VoIP and unified communications provider Fonality of Culver City, Calif. has two challenges on its plate.
With 10,000 commercial customers, mostly small businesses, the company is now looking to ramp up its systems to address enterprise-scale needs. At the same time Fonality faces the complexities of a radical shift in its business model—moving from a hardware-and-software VoIP solution PBXtra to delivering phone service exclusively in the cloud with its hosted solution Connect. These transitions have required new ideas about technical capabilities, and about the structure of client contracts.
A newly announced round of enhancements aims to address these evolutions.
The company first tackled technical issues, said Aron Aicard, senior director of product management. The problem had to do with the open-source core underlying Fonality’s platform. The Asterisk core didn’t scale well, and suffered from repeated crashes—not good, if you’re ramping up to the enterprise market.
“That isn’t necessarily interesting to customers, but it was something Fonality needed to do to continue to move forward,” Aicard said. The fix “was no easy task, but we did it.”
Even as Fonality engineers were re-architecting the Asterisk framework, management was giving thought to the business model. While the company’s promise has been to serve the needs of each individual user, it typically has sold functionality in consolidated packages, in response to small business’ need for simplicity.
Now they’ve broken it down, selling service in discreet pieces. “The new model is a la carte, a complete mix and match model,” Aicard said. “If I have 90 percent of the workforce just doing basic stuff—making simple calls, transferring from time to time—that’s what we license them for.”
Those who need more advanced functions such as call recording, unified messaging, call routing, and CRM integration, can have those services turned on individually.
Selling software-as-a-service helps enable the pick-and-choose model. At the same time, SaaS allows Fonality to give clients greater control over what they spend. Buyers today can sign on for anything from a month-to-month contract to a five-year commitment.
This in turn has proven a strong selling point among the CFOs who ultimately sign off on new phone system buys. “The financial guys really like this because it is easier to manage. They get greater control over what they spend, and it’s treated as an operating expense,” which simplifies accounting, Aicard said.
In general, the SaaS subscription model has proven tempting to customers for whom a major equipment buy might have been a little daunting. Fonality is no longer selling systems, just subscriptions, “and that dramatically lowers the barrier of entry for buyers,” Aicard said. “They have less to worry about, less to evaluate.”
It’s no small thing to swing a business from system sales to subscriptions: The typical hurdle has to do with cash flow, the ability to float while awaiting a buildup of monthly payments. Fonality has stayed atop the waves thanks to a hefty bankroll. “We had a lot of cash in the bank relative to the company size, probably more than most businesses do, relative to their size,” Aicard said.
Beyond the changes to the business plan and the open source architecture, the latest round of upgrades also includes support for toll restriction functionality, which helps businesses manage monthly telephone service expenditures by allowing administrators to limit calling rights.
In addition, Fonality has beefed up the ability of its UC suite to work across multiple locations. With this iteration, workers in multiple locations can see the status of colleagues, chat with associates, transfer calls, or start an instant conference.
UC is terrific, “but if you can’t conference across multiple locations with a tool like that, it is limited in its value,” Aicard said. “Now we have multisite communication that is totally seamless.”
Working in Fonality’s favor is a heavyweight OEM channel partner, Dell. The two companies have worked together for a while, and Fonality has learned what it takes to bat in the big leagues.
“Dell is big, they deal in volume, and they need things to be really refined,” Aicard said. “You want to make sure you have ironed out all the details before you roll out. It’s all about careful planning, so when you do go, you go in clean and you go in fast out of the gate.”