Magazine Article | December 13, 2012

Cloud Offering Lands VAR Business

By Brian Albright, Business Solutions magazine

A VAR profits from the recurring revenue of a cloud-based telephony system.

A few years ago Joy Communications, a South Floridabased business telephony and data services company, did not have a cloud-based offering for its clients. But as the functionality and reliability of cloud services increased, it was clear to the company that there was money to be made by selling hosted solutions.

“The traditional model is to solve every problem with hardware,” says Pete Nicolaisen, director of sales at Joy. “But there are great opportunities for cloud applications.” Case in point: a medical practice that offered physical therapy services in six different cities. “These were all small medical offices with approximately 20 phones per office,” Nicolaisen says. “But they had no WAN, and they wanted to consolidate their communications, but they had no physical infrastructure in place.”

Each office had its own staff dedicated to handling appointments, billing, and insurance calls. The company wanted to keep its local calling capabilities and phone numbers, but consolidate its administrative calls (e.g. appointments, insurance), while automatically directing other calls to the correct location.

The company was referred to Joy, and Nicolaisen says they knew from the beginning that a hardware-only approach was not going to work. “Our challenge was to overcome the dichotomy of wanting to have a single communications system that still enabled them to have a local presence and do that without an existing network,” Nicolaisen says.

The solution was a cloud-based, VoIP (voice over Internet Protocol) system from FreedomVoice, a Joy Communications partner. FreedomVoice provides customers with a nationwide toll-free number, auto-attendant service, call forwarding, and voicemail services. The client had to install new Polycom SoundPoint 450 and SoundPoint 335 IP phones (purchased through Joy), but all of the calling functionality is handled through a centralized cloud solution.

Cloud Solution Provides Competitive Advantage
The new system established a centralized, automated attendant in the cloud that provides consolidated business and appointment scheduling functions. The customer was also able to retain its local phone numbers.

According to Nicolaisen, “If I had gone in with just a hardware solution, I would have been shopped against five other hardware solutions. I would have had to buy six high-end phone systems, network them, and have the client buy a WAN to try and connect everything.”

The cloud-based solution provides the functionality the client wanted, while reducing the total number of phone lines — from 28 to 10 — needed by pooling the outgoing trunk lines in the cloud. Joy was also able to significantly reduce the up-front cost of the system for the client. Had they taken a hardware-only approach, Nicolaisen says the system could have cost as much as $37,000, in addition to ongoing WAN carrier costs. The FreedomVoice solution costs the client less than $900 per month, compared to the more than $2,000 per month they previously spent on phone service to all locations. Joy receives ongoing monthly revenue (roughly 20% of the monthly fee) via its relationship with FreedomVoice, in addition to the revenue the VAR received for its services and the sale and installation of the Polycom phones.

“The equipment sold up front is minimized, which means we’re making less on the hardware sale, but we’re making commissionable revenue over time that actually surpasses revenue from an on-premise sale after five years,” Nicolaisen says. “Plus, I don’t have to spend money to repair or provide maintenance on anything because it’s built into the hosted provider agreement.”

According to Nicolaisen, the key to successful cloud deployments is to make sure the infrastructure is in place at the client site to handle the voice traffic. “First, you have to have dedicated voice bandwidth,” Nicolaisen says. “This can’t be on the same connection as your data bandwidth, otherwise you have contention for that bandwidth. Second, you need a businessgrade router that provides the right quality of service. You can’t just put this type of voice service through an off-the-shelf router. For a telecom VAR to get into the hosted world, this approach is a blueprint that works every time.”

As with all of Joy’s clients, the company is able to track services and revenue related to this installation using its Tigerpaw Software CRM solution. The solution is tailored to telecom service providers and helps Joy manage billing, inventory, pricing, and revenue forecasting.