M & A Rainmaker

The Cisco FutureLine Hosted Voice system is based on Digium Asterisk at the core and uses Cisco Systems networking and endpoint ( voip phones, video over ip equipment etc etc ) hardware.

Whilst some people might view Cisco and Digium as unlikely partners I believe that they represent one of the most powerful combinations in the telephony world.

I regard Digium and Asterisk respectively as a company and a solution whose time has come. I am not alone in this view. If you doubt my opinion then perhaps you may consider the involvement of David Skok of Matrix Partners

http://www.matrixpartners.com/site/team_detail/david_skok/

in Digium. He is one of the investors.

David is specifically focused on the areas of cloud computing, Open Source, Software as a Service (SaaS), marketing automation, virtualization, storage, and data center automation.

Consider also the references in the book ” Asterisk: the future of telephony ” :

” In the book ” Paradigm Shift ” Tim O’Reilly talks about a paradigm shift that is occurring in the way technology ( both hardware and software ) is delivered. O’Reilly identifies three trends:

– the commoditisation of software

– network enabled collaboration

– software customisability ( software as a service – SaaS )

These three concepts provide evidence to suggest that open source technology is an idea whose time has come. ”

In this blog here

http://mandarainmaker.co.uk/wordpress/2011/02/19/digium-asterisk-based-futureline-at-uc-expo-2011/

I have highlighted a number of general benefits of  a Digium Asterisk based Hosted Voice platform. ( These benefits also apply to premises based or managed solutions ).

In the same way that a Digium Asterisk based pbx like the Switchvox can be compared favourably to other premises based alternatives e.g. Avaya/Nortel or Panasonic a Digium Asterisk based Hosted Voice solution can be compared favourably to other proprietary Hosted Voice solutions e.g. Broadsoft or Mitel.

Without going through all the general benefits highlighted in my earlier blog it is reasonable to assume that the advantages are scaled up in line with the scaling of the system from one that serves a single customer to one that serves multiple customers.

If you are a reseller, distributer or small telco or cloud services company looking to provide Hosted Voice services to your customers ( and perhaps the customers of your customers ) then you are going to be looking at an investment in the order of £100’s of thousands ( albeit financed over a period of time ) in order to acquire a proprietary Hosted solution from e.g. Broadsoft or Mitel.

I highlight proprietary solution because it seems to me that the very last thing you want to do is to spend £100’s of thousands on a solution that is not “open”, standards based, easily upgradeable, customisable and flexible.

For an in depth appreciation of the problem being faced we can turn to David Skok again and a series of posts such as

http://www.forentrepreneurs.com/saas-economics-1/

David starts:

” This post provides SaaS entrepreneurs with an Excel spreadsheet model and graphs that show the cash flow trough that happens to SaaS, or other subscription/recurring revenue businesses that use a sales organization. These kinds of SaaS businesses face a cash flow problem in the early days, because they have to invest up front in sales and marketing expenses to acquire customers, and only get payments from those customers over a delayed period of time. I refer to this phenomenon as the the SaaS Cash Flow Trough. ”

The cash flow problem in the early days is only going to be worse if you have to spend £100’s of thousands on your Hosted Voice platform !!

So, for many reasons, even though there have been successful models around the world based on proprietary Hosted Voice systems – I think there are a lot of failures in the Hosted Voice world based on such platforms – I believe that an investment in a Digium Asterisk based platform is going to help a Hosted Voice business model massively ( because it is going to be far less up front cost, more scalable, upgradeable etc etc ).

Evidently, if you are going to be supplying a total voice solution to a customer, you are going to need things like networking hardware ( routers, firewalls etc ), end points ( phones, video cameras etc ), possibly storage solutions, virtualisation hardware and software, broadband, SIP trunks etc etc

Who better to partner with than Cisco ??

As I have mentioned before there are millions of Cisco endpoints and routers attached to Digium Asterisk systems – particularly systems that have been supplied to small and medium sized businesses.

A quick review of  established and experienced Digium Asterisk value added resellers proves that they typically have Cisco and Microsoft skills and accreditations aswell as Digium Asterisk. They have to have really – don’t they !

Clearly Cisco have products and services that compete with Digium Asterisk products and services.

However Cisco also partner with e.g. Broadsoft and it could easily be argued that Broadsoft based solutions are preventing sales of e.g. Cisco UC 500 systems.

In the S.M.B. space particularly ( and here I mean S.M.B. end user customers and S.M.B. resellers, distributers and telco’s ) I believe the combination of Cisco and Asterisk is unbeatable and this is the combination that FutureLine provides.

This blog describes an effort to drive Internet leads for U.K. S.M.B. FutureLine using HubSpot’s Inbound Marketing process.

FutureLine ( http://www.futureline.net.uk/index.html ) is a U.K. based Hosted Voice solution being promoted to SMB’s and SMB resellers in conjunction with Cisco Systems. FutureLine addresses a particular demand from small SMB’s ( say 1-50 telephone users ) for a Cisco based hosted voice solution. The FutureLine solution allows small SMB’s to adopt Cisco solutions at a very low initial cost and then to upgrade seamlessly and inexpensively and grow as the business grows.

As a Hosted or SaaS ( Software as a Service ) solution it is believed to be best practise and important that the FutureLine website and FutureLine marketing messages be found by interested SMB buyers via Internet search.

It is believed that FutureLine’s target market will find FutureLine via Internet search to a very large degree and indeed the Internet Marketing efforts carried out so far bear this out as there have been a number of leads and indeed sales that came from Google searches.

I have been aware of HubSpot for some time ( see earlier blog posts on them ) and there are a number of interesting parallels here. For example:

• HubSpot’s founder, Brian Halligan, founded HubSpot when investing in and mentoring SMB’s. He realised that a different marketing approach was required to really drive sales.
• HubSpot has a dual focus on the SMB end user and the SMB reseller as with FutureLine.
• HubSpot has a very sales orientated approach which fits with the sales philosophy that we and FutureLine believe in. We all believe in tracking visits, leads and actual sales.

Those involved in this effort are already aware of some of the main principles of on Internet marketing e.g. the importance of relevant content, on and off page optimisation and good, powerful links.

We are also aware of the main components of the HubSpot solution e.g. website usage tracking, content management, SEO, CRM etc etc

We also have a network of experienced and potentially suitable contacts and resources, including website designers, SEO specialists, Social Media Marketing experts, CRM consultants, HubSpot qualified resource, Sales and Marketing specialists, P.R. Experts and Business Strategy and Business Value Creation specialists.

We decided that, in this instance, whilst it was obviously very important to generate leads for FutureLine it was also important to work through and prove the HubSpot process thoroughly.

It was decided that the first tasks included a thorough review of FutureLine’s target markets ( even though this has been done before ) which are broadly SMB end users and SMB ICT ( voice,data, PC/Server/Application ) resellers and a review of the message to each of these target markets.

It was also important to install HubSpot tracking and content management code on the FutureLine website so that we can gat a clear picture of the situation regarding visits, leads and sales , now and in the future.

Further posts will follow as we work through the effort.

I have a client who is looking for SaaS companies that might fit into it’s Buy and Build Portfolio. They will deliver solutions for the public and private sectors.

If you know of any such companies please let me know asap.

This is an interesting review from Icon Corporate Finance of Q2 M&A activity and mentions 365iT as being on the acquisition trail which it is for selected companies that fit the portfolio, such as the acquisition of 5i earlier this year and the very recent acquisition of 7 global.

http://www.iconcorpfin.co.uk/NewsEvents/M&ATechnologyReviewQ22009.pdf