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Performance & Growth

Buy a PBX or Host in the Cloud?

Here are 8 questions to ask yourself before choosing to go the tradional or cloud route with your PBX system.

Rapelang Rabana

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What do you do when your business needs a phone system? Whether you are a small company that’s growing every month with more telephone lines strewn on the floor or an established business that is having problems with its current phone system, there comes a point when you need to think about what to do next.

The options of office phone systems available today have gotten even wider with the introduction of cloud-hosted PBX systems alongside the traditional on-site PBX systems. Knowing what to look for enables you to decide which solution works for you and your business. The following are some practical questions you need to ask yourself when considering a cloud hosted or on-site PBX system:

What is the cost of ownership?

Traditional On-site PBX: There is the capital outlay, which is not just the price the system, but also any installation costs. If you have multiple branches, there would be PBX required for each of your branches, not just your head office. Being the owner of the system also means there is on-going maintenance costs which depending on the complexity of the PBX can be expensive if only a select group of experts can maintain it. Ongoing maintenance costs occur it If the system as any problems, if you need to change any configurations, or if you need any upgrades.

Cloud-Hosted PBX: A cloud-hosted PBX service is a ‘software as a service’ which do not take the risks and costs of ownership of – these remain with the service provider who manages and maintains the PBX in the private data centre. The main on-site equipment required are VoIP enabled phones to connect to the hosted PBX over your internet line. Your internet connection may need to improve to cater for greater usage and a back-up access point like a 3G Router should your primary internet line go down is essential. The capital outlay would still be significantly less.

What is the cost of phone calls?

Traditional On-site PBX: You need a PBX to make calls, so these rates should be made clear upfront. Look carefully at the details. Is there a connection fee? Is there minimum amount payable on each call? Do you have to buy a bundle of minutes to get access to the lower rates and if you don’t use the bundle by the end of month, do you loose it? The telecoms regulations in South Africa are lowering the rates to call mobile phones every March for the next 2 years – will you get the benefit of those rate drops?

Cloud-Hosted PBX: VoIP is used to make calls in a hosted PBX, giving you access to highly competitive calling rates. VoIP calling rates are in general more aggressive than the rates from the incumbent operators. VoIP rates are also now more competitive than the rates you used to get on Least Cost Routing devices (LCR), which were the boxes with SIM cards to make calls to mobile phones.

How does the system scale as my business grows?

Traditional On-site PBX: There is a limit to the number of extensions the PBX can support. When your company grows beyond a certain size, like 10 or 20 or 50, you would need to buy a totally new PBX or pay for an upgrade. But you also need to think about scale if you have multiple branches. An on-site PBX is exactly that – its ‘on-site’ so everywhere you have a ‘site’ you will need a PBX system if you add a new office or branch too which incurs additional capital outlay.

Cloud-Hosted PBX: There is no limitation to adding more extensions as the service provider can manage their scale of operations without a physical limitation of a box. Because its irrelevant to a hosted PBX where each person is connecting, as you add more branches or offices, locally or internationally, they can all still connect to the same system.

What happens if I need more telephone numbers?

Traditional On-site PBX: Typically, each additional number must be ordered, which can take few weeks and incurs and monthly line rental fee for as long as you use the number.

Cloud-Hosted PBX: Additional numbers can be obtained for a small activation fee or at a significantly less rental as you do not need to pay for a physical line connection.

What happens if I don’t like and want to change?

Traditional On-site PBX: Contracts are typically for 24 months and can be even longer if you are tied to financing agreement to pay of the PBX over a few years, making getting out very difficult. With this kind of lock-in you are precluded for benefiting from new products and technologies that become available.

Cloud-Hosted PBX: Contract terms are month to month, as with most ‘software as a service’ products. So you are not tied down to system you don’t like or that ceases to meet your needs.

How flexible is the system to change settings to suit work patterns?

Traditional On-site PBX: Changing any configurations would require an understanding of PBX equipment and most businesses simply won’t maintain that expertise in house. This means you would need to call on your service provider to make changes even as small as changing an IVR or changing extensions.

Cloud-Hosted PBX: Hosted PBX’s expose their features and functions through a web interface, so you can log into your account online and opt to change settings like IVR’s and extensions without waiting on someone else.

Can the system help me control and manage my costs?

Traditional On-site PBX: You can only control costs are made fully aware off. Getting a bill at the end of the month makes it impossible to be proactive about your telecoms expenditure. To block things like international calls, or cancelling a number you don’t need generally require making a call to the call centre and writing letters. If you need to breakdown your costs per staff member, or per department is generally impossible without getting an additional system.

Cloud-Hosted PBX: Access to real-time reporting to the costs you are incurring puts in control of your expenses. Cloud systems can even allow you to set a maximum expenditure budget for specific people if you need to contain costs. Through the online interface you can subscribe and unsubscribe for services on the fly.

What happens when I need an additional feature?

Traditional On-site PBX: A PBX box will have the same features it had when you first bought it and unless you purchase an additional module or upgrade, you would not be able to get more features as you need them. Generally, functions like call recording, telephone management system (TMS) that provides costs breakdowns per department, and SMS messaging are completely separate systems.

Cloud-Hosted PBX: The hosted PBX would typically have a comprehensive set of features that you would previously only get in the top end PBX that were too expensive for most businesses. Furthermore, the features and functions are developed on an ongoing basis and you would be automatically upgraded when a new service is rolled out without purchasing a new system.

As with any new concepts and ideas, there is that initial reluctance from many to use a cloud-hosted service. We like to ‘own’ things, but building expertise in and maintaining systems that could just as easily be sourced from the cloud will begin to make less and less sense as it diverts critical resources from core business areas. Why do you want to be in the business of phone systems in addition to your main business? Eric Schmidt, CEO of Google said “Conventional wisdom on cloud computing was that: these were toy systems, that were not going to be reliable, and that people would never store their information in the cloud. But that is all wrong… think about what is really going on here. Wouldn’t it better to have a qualified professional who is operating at absolute scale with a very strong incentive to keep you happy and trust them to do what they do? It actually works.”

Rapelang Rabana is the co-founder and CEO of SA based software development organisation, Yeigo. She oversaw the company’s integration into the TelFree Group of companies in 2008. Now as Global Head of R&D, she and her colleagues in Cape Town continue to ensure that the telecommunications pioneer remains at the forefront of alternative communications through highly innovative software applications across the telecommunications spectrum. Visit http://www.telfree.com and http://www.officeconnection.co.za for more information.

Performance & Growth

Benefiting From The 80/20 Principle In Business

It is by leveraging the compounding effect of focus that entrepreneurs can enjoy exponential success.

Gil Sperling

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By our very nature, entrepreneurs are explorative, often traversing a multitude of paths to success at any one time. While this approach is invigorating, the truth is that the lack of focus cannibalises new businesses before they have a chance to take off.

I have found that honing in on what really matters is imperative for success, an approach that aligns well with the 80/20 rule, or Pareto Principle. While initially an economics ratio that 80% of all wealth is owned by 20% of the population, the notion that focusing effort on the important aspects leads to more significant results, rings true in my business and personal life.

Letting Go of the Other 80%

The catalyst for utilising the 80/20 principle to manage my focus, was a meeting I had with a potential investor. At the time, my partners and I were involved in 7 or so businesses, in addition to ad-tech company Popimedia. These ranged from systems to manage doctor appointments to a social network for new parents. The investor we met with was enthusiastic about us, but would not provide funding due to our lack of focus on a single venture.

It was sobering feedback. We decided to cut chords with the other businesses and focus solely on Popimedia (the golden 20%), a decision that I believe lead to the company’s success.

Related: 7 Steps To Master The 80/20 Revenue Model

The Compounding Effect of Focus

The differentiating factor was focus. If we had chosen to pay attention to one of the other businesses instead, then that would have become the successful venture.

Focus works like compounded interest on an exponential curve; the more you centre your energy on something, learn, and reinvest your knowledge back into it, the better it will perform over time. Subsequently, any endeavour that is not receiving focussed attention from those heading it up is doomed to fail.

I use this principle in my VC investments too; I will only back someone who has unwavering focus on their venture, along with the ability to embrace failure.

Implementing it Day to Day

Being selective in what to focus on not only applies to those big business-defining decisions, but, perhaps even more importantly, to the day to day activities too. There are several ways in which the 80/20 principle can be utilised to guide the investment of focus:

1. You Cannot do Everything

Entrepreneurs are great at what they do, but we need to accept that we cannot do absolutely everything, on account of limited time. Choose the most impactful 20% of the tasks and focus on those.

Related: Bob Skinstad On Making An Impact With The 80/20 Principle

2. Delegate to Smart People

I find it useful to accept that not everything has to be perfect. While you may not receive the same quality when you delegate, the freedom you gain from having time to focus on the important things provides a much higher return. And if you have surrounded yourself with people who are smarter than you, you may be surprised.

3. Make a Bad Decision if You Have to

I have one rule when it comes to decision making: “Rather make a bad decision than no decision”. When you have a solid vision-based framework, making quick decisions to prioritise (or omit) tasks becomes easy, and having the ability to embrace failure allows for quick adjustments if it turns out to be a bad decision.

As entrepreneurs, we need to continuously recalibrate our focus by asking ourselves; “Am I pouring this energy and effort into the right 20%?”

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Performance & Growth

Your Organisation’s Values Must Generate Value – Otherwise Why Have Them?

Your values have to be the foundation of your organisation’s present AND its future if you are going to ensure sustainable value for your stakeholders.

Brian Eagar

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In the modern world of business, where social media compels organisations to tell the truth, transparency and ethics have become essential. Consumers no longer only care about getting value for money, but also about what your company values and how that transpires in what you offer.

Defining a set of values that describes your organisation’s heart, i.e. your organisational culture, is immensely personal and, if lived, immensely powerful. Successful leaders realise that an important factor in building brand loyalty is getting their organisations to wear their proverbial hearts on their sleeves and to authentically honour it in the way they do business. Sadly, many organisations define their values as a tick-box exercise that serves as mere decorations for their website.

Just think of infamous examples like KPMG, SAP and Steinhoff as well as more recent culprits like Bain and Gartner: Besides the millions many of them had to pay back, their severely tarnished brands are still costing them dearly. It is clear that if the values you proclaim to espouse are not overt in your client-facing staff and the way you do business; this lack of integrity will eventually catch up with you. As what happened with KPMG, this not only leaves you with less clients, but with a diminished team too. High potential employees do not want to be associated with leaders who don’t honour the organisation’s values.

Related: Here’s How To Value Your Business

For the organisation’s values to truly become visible in how they engage and do business, it has to start with the leaders and their message. Those we lead must see it in our example on a daily basis. Our organisation’s values serve as a moral compass, but if the leaders responsible for steering the ship do not abide by this compass, our crew can’t get us to where we want to go. Our team members either follow us, become disengaged or abandon ship. They will not make an effort to uphold the values within a business where the leaders themselves disown it.

As a business, we make a certain promise or commitment to our clients. However, if our values do not underpin this promise and if we, as the leaders, don’t role-model our values to achieve this, it remains an empty promise. Therefore, it is important to keep the following aspects in mind when selecting or re-viewing your organisation’s values:

  • Before defining your values, you should ideally define what kind of culture you want your values to underpin. Consider what is important to you and what is important to your customers: Is your organisation’s culture customer-centric, as it aims to exceed customer expectations, or quality-centric because of its strong focus on excellence? Perhaps your organisational culture leans more toward being cost-centric, as providing real value for money is important to you. A service orientated organisational culture, on the other hand, implies that providing your customers with the best possible experience is top of mind for you. Your organisation’s culture could be one of the above, or your culture could consist of a bit of an eclectic mix.
  • Once you have defined the above, choose values that will help your desired culture become a reality and that your team members and customers will buy into. Again, ensure that it captures the heart of your organisation.
  • Values are personal and we all interpret them in our own way. Although we don’t want to promote a homogeneous culture, we do have to communicate what we mean by our values. Therefore, the next step is to craft a set of behaviours that describe how the individuals in your organisation will live these values. Again, it is important to emphasise that the example must be set by the leaders but that it is the responsibility of every team member to role-model these behaviours.
  • Finally, your organisation’s values must come alive and inspire, as they are intended to, and it is your responsibility as a leader to make this happen. Ask your team and your customers to tell you how they will feel if these values are lived authentically, and then measure the organisation against their feedback. If your team and your customers do not experience your values in this way on a daily basis, chances are your values are probably still dormant.

Related: Harnessing Value-Based Delivery To Create Customer-Centric Solutions

It is the responsibility off all leaders to inspire hope and trust in the organisation’s future in good times as well as bad times. To keep your team engaged, you constantly have to paint an emotive picture of what the future looks like for your organisation. If you connect this picture to your values and role-model them as a leader, they become a powerful tool for fostering the emotions and engagement that will help your team members buy into your vision.

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Performance & Growth

How You Can Achieve Growth Through Access To Markets

If your goal is to scale your business, you need to increase your sales and access to markets. We found the best way to do that was through key strategic partners whose existing clients were our target market.

Dov Girnun

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Many sales-led organisations have come to the same conclusion at some stage in their business growth life-cycle: In order to build a sales-led business for scale, you need to adopt a multi-channel sales distribution strategy. In our world, this means a combination of direct sales (boots on the ground), digital marketing and strategic partnerships.

After five years we had grown Merchant Capital as far as we could organically. We needed a much larger sales distribution channel. Understanding the need for a multi-channel sales distribution strategy is one thing, execution is something else entirely. After paying significant school fees, our strategic partnership distribution strategy was crystallised, and off we went to bring our chosen partners on board.

1. Finding strategic partners

Re-calibrating our sales strategy led us to the conclusion that we needed a strategic partner who could bring us ‘one-to-many’. In other words, we needed to identify potential partners (‘one’) who have ‘many’ sweet spot clients who are also our target clients, and whom they are already servicing with other products daily.

The end result of this three-year process has been strategic partnerships with Standard Bank and Discovery Insure. In the case of Standard Bank, every business that utilises a Standard Bank point of sale (POS) system can apply for a cash advance from Merchant Capital. Thanks to the partnership, Standard Bank POS merchants can access a cash advance within less than 24 hours of application.

It sounds incredibly simple and straightforward, but the process of identifying the right partner, creating the value proposition and then building a relationship that can result in such a partnership is anything but.

The most crucial element in this process was identifying partners who could benefit as much from a relationship with us as we could from them — in other words, ensuring a strong mutual value proposition.

When you have a business need, it’s easy to convince yourself that your prospect or potential partner needs you as much as you need them. Unless you are absolutely sure that this is the case however, there’s a strong possibility that you end up having a life-changing initial meeting and then never hear from them again.

This can happen for one of two reasons: Either you haven’t found the right partner who will also benefit from a partnership with you, or you haven’t been able to adequately distil that value. If this happens, very often you’ve missed your opportunity and won’t get a second chance.

Related: How Merchant Capital And Retroviral Were Built To Sell

We therefore had to be extremely disciplined in identifying which partners we wanted to approach. We focused on removing any subjectivity from the process by building an objective ‘partner scorecard’ that allowed us to weight certain attributes of the partner (such as a large client base, deep client relationship and mutual value proposition) with what we could offer them. This empowered us to make educated decisions.

2. Making first connections

Identifying the right partners is only the first step — now you need to make contact. By design, the partners we had identified were behemoth corporates with much larger priorities than meeting us, and convincing them on the upside of a strategic partnership needed to be robust and well-articulated.

Step one is getting your foot in the door. We began the process by identifying ‘champions’ within the partner organisation. This process takes time. We were able to secure meetings and found that running pilots was a good way to provide demonstrable evidence of the proposed ‘win-win’ proposition.

Early on in a business life-cycle (before any traction and brand equity exist), we found that leveraging off our network of shareholders and mentors to make introductions to the appropriate decision-makers within the organisation was of great assistance.

When we signed our previous investment deals, this was actually a key consideration for us. For obvious reasons, growth funding holds value, but the network and mentorship that the right board and shareholders bring to the table can be much more valuable.

Until you’re able to build brand equity and gain traction with a partner (or client), the right networks, introductions and referrals help you secure the meetings you need to prove yourself. And then you need to start small. Don’t expect a meeting with the CEO. Start with someone who could be your champion within the organisation.

3. Finding your champion

Finding a business sponsor to champion the partnership within the corporate partner is fundamental to your overall success. They will understand the internal friction and potential hurdles in navigating the naysayers within the organisation.

There will always be people, and rightly so, who challenge the partnership and ask why they can’t just do it themselves. If you don’t have an internal champion who is engaged and passionately buys into the partnership, then the initiative will most likely fall over and die.

Being the first mover in a partnership with an innovative start-up has many advantages if the product takes off. Often, these people want to be involved on the ground floor.

That said, big corporations are still taking a chance teaming up with young companies (brand risk and financial losses, to name a few). The upside of having already landed a smaller partner where significant traction can be demonstrated goes a long way in softening the initial concerns and risks from the large corporate’s perspective.

4. Nothing worth having can be rushed

The one word that comes to mind when thinking about this journey and the past three years is grit. In our experience, landing great partnerships takes many years of relationship-building and demonstrating solid business metrics and track record.

Related: 5 Lessons for Entrepreneurs from the Most Famous Sling in History

As I’ve already mentioned, our discussions with Standard Bank began three years before doing the deal. What we found useful in the early days of the partner discussions was communicating that in the next quarter we were going to achieve certain results and then coming back the following quarter and presenting the fact that we had hit our milestones, or hopefully exceeded them.

Just as you would do with an investor, this built a track record and credibility. The rhythm of checking in every few months and reporting back on progress is a great way to build the relationship over time without being too pushy as well.

Pulling it all together

There are two types of growth: Organic growth and scale. We’re an organisation that wants to scale. We’re aiming for exponential growth. This wouldn’t be possible without exponentially increasing our access to market.

We identified that the best way to do this was through the right strategic partner, but there are many channels that business owners can consider.

The important thing is not to just do what you’ve always done, unless you’re comfortable with organic growth. Evaluate your current model, and critically examine what you need to do to increase your sales, distribution and access to market. There is no one right way to do this. It took us time, and we needed to learn a few tough lessons before we were confident in the direction we wanted to take.

Related: My Business Is Growing… What Now?

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