ShoreTel Targets 50% of Revenue From Cloud

August 25, 2015 Brian Hall

New Connect Platform Unifies the PBX and the Cloud

Following the launch of its ShoreTel Connect platform announced last week, ShoreTel (SHOR) is targeting getting half of its total revenue from cloud-based unified communications services, ShoreTel told the Daily Cloud. Of the nearly $95 million in revenue ShoreTel earned last quarter (fiscal Q4), about 30% came from the cloud, per Wall Street estimates. "We are entering an inflection point where we believe cloud revenues will accelerate. We are looking for more than half of revenue to come from the cloud,” ShoreTel Chief Marketing Officer Mark Roberts told us. ShoreTel Connect is the name for what has been called the “common platform,” a single software platform that works on both on-premise PBX systems and cloud-based UC systems. The promise of Connect is that it could, for example, support an organization which demands a premise-based solution for its headquarters, the license-based Connect Onsite, while simultaneously running the subscription-based Connect Cloud for its satellite offices. Because it's based on a cloud-based unified communications services.

Following the launch of its ShoreTel Connect platform announced last week, ShoreTel (SHOR) is targeting getting half of its total revenue from cloud-based unified communications services, ShoreTel told the Daily Cloud. Of the nearly $95 million in revenue ShoreTel earned last quarter (fiscal Q4), about 30% came from the cloud, per Wall Street estimates. “We are entering an inflection point where we believe cloud revenues will accelerate. We are looking for more than half of revenue to come from the cloud,” ShoreTel Chief Marketing Officer Mark Roberts told us.

ShoreTel Connect is the name for what has been called the “common platform,” a single software platform that works on both on-premise PBX systems and cloud-based UC systems. The promise of Connect is that it could, for example, support an organization which demands a premise-based solution for its headquarters, the license-based Connect Onsite, while simultaneously running the subscription-based Connect Cloud for its satellite offices. Because it’s based on a single code base, changes and updates are deployed across all offices or environments simultaneously. It also means that a ShoreTel client can begin with the premise offering and later transition to the cloud, and with almost no interruption or end user training required.

Corporate Antibodies

Roberts said that building a unified solution was a unique achievement in the industry. Smaller UC companies don’t have the resources to develop the proprietary software required, he said, while larger companies “have an organizational structure with divisions aligned around a cloud solution and a premise solution, with dual managers, dual interests.” “Corporate antibodies” prevent large companies from melding the two into one a single product based on a single technology. In what sounds like a swipe at Avaya or Cisco (CSCO), the historic gorillas of the PBX and IP-PBX space, Roberts added: “There aren’t other companies out there that possess the financial strength to do this, yet are small enough to truly place the customer at the center of the conversation.”

Both Connect Onsite and Connect Cloud “will ship in the September quarter. But we’re quoting, we’re selling, we have a team deployed and are training the channel [now],” Roberts said. He added that the go-forward marketing strategy will be steady and continuous. “We’re moving away from these large big bang launches. It’s one product, one code base, one user experience. That means small feature updates rather than one large product roll-out.”

ShoreTel Connect is based on technology ShoreTel acquired with its 2012 acquisition of M5 Networks for $146 million, followed by internal development. Last year, it was widely expected to be released in spring 2015. Roberts acknowledged the delay in the launch. “We extended the beta testing for another quarter” to make sure “we had the right solution, the right user experience.”

Though Onsite and Cloud are being quoted, Connect Hybrid is not expected to be introduced until late this year. This has been, and continues to be, a huge project for ShoreTel, which had 1063 employees as of June.

This was a two-year journey for ShoreTel,” Roberts said. “We transitioned every facet of the company over the past 18 months” to support the vision for a “one user experience. Everyone told us you can’t do a cloud solution on the same base code as the on-premise offering.” Now that they have, said Roberts, the “unified” Connect platform is a “no risk, easy solution.”

THE ADVANTAGES OF A CLOUD BUSINESS PHONE SYSTEM

Cloud Unified Communications – which is also referred to as UCaaS (Unified Communications as a Service) has become a popular choice for modern enterprise communications and collaboration. Rather than purchase, install and maintain an office phone system, users of cloud phone services and UC solutions subscribe to a monthly service from a cloud VoIP provider.

These services are delivered from the vendor’s secure data centers and the vendor takes responsibility for owning, configuring and managing them. Businesses connect to these communications services and applications through the Internet or private connections – and the benefits of the cloud phone systems are plentiful.

Update :SHORETEL IS NOW PART OF MITEL