Cisco's acquisition of Broadsoft is the latest example of your vendor flipping into your direct competitor overnight!
Unfortunately, in the IT Channel & Managed Services vertical this story is all too common. There are numerous examples over the years of a trusted vendor that you have standardized on flipping the script and competing directly again their own partners & resellers on the street. You don't really have to go that far into the past to see this happening.
Computer Manufacturers Turned Competitors
This example is from quite long ago but remember back in the day when Dell was channel only and then they flipped into literally selling to anyone? MSP's and IT firms also learned quick to NOT ship equipment directly to end user addresses to prevent Dell from sending out catalogs in the mail in the fear that their customers would simply call Dell in response to some "deal" or "coupon" they would get in the mail thinking that they were getting a bargain!
More recently, companies like Dell & HP have been offering their own form of IT support or managed services and selling into larger metros like Dallas, New York, etc. This became a MAJOR channel conflict for the IT Channel as it effectively signaled that nobody was safe from the big players trying to "do it all" even though it would be done poorly.
ISPs and Data Center Providers Turned Competitors
How shocking is it when an ISP like a cable provider sends your customer an advertisement about IT Support Services? The second you order internet services for your customer (which every will need obviously) they immediately try to up sell the end user. Sure, they may have a channel program but are constantly trying to push up sells downstream and when your customer says yes to that they end up "re-writing the deal" and you lose out on your commission anyway! This is no shock as ISP's have morphed into service companies and as a result want to sell anything from Office365 to surveillance cameras to Alarms to web hosting let alone IT Support.
The Data Center or Cloud Providers seem to be in a similar boat. You will find most of these entities are offering "managed services" publicly on their websites and marketing material even though what they call managed services and what MSP's who have been offering services to the street have been doing don't seem to truly line up. Marketing says a lot but the issue here is that if you utilize some service from an upstream vendor and then they turn around and want to sell against you how comfortable do you feel by bringing that vendor into your relationship with your end customer?
SaaS and Software Companies Turned Competitors
One could argue the Microsoft's of the world ALWAYS sold directly but it's really evident when a company like Microsoft starting flipping the larger part of their portfolio to SaaS solutions and initially made it impossible to manage as a partner, reseller, or MSP. Sure, eventually Microsoft rolled out the CSP program and acknowledged the IT Channel's role in standardizing on their stack but not without years of channel conflict. It was just announced this year at Microsoft Inspire that the internal sales restructuring of Microsoft's various divisions was done to SOLVE the conflict between direct sales efforts and the channel sales efforts. It was a "MAJOR" step forward according to Microsoft executives to solve this as deals where often creating a serious kink in the sales process for everyone and it was actually hurting business not helping.
Speaking more generally the whole point of SaaS is it's supposed to be easily consumable and instantly available right? Inherently, MSP's and IT Service Providers struggle with "shadow IT" when a customer just takes out a credit card and subscribes to something and then finding out after the fact that this is being added to the plate of the IT resource by surprise.
Cisco Acquiring Broadsoft is a Clear Channel Conflict!
Let's be clear, Broadsoft is largely a carrier platform mostly because it is extremely expensive to get going and the internal expertise needed to build, manage, and maintain a Broadsoft infrastructure is astronomical. Carriers and telecom providers would make and investment in Broadsoft and then offer more consumable services to downstream resellers and end users usually in the form of a per user per price monthly costing structure.
Let's also understand Cisco abandoned the majority of the SMB marketing several years ago after the discontinuation of the small business line of telephony PBX's, the selling of Linksys to Belkin which house the Cisco SPA line of devices, and the strategy of going after very large fish when it came to their telephony offerings became their M.O.
With Cisco's acquisition of Broadsoft, effectively the Vendor's Vendor is now able and willing to sell directly to the end user. An entire ecosystem is now upside down. Many have suggested there is no way Cisco can make it work in a direct model but let's be clear and look at almost ALL of the Cisco acquisitions, even in the last 24 months have turned into a direct play for them.
Cisco says they have "re-found" the channel all of a sudden and revamped their whole channel / partner program as a result but there is NO DOUBT that Cisco has not taken a Microsoft approach about removing the internal sales team's run up against the channel deals and how that ultimately plays out.
Broadsoft's Nearest Competitor Just Completed a Merger
Since we are talking about Broadsoft you may want to pay attention to Genband. Gendband has largely been considered Broadsoft's nearest competitor especially by the "magic quadrants" of the world. Genband and Sonos Networks just completed a merger. They will now be known as Ribbon Communications. The difference here is that this new company doesn't seem to have plans like Cisco to literally bypass the whole ecosystem and sell direct to the street. That being said all of those carriers that have investment in Broadsoft who are now more or less scrambling to find out their fate may end up going that direction as it's the next most logical place.
Final Thoughts
It seems almost impossible for the IT Channel to stack their products and services into a bundle safely if around every turn the rug is pulled out from underneath of them by upstream vendors. It also makes MSPs skeptical to adopt a vendor early to only have that vendor flip on them. While acquisitions are ultimately inevitable, it seems like it is a CONSTANT war trying to own the customer relationship and manage their experience especially when the number of vendors that need to be managed seems to be growing over time not shrinking. Make sure to keep an eye on how large vendors try to continue eating up other service based companies to ultimately roll them up into their direct strategy. Also make sure to run through your vendor list and seriously inquire if vendors that seem channel friendly are maybe not. Remember, all it takes is your end user to pick up the phone and call said vendor and they may immediately be getting the pitch to come direct.
One thing is for sure when it comes to BVoIP, we have always been Channel First, Channel Only, and rely solely on our partners to build our company. It's one thing to say you have a channel program and another when you truly rely on the channel to grow, flourish, and survive.
