Mitel Acquiring ShoreTel
By Travis Dillard, President & CEO
I’ve been in the telecommunications “Value-Added” Reseller (VAR) for over 20 years. That’s an eternity in this industry. Our businesses and our customers’ businesses have been affected by the ever changing landscape of tech companies like Nortel, 3 Com, Comdial, Avaya, and now ShoreTel. I’ve been through the rise and fall of technologies like TDM, Frame Relay, ATM, MPLS, and software defined networking (SDN). Change, and sometimes chaos, have always defined the tech industry. Even when a company doesn’t get purchased, we’ve seen products merge or get discontinued and buried. We’ve seen Wall Street influence technology manufacturers on what the customer wants. Sometimes they’re right, sometimes they’re trying to drive valuations without the customer’s best interest in mind. Sometimes the decisions made make sense, other times, they don’t.
My point is, change has always been the norm. And now change is happening at an even faster rate. Now we’re seeing cloud, Communications Platform as a Service (CPaaS), Unified Communications as a Service (UCaaS), Contact Center as a Service (CCaaS), and other TLA (Three Letter Acronyms) gain momentum. Along with them, you’re seeing new entrants like Slack, Zoom, Skype for Business, and others gaining speed in the collaboration and Unified Communications space. Consolidation, divestiture, and M&A are common place.
So how do I feel about the potential pending Mitel acquisition of ShoreTel?
I’m not surprised. Am I worried? No. We’ve had suspicions this was coming, we just didn’t know the time or the suitor. I was encouraged by this letter to the customer from Mitel’s CEO Rich McBee.
Let me share a few of my thoughts with you:
- Mitel’s interest in ShoreTel for its customer base: Mitel has been on an aggressive acquisition spree to consolidate as many customer bases in a short amount of time. They see consolidation in the UC space as inevitable and they intend to be the last man standing at the top. Why? Because they intend to guide as many of these customers, when they’re ready, to cloud, and cloud is the fastest growing market in the Unified Communications space. It’s easier to guide an existing happy customer to cloud than go out and find a new one. As soon as this acquisition is complete, Mitel will be the #2 UCaaS provider in the world. Then, as more onsite customers migrate to the cloud, Mitel will be well on it’s way to #1.
- Mitel’s interest in ShoreTel for its cloud technology: Currently, Mitel’s cloud offering is mostly built on a “single tenant” infrastructure. ShoreTel has successfully built a true “multi-tenant” cloud infrastructure. In a multi-tenant environment, common software, operating systems, dial tone resources, administrative consoles, and other services are used for multiple customers. In this model, software development, and maintenance expenses are shared across multiple customers. Additionally, features and enhancements can be applied to multiple customers rapidly, dramatically increasing the speed of innovation and ease of administration. With Unified Communications as a Service becoming more and more commoditized, it’s imperative for providers to gain economies of scale.
- Mitel is Interested in ShoreTel for its Summit Platform: Recently, ShoreTel acquired Corvisa, a Communications Platform as a Service (CPaaS) provider and rebranded it as ShoreTel Summit. Summit provides a platform for developers (partners or customers) to build custom telephony applications and services. Examples include disaster recovery, custom bill pay, SMS, call queuing, database integration, and other applications. Generally, the solution is monetized based on customer usage. CPaaS creates monthly reoccurring revenue streams for providers and is generally considered “sticky”. This is because these types of applications are mission-critical and custom-built for a business, reducing customer churn and downward pricing pressure due to commoditization. Also, this allows manufacturers and VARs to differentiate themselves and their solution in an effort to secure the business and expand revenue. Most cloud communication providers are trying to get into the CPaaS game, and few have it. Now Mitel will have a good one now.
What Does This Mean For You?
Nothing out of the ordinary. My advice would be to not knee-jerk, disrupt your business, and put your communications platform in jeopardy by ripping it out and ending up in a bad situation. You have time and the flexibility to continue, and expand and enhance your current ShoreTel solution, as you see fit. You also have the time to make calculated, prudent technology decisions for your business as you would in your normal process of technology evaluation, selection, and implementation to meet your organization’s needs.
If you’re a ShoreTel On-Site customer:
Mitel acquired Inter-Tel over 10 years ago. The Inter-Tel product line was used to fill the SMB gap in Mitel’s product lineup. This is the Mitel 5000-series phone system, which in my opinion, is long in the tooth and due to be put out to pasture. The ShoreTel technology stack is far from being long in the tooth, and in many cases, comes with features and an architecture superior to Mitel’s flagship product, the 3000-series product. I feel much of the ShoreTel solution will fill a specific segment of the Mitel product set, and replace the old Inter-Tel solution.
Mitel’s CEO has affirmed that your existing investment or near-term investment in ShoreTel hardware and software will not be sunk. Mitel intends to take the best from both platforms, and combine them into one. I interpret this to mean that, if you stay current on your software maintenance, you’ll be able to upgrade your ShoreTel software to the latest “Mi-Shore” software release, when it’s ready and available. If any piece of the ShoreTel solution (probably mostly hardware) is going to be discontinued, you have six years (1 year before it stops getting manufactured and 5 years of support) to continue using that technology and figure out what your next step is! If you decide that’s the best step forward for your business, perfect. If not, you have the time to make the best decision possible. If you think about it, this is what you would do anyway. You will always be navigating technology manufactures discontinuing products, merging features, and enhancing software. Nothing really changes, regardless of an acquisition.
If you’re a ShoreTel cloud customer:
This is even easier. Mitel’s CEO statement on this is bold. Nothing changes. The Mitel and ShoreTel cloud platforms will eventually merge with no disruption to you at all. It’s business as usual. That’s good, regardless of the acquisition, you would expect your cloud solution to be enhanced regularly. To me, this solidifies Mitel’s intention to leverage the ShoreTel multi-tenant cloud platform. I would be more worried if I was a Mitel cloud customer to be honest.
The Common Denominator, Service and Enablement
In my opinion, regardless of the location, be it onsite or in a data center, the brand (Mitel, ShoreTel, Bob-Tel, Acme-Tel), or the function (collaboration, Contact Center, CRM, security) the value of technology to a business is dramatically reduced without a solid partner.
The technology creators are running a horse race. They’re adding features to edge out the competition. They’re busy trying to acquire somebody or get acquired. Add to that, they’re busy adding valuation for their shareholders. They don’t have the resources to be the trusted advisor you need to optimize the solution to meet your business objectives. They’re not investing in enablement, consultation and service. They are investing in making the product better.
But the software or hardware is only 20% of the solution. Enablement, consultation, advocacy and service is the other 80%. You need a technology partner that understands your unique operation and business requirements and can then help you align technology to it. Having over 700 customers today, many of which we were not involved in the initial technology sale and implementation, we’ve all learned that the real value, with the right partner, comes after the implementation.
You need a partner that invests in the customer experience and provides a painless implementation and support model you can rely on. This is especially true with Unified Communications and Contact Center applications. This is the lifeblood to your business. You will never “set it and forget it.” With a tumultuous industry, as evidenced once again by this pending acquisition, you need a trusted partner more than ever. While your technology selection is very important, your technology partnership selection is critical!