Vonage (News - Alert) is now executing upon what the company’s CEO Alan Masarek calls a historic business transformation – from a residential landline replacement for traditional telecoms serving consumers only to a software-as-a-service company for businesses and consumers. INTERNET TELEPHONY recently interviewed Masarek to find out more.
Tell us more about Vonage’s transformation and the thinking behind it.
Masarek: We are extending the Vonage brand and our legacy as a VoIP pioneer into the rapidly growing Unified Communications (News - Alert)-as-a-Service (UCaaS) market for businesses. This transformation is fueled by the substantial and predictable cash flow of the consumer business, which drives our strong balance sheet and low cost of capital; low operating costs driven by the scale of our consumer business; the strategic flexibility provided by our support of two technology platforms for our core call processing infrastructure; and an accomplished senior leadership team capable of driving this transformation, along with talented and committed employees that share a sense of excitement and urgency around the delivery of new products, features, and customer experience enhancements.
What has been your role in creating this new path for Vonage?
Masarek: Shortly after I joined Vonage, I outlined this new direction for the company that included maximizing the profitability of the consumer business while aggressively growing organic revenues and pursuing inorganic growth for Vonage Business. I am focused on establishing Vonage as a leading business services brand; reinvigorating the company’s culture by returning it to its innovative and disruptive roots; and investing in our people so that Vonage becomes an employer of choice. I’m pleased to say we are making excellent progress on all of those objectives.
What are some of Vonage’s recent successes and its building blocks for the future?
Masarek: In late 2013, we purchased Vocalocity (rebranded Vonage Business Solutions) to enter the UCaaS SMB market, an industry that Frost & Sullivan predicts will grow 27 percent annually for the next five years to $10 billion. In 2014, VBS’ revenue growth accelerated to 50 percent, nearly double the annual growth rate of other public pure-play UCaaS providers. Underpinning our success is Vonage’s ability to leverage the iconic Vonage brand and low cost structure while utilizing our strong balance sheet to invest in growth.
With this acquisition playbook established, we completed the acquisition of Telesphere (News - Alert) Networks in 2014 and SimpleSignal in 2015. These three companies, now collectively known as Vonage Business, give us a comprehensive and compelling range of cloud-based solutions to address the needs of a wide range of enterprises. Further still, this strategic shift is quickly repositioning Vonage to a SaaS (News - Alert) model from its legacy roots as a telecom provider.
We also acquired gUnify, a SaaS integration company whose technology connects our communications platform with the most widely used SaaS business applications, including Salesforce for CRM and Google for Work for productivity. This type of service is in high demand by businesses who want to move to the cloud because, until recently, it could only be obtained through traditional, much more expensive, on-premises PBX (News - Alert) systems. gUnify’s cloud solution enables us to provide functionality comparable with traditional on-premises offerings.
What has made this combination of acquisitions successful?
Masarek: Our success is driven by strong demand for cloud-based communications, and Vonage’s ability to serve all segments of the business market. We have the right platforms and product set to serve single-person companies to those with thousands of employees spread over multiple locations.
While we are growing quickly in the mid-market and with larger companies within the SMB segment, we continue to see excellent growth potential with smaller businesses. It’s important to highlight that 90 percent of all employer companies in the U.S. have fewer than 20 employees, and this segment is rapidly embracing the cloud.
We are also very successful in serving business customers at the mid to upper ends of the market. These customers generally require quality of service, or QoS, service level agreements, and enterprise-grade feature sets matching those traditionally provided by on-premises PBX vendors.
What trends do you expect will have the most significant impact on Vonage Business’ growth going forward?
Masarek: One of the biggest changes in communications over the next few years will be the explosion of cloud communications adoption, which we are only seeing the beginning of today. Everyone has heard that large carriers are moving forward with their plans to sunset their copper wire infrastructures, and these and other changes will continue to drive continued adoption within the business sector.
Accordingly, this mass shift to hosted telephony solutions will continue to redefine the way people are able to communicate every day. Business communications running on software hosted in the cloud means that any data-enabled device across the Internet of Things has the potential to become a new telephony endpoint. Today, we are seeing a lot of buzz around things like wearable communication devices but, tomorrow, that attention could shift to something like smart TVs or connected cars.
Also, as the lines between an individual’s personal and business identities continue to blur, thanks, in large part, to the continuing BYOD trend, communications companies like Vonage will need to develop new user experiences that enable users to seamlessly transition between their different use cases. During the course of any given day, more and more people will need to switch easily between their personal and business identities across all of their devices.
Is cloud the answer to addressing all these needs?
Masarek: Communications flowing through the cloud will help companies of all sizes to realize the benefits of unified communications. Because solutions can be tied together easily and offered at a fraction of the cost of traditional telephony, even a sole proprietor working from home will be able to capitalize on the value that a unified communications solution provides.
Over the next few years, more technologies will emerge that remove the need to build individual networks or communities to communicate through a company’s telephony solution of choice. We’ll see technologies that allow anytime communications that are platform- and device- agnostic and can occur to and from any device, not just app-to-app or platform-to-platform.
Also, we’ll see more solutions that offer text and group messaging to any number in your business or personal directory and that will continue to expand across the complete range of communication endpoints. You won’t need to be concerned about whether the person you are trying to reach is using the same app or the same operating system.
Where does mobility fit in?
Masarek: The trends that will have significant impact are mobility, increased competition, and the need to boost productivity while maintaining costs. The workforce is becoming more mobile and employees need the flexibility to work from anywhere on devices that can do more. The office is not necessarily a physical office anymore, and unnecessary downtime away from the office can result in lost revenues if the business is not optimized for a mobile workforce.
With new competition and disruptive models hitting businesses from different angles, it can sometimes be hard to compete, especially for smaller businesses. But, with cloud technologies, a business can quickly scale, remain flexible, and compete more effectively with existing competitors and unexpected challengers. And, businesses are always looking to improve productivity without increasing head count. This dovetails with my point about being mobile. The cloud allows employees to be productive from anywhere.
How do all these factors come together to create a differentiated service offering?
Masarek: Vonage’s business solutions provide support for virtually any endpoint that a business may need to address. For example, a very small business may operate out of someone’s home and only require mobile and desktop support, while a large enterprise with hundreds of employees spread across many different locations may need support from everything from desk phones to tablets to video presence and collaboration tools, along with business application integration. Vonage has the ability to unify communications across all of these endpoints. This enables users to leverage their business telephony functionality from any device and integrate their communications with their everyday workflow programs, like those for CRM or productivity
In addition, Vonage has the unique ability to deliver our cloud communications solutions through whatever type of connectivity best suits the needs of the customer. Our portfolio of business products can serve single-person companies to those with thousands of employees spread over multiple locations. Vonage provides bring-your-own-broadband (BYOB) cloud products and those that offer carrier-grade reliability and Quality of Service (QoS) across BYOB service options and its private, national MPLS network. This ensures companies have the complete range of options for telephony and broadband connectivity, enabling them to deploy solutions that meet their business needs today and into the future.
Vonage also offers user-friendly management tools that allow customers to monitor their communications services and quickly and easily make changes from their PCs, smartphones, or tablets. Our proprietary provisioning platform, Zeus, allows partners to make changes for customers from any device.
In short, Vonage offers a great brand, a financially stable company, and the history and longevity of being a pioneer and expert in Internet communications, with a track record for quality, reliability and great service. Building upon this foundation, we have quickly become a leading provider of cloud communications solutions for business.
Edited by Dominick Sorrentino