The Market Impact of Cisco's BroadSoft AcquisitionThe Market Impact of Cisco's BroadSoft Acquisition
Examining the combined Cisco-BroadSoft offering and the impact it could have on the business communications market.
October 2, 2018
While Microsoft continued to discuss its transition to Teams at Ignite last week, Cisco Webex had a major outage that left customers without access to vital communications services. In spite of that outage, Webex has been an important part of the communications and collaboration experience for many people for many years, and it will continue to be so.
It's important to not forget that Cisco is also undergoing a big transition as it continues to incorporate and integrate the BroadSoft assets, personnel, and channel. When Cisco announced its intent to acquire BroadSoft almost a year ago, the communications market was shocked. Customers, partners, competitors, and analysts all wondered why Cisco would buy BroadSoft given that the two companies competed head-to-head in the business communications and contact center markets. Furthermore, speculation was rampant regarding what Cisco would do with the BroadSoft assets, capabilities, customer base, and partner channel (see "How Cisco-BroadSoft Acquisition Impacts UCaaS Ecosystem").
At the time of the acquisition, BroadSoft was the global leader in cloud-based voice solutions, with approximately 50 million seats deployed, of which 19 million were business seats. Cisco was the market share leader in large enterprise cloud-based voice deployments, with 5.5 million seats representing 75% share. Now, the combined company has 55.5 million cloud-based voice seats, of which 25.5 million are business seats. Combining the companies makes Cisco the undisputed market share leader in the business communications-as-a-service market.
Figure 1. The impact of Cisco's acquisition on cloud-based telephony market share. (Image Source: KelCor, Inc. Data from multiple sources. Data reflects public cloud multitenant and dedicated seats and does not include private cloud deployments.)
Since the acquisition closed in February 2018, many decisions around marketing, branding, and product rationalization have been made, and it's clear the BroadSoft acquisition significantly changes the dynamics of the unified communications-as-a-service (UCaaS) market and the adjacent cloud-based contact center market. This article examines the combined Cisco-BroadSoft offering, describing the impact it could have on the business communications market. It also explains the go-to-market strategies, branding changes, product rationalization, and channel partner opportunities as I understand them.
Go-To-Market, Branding, and Product Rationalization Decisions
Cisco has made many decisions regarding rationalization both within the Cisco portfolio and the BroadSoft portfolio and how Cisco plans to take the combined portfolio to market.
Table 1. Branding changes and rationalization as Cisco integrates BroadSoft into its portfolio
Rationalizing the Spark and Webex Assets
Spark was Cisco's cloud-based team workspace and collaboration solution. Spark had its own ecosystem of endpoints along with meeting capabilities and telephony functionalities. With Spark, users could also join meetings hosted by Webex.
In an effort to have a more consistent branding and licensing approach, the Webex brand has been expanded to include the team workspace capabilities of Spark and the Spark Calling functionality. Spark has been rebranded as Webex Teams, and Spark Calling is now branded Webex Calling. Webex will now have three elements: Meetings, Teams, and Calling, along with Webex-branded devices such as telephones and the Webex Board for video and whiteboarding.
A fundamental change to Webex Calling is that it will be supported by BroadCloud, a Cisco hosted version of BroadWorks run in the Cisco Webex cloud. BroadCloud gives Webex Calling the most complete and robust feature set of any cloud-based telephony platform in the market, providing Cisco with an exceptionally strong offering in the emerging and highly competitive telephony-enabled team collaboration market.
The New Contact Center: Customer Journey Platform
Several years ago, BroadSoft bought Transera -- a cloud-based multitenant contact center provider -- integrated it with BroadWorks, and sold it under the brand name "CC-One." Cisco has rebranded CC-One as "Customer Journey Platform" (CJP).
Although Cisco already had three contact center offerings -- Unified Contact Center Enterprise, Unified Contact Center Express, and Hosted Collaboration Solution for Contact Center (sold with HCS cloud deployments) -- none of them are multitenant, nor were they built specifically for a cloud deployment.
With CJP, Cisco now has a fully-featured, multitenant cloud-based contact center solution that partners can offer to their customers and prospects -- a capability that was sorely missing in Cisco's product portfolio. CJP provides Cisco with a far greater opportunity to compete with Genesys (PureCloud), Nice (inContact), and many other cloud-based contact center providers.
Figure 2. Cisco will continue to host Webex Meetings, Webex Teams, and Webex Calling which is based on BroadSoft's BroadWorks (called BroadCloud when BroadSoft hosted it). Cisco will host Customer Journey Platform, its new cloud-based contact center acquired from BroadSoft. (Image Source: KelCor, Inc.)
BroadSoft Team-One Rationalization
Prior to the acquisition, a small number of BroadSoft service providers ordered BroadSoft's team workspace product, branded Team-One, for inclusion into the customized offerings these service providers sell to their own customers. Cisco is honoring BroadSoft's Team-One commitments, delivering it to these service providers. Cisco will continue to support them, but no new providers will be added.
The Future of BroadSoft UC-One
UC-One is BroadSoft's umbrella brand for service providers who deploy BroadWorks or BroadCloud voice along with any of BroadSoft's three UC and meeting clients: Meet, Connect, and Communicator. In nearly all instances, UC-One is rebranded by the service provider. Furthermore, it may be customized to the specific markets in which the service provider operates.
There are no changes to BroadSoft UC-One. Service providers will continue to white label UC-One, define their own offerings based on UC-One, and charge customers what their individual markets will bear. If they choose, service providers can also sell Cisco's non-customizable Webex-branded Meetings and Teams offering.
BroadCloud Under Cisco
Most of BroadSoft's service provider partners license BroadWorks and deploy it in their own service clouds. However, BroadSoft also hosted a version of BroadWorks in its own data centers along with service management capabilities and provided it to its partners under the BroadCloud brand. BroadCloud will remain available to partners and service providers who may not want to stand up their own deployments of BroadWorks.
BroadCloud, which will also enable Webex Calling, is available in nine countries: USA, Canada, UK, Australia, France, Germany, Italy, Portugal, and Japan. By the end of 2018 it will also be operational in Spain, Mexico, and New Zealand; multinationals using BroadCloud with branch offices outside of these countries can home their users to the BroadCloud instance running in one of these countries.
Rationalized Licensing via Cisco Collaboration Flex Plan Subscriptions
With the rationalization of Spark into Webex and the availability of a highly functional cloud-based telephony platform in Webex Calling (via BroadCloud), Cisco has also rationalized its Flex licensing plan to enable end user organizations to more easily migrate to cloud at their own pace.
Cisco's Collaboration Flex Plan provides flexible licensing for calling, meetings, and contact center solutions. The Flex Plan Calling subscription allows organizations to use any of the Cisco calling platforms, including Cisco UCM, HCS, BE6/7K, BroadCloud, and Webex Calling. The Meetings subscription allows employees to use Webex Meeting or Cisco Meeting Server capabilities.
Service providers currently selling BroadWorks-based solutions can continue to charge what their individual markets will bear; however, service providers will also be able to offer Flex Plan subscriptions in the future to take advantage of pull-through and adjacent product opportunities the larger Cisco portfolio offers.
Webex Teams is bundled with any Calling or Meetings license at no additional charge.
The final major change to Flex Plan licensing, announced in mid-September, is that a Flex Plan subscription is now available for Contact Center offerings. This concurrent agent subscription allows organizations to use any of the Cisco Contact Center offerings: Contact Center Enterprise, Contact Center Express, or CJP. What this really gives Cisco's customers is the ability to migrate agents to cloud-based CJP when they are ready, without requiring a new commercial agreement.
Cisco has also announced that it is enabling customers with perpetual licenses for on-premises calling solutions to migrate to the Flex Plan more easily by reducing the price within Flex Plan for an on-premises Calling entitlement until the customer is ready to migrate to a cloud calling subscription.
Table 2. Cisco's Collaboration Flex Plan licensing for calling and Meetings. (Data Source: Cisco Systems).
Flex Plan licensing for the CJP (formerly CC-One) has been announced, but the actual pricing details will not be available until late Q4 2018.
Cisco Plus BroadSoft: Benefits for the End Users
End user organizations relying on BroadSoft's cloud solutions or on Cisco's on-premises offerings will have new and differentiated value propositions available to them from the combined company. Among these are the following:
A Consistent Meeting and Team Workspace Experience -- When Cisco offered both Spark and WebEx, there were two different meeting experiences, Spark Meetings and WebEx Meetings. These have now been rationalized into a single meeting experience: All meetings are hosted in Webex, and they all have the same look and feel.
Furthermore, Cisco has made the new Webex Meetings available via a WebRTC-client: People who join a Webex Meeting using a browser have the same capabilities as those who download and install the Webex Teams client, including the ability to host and share content.
Finally, while previously there were two Outlook plug-ins for scheduling meetings -- one for Spark and one for WebEx -- Cisco has rationalized these as well, and there will now be only one Outlook plug-in to schedule meetings, Webex Meetings.
Transitioning to Cloud with Flexible Licensing -- Webex Calling, powered by BroadCloud coupled with Flex Plan licensing, provides an easy on-ramp to cloud for the 100 million existing Cisco on-premises customers who want to move all or part of their workforce to a cloud-based solution. End user organizations can transition from their market leading on-premises product, Cisco UCM, to the market leading UCaaS offerings hosted by Cisco. And, because the combined Cisco-Broadsoft cloud Calling offer can economically support small numbers of workers, the transition to cloud can begin gradually with small groups or branch locations -- something that was more challenging when trying to move to an HCS-based solution, which usually required larger numbers of user seats. Thus, the 100 million existing Cisco customers can easily transition, when they are ready, from any of their current Cisco platforms to a cloud-based solution.
Collaboration via Cisco's Market Leading Video Solutions -- Existing BroadSoft subscribers will have bundled access to Webex Meetings, Webex Teams, and Cisco's market leading video solutions, including the 55-inch and 70-inch Webex Boards. Webex Meetings, which include Webex Teams licenses, are all included as part of the Webex Meetings Flex Plan license referenced above. Webex Boards can be purchased outright or on a subscription basis, if desired.
The benefit to both BroadSoft and Cisco users is that phones, Webex Teams clients, Jabber clients, and Cisco video devices will seamlessly integrate into a single collaborative meeting experience regardless of whether the end user is served by an on-premises Cisco PBX, a BroadWorks cloud, or a Cisco HCS UCaaS solution. Cisco's support for WebRTC also allows easy guest access with full meeting participation, including screen sharing, via a Web browser. UC-One Communicator users will join Webex Meetings by clicking on an IM link, which will launch Webex's WebRTC interface. The importance of being able to easily connect in any of these ways cannot be overstated, as it weaves full collaboration into the workplace, allowing people to focus on work and not on technology.
Access to Cisco Customer Journey Platform: BroadSoft's Multitenant Cloud-Based Contact Center -- As mentioned above, Cisco had three contact center solutions before the BroadSoft acquisition, but none of them were entirely suitable for cloud subscribers working in small-to-medium sized businesses. Cisco's CJP (formerly BroadSoft CC-One) remedies this shortcoming by offering a fully-featured multitenant cloud-based contact center that scales from small numbers of agents to thousands of agents. Furthermore, an agent's telephone can be connected to a BroadSoft cloud (BroadWorks or Webex Calling) or to an on-premises PBX, because CJP will work with on-premises PBXs as well. This gives existing Cisco customers an easy way to move some contact center agents entirely to the cloud while giving other agents a hybrid solution where the telephone is homed to a Cisco on-premises PBX while the agent's contact center is CJP in the cloud.
CJP also has a feature set that makes it attractive generally. For example, CJP has unique analytics and cloud routing capabilities that allow organizations to focus on outcomes and make changes to systems and routing to reinforce those outcomes. The analytics engine continuously examines customer interaction data from multiple contact center databases and applies predictive analytics to segment and profile individual customers, routing customers to the agent whose performance promotes the desired outcomes. For example, if on a given day a particular agent is closing well or upselling well to a particular set of customers, the analytics engine will route more calls from that customer segment to that agent. Conversely, if an agent is off his or her game on a given day, the analytics engine will route fewer calls or lower priority calls to that particular agent.
CJP, hosted in the cloud, also has the ability to route between multiple on-premises contact centers. It can provide the glue between contact centers in different locations and even contact centers from different manufacturers. Consequently, organizations can keep what they have and upgrade when they are ready to a CJP cloud contact center hosted in the Cisco Collaboration Cloud.
Hybrid Solutions Offering Cloud Agility and Functionality While Maintaining Existing Investment -- Generally, telephony call control has a mature feature set, and investment industry-wide in voice features and functionality is minimal. Most of the investment today is in communications and collaboration technology based in the cloud, and Cisco is no exception, investing heavily in Webex and in its video communications portfolio.
With BroadSoft's BroadWorks, BroadCloud, and CC-One now part of Cisco's solution set, it can offer customers the option to migrate to best-in-class cloud collaboration functionality while maintaining investments already made in on-premises call control. Flex Plan licensing allows Cisco customers to continue using an on-premises UCM or BE6/7K PBX deployment, while concurrently deploying Webex Teams, WebEx Meetings, and CJP -- all of which run in Cisco's cloud and are adding functionality regularly due to agile software development practices. These hybrid solutions and flexible licensing options allow organizations to move telephony to Cisco's cloud when the on-premises assets become fully depreciated or when other drivers cause an organization to seek an all-cloud solution.
Cisco and Microsoft -- Cisco realizes that although it has market leading telephony, meeting, and video solutions, many of its customers also deploy Microsoft Office software to the desktop. In a significant olive branch move, Cisco is licensing the Microsoft Office 365 E3 plan and will deploy the Office Suite (Word, PowerPoint, Excel, Outlook, etc.) from Microsoft's cloud. In addition, Cisco is enabling integration between its solutions and Active Directory and Exchange as delivered by Office 365. This means that other customers who have deployed Office 365 can also use these same solutions.
One of the most common questions organizations ask when discussing Cisco and Microsoft is how to make solutions from these companies play together. This question arises because roughly 40% of the market has Cisco telephony and over 50% of the market has some combination of Microsoft Skype for Business, Microsoft Teams, or Lync deployed. To this end, Cisco has demonstrated a Webex bot for Microsoft Teams that will enable Microsoft Teams users to easily launch Webex-based meetings for the entire team.
While there are ways to enable additional interoperability, a sensible response is always focused around user experience and ease of use: If you want a truly unified communications solution, where you can seamlessly move between messaging, voice, collaboration, and video, it's best to standardize on one vendor.
With Microsoft's decision to depreciate Skype for Business in the Office 365 cloud, these users must turn to Microsoft Teams or consider alternative solutions. Microsoft Teams is so different from Skype for Business, and the usage model via Microsoft Teams channels and connectors is so different, that Skype for Business users are going to have to go through a significant learning curve to become proficient with Microsoft Teams.
In fairness, Webex Teams will also require some learning on the part of end users; but if an organization must expend this effort regardless of whether it uses Microsoft Teams or Webex Teams, it may make sense for companies to consider whether this is a good time to standardize on Cisco or Microsoft across the board for their communications and collaboration needs.
Figure 3. Cisco's collaboration portfolio spans from private cloud deployments through service provider clouds and into Cisco's own Collaboration and Contact Center cloud. (Image Source: KelCor, Inc.)
Cisco Plus BroadSoft: Benefits and Opportunities for Channel Partners
In discussions with several BroadSoft partners, not one has expressed any angst over Cisco acquiring BroadSoft; to the contrary, these BroadSoft partners see the acquisition replete with new opportunity. The acquisition also gives existing Cisco partners new opportunities. Some of these opportunities are explored below.
Opportunities for BroadSoft Service Providers:
BroadSoft service providers will gain access to sell cloud solutions to organizations who have deployed the approximately 100 million Cisco on-premises telephony seats.
Given that each of these end user organizations already has a Cisco partner, it's likely that a number of existing Cisco partners will choose to partner with an existing BroadSoft service provider partner to sell cloud-based telephony services.
BroadSoft service providers will benefit from selling the much broader portfolio of Cisco products, including Webex Teams, Webex Meetings, and Webex Devices, as well as Cisco video, Cisco phones, network switches and routers, security solutions, etc.
Two additional key partner benefits result from Cisco owning BroadSoft and manufacturing BroadWorks compatible phones: 1) If the partner sells a Cisco phone, the traditional "middle phone configuration step" will be able to be eliminated, saving the partner approximately $4 per phone installed. 2) Because many service providers also use Cisco routers and switches, these providers will now have analytics and QoS capabilities end-to-end from the phone endpoint through the network and into the service provider core BroadWorks switch. This will give unprecedented call analytics with possibilities for delivering an extraordinarily high quality of service.
Cisco has a global channel support ecosystem for delivery and fulfillment that BroadSoft channel partners can now leverage. This will be particularly useful in deals with multinational and multi-regional enterprises.
BroadSoft had good brand recognition, but only among service providers. Most end users have not heard of BroadSoft. Cisco is 400 times larger than BroadSoft in terms of revenue, and it has excellent brand awareness across all market segments. The strength of the Cisco brand and backing will give existing BroadSoft service providers tremendous impetus.
Although BroadSoft service providers have always been able to use Cisco networking technology to optimize their BroadWorks and UC-One deployments, the fact that they are now Cisco partners as well will allow them to take fuller and more rapid advantage of new Cisco networking capabilities, including software-defined networking (SDN), self-organizing networking (SON), and Cisco's new 5G mobile integration technology.
Opportunities for Existing Cisco Partners:
Cisco partners selling HCS can now expand beyond the very large organizations and sell UC-One into the SMB market. As a dedicated instance, HCS was not economical in deployments smaller than about 250 seats; however, multitenant BroadWorks is economical to service even very small customers. Cisco partners can stand up their own BroadWorks cloud to accompany their existing HCS cloud, they can resell a BroadSoft partner's offering, or they can resell BroadCloud or Webex Calling services hosted directly by Cisco.
Cisco partners now have an elegant path for migrating organizations from their on-premises deployments to the cloud via a Cisco-BroadSoft hybrid intermediary step. End users can keep their existing call control and migrate immediately to agile cloud solutions for collaboration (Webex Meetings and Teams) and for contact center (Customer Journey Platform). New opportunities for Cisco partners are to immediately start selling CJP for cloud-based contact center capabilities and to sell Webex Calling cloud telephony to branch offices or small groups of end users. This hybrid capability, along with Flex Plan licensing, allows customers to migrate seamlessly to the cloud at their own pace -- something that was significantly harder with HCS.
BroadSoft has over 600 service provider partners, all of whom know how to sell cloud-based services. Cisco has approximately 130 HCS partners in 68 countries. The acquisition adds nearly 500 new partners who can inform existing Cisco partners on how to effectively sell cloud calling solutions. It's also highly probable that some of the BroadSoft partners may end up being acquired by some of the larger Cisco partners.
BroadSoft partners are all over the world, and existing Cisco partners now have a way to provide cloud-based solutions to their multinational customers by partnering with BroadSoft service providers in nearly any geography.
Just as BroadSoft partners have an extended portfolio to sell, existing Cisco partners can also bundle a much broader array of products and services for their end user markets. Many customers will want some combination of the on-premises telephony and video endpoint capabilities Cisco has traditionally sold along with elements of the BroadSoft cloud offering. Customers may want cloud telephony for some users or locations and may also want cloud-based contact center. New bundles can be created that provide a broader array of possibilities that should fit nearly any customer's needs -- whether the customer prefers on-premises, cloud, or a hybrid of both.
We referenced Cisco partners reselling BroadCloud services above, but call it out specifically here because BroadCloud/Webex Calling will allow Cisco partners to quickly ramp up to selling a turnkey BroadSoft cloud-based solution to their customers. In time, these partners may choose to stand up their own BroadWorks servers. The key idea is that just as Cisco partners now sell Webex, hosted by Cisco, selling BroadCloud/Webex Calling and Customer Journey Platform (which are now also both hosted by Cisco), gives the partner an immediate opportunity to capitalize on the benefits of the BroadSoft acquisition.
Cisco Plus BroadSoft: Unique Opportunities for Mobile Operators
BroadSoft has a unique capability that enables mobile operator partners to provide a highly differentiated experience that delivers "PBX-like" features on the mobile handset. Because BroadWorks is IMS compliant, it can be deployed as part of the mobile service provider's IMS network core. Mobile communications service providers (CSPs) who deploy BroadWorks in their core can provide three significant benefits to their business subscribers:
Business voice features with the CSP's mobile plans that include common PBX-enabled "mid-call" capabilities, including auto attendant, hold, transfer, forward, call park, etc. -- This gives mobile business users the same capabilities on their mobile handsets that they would expect with an office PBX system. A key difference between this type of offering and an OTT app like Webex Teams, Jabber, or UC-One, is that these features are enabled for cellular voice, not just OTT VoIP. Clearly, this is a functionality that only mobile CSPs can provide, and now Cisco can offer it to its mobile service provider customers.
The ability to ring a "mobile number" on multiple devices -- When a person's mobile number is called, BroadSoft's IMS solution can be used to ring a person's cell phone, tablet, desk phone, or PC/Mac soft client. There are two key differences between using a mobile phone number on a smartphone for single number reach versus an OTT VoIP application:
On the mobile phone, VoIP calls already in progress may be interrupted if you get a second inbound VoIP call and the first call is put on hold (Note: If the VoIP client has implemented Apple's Call Kit, this does not apply. Call Kit-enabled VoIP apps allow callers to choose whether or not a second inbound VoIP call should interrupt the first.). However, a true mobile number call is not interrupted by a second inbound call.
The mobile network is generally very good for voice in terms of reliability and quality. VoIP over the mobile device can be spotty in terms of reliability and quality, plus it will consume the mobile data plan when not connected to a Wi-Fi hot spot. The single number reach in this instance comes to the mobile device over the voice cellular network and not the data network.
Support for multiple numbers across multiple devices -- Even if an organization supports BYOD in which the employee brings his/her own mobile device with its own mobile number, a BroadSoft-based subscription from a mobile CSP allows a business number to be mapped to that same device so that mobile users can still use their own device, but it also becomes part of the company's business communications network. Effectively, each device has multiple identities: personal and business.
BroadSoft mobile business voice is a capability no other PBX or cloud-based service provider can offer mobile service providers, and an OTT mobile app will not give this level of integration with the mobile phone network. Although this segment of BroadSoft's business is nascent, it has huge potential, particularly with Cisco backing and promoting it to all of its service provider channel partners. It may erode Cisco's on-premises business faster, but it will help move organizations to cloud faster as well, which is a goal Cisco has. Plus, it can be bundled with other Cisco products and services, such as Webex Meetings and Teams.
One other important idea for mobile service providers is that now that Cisco owns it, BroadWorks can be used as a gateway to other Cisco call control platforms like CUCM and HCS. The implication is that mobile providers can put BroadWorks in their core, but register users to HCS or CUCM, expanding mobile business voice to the existing 100 million Cisco telephony customers.
Conclusion
BroadSoft and Cisco together make a powerful combination that will be very difficult to compete with in the market once the two product offerings are fully integrated and the Cisco marketing engine gets rolling. With this acquisition, Cisco now has:
The No. 1 on-premises voice platform in CUCM.
The No. 1 SMB and LMB cloud-based voice platforms in BroadWorks and HCS.
The No. 1 cloud-based meeting and collaboration service in Webex.
The No. 1 video endpoint and infrastructure solution.
A multitenant cloud-based contact center, Customer Journey Platform, that competes well with Genesys PureCloud, Nice's inContact, and other cloud-based contact center providers.
A mobile operator offering that can enable PBX functionality for mobile users as part of the mobile telephony service.
Compelling telephony functionality via Webex Calling, which will be far more functional than anything Microsoft will offer with Microsoft Teams (based on Microsoft's current roadmap).
A partner ecosystem that knows how to sell cloud solutions.
Cisco's acquisition of BroadSoft appears to offer a pervasive and persuasive value proposition to end users and to Cisco channel and service provider partners. Combining BroadSoft's asset with the new branding and go-to-market strategies will enable Cisco and its entire partner base to penetrate even deeper into the unified communications- and contact center-as-a-service markets while bringing these capabilities into adjacent markets where Cisco is also very strong, such as IoT, security, and networking.
