Rich Tehrani’s “Executive Suite” is a monthly feature in which leading executives in the Voice over IP/IP communications industry discuss the latest industry trends with TMC president Rich Tehrani as well providing insight and analysis on industry news.

In this issue, Rich speaks with Craig W. Rauchle, CEO of Inter-Tel.

Craig W. Rauchle

Craig W. Rauchle, CEO of Inter-Tel

Craig W. Rauchle serves as president and chief operating officer of Inter-Tel, Incorporated, an industry-leading provider of voice and data communications solutions for businesses. In this capacity, he is responsible for all day-to-day operations of the company, including sales, customer service, order fulfillment, training, engineering, product direction, and marketing. I recently spoke with Mr. Rauchle regarding Inter-Tel’s new Inter-Tel 7000 communications system, along with the company’s strategies for expansion into new markets.

Inter-Tel has caused a lot of buzz in the industry by announcing the Inter-Tel® 7000, an IP-based communications system that can scale to 2,500 users. Why is Inter-Tel looking to enter a crowded enterprise field, which already features the likes of Cisco, Avaya ( News - Alert) , and Nortel (News - Alert)?

We already successfully compete against these companies in the small and mid-size market. Inter-Tel has earned a sterling reputation in this segment for its ability to tangibly improve business performance through advanced communications technology. Typically, companies choose to do business with us because of our ability to provide systems and applications that can help them address their most fundamental needs, such as increasing revenue, streamlining operations, and controlling costs.

Inter-Tel sees that many larger businesses face a similar set of circumstances. Unfortunately, most of the vendors currently serving the enterprise space still perceive their position to be technology providers. Our philosophy — and our reputation — are built upon an ability to deliver tools that can positively impact these fundamental business processes.

When we combine our applications focus with an innovative Managed Services program that delivers a true end-to-end solution for one monthly fee with next generation pure IP products, like the Inter-Tel 7000 — which we think will help revolutionize business communications — we are comfortable that we can deliver a number of very compelling reasons for larger businesses to work with us.

Why do you say the Inter-Tel 7000 can help revolutionize business communications?

There are several reasons. In terms of technology, the Inter-Tel 7000 has SIP built into the core of the system. That means it is a pure, standards-based communications platform that will interoperate with other standards-based devices and applications. Over the next few years, this will provide businesses with enormous flexibility in their ability to integrate third-party solutions into their network. As the industry stands today, customers are pretty well locked into proprietary offerings, whether it be phones, software, or mobile devices. SIP changes the equation by allowing customers to pick and choose their communications and productivity tools as they see fit.

But many vendors offer SIP-based products. What makes the Inter-Tel 7000 different?

It’s true that other vendors offer SIP products, but, by and large, these systems provide only a fraction of the features and functionality upon which customers rely. The Inter-Tel 7000 delivers over 99 percent of the same feature set as our flagship Inter-Tel Axxess platform. We have taken great pains to ensure that the user experience will remain high in an Inter-Tel 7000 environment. But this doesn’t mean that the Inter-Tel 7000 functionality is status quo; quite the opposite, in fact. The Inter-Tel 7000 offers embedded presence management capabilities, advanced mobility applications, and the ability to easily integrate Inter-Tel’s leading collaboration, contact center and messaging tools. In addition, the Inter-Tel 7000 is completely redundant and offers superior security.

We’ve packed a lot into this system and we think customers will be absolutely delighted with its performance.

What has Inter-Tel’s experience been in selling VoIP solutions? Has the market growth met your expectations?

I don’t think anyone who follows our industry can dispute the notion that VoIP solution sales are noticeably increasing; whether that growth is “dramatic” or “substantial” is open to interpretation. Inter-Tel’s view is that VoIP sales are growing the way we initially expected: slowly at first, then escalating at a much quicker pace.

I think we’re in a strong growth mode now. Initially, VoIP sales were stagnant, frankly, because the technology did not live up to the hype. I’ll give you a couple of examples.

In the early days of VoIP, the primary benefit communicated to the customer was a perceived reduction in toll charges by “running voice over the data network.” Many companies bought this story hook, line, and sinker and learned, instead, they faced a number of issues. First, VoIP, in its initial stages was somewhat unreliable. End users faced a degree of difficulty with dropped calls, echo, and other inconveniences. There were also the financial realities. In order to accommodate voice traffic on their data networks, a lot of businesses spent enormous sums of money increasing their bandwidth and improving their networks. These capital expenditures eradicated any cost benefits of moving voice onto the data network.

But, today, the business model for VoIP has changed significantly and that’s why more companies are adopting the technology. Speaking for Inter-Tel, we’ve come to understand that the real benefit VoIP offers businesses has little to do with transport and much to do with applications.

Today’s business depends more and more on the productivity of its workforce, whether they work in the office or are constantly on the go. IP-powered applications, like presence, collaboration, and messaging, enable team members to stay connected with colleagues, customers, and suppliers. We’ve learned that the real value of Voice over IP resides in tools, like presence management, collaboration, and mobility. Solutions, like these, are the primary reason VoIP sales continue to grow.

You’ve mentioned the statement “improve business processes” several times. Don’t your competitors offer solutions that can make this claim as well?

For the most part, our competitors are focused on improving communications processes — and they do a good job with that. Most of them are astute at transporting voice packets over an IP network, delivering a telephony feature set, providing call center software, or offering rudimentary collaboration and presence applications.

It’s important for Inter-Tel to impact the communications process, too. But, frankly, that’s just the starting point for us. We are most successful when we can apply our solutions to internal operational groups beyond simple telephony. We look at several silos within a business, such as administration, sales and marketing, human resources, and accounting, and ask, ourselves, “How can our tools help this group perform better?” or, “How can our applications help this sales organization generate more revenue?” It requires us to study our customers and their processes and see where we can make an impact using any one of our solutions, like presence, collaboration, mobility, IP networking, or any of our other applications or products. Sometimes, this approach lengthens the sales cycle, but, in the end, this philosophy can make a real difference in improving the way our customers perform their tasks.

So, yes, we stand by our “improve business processes” philosophy. Everybody in our industry can competently address communications processes. We like to take it one step further.

Is good technology a compelling enough reason to sell solutions, or do customers expect more?

Having an outstanding product portfolio is certainly very important, but there are a number of additional factors that come into play when we meet with customers.

Today’s businesses are looking for a lot more than just hardware and software. They need consultative services to ensure their systems are configured and performing properly, and they want an ongoing relationship with a vendor that will address any issues that may arise. In addition, many businesses look for help with a migration strategy to leverage new products as they become available. But, virtually every business we speak with wants a company that demonstrates expertise in both voice and data environments.

That’s why it is imperative that vendors have proficiency in assessing a network to ensure it has the proper bandwidth to carry not just voice traffic, but also video and other rich media applications. The demands on the network will change exponentially over the next few years, so it’s critical that customers plan accordingly.

We have taken great strides to grow this expertise in-house. Inter-Tel is one of just a handful of vendors that has a high level of expertise in both voice and data networking. Our Inter-Tel Services group works with both our direct offices and resellers to ensure that customers are fully prepared to successfully implement VoIP solutions. Our Services group is highly proficient in data networking and boasts a team of technicians who are fully credentialed in both wired and wireless data communications. They are a great resource for our customers and exemplify the breadth of knowledge and experience that businesses rely upon to successfully implement VoIP.

Inter-Tel solutions are primarily distributed in the North American and Western European markets. Do you foresee expansion into other territories, too?

We are constantly looking for outstanding partners that we think could help us penetrate a particular market. We’re more interested in finding the right partners instead of focusing on a specific geographic footprint. A recent example is our foray into South Africa, where we partner with Tellumat, an outstanding provider that has an approach similar to what Inter-Tel does in the United States — it is a full-service reseller that intuitively understands how technology can best meet the needs of a business. We’ve only been in South Africa for two years, but we’re starting to see real traction.

We also are in talks with potential partners in other areas of globe and have plans to leverage the relationships our LAKE Communications subsidiary maintains with its global service provider accounts. We do see international growth as an important element of Inter-Tel’s long-term strategy. Still, we must remain diligent in choosing the right distribution partners.

You mentioned LAKE Communications. What was the thought process behind that acquisition?

Inter-Tel already had an established relationship with LAKE. We had sold their products through our channel in North America, so were very familiar with the company, the management team, and, of course, its products.

There are a lot of opportunities that LAKE brings to the table and is an important asset for a number of reasons. First, its products address the small business and home office markets, perhaps the fastest growing segment around the world. Its products are reliable, competitively priced, and easy to install and use, which is a key factor in this market segment.

Just as attractive to us is LAKE’s distribution channel. The company sells through many of the world’s leading service providers, like British Telecom, Telecom Italia ( News - Alert) , and Commander in Australia, and we fully expect to use LAKE as a springboard to introduce the Inter-Tel product line to these distribution partners. We’ve also recently brought Sprint (News - Alert) on as a distributor, so we expect to gain even more exposure throughout North America, too.

Where do you think the enterprise communications industry is heading?

This is probably one of the most exciting — and, at the same time, challenging — periods this industry has ever seen. New services and technologies are being added at a breakneck pace; SIP, 802.11, and other standards are beginning to permeate the market. As a result, we’re going to see a whole new breed of third-party applications and devices. Mobility tools will become increasingly important, as will collaboration, presence, and other productivity tools that will change the ways businesses operate, let alone communicate.

But with all the technology and wizardry coming into being, businesses will rely much more heavily on providers to help them make the transition to new technology in a seamless and cost-effective manner.

That’s a point worth repeating. In nearly 30 years in this industry, I still haven’t found a company that has the luxury of throwing money away on technology. Every business expects a tangible return on their technology investments. This paradigm will never change, nor should it. As technology becomes more complicated, customers will continue to look for companies, like Inter-Tel, to develop advanced solutions that will help them address their most fundamental challenges and, yes, tangibly improve their business processes.

Rich Tehrani is President and Editor in Chief at TMC.

» Return to Executive Suite Home