With Tim Mercer, CEO of Vapour Cloud, the fast growing, cloud-first specialist in secure voice, video, networks and cloud infrastructure
Vapour Cloud, the Elland-based managed service provider specialising in voice, video, networks and storage, was founded as a cloud-first company in 2013 and today is one of Avaya’s fastest growing mid-market cloud voice partners in the UK. In the last six years, the company has expanded through a combination of acquisition, organic growth and collaboration with other channel businesses. These include IT hardware VARs that in the past might have struggled to generate recurring revenue streams, as well as Avaya partners that benefit from Vapour Cloud’s ability to deliver the network, cloud voice and SIP all under one SLA. Vapour Cloud grew by 51% in 2018 and expects to achieve a similar level of growth in 2019. Technology Reseller asked CEO Tim Mercer for his ‘View from the Channel’…
Technology Reseller (TR): How’s business; better or worse than 12 months ago? And how confident are you about the future?
Tim Mercer (TM): We are better placed for the future after having invested heavily in cloud technology services in 2019.
Our network has cost us millions – in terms of time, money, ongoing resource and support – and our engineering alone continues to cost hundreds of thousands per year. But maintaining the level of resilience we set out to deliver, on a network that is owned, run and managed by our own incredibly talented engineers, is ultimately what ensures optimum robustness with a single, defined SLA.
This has been key to our reputation as a trusted, agile, cloud-first Managed Service Provider, and I’m now confident that our thoughts on the market are coming to fruition. We’ve got a 96% recurring revenue rate, which shows how the channel is responding.
TR: In what areas are you experiencing strongest demand?
TM: Without a doubt, cloud voice underpinned by secure networks and security. At the start of 2019, Avaya hailed us as one of the fastest-growth mid-market voice partners in the UK.
Our clients – VARs and Avaya partners – are looking for a cloud specialist, not a jack of all trades, and the fact that we came into this space before the market was ready for cloud means we’ve earned our stripes in this respect.
There is also a definite shift into partnerships, which is what our ‘collaborate not compete’ business model is there to support – we don’t go after end user business.
TR: Where is business proving most difficult?
TM: For me, it’s around education. There’s a very mixed picture when it comes to the market’s understanding of products and services. That is why I strongly believe collaboration between specialists and nonspecialists is the key.
Look at SD WAN for example. There is a lot of information out there – much of it wrong. Players like us have an obligation to educate the channel, and they in turn can educate their clients, to ensure businesses buy the correct services.
TR: How have you changed/are you changing business operations to exploit new opportunities?
TM: As I alluded to above, being an MSP has long been one of our key strengths. That’s why many years ago, we combined the build of our own network with the fostering of SIP, tier one carrier interconnects and the appointment of some of the most high-level technical resource in the industry. We’ve really ramped up our comms on this over the past 12 months, in response to market demand.
Take voice. By having sight of everything from handset to delivery, we can see the whole length of the traffic and provide a consistent, defined and trusted service level, which people are prepared to pay more for. We’re currently in the process of finalising the biggest managed service deal in our company’s history, which is proof that years of effort are paying off.
We are also always looking at new technologies that complement the services we deliver and support. We’ve seen some huge advancements in our video portfolio over the last 12 months for instance, and we’re still only touching the tip of the iceberg.
That said, technology is changing so fast, and while our partners need to be confident that their investment is future-proofed, they don’t want to be the guinea pigs of new tech that hasn’t been tried and tested. That’s why we spend vast amounts of time, money and development resource in beta phases. We also have to upskill with people and processes that can support every new innovation we implement.
TR: What do you see as the biggest challenges facing channel businesses today?
TM: The channel feels like it is becoming smaller, with an increasing number of mergers and acquisitions, particularly involving traditional hardware telcos on the hunt for recurring revenues. There is also a change in larger American players offering master agent models, which I don’t believe always work with the diversity of our channel, especially in voice and video.
There is currently so much choice that the channel has to be the training ground for sales people and clients alike. Sadly, I think there is still a tendency for many firms to overpromise on things they don’t fully understand, just to get the sale. This needs to change – which brings me back to collaboration.
TR: Could vendors and distributors do more to help you overcome them? And, if so, what?
TM: I think it’s a tough call. Non-cloud specialists, for example, are all fighting for the share of the market that is relevant to them. If a customer expresses a cloud need that the VAR can’t satisfy, the threat from competition increases massively, so they do what they can to protect the relationship. I genuinely believe partnerships, rather than fake promises, are the key to this.
I go back to education, which I think the distributors are getting much better at. Utilising technology to help the channel – whether harnessing video, webinars or other online apps – will help to continually foster channel-wide relationships by driving that all-important ongoing communication and learning.
TR: Are customers becoming more demanding and, if so, in what ways?
TM: Customers are becoming more switched on. Technology is appearing in their inboxes or on social media and they are asking questions as to how it could work within their businesses. They’re questioning – could it save time, efficiencies, make more profit, or generally help us win more work? This can only be a good thing; inquisitiveness and innovation go hand in hand, as long as the right people have a voice at the table.
TR: If you could change one aspect of your job what would it be and why? TM: I’d like more time.