2. Recognizing the Opportunities in the SMB Market Bill Miller VP Product Management Digium, The Asterisk Company

3. 3 Recognizing the Opportunities in the SMB Market Recognizing the Opportunities in the SMB Market (TMCU3-05) Tuesday - 09/16/08, 1:45-2:30pm Many SMBs find the idea of cutting their phone bill and, perhaps more important, being able to take advantage of applications that unify voice and data, very appealing. However, research also shows that SMBs are confused about the products on the market and often lack the in-house technical expertise to comfortably sort through the options. Vendors of all sizes are coming out with products that are designed to be easier to use and many big telecom equipment vendors are moving downstream from the enterprise market to SMB with tailored offerings, which only serves to add to the SMBs’ confusion. In this session, the presenter will help attendees better understand the factors affecting their opportunities in the SMB market and determine how they can make the most of its opportunities. Presented by: Bill Miller Vice President of Product Management Digium Inc.

4. Why are you Here? Are you an end user? Are you a reseller? Are you an open source developer? Are you a service provider? Hosted? Are you a student? Will you use twitter during the presentation? Will you just plain text during the presentation? 4 ……….one more question……

5. Are you confused? 5

6. SMB’s…..S…..M…..B…..!!!!! So let’s look at the definition of an SMB in Wikipedia: Super Mario Bros., a video game made by NintendoSuper Mario Bros. San Miguel Beer, a local beer in the Philippines.San Miguel Beer San Miguel Beermen, a professional basketball team in the Philippines now called Magnolia Beverage MastersMagnolia Beverage Masters Server Message Block (alternatively, SMB/CIFS), an application-level network protocol mainly applied to shared access to files, printers, serial ports, and miscellaneous communications between nodes on a network, used in particular by MicrosoftServer Message Block Seven Mile Beach, a name of several beachesSeven Mile Beach Simulated moving bed, a method for countercurrent chromatographySimulated moving bed Small and Medium Business, a synonym of Small and Medium Enterprise which is a perceived commercial sectorSmall and Medium Enterprise Small Mouth Bass, a fishSmall Mouth Bass Spartan Marching Band, the marching band for Michigan State UniversitySpartan Marching Band Steve Miller Band, a 1970s rock band.Steve Miller Band SMB connector, SubMiniature version B connectors for radio-frequency circuitsSMB connector Super Monkey Ball, a video game made by SegaSuper Monkey Ball Surface Marker Buoy, a surface detection aid used by diversSurface Marker Buoy Sveriges Medeltida Ballader, the 'official' collection of old Swedish balladsSveriges Medeltida Ballader System Management Bus, a PC communication busSystem Management Bus 6

7. SMB’s…..S…..M…..B…..!!!!! Ok, just having some fun with you…. ….seriously, when you talk to “our SMBs”, if they are confused YOU can help them! 7

8. What is an SMB? Small Business & Medium Business An SMB is classified as a business with 2-1000 employees The divides vary by supplier, but typical number of users/seats/phones: –<100 –<500 –<1000

9. Classifications for SMB Today Lets have some fun here as well… –Some companies call SMB 5 users –Some companies call SMB 50 users –IBM and others calls SMB under 1000 users –Some companies refer to as SME, Small Medium Enterprises as multi-site businesses with up to 5,000 users For this session, let’s call all the following sizes SMB Each group has both common and specific requirements which we’ll address –1 to 10 Seats/Phones = SOHO, or Small Office - Home Office –<50 Seats/Phones = Small business class –<100 Seats/Phones = Small to medium business class –<250-500 Seats/Phones = medium mostly multisite business class –<1000 Seats/Phones = medium enterprise class 9

10. Market Dynamics and Data Infotech: 70% of US SMBs are implementing, trialing, or planning a deployment with VoIP & Unified Communications A Savatar-Digium survey: over 90% of all enterprises, including SMB, would consider open source for their corporate telephony system 10

11. 11 SMB Explosive Market Potential 6.3M SMBs have <99 users in the US Source: AMI (2008) Less than 20% of the SMBs have purchased VoIP Systems 1/3 of SMBs are planning to purchase a new phone system in the next 12 months 2/3 SMBs are selecting premise based IP PBX solutions rather than hosted but there is growth in both

12. SMBs, VARs and Open Source Whom do SMBs buy their business phone systems from? Over 65% purchased it from a VAR VARs should sell a *total* solution, taking the worry out of the SMB’s objection category: Phones, PBX, VoIP/T1 service, networking, network services, etc Blur the line between sales & consulting (be consultative) You’ll close more sales Your customers will be happier Gartner Group says: –90% of new businesses in US are SMBs –These SMBs will accelerate adoption of open source –Up to 15% of spending will cannibalize proprietary software market but it is incremental spending (over next 5 years) 12

13. SMB Telecom Phone Costs Sweet spot of phone systems for SMB: –97.6 percent is <100 users. Top 10 Vertical Markets for sub 100 users: –Finance, Insurance, Wholesale, RE, Mfg, Admin, Health Care, Trans, Educ, Const, IT, Prof, Sci, Repair, Retail, Hospit, Farming Size/Ranges of these SMB Phone Systems: 3-7 phone lines; $250-$1250 per month $3000-$15,000 annually 13

14. SMB factors….. SMBs will consider changing to a VoIP system if: –Economics: Maintenance is more expensive than a new system –Support: Old System needs replacing or “End of Life” and no longer supported –Management: new systems have easier to use tools and better visibility to the owner –“Change” event: Office Move –Company growth –Features: Owner wants new applications and flexibility

15. How do SMBs buy their VoIP? Most are unsure where to turn Need “Trusted Advisor” Today, there is NO #1 brand, it’s splintered SMBs buy differently than Enterprises; no RFP Its about SMB owner trust of supplier & implementer Many SMB owners are hobbyists and/or gadget folks Decision maker is typically the business owner Most are not savvy enough to know questions to ask! 15

16. Selling to SMB VoIP customers? AMI says 80% of SMBs try to understand the TCO for their potential purchase Explain to the SMB owner how the new VoIP system will make life easier Explain a few of the many VoIP features that have relevance to their business

17. SMB VoIP Choices There are two basic choices: –Premise based IP PBX: traditional –Hosted PBX: Centrex-style There are combinations of above from various channels and suppliers, and some offer both Resellers who build and integrate turnkey offers, including services, SIP Trunks or phone trunks (FX0, T1/E1), integrate converged solutions have the advantage since it’s “One throat to choke” and make it easy for the customer. 17

18. Buyer Selection Drivers When does premise-based make sense? –Buyer wants ownership and control –Buyer does not trust any phone company/service provider –Buyer is uncertain of quality of service When does hosted make sense? –Buyer does not want to manage the system –Buyer wants ability to modify service with a phone call –Buyer wants to minimize up-front costs –Buyer does not want to pay perpetually 18

19. Basic Feature Sets for SMBs The MOST basic features for SMB (from recent interviews with a group of SMB resellers): –Voice mail –Call Control: Call hold, call transfer, etc –Caller-ID –Conferencing (Audio) –Auto-attendant/IVR –Find me/Follow me –Simultaneous Ring 19

20. Advanced SMB Features Performance Monitoring –Call management including concurrent calls, max number of calls, call flow patterns, bandwidth used Cost Control –Call Detail Records (CDR) to analyze costs –Comprehensive Historical reporting and trends –Expense management Call Center –Queue management –Call Recording –Supervisor barge-in for monitoring and assistance –Customizable Reporting 20

21. Advanced SMB Features Unified Communications –Web 2.0, web-based tools –Presence –Presence across multiple networks (SMBs use own network, Skype, Internet, open source Asterisk, soft clients, social networks, Google, etc) –IM/Chat/Text/Emerging Social Network tools –Integration with CRM –Outlook/Office/Google Integration Security –Voice encryption 21

22. Most popular SMB VoIP Capabilities SMB <100 EmployeesSMB/SME >100 Employees Auto Attendant/IVR11 Simultaneous Ring (1)28 Call Center Features36 Find me/follow me45 Unified Communications (2)52 Soft Phone63 Click to Dial79 Office Integration84 Music on Hold97 22 1. Office Phone & Mobile Phone, most common 2. Voice Mail to Email, most common Source: Savatar

23. Unified Communications for SMB

24. SMB/SME Challenges SMB <100 EmployeesSMB/SME >100 Employees Phone System Costs12 %7 % Features Missing10 %7 % Features Costly10 %9 % Moves/Adds/Changes9 %10 % Billing Accuracy7 %10 % Routing6 % Capacity5 %11 % Multi-site4 %9 % 24 Source: Savatar

25. What End Users Ask For The solution has to be easy to install, buy and use (No IT Department) Complete Solution with Feature Rich Services Quick Provisioning Time Fully supported if mission critical

26. SMB Gains Productivity Adding more information to your call enriches your productivity Customer calls present information to enhance customer service and satisfaction Internal calls can do wiki lookup and background of person and display them for immediate access 26

27. SMB Benefits: Gain Productivity Recording calls on the fly protects an owners business while ensuring new employees can be trained properly and legal issues can be tracked Presence enables more efficient communications Simplicity enables the SMB to focus on the business, customer service, and flexibility 27

28. Connecting: Trunking Choices ( Trunk=Phone Line=channel) What is trunking? It’s the Connection to phone service and phone company. –Traditional analog (FX0) trunks SMBs typically buy one phone line for each 5 people, but minimum of 3: main line, backup line, and fax –Traditional digital (T1/E1) 24/30 trunks respectively Using 5-1 ratio (employees-phone lines), can support companies over 100-150 people –IAX (Asterisk) These are VoIP lines that connect Asterisk Servers –SIP (Emerging) Newest Popular VoIP Service Attend SIP Trunking Seminar here at ITEXPO 28

29. Resellers Pitfalls Our experiences have shown: –Some data VARs over-engineer the solution –This places their quotes higher than the winning VAR –Some Voice VARs understand features, but lack in depth knowledge of VoIP and data infrastructure –Key system replacement with VoIP tricky IP Phones more expensive IP Applications far exceed KS capabilities Why these observations and experiences? –Data engineers want redundancy; fault tolerant –Ideally match the user requirements with the solution –And the budget….. 29

30. End User Pitfalls Know your pain points and toleration for key criteria –Features (VoIP SMB Systems near parity with legacy solutions) –Price (legacy systems cheaper, less flexible) –Technology (Do you care?) –Ownership – hosted or premise based (i.e. want complete control to add/modify users?); Be clear about requirements –Complete Clarity 30

31. In Summary VoIP is mainstream today Price/performance is unparalleled Resellers are looking for a new offering to address today’s SMB/SME If you answer a few simple questions, you should be able to focus on the right solution – both price points and capabilities. Digium is in the Open Source pavilion, stop by and see UC for SMB and why today’s choices are more cost effective than ever before! 31

32. 32 Thank you! Bill Miller bmiller@digium.com