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Phone System Guide Part 2: Allworx vs. Everybody else

by Nick 10 years ago

If you haven’t read Part 1 of the guide yet, you might want to go back and read it first.

Even if you’re unfamiliar with the work of Frank Loyd Wright, his place in American architecture, or the sheer volume of what he produced, you probably recognize Fallingwater. It was commissioned as a weekend retreat for the Kaufmann family of Pittsburgh, and was completed in 1937 at a cost of about $155,000 (at least $2.6 million in today’s dollars). It was built for a time, and for clients that valued quality or quantity, and appreciated Wright’s organic style. It’s a stark contrast to the modern tract-style McMansion. Let’s contrast Fallingwater with your investment in a phone system.

fallingwater-2

Phone Systems aren’t beautiful.

They’re not enduring.

They’re not even that unique.

Of the 150 phone systems that I’ve looked in the past year, they’re more than 90% identical. In fact, the only thing more ubiquitous than their feature-sets is the near universal contempt that business owners have for buying phone systems. It’s not hard to see why… phone systems have a reputation of being big, expensive, and frustrating. It’s an epitaph earned in earlier product generations.

As I alluded to in Part I, and elaborated on in my free PDF download, before buying a phone system – you should know what you care about. Not everything mind you… you don’t necessarily need every detail thought-out beforehand (that’s part of why you’re soliciting bids, after all). But at 30,000 feet… if there’s one or two must-have feature requirements for you, be sure you know what those are. Otherwise, if you bring in the integrators who compete in this space – unless you have a very specific need, or have a situation where there’s a clear incumbent, you’re going to find yourself comparing apples and oranges in a market saturated with feature overlap.

Given no constraints, I’m a big fan of ShoreTel’s Unified Communications Platform. As much as I respect Asterisk-based systems, and the contributions that Digium has made to the ecosystem, I can’t help but like ShoreTel’s platform. To the extent that a phone system can be beautifully designed… this one is. The platform runs on a combination of embedded Linux, and VxWorks (it’s the same OS that runs the Mars Curiosity Rover). Interested in five-nine’s? It’s achievable. Geographic failover, high-volume call centers, fancy mobility features (that few people actually use) – all the boxes are checked. In other words, ShoreTel’s platform is the phone-system equivalent to a home designed by Frank Loyd Wright. Or if that analogy doesn’t strike you, than it’s probably the BMW of phone systems.

But here’s the thing… most of us don’t want, or need to live in a home built by Frank Loyd Wright, just most of us don’t need something like a BMW 7-series. More than that though, even with some innovative modern takes on the Prairie style home, and renewed general interest in organic architecture – your average executive is going to pick a turn-key tract-style McMansion in the suburbs near the office, over a Frank Loyd Wright original. Why? Because the tract style McMansion is good enough.

Enter the tract-style McMansion of phone systems.

The Allworx Unified Communications platform was conceived of in 1998 by two engineering executives from Kodak and Xerox who formed what later became known as Allworx. During the first few years of business, while the Allworx system was being developed, the company established a presence doing consulting work for big-name organizations like Kodak, HP, Xerox, and Harris. The Allworx phone system came to market at just the right time in 2002. With the platform positioned as a turn-key VoIP telephony solution, it competed feature-for-feature with many higher-cost alternatives, which were often sold via regional telephony providers. As Allworx grew, it was acquired by a publicly traded Fortune 1000 company, before eventually becoming an asset of Windstream Communications in 2011. If this were a different company, then the story would probably have ended in relative obscurity as nameless corporate asset. But that doesn’t appear to be the fate for Allworx with Windstream… since 2011, Windstream, leveraging their role a telephony provider in some markets, and taken clear steps to increase market penetration for the Allworx’s product line. As a result, the Allworx platform has experienced revenue growth of more than 250% over the past year. As of last check, the Allworx division had 80 employees, and their product continues to win market share from higher-cost alternatives sold by companies Cisco, Avaya, ShoreTel, and others.

Allworx is continuing to win business away from the high-cost Enterprise-focused competitors, by providing an innovative, low-cost, and easy to manage alternative with a rapid and continuous release cycle approach to upgrades and platform improvements.

Perhaps calling Allworx the “tract-style McMansion” of phone systems is the wrong tract, as it’s clearly a low-cost platform. So if ShoreTel is BMW, then I’d venture to call Allworx the Toyota of phone systems. Allworx is the mainstream, mid-sized economy of boring purposeful solutions. It’s not a kit-car, like the FreeBPBX, nor is it a BMW 7-series. But you’ll be hard-pressed to go as far at a comparable level of cost as the Allworx platform will take you. It’s the purpose-built and priced-right unified communications solution for small and mid-sized organizations than want reliability and ease-of-use, without paying a premium for high-end hardware, or obscure feature-sets. Put differently, a client recently contracted me to help them with phone system vendor selection, they were a medium-sized, multi-site organization, and I brought in bids from integrators representing products from Allworx, Cisco, NEC, Digium, as well as a Cloud-based solution.

Allworx had the lowest installed cost.

NEC and Digium solutions ranged 20%-25% higher.

ShoreTel? 2.5X.

Cisco… more than 3X.

Hosted solution? It cost more per year than the Allworx solution.

By that I mean, not only was the installed cost of the hosted solution higher than Allworx, but you could afford re-purchase the entire Allworx solution every single year, for what the hosted solution cost. Now granted, the hosted solution could tolerate a data center failure, since it’s serviced by separate regional datacenters. That was its primary, albeit expensive edge.

How reliable is the Allworx solution?

Availability can be measured in terms of nines of reliability. For example, the platinum standard is five-nines… 99.999%. That’s a cumulative total outage of 5.62 minutes per year. To put that in perspective, last year Google failed to achieve five-nine’s of availability in search. Surprised? Amazon and Netflix fared far worse . In fact, even the public switched phone network fails to reliability achieve five-nines in a given year. There are a lot of reasons why five-nine’s is hard to achieve, but to give you some perspective… the difference between four-nines and five-nines is 47 minutes per year. The cost of targeting five-nines tends to grow exponentially as you approach it. On the other side of the fence, phone system manufacturers love to tout five-nines. And it’s not just a bullet point on their marketing material, because targeting five-nine’s adds complexity, hardware, licensing, and cost. So while you may desire 99.999% availability, something to keep in mind is that even if your system can conceivably this level of availability, make sure you have an obvious business case for it. As in, unless your business lives and dies by the phone (e.g. a busy call center), you might be overbuying. In my experience, my clients that have Allworx systems are generally seeing around 99.9% availability in a given year.

If you require anything resembling five-nines, you shouldn’t buy the Allworx 48X. It’s just not designed with high-availability in mind. Allworx makes no pretense about it… there’s simply no attempt at competing in high-availability space. Which means Allworx can spend their time and resources improving things that the target market values … bug-fixes, usability, and day-to-day feature requests. Perhaps that’s why you can afford to buy a cold-spare Allworx 48X, along with everything else and still have a more competitive offering than the competition does, even before the competition adds high availability capabilities.

Wright’s masterpiece, Fallingwater was completed in a timespan of three years, and overlaps two other of his great works from the late 1930s. The original sketch for Fallingwater was actually drawn up while Kaufmann was on his way to meet with Wright and review the “completed” sketches of Fallingwater. In defense of Wright’s genius (or arrogance), he said that Fallingwater was fully formed in his mind and that he was completely prepared for the meeting before drawing a single line. Perhaps. In comparison, the Allworx platform is the byproduct of more than fifteen years engineering, funded by investors focused on a building an innovative, low-cost, high-value unified communications platform that is essentially turn-key. At the end of the day, Allworx provides you with a mainstream unified communications solution, at a price point that the competition can’t touch.

The above article is a continuation of Part I. Some of the other platforms that were evaluated included Avaya’s IP Office, ShoreTel, Digium’s Switchvox, Trixbox, FreePBX, and Allworx. If you’re interested more of the detail surrounding the vendor selection process, just sign-up for the newsletter here, and you’ll be able to download this article along with my deliverable (which includes some additional commentary). I use the newsletter to send the occasional update, often with content that’s exclusive to the newsletter (e.g. the client-facing deliverable). No spam ever. Unsubscribe at any time.

Phone System Guide Part 1: Choosing the right phone system for your business

by Nick 11 years ago

In the late 1990’s, 3Com was the number two network equipment company, competing with Cisco in the high-end, high-margin business of core routers and network gear. This was back before the HP acquisition… before the Palm spin-off… even before 3Com started to fall apart. If you remember back then, plenty of capital was floating around telecom-related stocks, and the fortunes of even quality companies were not immune to irrational exuberance. It was then that 3Com, buoyed in part by the price of its stock, acquired up-and-comer NBX Corp. for $90 million in cash and stock. The NBX acquisition made sense… they were one of the first to market with a viable small-to-midsized (SMB) VoIP PBX, and by partnering with regional telecoms 3Com quickly established a foothold in the emerging segment with a game-changing product.

Industry Status Today

Even though I’ve deployed, managed, supported, and otherwise been responsible for quite a few PBX systems… including systems from Toshiba, Inter-Tel/Mitel, Asterisk, Allworx, NBX (and more), telephony has never really been something that got me excited. Phones are necessary. Which means you need a cost effective PBX solution. Therefore, the quicker you can make a good decision and move on, the better. So that’s the approach I’ve taken… give you the highlights, help you understand the the industry, and then accelerate your option analysis phase. In short, I want to help you move forward more quickly than you might otherwise have.

Over the course of past decade or so, the phone system market has gone through 3 major disruptions. First the industry was transformed by VoIP, next came Asterisk and the open-source ecosystem that grew up around it, and finally the Cloud and the “bandwidth transformation” that we’re living through today. While the Cloud is undoubtedly going to change phone systems, many PBX Clouds look very much like the first generation attempts that they actually are. One significant change over the past 5 or so years is that that Asterisk-based systems have gone from hobby, to good enough, and many integrators offer low-cost alternatives to what you might think of as the “big-names” of the phone system business (e.g. Tier 1 competitors). That said, there are good reasons to opt for a Tier 1 mid-sized business phone system… you just need to understand what might drive you to such a system, and how to identify the right solution for your business.

Is the PBX business a good business to be in?

Among the Tier 1 competitors, ShoreTel (SHOR), Mitel (MITL), and Cisco (CSCO) are publicly traded, NASDAQ listed companies – which means we have access to some relevant financial data. Setting aside Cisco (because they’re involved in so many businesses), I can’t say the performance of either Mitel or ShoreTel’s stock has historically really been worth taking note of. Indeed, as I write this analysts are projecting a 7% decrease in revenue for Mitel, while at the same time a recent 10-Q shows an unsettling uptick in inventory levels. ShoreTel’s revenue forecasts fare better, and indicate continued growth in terms of the their on-premises product, as well as their hosted product (via the M5-acquisition). But in neither case does the current trend suggest anything resembling a secular growth story. But is it a good business to be in? Just because their stocks aren’t all that interesting, doesn’t mean this is necessarily a bad business to be involved with. Looking no further than the annual sales of these companies ($200 – $650 million in revenue), and the compensation packages that exist for key executives – one realizes that someone is making money doing this. So while I don’t see myself picking up SHOR or MITL as an investment… the phone system business is still a descent one to be involved in.

Does their business matter?

The extent to which I care about the business of the company whose products I’m buying is really limited to my expectation of the product’s long-term viability, the anticipated life-cycle of the product, and perhaps the on-going R&D investments that the company is making. For instance, after 3Com acquired NBX, they made significant in-roads via their regional telephony partners in bringing “turn-key” VoIP systems into mid-sized organizations, and establishing VoIP as a viable technology. More importantly, even though 3Com self-destructed, the NBX assets continued to be supported by HP, and despite some unpleasantness the platform remained viable. For what it’s worth, it seems that the average life-cycle for a product-set in this business is about 7 years. While your purchase may be viable for longer, it’s probably reasonable to assume based on past behavior that they go through a major product change about every 7 years. In the current market, just about everyone appears to be trying to figure out what the cloud means to their customers, their businesses, and how they can have a competitive solution in that space.

Getting Started

If you were to create a diagram comparing the major features in prominent PBX systems that make sense for a mid-sized organization, you’d probably find about 90% overlap between the platforms. That wasn’t the case back in the NBX days, when VoIP was relatively new to the space. While many phone systems are similar today, they’re not perfect substitutes for one another. So, when you go though the vendor selection process, unless you know in advance what features to care about, you might find yourself at a loss for where to start.

Terminology: Is it a phone system, PBX, or Unified Communication platform?

The answer of course, is all of the above. The term PBX (Private Branch Exchange), is a generic term that conveys the concept of a “phone system”… it’s the aggregation and interface point between endpoints (e.g. phones), and the public switched telephone network (PSTN). Continuing down that line of thought… Unified Communications (UC) extends the concept of a PBX to integrate all types of communications. So think of UC in terms as aggregating telephony (phones), instant messaging, presence status, video conferencing, email, cellular, SMS… and so on, so that your communications “follow-you”, and that you’re reachable via a single contact point. So, you no longer have to separate out the concepts of work phone, cell phone, email, IM, etc… because now it’s all unified. While Microsoft’s Lync is promising, most of the systems today that I’ve looked at haven’t quite bridged the gap between PBX and everything else, and therefore in my mind, aren’t quite yet unified UC platforms. So for the most part, I tend to think of UC as a check-box on the feature list that falls somewhere short of my top priority at this point.

The things that matter – critical features

Before you survey the entire market, bring in integrators, evaluate the demos, and stratify your options based on features or cost… my first suggestion is to determine what functionality is critical to you and your business. If you haven’t been in the market for a telephony solution in some time, that question might be difficult to answer. If your perception of a phone system is limited to something that lets you and your employees pick-up a phone and make calls… and any extra feature as “nice to have”, it might be worth digging a bit deeper.

Redundancy Requirements
Employee Headcount / Geographic Dispersion

Let’s size this up pretty quickly… did your business do $200+ million in sales last year, employing a geographically diversified workforce numbering in the thousands, in a business where phone system downtime can be measured in hundreds of thousands of real dollars per hour? Then you need something bullet proof, and you need to get a team of stakeholders involved, hopefully driven by the CTO (or your equivalent role) to get the right solution for your organization. Otherwise, if you’re a mid-sized organization redundancy requirements, and head-count might just be your driving decision factors.

Redundancy Requirements

Setting aside most of the feature overlap that exists in these systems, a key differentiator is redundancy capability. We can talk about web-conferencing capabilities (yes, most of have some sort of GoToMeeting imitation product), ease-of-use, Unified Communications, market share, and whatever else might matter to you when looking at phone systems… but understanding your redundancy requirement really points you in a particular direction. It will also save you a great deal of time and energy during vendor selection to know if you only need to consider Tier 1 players.

Let me put it to you another way… can you tolerate any downtime on your phone system? If a critical component of your phone system were to fail, and result in the system being off-line for a period of time (minutes to hours), would that materially affect your business? I think the knee-jerk reaction that most of us would give is “Yes, of course that would kill us!“. But are you sure about that? And there’s the rub… you need to be able to answer the question of how just how important the phone system is to you, and even better… put a dollar value on downtime. So if your revenues live-and-die by the phone, or if you run a busy call center and being without the PBX for a few hours every X number of years would be significantly disruptive, then you need to consider a Tier-1 system that supports N+1 redundancy, or Active/Active redundancy. Expect to pay on the order of 2x more for systems that support this kind of redundancy.

Employee Headcount

At the risk of over simplifying the conversation, 600 employees is often the break-point. For instance, if you have fewer than 600 employees, and the majority are based out of only a few locations, then look at the Tier-2, or Tier-3 options because you’re going to significantly reduce your CapEx. Once you get over 600, and certainly when you get into the thousands, you should focus more on Tier-1 systems.

Other Features

Once you move beyond redundancy requirements and employee count you’ll quickly find yourself approaching the 90% feature-overlap realm. When it comes to vendor selection, understanding your business and the real-world value you should expect to derive from the considerable (exhausting) list of features will go a long-way to filtering out the noise of the selection process. Two remaining features are CRM integration, and Mobility capabilities.

Mobility:

By mobility, I really mean everything that occurs outside of your office. The extent to which you have mobility requirements, are often driven by remote worker and your sales forces requirements. Within all 3 tiers, mobility as a “feature” exists. The details though are likewise going to drive your requirements.

Android/IOS app for call handling
Mobile worker (Phones in home-offices)
Data/Minutes integration for mobility (or lack therefore)

Mobility can become a bit of a quagmire, as nearly all of the systems that I’ve evaluated have some type of mobility functionality. But the details of how it works, the relative security of the platform, and the “ease-of-use” are where you start to see the complexity of the solution you opt for really increasing. Here are some things to think about…

Is there an Android/IOS app the currently exists that I can use to integrate my employee handsets into the PBX’s infrastructure?
What specific capabilities do the Android/IOS apps have and to what extent are they transparent to the employee? What do you mean by Transparent?
Do the Android/IOS apps utilize data, minutes, or both? And is it configurable?
How is the call quality if using data on 3G?
Does the Android/IOS app have its own dialer? Does it mask caller ID?
How does voicemail integration happen on the Android/IOS app?
Is the Android/IOS integration seamless? Or does the PBX bridge the remote caller, and the current caller in an non-intuitive manner?

The mobility conversation can go on at length, because the “how” of it, is still evolving for most platforms. From my perspective, the above is all critical to know as you dig down into an individual system’s capability, but more important than the above is the question… “Will your sales people actually use the mobility features, or are they just call from their cell phones all of the time?” This is really the point where the rubber meet the road, because in my experience across many clients, the Sales folks (mostly) aren’t leveraging these features, even though they’re the target audience and stand to benefit the most. There are many reasons why this may be the case, but if you’ve spent any time in sales the why is probably not a mystery. In any case, if they’re not going to use the features, or if the features aren’t obviously intuitive… then I’m not sure that these are important features for your organization (yet). Sure, geeks might play with this type of functionality – but if mobility is a key topic for you, then you need to both understand how your sales force (or other target stakeholders) will benefit from this feature, and I recommend you pull them into the decision making process early.

CRM Integration

Customer Relationship Management (CRM), and/or Enterprise Resource Planning (ERP) integration mean varying things to different platforms. To generalize, CRM integration enables the ability for an incoming or outgoing call to sense-caller ID information and automatically do something relevant with your CRM software (e.g. pull-up client information, display last touch data, etc.). Different platforms have different integration levels and capabilities, with some of the more common being Microsoft CRM, and Salesforce.com integration.

The Bottom Line

While the 3Com acquisition of NBX may have served as the beginning of the VoIP adoption cycle for many organizations, unfortunately for 3Com and many of their 12,000 employees, that acquisition also marked a less than strategic shift away from 3Com’s Enterprise equipment cash-cow. Having survived the acquisition, outlived 3Com, and outlasted HP’s interest in inventorying parts, many organizations are left with no one to support the NBX and similar products. If you find yourself in the market once again for a new phone system, realize that the core functionality of most phone systems is “good enough”, and that the big differentiators have become redundancy and scalability. Beyond that, understanding how and to what extent mobility, CRM integration, and any other key features are relevant to you and your organization will go a long way to saving you time, and frustration and help you to hit the ground running.

The above article is based in large part on a vendor selection process that I assisted a client with recently. The platforms that we evaluated included Avaya’s IP Office, ShoreTel, Digium’s Switchvox, Trixbox, FreePBX, and Allworx. If you’re interested in what our decision criteria included, approximate platform costs, what my client-facing deliverable looked like you, just sign-up for the newsletter here, and you’ll be able to download this article along with my deliverable (which includes some additional commentary). I use the newsletter to send the occasional update, often with content that’s exclusive to the newsletter (e.g. the client-facing deliverable). No spam ever. Promise. Unsubscribe at any time.