Key criteria for winning hosted PBX business

Diane Myers, Infonetics Research

Enterprises of all sizes are actively interested in hosted voice services, contrary to the old paradigm that hosted services are suited best for smaller companies. However, to successfully capture this business, particularly from mid-market to larger enterprises, there are important criteria service providers must possess, or at least be able to adequately address.

Maturity rings loud and clear
In talking with mid-market and larger enterprises, the most important criteria that comes up time and again is the maturity of the provider. Moving-up-market businesses are interested in utilizing hosted VoIP services but want to evaluate providers that are financially sound and will be able to support the business over the long haul. Additionally, maturity for businesses means these providers have experience in deploying and supporting customers much like themselves.

Winning hosted IP PBX businessIn Infonetics' April 2010 North America Business VoIP Services Leadership Matrix, the two heaviest weighted criteria are installed base and financial stability. This has been validated by the recurring theme of businesses looking for a mature provider, a company that is not fly-by-night and has the depth of experience to successfully handle their requirements.

Larger providers such as Verizon and AT&T are inherently considered mature. On the flip side, it is often challenging for smaller, more focused business VoIP providers to address the issue of maturity. There are quite a few solid providers, but to make significant inroads up-market requires full disclosure of financials with prospective clients. It also is imperative that prospective customers feel comfortable that a provider can handle the business through customer references that have successfully used the service. Businesses look to their peers or companies of similar size and scope when evaluating potential technology suppliers.

Key leadership qualifications
Beyond demonstrating maturity of customer base and financials, the most important attributes that separate the true hosted IP PBX leaders are support options, market strategy, and service capabilities.

Infonetics IP PBX successWhile having a comprehensive service and support policy may seem obvious, there are varying degrees of support options, and virtually all of the providers that hit the top in terms of leadership are strong in this area.

With the market for hosted business services brimming with providers, in evaluating the market leaders we look to see if an individual provider has a clearly defined market strategy and whether it is executing on that strategy (e.g., is it using channels, defined target market by vertical and/or size of business, or geographic focus). We have found that service providers that remain focused on a strategy that best fits their strengths are best positioned for continued success.

Lastly, a hosted PBX provider's service differentiation provides the ability to maintain or increase average selling prices per customer. This could include offering services or features such as hosted unified communication capabilities, hosted call center services, HD voice, or video solutions. While hosted PBX services have not been hit by as much pricing pressure as other service areas, the leaders in this market capitalize on the right mix of value-added services to increase the strategic relationship with the customer and grow revenues.

Providers rising to the top
When looking at the top 10 hosted PBX providers in North America, most excel at the key leadership criteria outlined above--hence why they are building a strong installed base and in the top group to start. However, not all readily meet the requirements of a mature provider as discussed at the beginning, which is fine if they are focused on serving smaller businesses.

The hosted PBX providers that are rising to the top include 8x8, AT&T, Broadview Networks, Cox Communications, ENA, M5, New Global Telecom, Nuvio, Smoothstone, and Verizon Business. There is a sizable group ranking right below these 10 and many are clamoring to move up-market. Our most important piece of advice to those providers is: readily share your financial health with prospective customers, and share as many customer references of successful deployments with larger businesses as you can.

Diane Myers is Directing Analyst, Service Provider VoIP and IMS for market research and consulting firm Infonetics Research and a FierceTelecom columnist.