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ShoreTel CMO Offers an Update on the Company's Transformation

November 17, 2015

The last couple of years have been a period of significant change at ShoreTel, which two years ago installed Don Joos as CEO and embarked on a strategy to transform the company, which has become well-known over the years for its Brilliantly Simple tagline, into one that is easier to do business with ­– both from the perspective of its business customers and channel partners – and better positioned for growth.

In announcing its first quarter 2016 financial results last month, ShoreTel revealed that although its total revenue was down at $90.2 million, compared with $90.4 million in the first quarter of its 2015 fiscal year, the company in the quarter increased its cloud bookings, expanded its hosted gross margins, delivered record cash flow from operations, and had recurring revenues that represented 51 percent of the company’s total revenue at $184 million, an increase of 15 percent vs. the first quarter of fiscal 2015.

A key part of ShoreTel’s transformation involves the company’s newly introduced ShoreTel Connect solution, CMO Mark Roberts noted in an interview with me last week at TMC Editor’s Day Silicon Valley. ShoreTel Connect is a single platform that can deliver cloud, on-premises, or hybrid business communications. Doing all that on one platform, ShoreTel says, simplifies the management and deployment of business communications systems, and makes scalability more seamless.

Having a single-experience platform support cloud, on-premises, and hybrid deployments makes sense, Roberts said, because “we don’t believe it’s ever going to be all cloud.” The initial deployments of ShoreTel Connect are taking place now, he added. Gartner, which in its 2015 Magic Quadrant for Unified Communications denoted ShoreTel as a visionary, seems to think the company is headed in the right direction.

ShoreTel this month launched a new channel partner program to educate its channel about the cloud, its new platform, and to make it easier for partners to sell these solutions. ShoreTel’s Champion Partner Program is a points-based reward system has one annual target, considers both cloud and premises-based sales, and consolidates 11 tiers into four. Roberts said cloud has the connotation of a being a direct sale, but said that ShoreTel is continuing to work with the channel and to education them on the long-tail profitability the cloud can help them realize, and to offer them upfront commission payments for cloud sales so channel partners have time to adjust to this new business model.

In addition to delivering a platform and a partner program that help simplify the migration from on-premises to cloud-based communications, ShoreTel is differentiating by delivering high-touch, high-quality after sale service and doing integrations with other enterprise systems such as CRMs to make voice more useful for its business customers, said Roberts. He indicated that ShoreTel is now well-positioned to compete against cloud companies, saying ShoreTel’s average deal is three times the size of what its public competitors are doing. The cloud players, he added, are excited if they get a deal that involves five people.

Edited by Kyle Piscioniere