer satisfaction, the customer experience, and providing the best solutions for that in a very repeatable way.

What are going to be some of the areas of investment going forward?

I think No. 1, we’ll get the companies really organized together. So there’ll be a lot of employee investment. A lot of investment in personnel training, investments in systems. And then, the biggest gap we see in the marketplace from a customer’s need perspective is really filling that void of capabilities that used to be on-prem, and now are capabilities that need to be in the cloud. And that’s where EMP fits in. So, one of our biggest investment areas will be the Experience Management Platform. Because everything’s about the customer experience. And then also there’s just classical requirements, that I mentioned earlier, that the customers need to replace, which was on-prem and now needs to be in the cloud. And that’s a big gap in the marketplace today that we’re filling.

What are some examples of those types of capabilities?

It could be, you’ve got a network slowdown, and you need to determine where that problem is. It’s pretty classical, but if you’re in the cloud, you may not know where that problem lies. Billing is a really unique challenge—how you’re getting billed in the cloud and who’s doing the billing. Analytics around who’s using the system, what the volume is, where the slowdowns could be, when are the busy times of the month. Security—who’s on the systems, who’s using them, how much are they using them, what are the capabilities around that. Asset tracking—I’ve got all these new cloud subscriptions and I’ve got ELAs, and I need to know where I am in my ELAs, and can I get more, and can I just automate that and just subscribe to do more. There’s just a lot of capabilities where there’s going to be a good bit of opportunity for us.

Could you elaborate a bit more on the opportunity around extending the EMP to Carousel’s customers, and why that represents a business growth opportunity for you?

For the Carousel team, with their cloud revenues and their customers moving from on-prem to the cloud, they’ve seen huge growth. And so people first make the move to go from on-prem to the cloud, and then they need the operational tools to support that. So they’ve been part of phase one of people moving from on-prem to the cloud. And now we’re in phase two, where they need the operational capabilities in the cloud. So every one of the clients they have has a perceived need around having better operational capabilities. Then it’ll move to more business type of priorities, around what type of capabilities they need. The timing is perfect because there’s been such a massive shift to the cloud. But it’s really we’re kind of in the phase one of this shift, and now you need to move in the right capabilities around that.

Overall, how would you characterize how this sets up NWN Carousel to be a major player in the market?

The top priority for customers that we see is cloud communications. And a subset of that is the unified communications, the contact center, the security around those environments, the networks to support it—and then all the endpoints, with a management layer around it. Our goal is to be the best provider for all of the accounts in North America in that space.

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