ShoreTel CEO: We have three-year window to get market lead

Don Joos talks us through his plan to invert annuity-capital revenue split

ShoreTel's chief executive Don Joos believes the firm has a three-year window to establish itself as the market's leading hosted comms player. During that time the vendor boss also intends to invert his firm's on-premise-to-hosted revenue split.

Joos was appointed as CEO in August, after two years in services and operations leadership roles. He told CRN that his first 100 days in charge had been about formulating an operating plan, and that he is now halfway through creating a strategic blueprint.

"A lot of time has been spent with the investor community, particularly [talking about] the strategy - where we are going and why?," he said. "They did not really understand the sum of the parts; they did not understand how hosted, on-premise, and services came together. It is about helping them decompose [the three]. They did not understand that the on-premise is an asset - it gives us cashflow to make investments in the areas we want."

Around a third of the vendor's turnover is currently annuity based. Joos outlined his desire to drive the amount of sales drawn from the ShoreTel sky hosted business to north of 60 per cent in the coming years.

"I firmly believe that over the next three years, the one or two market leaders are going to differentiate themselves," he said. "The UCaaS (unified-communications-as-a-service) market is really fragmented at the moment; our goal is to be number one, and we are currently number two.

"Every time a shift occurs like this in the marketplace, the market leadership typically gets defined within a 36-month window. The next part of our plan is how we get to that number-one spot. It is not every day a company can look at all its assets and say ‘I have all the pieces', [as we can]."

Changing channel
Joos reiterated his firm's commitment to being an entirely channel-focused firm, and suggested that this could help differentiate it from cloud rivals in the coming years.

"A lot of cloud companies today are going with a direct model, and I understand why. But I have never seen a company go from direct sales to a channel model without a few bumps," he said. "It is bumpy and it takes several years."

The ShoreTel sky channel programme contains three tiers: Referral; Approved; and Enabled. Referral partners will receive one-off payments for introducing hosted clients to ShoreTel, while approved partners will work closely with the vendor during the sales process. Top-level Enabled partners will assume responsibility for the entire sales cycle.

"[It is about] getting our on-premise channel into Approved or Enabled, [and also] we really have the opportunity to bring in net new partners," said Joos (pictured right). "We are looking at software partners, such as those in the Salesforce ecosystem."

The ShoreTel boss asserted that although the evolution of the market will take time, the vendor does not need to browbeat partners into embracing hosted telphony.

"This is a transition, it will not happen overnight," he said. "Today [the market] is 90 per cent on-premise and 10 per cent hosted. There is going to be 25 per cent growth in hosted, but there is going to be a long tail [of on-premise] that goes with that, just as there was with the transition from TDM to IP. Is it carrot versus stick? We do not need a stick, as [partners'] customers are pulling them into this."