european voip summit 2017 // edgewater // panasonic // siphon // q advisors
TRANSCRIPT
European VoIP Summit 2017 - London
#EVSLDN17
Copyright Cavell Group 2
Best Practices for Reducing Operational Cost, Customer Churn and Enhancing
Customer ExperienceSteve Pattison - CEO
#EVSLDN17
Operator Best PracticesReduce Operational Cost
Minimize Customer Churn
Enhance Customer Experience
4
EDGEWATER NETWORKS OVERVIEW
▪ Based in San Jose, CA▪ 14+ years experience scaling network services ▪ Market share leader in endpoint management
Network Edge Orchestration Powers Real Time Communications for Businesses and Service Providers
2XREVENUE GROWTH
2014-2016
500K+EDGES UNDER MANAGEMENT
20M+CONNECTED ENDPOINTS
#1MARKET SHARE
NORTH AMERICA#2 WORLDWIDE*
*IHS Technology Enterprise Session Border Controllers Market Tracker – Q3 2016 – < 800 Sessions
5
OPERATIONAL BEST PRACTICES
Awareness Consideration Purchase Service Loyalty
Contract to Cash
Revenueto Retention
Provisioningand Installation
First 30 DayCustomer Experience
ProactiveIssue Resolution
Contract Renewal
6
BEST PRACITICES OPPORTUNITIES
Customer Acquired
Customer Installation
Day 2+ Issues?
Customer Service Management
End of Contract
Renew or
Churn?
Issue Resolution
Process
Issue Resolved? Customer
Lost
Goal: Reduce Installation Intervals and Minimize OpEx
Goal: Quick and
Complete Resolution
Goal: Proactive Service Management
Goal: Minimize
Churn
Renew
Churn
No
No
Yes
Yes
7
BEST PRACTICES – PROVISIONING AND INSTALLATION
1. Choose solution components that are proven to interoperate (Phones, Routers, CPE, etc.)
2. Bundle components at distribution for dropshipment to customers
3. Ensure deployment model allows ‘flow through’ provisioning from OSS/BSS
4. Develop and standardize consistent configuration templates for each solution element
5. Minimize labor costs through Zero Touch Provisioning (ZTP)
“By implementing best practices with the right technology, we have been able to reduce our ‘contract to cash’ OpEx by 35%”
- Director, Comcast Business
8
BEST PRACTICES – FIRST 30 DAY CUSTOMER EXPERIENCE
1. Choose service control tools that provide access to all CPE and IP endpoints
2. Choose CPE and service control tools that can identify and isolate LAN issues from WAN issues
3. Set high service quality thresholds, monitor and report on every call
4. Use analytics and reporting to quickly see deviations from normal service quality
5. Put Tier 2/3 visualization tools in the hands of Tier 1 support agents for better customer communication
“Without visibility into the customer premises, my team would spend 5 to 10 hours a week trying to prove our network was not at fault. With visibility, we resolve issues in 30 minutes”
- Sr. Director Network Operations
9
BEST PRACTICES – PROACTIVE SERVICE MANAGEMENT
1. Know about service quality issues before your customer does
2. Choose a deployment method that allows for ‘Event Based’ triggering of service alerts
3. Set up ‘Event Triggers’ (e.g. low MOS, dropped SIP registrations, etc.) to capture intermittent service quality issues
4. Define specific actions to ‘Event Triggers’ to assist in troubleshoot and remediation
5. Use all tools at your disposal – packet captures on WAN and LAN interfaces, active line tests, TCP dumps, etc. – in an automated fashion
“If there are issues for even 30 seconds of an hour long call, we want to know about it. We measure the value of knowing and fixing in the number of crisis situations we avoid.”
- Sr. Director Customer Care
10
BEST PRACTICES – REDUCE END OF CONTRACT CHURN
1. Use reporting and service quality analytics to reinforce Service Level Agreements
2. Provide monthly reporting and service quality analytics to show below threshold events, call volumes and resolution times.
3. Use Proactive Service Quality management as a customer touch point to highlight commitment to quality
4. Use reporting and analytics to ‘right size’ customer bandwidth and call volumes
“Our contract renewal process starts the day we turn up the customer. We provide all of our customers with monthly service quality reports and use that as an opportunity to talk about our commitment to them.”
- Sr. Director Marketing
Copyright Cavell Group 11
Benefit that matters
Raphael Studer – European Partner Account Manager SIP Product
#EVSLDN17
12
Benefit that matters!
European VoIP Summit
London
13
Raphael Studer
European Partner Account Manager
SIP Product Group
14
P roducts
SIP Line-up for
strong growth
S upport
From interop to
life cycle
E fficiencyLean operationcreates revenue
A dvantage
for Channel Partners
B enefit
Changeexperience
Panasonic has prepared a highly reliable
link for your business. A long tradition of
proven technology and a solid strategy
for future markets combined to offer new
and exciting business growth.
The answer's in here
1. Panasonic Introduction Products
SIP Line-up for strong growth!
16
FY2015New Products
Global Market – Extension Base
16
0
10
20
30
40
50
60
70
2013 2014 2015 2016 2017 2018 2019 2020
On-Premise Legacy PBX
On-Premise IP-PBX
Cloud Based IP-PBX
Carrier IP Phone (HPBX)
(Mil Extension) Extension (CAGR 101%)
58Mil Ext. 62Mil Ext
(Source MZA)
SIP
Device
Market
17
Panasonic Product Segmentation
1
7
+
+-
Enterprise
Cloud PBX
Market
Small / Medium
Cloud PBX
Market
Residential / SoHo
Cloud PBX
Market
-
+
Potential Volume
Reve
nu
e
Solution for
Project or
Mass sales
Vertical
Approach
Segment
overlap
18
Unique Performance
KX-TGP600
Base Unit
(TGP600)
Wireless Desk Phone(TPA65) requires no wiring for installation.Repeater for expanding coverage area
Remote configuration & handset managementTwo types of maintenance (Local or Provider)
Variety of Handsets Easy Setup and
Maintenance
Wireless Desk Phone(TPA65)
8 Simultaneous Calls x 8
HandsetsUp to 8 simultaneous calls, up to8 Handsets, up to 8 SIP accounts.For travel agencies, small retail stores, and other businesses with10 or fewer employees.
Single Cell SIP DECT – variation for everyone
Standard Handset(TPA60)
Tough Handset(UDT131)
Slim Handset (UDT121)
Repeater(A406)
19
Key Concept
KX-UDS124
Up to 8 clusters of 32 CS as a solution providing rooming for up to 255 HS
Remote configuration & handset management, no controller required,two types of maintenance (Local or Provider)
Enterprise segment
capability
Easy Setup and
Maintenance32 Cell Station providing
seamless hand-overUp to 4 simultaneous calls per CS, one master CS for entire management, over the air synchronizations for hand-over
Multi Cell SIP DECT – designed for cloud
Slim Handset (UDT121)
Tough Handset(UDT131)
Basic Handset (UDT111)
Base Station(UDS124)
20
Quality and Design
Highly rated Panasonic voice
quality, and a sharp/flat design
that embodies IP technology.
Leading Features
Complete line-up from price-oriented
entry terminal to high-end video
terminal.
Priced to make every model
competitive with other-brand
models.
From Entry to Video Highly Competitive Prices
KX-HDV Series
HDV130
SIP Corded Phone – device for every demand
HDV230 HDV330
HDV430
Visual Communication
21
Comparison of Video Quality
Original Subject
Comparison of Automatic White Balance Performance in Changing
Illumination
The automatic white balance in the Panasonic
KX-HDV430 has stable color reproduction
without being affected by the room's illumination.
Efficiency
From interop to life cycle
23
Broadsoft (BroadWorks / BroadCloud*)
Teles AG (C5 System)
Centile (Istra System**)
Sipwise (LGI Group)
Metaswitch (MetaSphere)
Open source as Nfon, Blueface, Altos, etc.
* BroadCloud ready as per E/March 2017
** Certificate of TGP only at the moment
Soft switch compliance – basic condition!
24
From interop test to life cycle management
25
Cost savings from the beginning!
Auto provisioning as one option for “Zero Touch” business
Panasonic global
redirection server
checks carrier
Device requests
account credentials
Carriers provisioning
server releases
credentials
Panasonic reroutes to
carrier server based
on MAC address
Carrier Server
deploys Account Data
Device stores account
information for operation
Pre-installed URL
leads to Panasonic
redirection server
1
2
3
4
5
6
7
26
Advantages
For channel partners!
27
Panasonic support for more business
End User
Service Provider
Terminal
Sales
Service Fee
Air Time
Brand
Awareness
Panasonic supports channel sales
Partner
Certification
+ Integration
New business
from cloud services
Panasonic keeps
channel sales model
Painless on Integration
and operation
Reliable Partner to
Channel + Carrier
Recurring commissions
on hosted service
HW Margin
Service
Commission
28
New HWaaS Business Model
Hardware as a Service (HWaaS) your new OPEX Business Model
Introduction in Q2 2017 with prior to UK/IRL, DACH, BNLX
Benefits
That will change experience!
30
FY2015New Products
End Customer
Partner
Carrier
✓ Competitive value
proposition
✓ Attractive for any
segment
✓ Support channel
sales
✓ Flexible
Distribution
✓ Contribution to
carrier strategy
✓ Long term
technology partner
31
FY2015New Products
Thank you!
Copyright Cavell Group 32
Will Voice over IP become Video over IP?
Ed House – Sales Director of Video
#EVSLDN17
Will Voice over IP become Video over IP?
Introduction to Video - Ed House
SIPHON strives to be the leading Unified Communications Technology Enabler in Europe by
helping our Customers succeed in delivering Innovative, Profitable and High Quality services.
Awards and Accreditations
Industry Leading Vendor Partnerships
Customer Success Stories High Growth & Established Leaders
• Established in 2009
• Deloitte Fast Track50 UK &
Fast500 EMEA Winner 2015 &
2016
• Sole Focus on Cloud & UC
Technology Enablement via
Partners
• >50% of staff are hands on and
accredited engineers
• Became part of the Nuvias
group in 2016 as Unified
Communications practice
Company Vision & Background
Why are we here today?
• What is the opportunity for me to offer Video services and why should I?
• What are the various options for launching Video?
• Cloud, Premise based, Hybrid?
• How do I start to plan and develop my service, platform and proposition?
• Who are the main players in the market today and how can I partner or compete with them?
• How do I enable and support my video service when ready?
• What can SIPHON do to help me?
UCaaS today is Voice and IM centric and is moving to full Collaboration
• Voice and Video traditionally separated but now being seen as one in terms of User Experience and Interface. SKYPE showed potential but also demonstrated issues in delivering successfully (user frustration even when free)
• Traditional Integration between the two services was very disjointed with vendors taking different approaches. Starting to move to more integrated offering.
• Video and Collaboration players moving into Voice and Voice players adding Video services as logical extension to portfolio
Video Adoption
• Video no longer a ‘nice to have’ for companies, but a necessity.
• Skype & Facetime driving video adoption
• The future work force and next generation – Facebook live & Youtube / on demand
Who are the main Players – Group Video, Web Conferencing and UCaaS
Why should I offer Video services?
Internet Service Provider Cloud Telephony Provider Systems Integrator/Reseller
• Video services as a start to
UCaaS portfolio offering
• Need to offer converged
services versus competition
• Drive increased bandwidth
use and associated
connectivity revenues
• Video services to further
complement existing Voice
led service
• Need to offer converged
services versus competition
• Increase ARPU and
Recurring Revenues to drive
EBITDA & valuation
• Video technology drives
extended requirement for
professional services
• Need to offer converged
services versus competition
• Ability to offer service with
combination of equipment resale
and recurring revenue
Components of a Video Service Offering
End Points / Clients Room Systems Core Network
• Individual users will require
both point to point
communication and ability to
enter multi party calls
• Needs to integrate with
Room system and share
collaboration content
• Support Desk Phone, PC
Client and Mobile Clients
• Enable multi site and multi
party video calling
• Enable extension of
communication to include
collaboration
• Be easy to deploy, integrate
and support
• Cost Effective
• Seamless working with Rooms
and Users with single user
experience
• Support for multi vendor systems
plus various deployment
scenarios
• Multi level user/reseller portal to
enable effective management
and scheduling
Where do I start – I have my own Call Control and existing Voice offering?
• Can I re-use my existing platform and integrate video to my service?
• What level of integration is available?
• What additional investment do I need to make in Cloud infrastructure?
• How do I deploy, manage & support the various end points
• Do my current soft clients and voice related CPE work together with the video end points as a unified service?
Voice Video
UC Cloud Platform Providers
What is the market opportunity for adding Video services?
• Video conferencing market set to reach $2.9 billion by 2022
• Video Conferencing Services Market to see 19.6% CAGR to 2022
• Healthcare, Education and Government as key growth verticals
• New SME and mid-market opportunity with desktop and cost effective room systems and SaaS pricing
• £20 / month per VMR
Thank you
Any Questions?
Copyright Cavell Group 44
Cloud Communications Success Stories from around Europe
#EVSLDN17
Copyright Cavell Group 45
Cloud Communication success stories from around Europe
Xavi Casajoana – CEO & Owner, Voztelecom
Rami Houbby – MD, NFON
Kevin Scott-Cowell – UK MD, 8x8
Matthew Townend – Director, Cavell
Copyright Cavell Group 46
Market Experiences
• Simple Bundled propositions have prevailed
• Marketing and Channel expertise has been key to success
• Traditionally competed with PBX based on Opex, but now more competition between offerings
• Providers have differentiated by:
• Global/International Focus
• Vertical Business Process Integration
• Integration to common business tools (Microsoft, CRM etc)
• Focus on specific features/capabilities: Recording, Inbound/Contact Centre, Continuity & Security, Collaboration
Copyright Cavell Group 47
Cloud Communication success stories from around Europe
Xavi Casajoana – CEO & Owner, Voztelecom
Rami Houbby – MD, NFON
Kevin Scott-Cowell – UK MD, 8x8
Matthew Townend – Director, Cavell
Copyright Cavell Group 48
#EVSLDN17
Break – Return at 3pm
Room 1: What role will developers play in the future of communication?
Room 2: ’Running to where the ball is going to be’ - A discussion on M&A strategies
Room 3: The General Data protection regulation: How to prepare
Copyright Cavell Group 49
‘Running to where the Ball is going to be’ – A Discussion on M&A Strategies in the Cloud Space
#EVSLDN17
Copyright Cavell Group 50
“Running to where the ball is going to be” – A discussion on M&A strategies in the Cloud space
Michael Quinn – Founding Partner, Q Advisors
Alan Foy – CEO, Blueface
© Copyright 2017 Q Advisors LLC · All Rights Reserved. | WWW.QLLC.COM
Member FINRA | SIPC
CLOUD M&A – RUNNING TO WHERE THE BALL IS GOINGQ Advisors Presentation to the European VoIP Summit
March 2017
52
Q Advisors Overview
• Founded in 2001 to provide financial advisory services
• Focused primarily on Communications, Technology and Media
• Most active UCaaS and managed services investment bank in the industry, based on the number of active clients and deals closed
• Significant experience in structuring and negotiating M&A and financing transactions for private and public companies:
Sell-side and buy-side engagements
Debt and equity financings
Strategic financial advisory engagements
Global reach and capabilities
• Closed over 200 transactions since inception
Total transaction value of approximately $9.0 billion
Global reach and capabilities
Q1 will see over $2.0 billion in additional transaction value consummated
• Offices in Denver, CO and San Francisco, CA
• Team of 17 professionals
• Major-bracket experience coupled with boutique attention
Firm Profile TMT Experts
Cloud Contact Center Solutions
Unified Communications-as-a-Service (“UCaaS”) / Managed Services
Managed SecurityManaged Network and Infrastructure
Digital Media / Ad Tech
Mobility Services & Applications
Internet of Things (“IoT”)
Collaboration / Conferencing
53
Select Q Advisors Cloud Transactions
ACQUIRED BY
sell-side advisor
ACQUIRED
buy-side advisor
ACQUIRED BY
sell-side advisor
ACQUIRED
buy-side advisor
ACQUIRED
buy-side advisor
EQUITY FINANCING BY
placement agent
DEBT FINANCING BY
placement agent
ACQUIRED BY
sell-side advisor
ACQUIRED BY
sell-side advisor
ACQUIRED BY
sell-side advisor
54
Valuation Optimization: Getting into Position
Move up the Services Stack
Accelerate Geographic Expansion
More Tools in Toolbox
Expand Partnerships via
APIs / Integration
Achieve Scale (Organic / Inorganic)
“There’s only one moment in which you can arrive in time. If you’re not there, you’re either too early or too late”
- Johan Cruyff
Ability to differentiate and capture enterprise market share will be key to optimizing value going forward
Vertical Expertise
55
Rapidly Expanding Cloud Market Opportunity
CLOUD MANAGED SERVICES OPPORTUNITY1
VOICE AND COLLABORATION
MANAGED NETWORK MANAGED SECURITY
CLOUD CONTACT CENTER
IAAS
BUSINESS PRODUCTIVITY APPLICATIONS (CRM, ERP, ETC.)
CPAAS
WEBRTC
Cloud Managed Services represents an expanding market, spanning several cloud solutions beyond traditional voice and connectivity. This new opportunity is fueling technology M&A and investment activity
OBSERVATIONS
MARKETOPPORTUNITY
$200+ B(2020)
$50.8 BCAGR 11%
$9.0 BCAGR 20%
$4.5 BCAGR 51%
$8.0 BCAGR 156%
$20.0 BCAGR 30+%
$15.0 BCAGR 26%
$56.1 BCAGR 20%
$50.8 BCAGR 18%
CLOUD COMMUNICATIONS APPLICATIONS
CLOUD MARKETPLACE EXPANSION
CLOUD INFRASTRUCTURE
CLOUD PRODUCTIVITY APPLICATIONS
MANAGED SECURITY
MANAGED IT
DEMAND FOR SINGLE SOURCE SOLUTION
SINGLE UI, UX AND POINT OF CONTACT
PRIMARY COMMUNICATIONS PROVIDERS
HAVE LEG UP
OPPORTUNITY FOR TRADITIONAL TELECOM
COST SAVINGS STILL BIG VALUE DRIVER
MANAGED IT$731.0B2
(2) Managed IT market alone equates to $730B+; not included in aggregated opportunity above due to overlap of select segments (e.g.. managed security)
(1) Sources: Frost and Sullivan, IDC< Market and Markets, Strategic Analytics
56
M&A Activity: Transformative Strategic Acquisitions
Cloud Managed Services segment expected to see continued deal volume in 2017 and beyond, driven by highly disruptive cloud technologies and non-traditional players making inroads in the space
Buyer Target Notes Who’s Next
• Hosting provider, GoDaddy, purchased proprietary UCaaS provider, FreedomVoice to enter into growing cloud services space
• KPN acquired IS Group and RoutIT to accelerate growth in managed IT and cloud services
• Nuvias acquired Siphon to accelerate the integrator’s expansion in Europe
• Enhances Nuvias’ cloud product capabilities
• Arkadin has acquired several collaboration providers to expand strategic customer base
• Recently acquired implement.com and Applicable to expand Skype4Bcapabilities in U.S. and Europe
Non-traditional players expansion into cloud
managed services
Traditional Telecom further expansion into Cloud and Managed IT
Acquire new distribution model and
cloud product capabilities
Enhancement of core product capabilities
57
M&A Activity: Transformative Strategic Acquisitions (cont’d)
Cloud Managed Services segment expected to see continued deal volume in 2017 and beyond, driven by highly disruptive cloud technologies and non-traditional players making inroads in the space
Buyer Target Notes Who’s Next
• West acquired proprietary platforms, Smoothstone and Magnetic North to add product capabilities to core solution
• Broadsoft acquired Transera to enhance its contact center platform capabilities and address product gap
• NTT purchased Arkadin, Virtela and recently Dell Services to expand market presence and address enterprise needs along cloud stack
• Vonage recently purchased Nexmo to leverage CPaaS solution alongside core UCaaS platform to better serve mid-to-large enterprise segment
Acquisition of proprietary cloud
platform
Acquisition of cloud contact center platform
to fill product gap
Expansion of market presence to new
geographic region / country
Acquire adjacent, innovative capabilities
such as CPaaS platforms
58
Investment Activity: Increased Interest from Private Equity
Private equity continues to circle the cloud managed services space, driven by several market rollup opportunities, preference for recurring revenue streams and “as-a-service” models
Partner Platform Investment Notes
• Cloud infrastructure and managed services provider uniquely serving mid-tier enterprise segment
• Investment to fund global acquisition strategy targeting cloud providers
• Masergy positioned as leading managednetwork provider with global capabilities
• Demonstrated ability to move up and across cloud managed services stack
• Attractive positioning in high growth managed security segment
• End-to-end managed security solution with increasing transition to MRR model
• Highly unique solution relevant to several cloud providers
• Current positioning as unique player in the rapidly growing cloud market
Proven cloud infrastructure platforms
with data privacy and security
Attractive positioning in high growth managed
security segment
Managed network providers with proven ability to move up the
cloud stack
Highly differentiated platforms riding wave
of cloud growth
59
M&A and Investment Activity Outlook
Telecom and Technology sectors expected to see the most deals in 2017 and beyond, driven by highly disruptive cloud technologies such as cloud voice, unified communications and applications
Corporate Buyers Seeking Transformative Acquisitions
Heightened Activity from Private Equity Community
Traditional Telcos Continue to Augment Existing Solution through M&A
Macro Factors Fueling Activity
• Enter new line of business
• Acquire new geographic region/country
• Acquire core technology platform or solution
• Acquire mid-to-large enterprise customer base
• U.S. buyers taking advantage of strong U.S. dollar
• Preference for contracted, recurring revenue model
• Will fund transformation of legacy revenue / customer base to cloud recurring model
• Larger PE firms looking for proprietary cloud roll-up opportunities globally
• “Second wave" of M&A activity as private equity players look to bulk up newly acquired platforms
• Renewed effort to attract SMBs and enterprises through upsell of cloud-based managed services
• Proprietary technology often favored as core platform to build cloud and collaboration portfolio
• Bolt-on acquisitions for cloud product, customer base and/or expanded geographic reach
• Buyers leveraging strong balance sheets, access to capital and slow but steady economic growth
• Foreign buyers driven to select U.S. markets and vice versa in select markets in Western Europe and Scandinavia
• Cash-rich consolidators
Source: (1) M&A Outlook Survey, KPMG
60
EU & U.S. Deals Other Cross Border Deals
M&A Outlook: Accelerated Cross Border Activity
U.S. Buyers Fueling Transactions1
U.S. and EU Most Active Relationship1
• Global, cross-border M&A market is set for future deals with technology deals generating highest value among sectors1
U.S. Outbound M&A Other Regions Outbound M&A
41% U.S. Buyers
67% EU / U.S.
Deals
Strategic acquirers are paying a premium for expansion outside of domestic markets
Representative Transactions
Source: (1) Baker & Mckenzie
Acquirer Location Target Location Valuation
Nuvias Group U.K. Siphon Networks U.K. N/A
Arkadin France Applicable U.K. N/A
NTT Tokyo Dell Services U.S. N/A
Arkadin France AT Conference U.S. 1.0x LTM Rev
Broadsoft U.S. PBXL Tokyo N/A
West U.S. Magnetic North U.K. 3.7x LTM
8x8 U.S. DXI Limited U.K. 2.1x LTM Rev
Enghouse Canada Reitek Italy N/A
NTT Tokyo Arkadin France 2.6x LTM Rev
NTT Tokyo Virtela U.S. 4.0x LTM Rev
U.S. and Europe most active cross border relationship with U.S. buyers paying a premium for expansion into European markets
61
Valuation Update: Cloud Public Trading Comparables
TEV / LTM Revenue - LTM
0.0x
1.0x
2.0x
3.0x
4.0x
5.0x
6.0x
Reven
ue M
ult
iple
Relative Trading Performance - LTM
-40.00%
-20.00%
0.00%
20.00%
40.00%
60.00%
80.00%
100.00%
• Proprietary pure play cloud managed service platforms including 8x8, Broadsoft, and RingCentral continue to trade at a premium relative to peers
• Players higher up the managed services stack (i.e. 8x8, Broadsoft, Ringcentral) trade at a premium to players operating further down in the stack (i.e. GTT)
• Proven ability to move up the services stack has attributed to GTT’s increase in relative performance
• Both West and 8x8 have hired investment banks to explore strategic opportunities (i.e. sell)
Observations
62
What’s Driving Cloud Managed Services Valuations?
What specific company characteristics are driving valuation across Europe?
Proprietary Solution
Beyond Standard UCaaS
Scalable Globally
Cloud Contact Center
Security / Data Protection
Robust Capabilities
Multi-lingual
Multi-currency
Multi-tenant
Customization (APIs)
Multi-regional tax
Diversified Customer Base
Pan regional
Mid-to-large enterprise
Multinationals
Low churn
Strong Sales Channels
Key European MSAs
White Label Partnerships
Direct sales presence in primary markets
Quality of Service
Key Telecom Licenses
Data Protection Guarantees
Automated Platforms
SLAs
European Specific Valuation Drivers
Specialization
Geographic presence in key developed markets (i.e. UK)
Ability to offer hybrid solutions
Vertical Expertise
Global Valuation Drivers
Technology / Solution
Robust Capabilities
Diversified Customer Base
Strong Sales Channels
Quality of Service
Specialization
63
Ability to “Move up the Stack” is Key to Success in the Cloud
Profile➢ Employees (1,000+)➢ MRR (>$5,000)➢ Multi-location offices / employees
Profile➢ Employees (100-999)➢ MRR (>$1,000)
Profile➢ Employees (<100)➢ MRR (<$1,000)
Managed Cloud Infrastructure
Managed Cloud Network
Managed Cloud Software / Applications
Services➢ Cloud Voice & UC➢ Cloud Contact Center➢ Conferencing and Collaboration➢ Productivity & Vertical Apps➢ Mobility
Services➢ IaaS➢ PaaS / Middleware➢ Cloud Storage ➢ Colocation
➢ Ability to move up the Target Market stack from SMB to mid-to-large enterprise will increase ARPU and reduce churn
➢ Ability to address needs higher up the cloud services stack is key to increased wallet share and creating a differentiated solution
Mid-to-Large Enterprise
SOHO / SMB
Large Enterprise
Services➢ Cloud Networking➢ MPLS/VPN➢ Network Monitoring
Opportunity to address cloud needs higher up the cloud services and SMB / Enterprise stack to capture greater wallet share and recurring revenue streams
Managed Cloud Services Stack Target Market SMB / Enterprise Stack
64
Representative Players “Moving up the Stack” in Product Capabilities
Several Providers traditionally operating in the managed network and infrastructure segments are moving up the cloud services stack in terms of product capabilities and service offerings
Strategy Examples
Traditionally Cloud
Infrastructure Providers
Traditionally Managed Network Providers
Amazon ChimeLeverage AWS
Google Apps for WorkLeverage GCS
Skype for BusinessLeverage Azure / Office365
BT One SolutionPartnership with Cisco and
various cloud providers
UC StrategySeeking acquisitions to
enhance cloud technology
Easynet acquisitionAcquisition of Easynet
provided range of UC apps
UCaaS / Managed SecurityAcquisitions: Broadcoreand Global DataGuard
Collab / Managed SecurityAcquisitions: Arkadin and
Solutionary
UCaaS / Managed ITAcquisitions: Telnes
Broadband and One Source Networks
Leverage existing enterprise managed network solutions to
upsell cloud applications
Leverage cloud infrastructure
enterprise solutions to upsell cloud applications
65
How to Differentiate When Targeting the Enterprise
Proven Ability to Move Up the Services Stack1
Plenty of “Tools in the Toolbox”2
Geographic Diversification3
Demonstrated Vertical Expertise4
Proven Role as Trusted Advisor5
Ability to Achieve Scale6
66
Differentiating Cloud Capabilities: 2017 & Beyond
$242.0BMarket
Description: Outsourced monitoring, management and problem resolution of a company’s IT infrastructure
Growth Driver: Growing demand for outsourced IT departments where provider acts as single source, trusted advisor
Managed IT
$33.7BMarket
Description: Outsourced security monitoring across a Company’s network, infrastructure and applications
Growth Driver: Increased high-profile cybersecurity attacks and growing demand for security offered as fully managed service
Managed Security
$6.0BMarket
Description: Software defined networking for WANs; simplifies the management and operation of networks, ensuring QoS
Growth Driver: Increasingly used to provision cloud services OTT while ensuring QoS, compliance and security
Enhanced Managed Network
$4.9BMarket
Description: Lifecycle management or TEM platforms that track, automate and monitor cloud infrastructure and networks
Growth Driver: Increasing complexity of networks and ability to achieve significant efficiencies and cost savings through automation
Communications Lifecycle Management
$18.0BMarket
Description: Expanding beyond domestic market to serve multinational organizations
Growth: Europe is made up of several high growth, underpenetrated markets
Ability to operate in key European markets such as U.K., the Netherlands and Germany
Geographic Expansion
$8.1BMarket
Description: Cloud based platforms that allow enterprises to customize and embed communications features via APIs
Growth Drivers: Demand for customization and real time communications capabilities from mid-to-large enterprises
CPaaS / Advanced API Capabilities
CAGR: 10.8%
CAGR: 13.5%
CAGR: 14.6%
CAGR: 65.1%
CAGR:156% CAGR:29.1%
Source: IDC
Source: Markets and Markets, US Commission on Enhancing National CybersecuritySource: Markets and Markets
Source: Markets and Markets
Source: Frost and Sullivan, IDC, Market and Markets, Source: Frost and Sullivan, Cavell Group
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Has the Cloud Won Yet?
Cloud has not won the enterprise yet, but it is winning, especially in light of Avaya’s recent
chapter 11 filing
Market Implications
(1) Represents land grab for all UC participants, especially cloud providers
(2) Pure OTT players (i.e. RNG) targeting enterprises will be like going to war with a bow and arrow. These players lack the requisite network and security capabilities to serve mid-to-large enterprises
(3) Enterprises not comfortable shifting 100% of IT operations to the cloud
(4) Ability to offer a hybrid solution will be key to getting foot in the door as enterprises gradually warm to cloud
(5) Positive impact on overall valuation of cloud service providers. Serves as validation of cloud’s future role in the enterprise telephony and UC market
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New Entrants and Impact on Market
[Will large cloud technology providers (i.e. Amazon, Google) “move up the stack” as Microsoft has done?
These players all appear to be targeting an integrated enterprise cloud offering
New Entrant Product(s) Observations
• OpenTouch Office Cloud is a UCaaS offering targeting the enterprise primarily through the channel
• Rainbow offering is a CPaaS add-on to enable development and customization of collaboration apps
• Amazon’s Chime service is a WebRTC UCaaS offering stemming from the acquisition of Biba last year
• Coupled with the AWS offering, Amazon is moving upmarket with its solution to the enterprise
• Recently partnered with a handful of UCaaS players, such as Vonage
• Recent merger of LogMeIn and Citrix’s Go-To business
• Creates $1B+ provider of Collaboration (Go-To family), UCaaS (Grasshopper), and customer engagement and security applications (LogMeIn products)
• Skype for Business launch with PSTN capabilities
• Coupled with native Office365 and Azure offering
• Relies heavily on partners for telephony services
• ReadyTalk acquired by PGi
• PGi has a rival service called TalkPoint
• Seamless integration into PGi’s partner and carrier strategy
• Invaluable asset to PGi to grow their SaaS and UC portfolio of products
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Most Active Cloud Strategic Sectors
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Carriers
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Hardware / IT Solution Providers
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Next Wave of Consolidators
Cloud Infrastructure Players SaaS Vendors
Hosting Providers Value Added Resellers
• Next consolidators include several relatively new entrants to the market: Amazon Google Microsoft GoDaddy
• New entrants likely to take buy vs. build approach (i.e. buying one of the pure plays in the space)
• 8x8 is currently in market; in addition to the usual suspects (e.g. telecom providers), several new entrants are viable acquirers Amazon Salesforce Google
Observations:
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Most Active Private Equity Players
Existing Platform Investment Actively seeking:
• Most open to both minority and majority equity positions
• Bolt-on of technology solutions for existing portfolio companies
• Platform for rollup opportunities across U.S. and EU
• Integration along cloud services stack
• Transition legacy revenue streams to cloud based model
Seeking Platform Investments
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Valuation Optimization: Getting into Position
Move up the Services Stack
Accelerate Geographic Expansion
More Tools in Toolbox
Expand Partnerships via
APIs / Integration
Achieve Scale (Organic / Inorganic)
“There’s only one moment in which you can arrive in time. If you’re not there, you’re either too early or too late”
- Johan Cruyff
Ability to differentiate and capture enterprise market share will be key to optimizing value going forward
Vertical Expertise
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CLOUD M&A – RUNNING TO WHERE THE BALL IS GOINGQ Advisors Presentation to the European VoIP Summit
March 2017
Copyright Cavell Group 74
“Running to where the ball is going to be” – A discussion on M&A strategies in the Cloud space
Michael Quinn – Founding Partner, Q Advisors
Alan Foy – CEO, Blueface
Copyright Cavell Group 75
BREAK
Room 1: Future of Communications
#EVSLDN17
www.cavellgroup.com
@CavellGroup
www.thevoiceofvoip.co.uk
01206 381544
Thank you