Virtualisation - Why the channel must get prepared for the next force in business communications. Comms Dealer reports on last month's ground breaking round table debate led by voice virtualisation trail-blazer Mitel.

Graham Bevington, Mitel's Managing Director for EMEA, is fast developing a reputation for sticking to a policy of absolute restraint about what he says for fear of influencing the markets now that Mitel is listed on Nasdaq, but he took little prompting to launch into a passionate harangue about the march of voice virtualisation, its growing influence on the comms channel and Mitel's stake in a software-centric future. "For Mitel, virtualisation is front middle and centre," he told the round table delegates. "It's not a question of whether voice gets virtualised, or when, the issue is whether we want to be at the back of the bus hanging on or at the front driving the debate. As a manufacturer it is our responsibility to be in the driving seat."

Mitel and VMware have made radical steps forward in resolving voice latency challenges, meaning that real-time voice performance is now a trusted application in a virtualised environment. Virtual Mitel Communications Director (Virtual MCD) is the first real-time voice application designed for the VMware Sphere 4 platform. As the first household name in the comms channel to deploy virtualised voice, Mitel pulled off a unique triumph when it implemented a voice virtualisation solution for Ashford Borough Council.

This implementation is indicative of a topsy-turvy market that is turning on its head as more organisations look for best value. And virtualisation's influence is already making itself felt in many ways, not least where assiduous efforts are being made to reduce costs. Rob Neil is Head of ICT and Customer Services at Ashford Borough Council, areas that are seen as cost centres. He commented: "One of the key drivers for us was to reduce the cost of ownership. We had been successful in doing this with VMware on the data side, and we wanted to move that forward with voice too. We previously had lots of line and business systems sitting in data centres, most of those would be one application on a single server. We saw a very quick RoI in moving over to VMware."

The second driver for Ashford Borough Council was disaster recovery. "One of the reasons why many authorities are collaboratively going down the VMware route is because it obviates the need for large scale DR contracts," added Neil. "Moving voice into that whole DR environment and being able to quickly DR voice infrastructure became a key corporate driver."

Mitel and Ashford Borough Council clearly illustrate how virtualisation represents an unprecedented opportunity in the hands of those able to read the market and turn vision into strategy. The key principle advanced by Mitel is that customers already understand virtualisation because they have virtualised applications for years. "We're not turning up as missionaries, we're just saying here's another application that can be virtualised," stated Bevington. "If we don't put our hands in the air and say ‘we can do this', the revenue steam from virtualised voice will go to someone else. We have to accept that we're not being evangelists. VMware will go wherever there's a complex business with a lot of applications that need simplifying. This is happening."

Mitel partners Scalable Communications and Alternative Networks, from their different perspectives, add much value to the vendor's channels. Scalable has not got a large installed Mitel base, it's not interested in acquiring large maintenance contracts, but it understands new technologies and is winning new business for Mitel. Alternative on the other hand is a carrier with infrastructure and billing, bringing a different set of assets to the market. It too understands that the world is changing.

Simon Turner, Sales Director at Alternative Networks, noted that the channel historically buys into new technologies. "We all jumped on the bandwagon of IP," he said. "The channel has matured, as have customers and their expectations from us as business partners. Virtualisation is a key enabler, and our responsibility is to take this enabling technology, package it properly and make it fit for purpose. A major challenge is the culture of our enterprise sales people. We need to get under their skin and persuade them that there's another conversation to be had away from the CPE way of doing things."

Technology is changing rapidly and the market is changing almost weekly in terms of its demands, with companies under more pressure to be cost-efficient. Now is a critical time to grab the bull by the horns, read the market, change direction and deliver what the market wants. "The reality is that virtualisation will take off," added Turner. "One of the problems is that we just haven't started doing it. We know the road has to be driven."

Although a decision of major importance, the shift to a virtualised business model for both partner and customer need not be seismic. "With Mitel's solution the customer can buy CPE knowing that the voice application can be virtualised when required. That's where we are flexible," said Bevington. "Customers go through a process at their own speed that reflects their comfort with our technology. Virtualised voice is a progression for them. There will be a point when customers won't want to buy servers."

The market opportunity for virtualisation is just 15 per cent penetrated, and according to Gartner 89 per cent of all virtualised applications across the globe are run on VMware. "These are mostly in large data centres delivering public services," pointed out Adam Knight, Strategic Technologies and Partnerships Manager for EMEA, Mitel. "The rest is left to play for."

Most companies have virtualised just 20-30 per cent of their estate, calculates Mark Newton, Regional Director for UK and Ireland, VMware. "One of the challenges we have is furthering the penetration of virtualisation into the overall IT estate and the SMB sector. If you look at our channel, for every pound spent on virtualisation software they generate an extra £5-£10 in services, storage, security, all the other pieces. The major thing we are seeing is the whole virtualisation of the desktop. And SMB is a valid proposition for us, where we can simplify the hardware story they are trying to host. Telecoms companies have a big opportunity."

According to Marcus Jewell, Director of Enterprise Sales at Mitel, the technology is just ahead of the business model, but poised to overtake. "In our point-based solution market collaboration between suppliers and partners has not been good. As soon as we get into virtualised applications the challenge becomes a question of partnership. On top of this complexity is a changing business model for the reseller and manufacturer. Although a global player, Mitel is small enough in terms of revenue streams to make bold decisions on how much revenue we can afford to give up for the bigger picture. Could our competitors give up all the hardware for an end-to-end virtualised solution? We don't think so."

Jewell highlighted that IPT didn't deliver on the promise in the early years, and be believes that UC has not taken off due to cultural issues around education. However the inevitable journey towards ‘destination virtualised world' has been well mapped out by Mitel as it plans to become a software-centric business, offering a clear path to the future of business comms. "We've been careful not to turn anything off in our portfolio," said Jewell. "Our core software is the same and can be deployed however the reseller sees fit. That's a pragmatic approach. It's hard for existing channels to make those steps in a wholehearted way. We need to work with partners, make them understand that they don't need onsite engineers to deploy virtualised voice. We need to encourage companies to work with virtualisation. Vendors that don't transition to software-only will eventually disappear."

With the market turning on its head as organisations look for best value, it is clear that resellers will need to build on their expertise and work with customers at the strategic level. Bevington added: "Every time we have a change it's supposed to be the death of the channel. In reality the voice channel has been the most adaptive progressive group in the world. If the channel is not asking customers about their virtualisation strategy, they're missing out."

Retrenching sales staff into a different proposition is a small mountain to climb, said Denny Meijer, CTO, Scalable Communications. "It's not difficult to change the focus," he stated. "The challenge goes back to whether a sales person in a pre-sale environment understands the business and the vertical. Given that the world is converging the proposition becomes broad. It's not just about voice, there are many other applications such as security, DR, the LAN etc. A way forward is to verticalise heavily and replicate that depth of knowledge."

Turner added: "Being virtualised is truly looking at the product and exactly what people want, putting real meaning into the hackneyed phrase ‘bespoke scenario'. We're trying to say this is an intelligent managed service, designed and managed to the extent that people are only paying for what they are using. We're offering the ability to control the ICT estate. That's what we're looking to build into our proposition. This is about us adding value to our customers with confidence in what we're saying, and with a spring in our step."

To say that unprecedented cost reductions are a key business driver for virtualisation would be to greatly understate the significance of end user money savings. "I'm concerned with having an organisation that's fit for purpose within a tightening financial envelope," commented Ashford Borough Council's Rob Neil. "The infrastructure that is put in place is almost irrelevant so long as it delivers that value. I believe firmly that the virtualised route for data and voice will deliver those financial savings. We are doing this because I need to deliver services for less."